Poverty or Prosperity for China’s Farmers?

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 thatChina is growing into anindustrial powerhouse, butfarmers still make upalmost two-thirds of itspopulation. The mainlandhas an astonishing 700million rural people, andthey've been largely leftbehind in the economicboom. This month may prove a decisivemoment in Beijing's efforts to develop itsbackward countryside.

The new Property Law, the first of itskind in China's modern history, came intoeffect on October 1. And the CommunistParty's 17th National Congress begins onMonday. At the congress, President HuJintao is expected to furtherconsolidate his power and focus on his topagenda — building a "harmonious society".

The two events could be mutuallyreinforcing in their impact on themainland's rural people, whorely heavily on agricultural land for theirlivelihood, and lag badly behind theirurban counterparts. Much depends onhow seriously the central leadership takesthe challenge of implementing theProperty Law's provisions to strengthenfarmers' rights to land.

The average urban-rural incomedisparity on the mainland reached a record3.34:1in the first half of this year, and amajority of farmers' land rights are stillundermined and insecure. Local officialsoften assert unlawful power to seize andreallocate farmers' land. That discouragesthem from making long-term investmentsor engaging in any meaningful landtransactions.

Weak land rights turn properties intositting ducks for local governments, whichare increasingly seizing land for nonagriculturalpurposes and lucrative resaleas the industrial economy expands. Land isnow the primary source of rural grievancesand unrest in China. In the first ninemonths of last year, the nationdocumented 17,900 cases of "massive ruralincidents" — about 80 per cent of themrelated to illegal land seizures.

For this vast and lagging rural sector, theProperty Law offers the best shot at thebenefits of development and modernisation: it's a new, far stronger andmore authoritative statement of farmers'long-term (30-year), documented andmarketable land rights. By strengtheningland rights in the countryside, Beijing couldreplicate the amazing transformations thatoccurred in rural Japan, South Korea andTaiwan.

Even the halting implementation ofpast laws and issuance of some land-rightsdocuments have been enough to trigger anestimated 26 million additional mid- tolong-term farmer investments in land —creating as much as US$200 billion inmarketable land value. If mainland law andpolitics can successfully combine toenforce farmers' land rights under theProperty Law, such investments wouldmultiply.

That would greatly boost farm outputand create as much as US$500 billion inland wealth for farmers. Thesereforms would narrow the urbanruralgap, and help domestic and foreigncompanies alike benefit from the vastconsumption power of China's ruralpopulation. In August, the State Councilapproved an action plan put forward byseven ministry-level agencies of the centralgovernment, aiming to rectify land rightsviolations in the countryside. The plan setsthe ambitious goal of issuing land rightsdocumentation, as provided by law, to 90per cent of farm households by the end ofthe year.

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

Farmers need access to an independentcourt system, and to legal aid. Legal rightsare meaningless if the government cannotenforce them. Today, farmers with landgrievances often cannot receive fair andunbiased rulings from the courts.

They need a means of registering theirlands. Every developed economy in theworld has some system for this purpose,providing official confirmation of farmers'rights in land and enabling them to obtainthe full economic benefit of those rights inmarket transactions. In rural China there isvirtually no land registration. Local officialsmust know that they will be judged on theirability to secure farmers' land rights.Building a harmonious society is theprimary task of the Communist Party andthat requires the rule of law.

If local officials' political futuresdepended on it, the law would beimplemented effectively.There is no better platform to give theimplementation of farmers' land rights thenecessary political impetus than a NationalCongress of the Communist Party. Nothingis more important to the mainland's 700million rural people than their secure rightsto land. Nothing is more likely to determinethe economic and political future of thecountryside in the years to come.

Will China's leaders seize theopportunity?

Zhu Keliang and Roy Prosterman

Zhu Keliang is a staff attorney with the Rural Development Institute (RDI). Roy Prosterman is founder and chair emeritus of RDI and professor of law emeritus at the University of Washington Law School.