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Development, 2011, 54(1), (5558) r 2011 Society for International Development 1011-6370/11 www.sidint.

net/development/

Dialogue

Land in China: Struggle and reform

A.C.M. (GUUS) VAN WESTEN

ABSTRACT China has inherited a unique dual system of land tenure, in which urban land is essentially commercialized and rural land belongs to village communities guaranteeing access to all community members. The Chinese government has launched a major reform of this system, enabling the privatization of rural land use rights. Guus van Westen argues that while this reform may serve to remove institutional obstacles to agricultural modernization as well as urban development, it will also increase the risk of the rise of a landless rural proletariat. KEYWORDS land rights; governance; land grabbing; urbanization; agricultural modernization; privatization

Introduction
Land rights in China have become an arena for conflicting interests and struggle among various stakeholders. Media coverage is discouraged, but numerous reports of farmers protests indicate that unease is widespread. In 2007, the issue of a nail house in Chingqing managed to reach a rare iconic status worldwide thanks to stark pictures of a lone remaining house on a pinnacle in the midst of a huge construction pit. Most land problems, though, receive far less attention. In October 2008, China announced important changes in its tenure system for rural land. The stated reasons for reform were, first, concern for widening rural-urban income gaps in the wake of the countrys massive transformation from an overwhelmingly rural society to an urban-industrial giant, and second, the need to boost agricultural productivity (The Economist, 2008). While the reforms reflect Chinas impressive economic performance in recent decades, there are also reasons for concern about the socio-economic consequences for especially rural populations.

Land governance in China


China has a unique dual framework of land tenure that maintains two radically different systems alongside each other, one for land classified as urban and the other for rural land. Since the reforms introduced by Deng in the late 1970s, urban land is state owned but in practice much of it is in private hands since ownershipand use rightsare effectively separated and the latter, as long-term leasehold, can be traded commercially (Wu et al., 2007). Rural land, however, belongs to rural collectives. These are not clearly
Development (2011) 54(1), 5558. doi:10.1057/dev.2010.92

Development 54(1): Dialogue


defined, but are often considered to consist of the village communities that stand center stage in the organization of Chinese rural life. Rural families are given land to farm and build a house, which until recently could not be transferred to others or converted to urban uses. Rural land is also periodically redistributed among community members in order to accommodate changes in household composition. Conversion of rural into urban land requires appropriation by the state in exchange for a compensation package for the affected village population ^ at least, in principle (Ho, 2005; Lin, 2009). Many reports from all over China point to the fact that procedures are not always complied with, and officials and village leaders are often accused of bending the system to their advantage. Land issues are a major source of unease in rural China. Media coverage is discouraged, but there are frequent reports of farmer protests throughout the country. The October 2008 rural land reform now allows the beneficiaries of rural land certificates to rent these out, or even sell them, to third parties. These leases may in future last beyond the 30-year horizon now in place. Thus, conversion of rural land to more productive uses and users is made easier, as the cumbersome process of state appropriation and conversion can be avoided. The principle of collective land ownership as such is not abandoned, as this is perceived as too flagrant a breach of socialist principles. Other restrictions (e.g. putting up land for mortgages) also likely remain in place. Nevertheless, the reform, if fully implemented, heralds a significant step towards commercialization and privatization of rural land in China. growth in this densely populated country where actually only part of the national territory is suitable for intensive human occupation. The major stated reason for the Chinese state to launch the rural land reform is the desire to reduce the growing urban-rural income gap. In 2007, urban incomes exceeded rural ones in China by a factor of 3.33. Overall income inequality in China is now higher than it was before the 1949 revolution. Of course, most people are now better off, and the countrys spectacular economic success in recent decades is considered a major source of legitimacy for the existing political regime. From this perspective, it is especially the rural-urban income gap that risks becoming a destabilizing factor in Chinese society over time. In the early days of Dengs reforms, agricultural output and rural incomes increased rapidly with the introduction of the Farmer Responsibility System, effectively replacing the commune system with a system of family farms organized in village communities. More recently, Chinas economic growth has been largely based on the expansion of the urban and industrial sectors. Agricultural productivity has improved over the years, but still lags behind other countries in the region. Grain production, for instance, is reportedly some 20 percent lower in China than in South Korea in 2005 (MGI, 2009: 405). Use of fertilizers and pesticides is already high, but productivity could be boosted by using better (disease resistant) varieties and especially by introducing better farming techniques, that is, mechanization and irrigation. The problem is that this requires larger plot sizes than prevail in densely populated parts of China, where the average farm size is variously estimated at between 0.4 and 1.2 hectares. Hence, a land consolidation programme that combines fragmented plots into holdings suitable for mechanization could boost cereal yields by as much as 40 percent by 2025, according to MGI (2009: 39). This is likely what the Chinese authorities have in mind when launching the recent reforms. It is clear that this could entail significant consequences for rural China. Massive restructuring of rural China, consolidating fragmented lands into units suitable for modern agriculture, will likely reduce the agricultural labour requirements.While

