Chinese companies have a simple reason for incorporating as public U.S. firms: They want to sell stock shares to investors and raise money.

However, the phenomenon is indicative of a broader trend.

Agricultural entrepreneurs are on the move in China, and they need money to expand, according to experts.

Credit isn't easily available to startup companies and individuals, said Fred Gale, a senior economist at USDA's Economic Research Service who specializes in China.

To be publicly traded on any Chinese stock exchange, firms usually need to be relatively large and have ties to the Chinese government, Gale said.

Entrepreneurs who haven't yet risen to that level can turn to other alternatives, however.

"There's an underground financial market," Gale said.

Often, this form of credit is as innocent as borrowing from family and friends, he said. However, there are also underground banks, loan sharks and organized crime lenders who are not legal but sometimes operate out in the open.

The Chinese government also presses larger companies to pour money into rural ventures, Gale said.

"Non-agricultural companies have been investing in agriculture," he said.

The country's burgeoning population will need more food in the future, but that's not the only incentive, Gale said. China's government wants to build prosperity in the nation's western region, which is not affluent like the eastern coast.

Companies are expected to invest in projects for the societal good, or risk not getting various regulatory approvals from the government.

Right now, the push is to emulate the West's agricultural economy, with its efficient economies of size and consolidated infrastructure, said Francis Tuan, an economist at ERS who also specializes in China.

"They really could not produce as efficiently as we can in the United States" under the traditional system, he said.

"The sizes are getting bigger. The scale is getting bigger."

Change is often driven by government policies. Land rights offer a clear example of the shifting agricultural economy, Tuan said.

Under the communist system, land belongs collectively to villages, he said.

In the past, the government divided plots of land among individuals and families based on household size.

These days, however, laws are being revised so farmers can lease land rights from their neighbors to increase plot size, Tuan said. "They're trying to consolidate that land to produce in a more efficient way."

-- Mateusz Perkowski

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