In response to the tens of thousands of peasant protest taking place in China each year – nearly half of them related to controversial land grabs – the Communist Party has recently announced alleged “breakthroughs” in its thinking about the countryside. It is not yet entirely clear what these “breakthroughs” amount to since the details for now remain classified, but many hope that the Party has finally recognized, and reconciled itself with, the importance of private land ownership to the country’s development.
Collectivization of land is the cornerstone of communist ideology; however, it hasn’t quite been the reality in China since the post-1978 reforms. The grassroots movement of peasants insisting that they should be able to farm their own plot of land has been so widespread that the government chose to more or less accommodate it, even though in theory the rural areas are still collectively owned. Changing this tacit acquiescence to an open admission that collective farming simply doesn’t work would indeed be a big watershed.
The fact that Chinese farmers have no secure legal rights to their land (they can only lease it) has led to many problems that incite aforementioned protests. First, the land can’t be mortgaged and selling usage rights or buildings can be legally problematic. Second, many local party officials have taken collective ownership to mean that they are ultimately in control and they often engage in lucrative deals with developers that translate into indiscriminate land grabs for the farmers.
Beijing doesn’t have to rely on the opinion of foreign economists that this is a less-than-ideal system; domestic experts have reached the same conclusion (see the Economist article):
-
Chinese academics have long argued that a freer and better-regulated rural property market is essential if peasants are to enjoy more of the fruits of growth. They say it would encourage the consolidation of tiny, inefficient plots of land leased to farmers by collectives and allow peasants to cash in on their land’s market value, enabling them to use the capital to go into business in the cities.
But the Communist Party’s commitment to reform remains half-hearted at best, despite the recent pronouncement claiming to be the harbinger of change. For one, as mentioned before, the current proposal is really vague and secretive. That’s not a good sign. Since the announcement, the Chinese media have reported that the principle of collective ownership of rural land will remain unchanged – and that means that local party appointees will retain corruption-prone authority over land deals.
In order to placate frustrated farmers, the government set a target of doubling rural incomes by 2020. But as long as land property rights remain in the legal limbo, that land cannot become a fungible asset, something that can be securely traded, mortgaged, and used either to increase agricultural productivity or as a means for investment in more than just farming. It will instead remain what Hernando de Soto calls dead capital suitable only for inefficient subsistence farming.
Published Date: October 16, 2008