Rural land issues


The reform of rural land governance should be seen against the backdrop of three related problems that preoccupy Chinese policymakers. One is the widening gap between rural and urban income levels since Chinas emergence as a major manufacturing powerhouse in the global economy. The second point is the stagnation of agricultural productivity that appears to have reached its ceiling under present conditions. A third concern is the loss of rural land due to massive urban

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van Westen: Land in China


some rural households may gain more prosperous farms or benefit from successful renting out of land certificates, others are bound to be less successful. Part of the rural population may eventually face loss of their land claims, in a significant departure from the principle of the iron rice bowl established since the 1949 revolution (Lin, 2009). The question then is what alternative sources of income will be available to these people. Rural restructuring along these lines will either necessitate the creation of lots of new jobs and industries in the countryside, or it will uproot millions of farming families who would need to move urban areas in search of alternative livelihoods. convert from rural to urban uses (Yang, 2004). Since 2005, minimum fees are imposed for the allocation of urban land. Nevertheless, given the huge gap in value between urban and rural land, massive pressures in favour of conversion are likely to prevail. It is clear from many reports that all over the country, local officials benefit from land conversions. Although illegal and against Chinese government policy, the procedures are such that it is difficult to prevent this from taking place (Wu et al., 2007). The October 2008 reforms, by granting land certificates to farmers, may make this urban land grabbing at the expense of farmers more difficult in the years to come. But it remains to be seen how effective this will be in curbing rural land alienation.

Urban land issues


The rural land issue is exacerbated by rampant urban growth. The move of people from the countryside to urban jobs and the expansion of cities into rural surroundings are to be expected in a country experiencing rapid industrialization and now also expansion of its service industries. However, the specifics of Chinas land governance system is adding to the problem. Urban land hungerexceeds the urban population growth. Between 1990 and 2005, the urban built-up area of China increased by 150 percent, and the country is now constructing two and a half Chicagos per year (MGI, 2009:73). As a result, arable land is lost at a speed that conflicts with strategies of maintaining food security (essentially, self-sufficiency in basic agricultural products) and announced minimum reserves of agricultural land. In China as a whole, each new urban resident reduces the size of land for cultivation by 0.04 hectares (MGI, 2009: 119). Arable land per capita declined from 0.19 hectares in 1965 to below 0.1 hectares at present, roughly at the government-mandated minimum for 2010 (MGI, 2009). Regulatory reform has tried to reduce the loss of arable land to urban uses from 1986 on, but this was reversed in later years. Between 1999 and 2003 new development zones were launched throughout China in an attempt to limit land losses by concentrating development in designated areas. In recent years, the central government again seeks to restrict the quantity of land cities may

