China has strengthened farmers' land use rights, increasing land values-but a true market has yet to form.
Chinas 750 million rural residents face a common problem: The value of their agricultural land is greatly depressed because of the insecurity of land rights and legal restraints. The Peruvian economist Hernando de Soto has aptly called such land "dead capital" and has pointed out the key role that measures to bring such capital "alive" can play in the overall process of economic development. For Chinese farmers, the questions are when and how the PRC government will implement stronger measures to create greater land security and allow a full land -transfer market to form.
A recent survey shows that the confidence of rural Chinese in their land rights is growing incrementally and that a land-transfer market is developing. Secure, long-term land rights and their accompanying benefits may help raise Chinas rural poor out of poverty.
Brief history of land rights in China
Looking back on the last century, two world records associated with rural China - and related to land rights stand out. One devastated the lives of hundreds of millions of people; the other lifted millions of families out of destitution. The first record occurred in the late 1950s and early 1960s, when anywhere from 15 to 30 million people died of starvation or malnutrition in the most horrific famine of the twentieth century. The famine was a direct result of the state s disastrous experiment to collectivize individual farms, which ended private landownership across the country. The second watershed event was Chinas dismantling of collective farms and giving of limited land rights to individual farmers in the late 1970s and early 1980s, spurring the single greatest global poverty-reduction achievement of the century.
Today, collectives (each collective is made up of all the members of a village) remain the legal owners of land. But during the late 1970s and early 1980s, the government divided up the land and allocated it to families for households to farm. Nearly all rural families received some land. Initially, farmers' right to farm their allocated land was limited to three years. In 1984, with little grassroots publicity and implementation, the government extended the rights to 1 5 years. In 1993, the central government proclaimed that the right would last for 30 years, but the 30 -year right was not written into law until 1998, when China began a campaign to issue documentation to all farm families to confirm such rights.
Early in the reform process, most officials and farmers treated farmers' rights like lease rights - farmers paid a certain amount of grain or money to the state in exchange for the right to farm. But farmers also faced great uncertainties from unpredictable re-allocations and takings of land, which affected land investments and transfers.
The 2002 Rural Land Contracting Law and the 2007 Property Law expanded and strengthened the scope of farmers' rights by defining rights to allocated farmland as property rights rather than contractual rights, like leases. The land-use rights consist of the right to possess, use, profit from, and transfer the land during the 30-year term. Leases, assignments, or in-kind exchanges are legal, but sale or mortgage is still prohibited. These relatively new laws are not fully implemented at the grassroots level, which has inhibited the development of rural land markets.
Emerging land markets
According to recent press reports and interviews, rural-to -urban migration, industrial development, or other socioeconomic circumstances are driving farmers to engage in market transactions of their land rights. There are, however, few studies on the exact nature and extent of these transactions. The Seattle-based Rural Development Institute (RDI), with assistance from China Renmin University and Michigan State University, has conducted four …