Far beyond its plans for opening the economy to market forces,
Beijing must also contend with farmland rights and local government
China's Communist Party has burnished President Xi Jinping's
plans for an economic overhaul with exultant propaganda about a
historic turning point. But the success of his proposals, and the
long-term health of the Chinese economy, could rest on policy
battles that reach down into thousands of towns and villages over
land, money and a misshapen fiscal system that has bred public
discontent and financial hazards.
The Communist Party Central Committee under Mr. Xi endorsed a
package of 60 overhaul goals, released to the public on Friday, that
the government said would propel China closer to becoming a secure,
powerful and well-off country by the end of this decade.
The economic goals include expanding the role of markets in
energy and natural resources, encouraging private investment in
finance and easing state controls on interest rates.
"If the implementation of these reforms is successful, the
structures of the Chinese economy and society will change in
profound ways," said Eswar S. Prasad, a professor of economics at
Cornell University, who was previously in charge of the China
division of the International Monetary Fund. "The timeline for
accomplishing them is ambitious."
But the Central Committee's decision and Mr. Xi's accompanying
statement also dwelled on another set of problems, far from bank
headquarters, that could matter just as much for China's economic
health: farmland rights and revenues, local government taxes and
finances, and chronic shortfalls between many local governments'
outlays and the money they receive from the central government.
Mr. Xi spent part of his career as a county official, becoming
familiar with the countryside.
He said in a statement accompanying the overhaul goals that the
barriers to rural development were among China's biggest worries.
"There has been no fundamental reversal of the constantly growing
disparity between urban and rural development," he said in the
statement, which was issued through the official news agency,
In many ways, China's rural problems are a knot of issues about
land and revenues. Local governments have grown dependent on taking
farmers' land for relatively little compensation and selling it to
developers for a profit. They have been encouraged to do so because
the central government takes the bulk of revenues, while assigning
many tasks to local governments that require expenditures.
In China, farmland is, by law, owned by the village collectively,
but in practice the land is controlled by the state, giving
officials a powerful voice over when to develop land and on what
The central government transfers revenues to local governments,
but many town and county officials say the amount is not enough to
meet ambitions set by central leaders, economists who study China
said. Officials in county and city governments, eager to secure jobs
for their constituents and to advance their careers, have also gone
into dangerous debt to pay for building and business projects that
often use that land as collateral for loans or as a lure for