Introduction: Small-scale farmers dominate the Chinese farming sector where the average arable land per farm amounts to less than one hectare. According to China's Third National Agricultural Census in 2016, only 3.5 million large-scale farm households are operating 50 mu (3.3 ha) or more, accounting for only 1.7% of the 230 million farm households (Zhang, 2018). Small-scale farmers find it challenging to integrate into modern supply chains, to obtain access to capital as well as technical knowledge and market information (Zhang, Mishra, and Hirsch, 2021). Higher prices in input markets, lower prices in output markets, and longer agricultural supply chains hamper farm growth, and hence, the realization of economies of scale for small-scale compared with large-scale farmers (Kendall et al., 2022). Higher production costs, low technology adoption, and a disadvantaged position in the market further lead to lower productivity for Chinese small farms (Zhang, Mishra, and Hirsch, 2021).
In China's agricultural transformation, commercially oriented production is crucial to improving productivity and the welfare of small farmers. With the improvement of rural roads, transportation systems, and the market environment, Chinese farmers now have widely embraced the input and output markets. However, evidence shows that farmers' commercially oriented behavior is still subject to greater constraints (Zhang, Mishra and Hirsch, 2021; Kendall et al., 2022). This is because small Chinese farmers engage in part-time off-farm work and make farm input decisions based on maximizing family utility instead of maximizing farm profit. Additionally, farmers have low incentives to adopt new technologies and change management strategies in production in accord with market information (Kendall et al., 2022). However, technology adoption is crucial in enhancing farm productivity, and subsequently profitability and food security. Lastly, rural farmers face imperfect markets, especially credit markets and land rental markets, which hamper a reduction of farmers resource constraints and farmers' commercial production orientation (Zhang, Mishra and Hirsch, 2021).
Objectives: This study investigates the impact of Chinese smallholders' participation in the land rental market on farmers' commercially oriented production and productivity. To our knowledge, few studies focus on farmers' commercial orientation of production in China (Chen et al., 2020; Kendall et al., 2022). However, none of them discussed how land endowment and the land rental market affect smallholders' commercial agriculture production and productivity (land and labor).
Data and method: The data comes from a nationally representative Chinese household survey conducted by the China Household Database (CFD) and the China Household Finance Survey and Research Center (CHFS). The 2015, 2017 and 2019 round panel dataset were used in this study.
In our conceptual framework, farm households renting-in land may expand farm size, affect commercially oriented farming, and further impact farm productivity. Commercially oriented agriculture may improve productivity through specialization, technological improvement, information, and economies of scale. Our index of commercial orientation is a binary categorical variable, and will be assigned a value of 1 when farm households involved in greater sales of agricultural output with an index value of 0.5 and above, and 0 otherwise. We will first investigate the impact of the land renting-in market on commercial agriculture orientation, and then the joint effect of participation in the land renting-in market and commercial agriculture orientation on agricultural productivity. We adopted fixed effects model and instrument variable method to solve problems of endogeneity.
Preliminary results and discussion: Findings reveal that farm households' decision to rent-in farmland, the farms’ land endowment, household head characteristics, and value of machinery drive the households' commercial agricultural orientation. Farm households' decision to rent-in land increases the commercial agriculture orientation index by about 4%. Furthermore, renting-in farmland has a negative effect on land productivity which implies an inverse relationship between productivity and farm size. In contrast, renting-in farmland has a positive impact on agricultural labor productivity. Commercially oriented production has significantly improved farm households’ land productivity and labor productivity.
China has laid out support policies and strategies to promote agricultural productivity and market orientation to ensure food security. The land rental market is one market institution that the policies focus on, which is the foundation for the large-scale operation and agricultural modernization. It is necessary to further facilitate farmers' participation in the land market and provide agricultural mechanization services to promote farmers' commercially oriented production. This study contributes to current literature in the following ways. First, we focus on the impact of Chinese farmers' land renting-in activity on their commercially oriented farming under the imperfect land rental market, which enriches the explanation of small farmers' market-oriented production. Second, the relationship between commercially oriented agriculture and farm and labor productivity has significant policy insights for small farming systems such as those in China and other Asian countries. Third, the study considers the productivity effects of small farmers' participation in the input market (land market) and output market (commercial orientation).
Keywords: Land rental participation; commercial orientation; land productivity; labor productivity
 

Land rental participation; commercial orientation; land productivity; labor productivity