Poverty or Prosperity for China’s Farmers?

October 12, 2007 • Commentary
By Zhu Keliang and Roy Prosterman
This article appeared in the South China Morning Post on October 12, 2007.

The mainland’s harmony depends largely on stronger land rights for farmers

Everyone has noticed that China is growing into an industrial powerhouse, but farmers still make up almost two‐​thirds of its population. The mainland has an astonishing 700 million rural people, and they’ve been largely left behind in the economic boom. This month may prove a decisive moment in Beijing’s efforts to develop its backward countryside.

The new Property Law, the first of its kind in China’s modern history, came into effect on October 1. And the Communist Party’s 17th National Congress begins on Monday. At the congress, President Hu Jintao is expected to further consolidate his power and focus on his top agenda — building a “harmonious society”.

The two events could be mutually reinforcing in their impact on the mainland’s rural people, who rely heavily on agricultural land for their livelihood, and lag badly behind their urban counterparts. Much depends on how seriously the central leadership takes the challenge of implementing the Property Law’s provisions to strengthen farmers’ rights to land.

The average urban‐​rural income disparity on the mainland reached a record 3.34:1in the first half of this year, and a majority of farmers’ land rights are still undermined and insecure. Local officials often assert unlawful power to seize and reallocate farmers’ land. That discourages them from making long‐​term investments or engaging in any meaningful land transactions.

Weak land rights turn properties into sitting ducks for local governments, which are increasingly seizing land for nonagricultural purposes and lucrative resale as the industrial economy expands. Land is now the primary source of rural grievances and unrest in China. In the first nine months of last year, the nation documented 17,900 cases of “massive rural incidents” — about 80 per cent of them related to illegal land seizures.

For this vast and lagging rural sector, the Property Law offers the best shot at the benefits of development and modernisation: it’s a new, far stronger and more authoritative statement of farmers’ long‐​term (30‐​year), documented and marketable land rights. By strengthening land rights in the countryside, Beijing could replicate the amazing transformations that occurred in rural Japan, South Korea and Taiwan.

Even the halting implementation of past laws and issuance of some land‐​rights documents have been enough to trigger an estimated 26 million additional mid‐ tolong‐ term farmer investments in land — creating as much as US$200 billion in marketable land value. If mainland law and politics can successfully combine to enforce farmers’ land rights under the Property Law, such investments would multiply.

That would greatly boost farm output and create as much as US$500 billion in land wealth for farmers. These reforms would narrow the urbanrural gap, and help domestic and foreign companies alike benefit from the vast consumption power of China’s rural population. In August, the State Council approved an action plan put forward by seven ministry‐​level agencies of the central government, aiming to rectify land rights violations in the countryside. The plan sets the ambitious goal of issuing land rights documentation, as provided by law, to 90 per cent of farm households by the end of the year.

If the property law is to be effective, farmers must know about it — yet many farmers and local officials are unaware of it. It must be widely advertised, and discussed in village meetings.

Farmers need access to an independent court system, and to legal aid. Legal rights are meaningless if the government cannot enforce them. Today, farmers with land grievances often cannot receive fair and unbiased rulings from the courts.

They need a means of registering their lands. Every developed economy in the world has some system for this purpose, providing official confirmation of farmers’ rights in land and enabling them to obtain the full economic benefit of those rights in market transactions. In rural China there is virtually no land registration. Local officials must know that they will be judged on their ability to secure farmers’ land rights. Building a harmonious society is the primary task of the Communist Party and that requires the rule of law.

If local officials’ political futures depended on it, the law would be implemented effectively. There is no better platform to give the implementation of farmers’ land rights the necessary political impetus than a National Congress of the Communist Party. Nothing is more important to the mainland’s 700 million rural people than their secure rights to land. Nothing is more likely to determine the economic and political future of the countryside in the years to come.

Will China’s leaders seize the opportunity?

About the Authors
Zhu Keliang
Roy Prosterman