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Changes to the long-standing forest ownership system are providing new sources of revenue for impoverished rural residents, as Hou Liqiang and Hu Meidong report from Wuping, Fujian province.

Editor's note: In the run-up to the 19th Communist Party of China National Congress, China Daily is reporting on a number of key projects of national importance that showcase the country's great improvements in crucial fields, such as recent reforms aimed at improving living standards and creating a moderately prosperous society by 2020. This is the first of two reports looking at reform in the country's rural areas. The second report will be published on Tuesday.

According to an old Chinese saying, "If you live on a mountain, you live off the mountain". The people of Wuping county, Fujian province, are living proof of that adage.

In the 1990s, whenever the locals needed money they simply cut down trees and sold the wood. The resultant excessive deforestation prompted the local government to reform the collective forestry ownership system in 2001 and distribute resources to individuals, a move endorsed by President Xi Jinping, who was governor of Fujian at the time.

The reforms were so successful they were promoted nationwide, and changes are continuing in the forestry sector.

Having established a government-backed credit guarantee company, which specializes in forestry evaluation, management and disposal, Wuping has set an example by helping residents to obtain bank loans using their forestry assets as collateral, so they can start businesses related to the sector.

So far, the move has been successful both in raising living standards for people in mountain villages and in maintaining woodland.

In 1998, when Li Yongxing returned to Jiewen village in Wuping, after being made redundant by a State-owned company in the county seat, the villagers and officials asked him to become village head. While he was keen to take on the role, the difficulties the villagers faced in protecting the collectively-owned forests made him hesitate before accepting.

"All the large trees had been felled, and the villagers often fought when scrambling for trees to cut down," Li, 68, recalled.

The situation in the county, which borders Guangdong province, was so bad and the people were so poor that in the 1990s more than 100 farmers driving tractors loaded with lumber forced their way through a pass, and headed for Guangdong, where they could sell the wood at a high price, according to Deng Suimin, former deputy head of the Wuping county government.

Li attempted to rectify the situation by hiring rangers and organizing patrols, but his efforts failed. In 2001, he was considering quitting when he heard that the county government was launching a pilot project to distribute forest resources to individuals. Li applied for the project to be carried out in Jiewen because he had been thinking about using the same approach to protect local woodland.

Li's application was approved, but troubles lay ahead because at the time China's forests were either held collectively or owned by the State.

"There was almost no experience or legal support for the pilot project," he said.

Local opposition

About 20 percent of the villagers opposed the redistribution of resources, and some even lodged complaints against Li with the county government because they thought the move would result in the erosion of collectively-owned assets.

One person who stood by Li was Yan Jinjing, deputy director of the Fujian Forestry Administration who was the local Party chief at the time. "As there was no experience of, or policy for, the reform of forest ownership we could have chosen to do nothing. But the reforms were related to people's interests, and it was our responsibility to protect those interests," said Yan, who found himself under great pressure because failure could result in even greater deforestation.

When villagers discussed how to distribute the assets, a number of wealthy outsiders contacted Li and promised to reward him if he sold some of the forest to them. Li refused.

"The villagers had lived off the mountains for generations. If they didn't even own a small area of the mountain, it would be hard for them to make a living," he said.

With the help of about 10 officials from the county government, a plan was eventually drafted that satisfied the villagers. At the end of 2001, the villagers received ownership certificates for the sections of forest they had been allocated.

In April 2002, the county government began to roll out the reform, known as the Collective Forestry Ownership System, across the county, despite the fact that the higher level of government had not authorized the move.

The reform won support from Xi when he visited Wuping in June that year. During his visit, the then-governor said: "The reform of the forestry system is on the right track. It should be put forward in a down-to-earth way, so the people will benefit."

He also said the reforms should follow the example of the Household Responsibility System, which was introduced in the 1980s and allocated land to individual farmers via contracts. They were allowed to either sell surplus produce at market rates or keep it for their own use.

The reform also protected Wuping's ecosystem. According to Li, before the redistribution of resources, forest fires were common because the villagers had no vested interest in the woodland and few helped to put out fires. Once the reform had been implemented, however, they began to take better care of their assets.

"After the reforms, there were no more forest fires because the villagers became more cautious about where they lit fires to ensure their assets weren't damaged," he said.

According to the county government, almost 47,667 hectares of trees have been planted since 2002, equal to the total area planted between 1977 and 2002. Now, the county's forestry coverage rate is almost 80 percent, up from 76.8 percent in 2001.

Yan said Xi's support at the most challenging time in the reform process was "decisively significant" for its success.

Quota system

However, new problems arose. For example, China employs a quota system for tree felling, which states that farmers can only cut a certain number of trees 10 years after they have been planted, and are only allowed to fell their entire stock after 26 years, which means it takes a long time to make a profit.

"Last year, the value of Fujian's forestry resources was estimated at 1 trillion yuan ($147 billion). Exploring and understanding how to transform these resources into capital is the key for building a moderately prosperous society in Fujian," Yan said. He added that the most challenging work the government faces is ensuring that the local ecosystem is well protected, while simultaneously developing the local economy and raising living standards.

In June 2006, Wuping attempted to help farmers obtain loans by offering local banks 2.4 million yuan as security. The banks would then be able to issue loans totaling five times that amount.

The idea was trialed, but failed to achieve the desired effect. The lack of evaluation and management expertise of forests, which were prone to damage by the weather or disease, meant the banks were reluctant to provide loans, according to Huang Jianzhong, director of the Wuping Hengxing Rural Bank.

As a result, the county government established a forestry ownership collection and bonding company in May 2013, which helps bridge the gap between farmers and banks.

The collective not only helps to evaluate farmers' assets, but also assumes management duties if the owners are unable to maintain loan repayments, said Chen Jianmin, director of the Wuping forestry ownership service center.

Benefits

With 15 million yuan provided as security by the county government and using the resources as collateral, three local banks had issued loans totaling 310 million yuan by the end of May, he added.

Jiewen resident Li Guilin, who was granted China's first-ever forestry ownership certificate, was one of the earliest beneficiaries.

In 2014, the 69-year-old farmer and two partners began raising chickens. However, a lack of funds meant they could only raise about 1,000 birds initially, but after Li Guilin obtained a bank loan of 20,000 yuan in 2015, they increased the number to 8,000.Having repaid his original loan, Li Guilin has borrowed another 100,000 yuan to expand his farm.

"At 15 yuan per kilogram, the price of chicken is good. I can make at least 20,000 yuan a year from the farm now," he said, adding that without the loan his income would be much lower.

Last year, Wuping's forestry industry generated revenue of 5.47 billion yuan, and the scale of related businesses was 2.4 billion yuan, a rise of nearly 23 percent from 2015. The area under cultivation and used for flower nurseries was more than 1,926 hectares and worth more than 1 billion yuan.

At least 38 forestry ownership collectives and bonding companies have been established in the province. They have helped farmers to obtain loans totaling more than 2 billion yuan, by using their assets as collateral, according to Xu Ruhui, director of the forestry ownership reform office at the Fujian Forestry Administration.

In 2015, Wuping also started a pilot project to establish cooperatives to help farmers obtain loans. The one in Yuanding village has helped 280 farmers to secure about 40 million yuan to develop forestry-related businesses.

The reform will continue and will build on previous successes, Yan said:" Once the benefits from earlier reforms are exhausted, other problems will arise, so we must continue to innovate and undertake even more reforms. We are' crossing the river by feeling the stones', and we have yet to reach the riverbank. Reform is the key to solving the farmers' problems."