How does rural village in China achieve industry integration to reduce labour force surplus through farmers’ co-operatives?

Facing the difficulties in developing industries in rural regions in china, farmer’s co-operative is proposed as a valid solution to transform the excess labour force from agriculture to manufacture and service industries. The co-operative has two main advantages: centralised production and service provision that drive up the profitability and competitiveness of the production. However, the growth of co-operatives is obstructed by numerous barriers, namely, lack of funds and lack of collaboration. Targeting these two defects, this paper proposes two policy recommendations: first, direct government service provision and financial aid to expand co-operative service range and basic equipment; second, promote a shareholder based co-operative model to enhance the interest linkage between farmer members, thus reducing the transaction costs of production.