From Land Rights to Economic Boom
Keliang, Zhu, Prosterman, Roy, The China Business Review
A 17-province survey reveals that more secure land rights can boost the incomes and consumption power of China's 850 million rural residents
New survey data collected and analyzed by a team of US- and China-based researchers paint a stark picture of rural land reform in China. Over the past decade, the number of land takings by local governments has ballooned. Meanwhile, despite the 1998 revisions to the Land Management Law (LML) and the 2002 Rural Land Contract Law (RLCL), which mandate written documentation of land rights, few farmers have received official documentation that conforms to the law.
Although Chinese farmers have enjoyed steady income growth and rising living standards since the early 1980s, the rapid economic growth of the last 20 years has been concentrated in China's coastal cities, significantly deepening the rural-urban income gap. Now, as farmland continues to give way to development, both Chinese and foreign observers have noted the increasing frequency of rural unrest incidents, including violent conflicts between government officials and farmers. In January 2006, PRC Premier Wen Jiabao said that efforts to narrow the ruralurban wealth gap were falling short and that land seizures by officials were provoking mass rural unrest that could threaten China's national security and economic growth. According to Ministry of Public security statistics, China witnessed 87,000 social unrest incidents in 2005, up 6 percent from 2004 and 50 percent from 2003.
Unleashing a giant consumer market
secure property rights for Chinese farmers could not only reduce the number of rural unrest incidents, but also unleash unprecedented spending from the largest potential consumer market in the world. Without secure land rights, local officials can unpredictably and arbitrarily reallocate, or even deal to a developer, a farmer's piece of land without his or her consent. More than once, a farmer has arrived at his or her plot of land only to discover heavy equipment tearing into the field and found little recourse to prevent the loss. It is thus easy to understand why Chinese farmers rarely undertake long-term investments, such as installing irrigation and drainage infrastructure, planting trees, and constructing greenhouses, all of which are essential for rural prosperity.
One needs to look no farther than across the Taiwan Strait to see the beneficial results of secure land tenure. Annual rice yields jumped 60 percent on average in the decade following Taiwan's successful "land to the tiller" program of 1949-53. During the same period, the average farm household income, amplified by diversification into higher value-added crops, rose 150 percent. These higher incomes almost immediately translated into substantial increases in the consumption of basic consumer goods, such as clothing, furniture, and bicycles. Over the long term, Taiwan's secure and marketable land rights provided the capital that enabled farmers to transform themselves into entrepreneurs and consumers. Fieldwork conducted by the Rural Development Institute (RDI) in 2000 found that the vast majority of Taiwan's farmers not only own cars, computers, and cell phones, but have also bought stocks and have traveled overseas. South Korea and Japan enjoyed similar successes in their countrysides after World War II.
More secure land rights thus can help broaden China's consumer base and boost consumer demand at many levels, from low- to high-end consumer products. This happened on a smaller scale in the early 1980s when China adopted the household responsibility system (HRS), breaking up the collective farms and giving Chinese farmers limited individual land rights. In 1982, less than a year into the reform, China embarked on its first rural consumption boom as televisions and bicycles made their way into tens of millions of rural homes.
Land represents the single asset of greatest significance to the rural …
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Publication information: Article title: From Land Rights to Economic Boom. Contributors: Keliang, Zhu - Author, Prosterman, Roy - Author. Magazine title: The China Business Review. Volume: 33. Issue: 4 Publication date: July/August 2006. Page number: 44+. © U.S.-China Business Council Mar/Apr 2009. Provided by ProQuest LLC. All Rights Reserved.