Formalization and the use of ambiguity


Several observers (Lin, 2009: 27^29) suggest that the ambiguous nature of (urban and rural) land rights under Chinas dual land tenure system is actually a root cause for urban overdevelopment and land hunger. Although legislation clearly reserves property rights to urban land as the prerogative of the state, in fact land rights are now acontested sphere between the central state, local governments, private developers and other public sector entities (Lin, 2009: 28). This relative ambiguity creates opportunities for enormous profits by transferring land rights from one (public) domain to the other (private development). The profits generated by transforming a nominal public asset to a marketable commodity benefit both private developers and various public sector agencies, including local governments that fund infrastructure development by assigning land use rights. The dual system of separate regimes for rural and urban land, enable city governments in China to benefit from converting rural land to urban uses. Land is acquired cheaply and make it available to investors (and residents) at prices set according to policy priorities. Some cities offer new urban land at low cost to investors, encouraging companies to set up businesses and facilitate economic growth. Cities such as Changsha (Hunan) offer discounts of up to 50 percent to attract desired investments. On the other hand, cities

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Development 54(1): Dialogue


have been able to fund their expansion and the corresponding massive investment in infrastructure and services by realizing a huge margin between the acquisition cost of (rural) land and the prices paid by (urban) users. City budgets (and individual officials) benefit from this condition, while farmers largely loose out. In fact, many urban governments in China have come to rely on land conversion and allocation charges as an important source of revenue. Such policies are to a large extent framed locally, even in conflict with stated central government objectives. Lin (2009), in fact, warns against an overzealous drive for privatization and titling of all land use rights.While security of tenure is undoubtedly a major factor for investors sense of security, there are also other considerations (Payne, 2004). As mentioned, a limited degree of ambiguity and local room for maneuvering does allow for adaptations to local/regional conditions and priorities: moving a bit faster in economic hotspots attracting lots of investors on the one hand while protecting vulnerable groups of society on the other. It is interesting to note that a titled and privatized approach is by no means generally favoured by the Chinese population. While some surveys of farmers suggest that they would be inclined to invest more in their farms if granted a more secure title to the land, other studies show that many (between half and two-thirds (Lin, 2009: 37)) would prefer to retain the socialist practice of periodical land adjustment to accommodate changes in household size and composition. Rural populations fear that changes in their household composition can no longer be compensated for by adjusting access to land resources. They may also fear that stronger members of society or outsiders could grab the land at the expense of less agile or well-placed people. Definition of land property rights must be understood as a compromise derived from y time- and place-specific demographic, political, and economic conditions (Lin, 2009: 37). In this view land tenure arrangements tend to be the dependent variable in a developing social and economic context, rather than an independent variable that can be manipulated at will to attain economic growth.

Conclusion
The explosive growth of Chinas cities would arguably then, not assume such a massive scale in a unified tenure system ^ be it a free market model or a fully socialized system. Others, however, challenge this view. Peter Ho (2005), amongst others, sees Chinas land tenure system as a case of deliberate institutional ambiguity, enabling the state to respond to a variety of pressures. The vague definition of collective ownership in rural areas is an example. In this perspective a certain ambiguity in land tenure arrangements is an instrument of the state to reconcile competing and conflicting interests in a pragmatic way. As a result of this pragmatic response, tenure arrangements vary somewhat from one context (area) to another. Thus, land rights do not always constitute auniform and consistent arrangement throughout China (Lin and Ho, 2005). Property rights vary from region to region in response to differences in local conditions.
References

Ho, Peter (2005) Developmental Dilemmas: Land reform and institutional change in China, London: Routledge. Lin, George C.S. (2009) Developing China. Land, Politics and Social Conditions, London: Routledge. Lin, George C.S. and Samuel P.S. Ho (2005) The State, Land System, and Land Development Processes in Contemporary China, Annals of the Association of American Geographers 95(2): 411^36. McKinsey Global Institute (MGI) (2009) Preparing for Chinas Urban Billion, Shanghai: McKinsey & Company. Payne, Geoffrey (2004) LandTenure and Property Rights, Amsterdam: Elsevier. The Economist (2008) Land Reform in China, 23 October. Wu, Fulong, Jiang Xu and Anthony Gar-On Yeh (2007) Urban Development in Post-reform China. State, Market and Space, London: Routledge. Yang, Hong (2004) Land conservation campaign in China: Integrated management, local participation and food supply option, Geoforum 35(4): 507^18.

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