Land Reform and Urbaniza0on An Evolu0onary Perspec0ve

Land Reform and Urbaniza0on An Evolu0onary Perspec0ve Qiren ZHOU Na$onal School of Development Peking University qrzhou@ccer.pku.edu.cn 1

2012 China: 65% of Popula5on is Rural Residents with rural HUKOU( 户口 ). 48% of Popula5on is Residents living in rural areas longer than 6 months per year. Only 10.1% of GDP comes from Agriculture 2

Economic Implica,ons It doesn t mean that 65% of Popula,on share only 10% of GDP Because about 17% of Popula,on (230 million!) is rural migrant worker living in ci,es longer than 6 months per year but s,ll keeps rural Hukou, and owns farmland and rural houses in their hometowns. It doesn t mean that 48% of popula,on share 10% of GDP. Because another es,mated 15-20% of popula,on commutes between rural areas and ci,es, earning income from non- agriculture businesses. 3

Adding all their income together, rural residents per capita income is only about 30% of those urban residents. Rural- urban income ra,os 65% 35% 15% 4

Key Issues How to make agriculture more efficient to support rapid urbaniza,on? How to reconstruct rural society when millions rural people moved out? How to enlarge the scale of ci,es? How to raise funds to build more urban infrastructure? How city socie,es become more inclusive to rural migrants? 6

Gradualism in land reform Since 1978, rural households have been allowed to take out long term lease on collec,ve land for private farm use Since 1984, farmland has become transferable among rural residents for agriculture business. Since 1987, urban land owned by the state can be leased long- term on market- basis for commercial usage. 7

An Incomplete Project Rural residents have rights to transfer their farm land to other rural residents, or even lease their farmland to urban people, but the exis,ng law prohibits them from selling their housing land and proper,es to urban residents. Local governments have legal power to requisi,on rural land for urban development A segregated land system has caused wide- spread conflicts and massive misalloca,on of land resources. 8

2005-2011, a total of 27,200 sq kilometers of rural land was requisi,oned and converted to state- ownership.(roughly 4500 sq kilometers per year)(wb, 2013) Total outstanding debt of local government amounted to 10.7 trillion RMB or about 27% of China s GDP of 2010. Also in 2010, 78 city governments and 99 county governments held debt obliga,ons more than 100% of local GDP. 9

Across the country, the government takes land from approximately 4 million rural people or 1.1 million households every year (Landesa 2013); There had been more than 100,000 mass incidents with more than 100 people involved each every year in recent years (CASS, 2013); 60% of all mass protests have to do with land (DRC,2012). 10

In Yunan Dali city, Xizhou town, Wenge villiage, Mr. Duan s family: Mr. Duan has been a taxi driver in Dali city for 12 years; the couple rented a one-bed room apartment in the city they have a house of 700 sqm, built on a 400 sqm land at their hometown, which is 40 minute drive away from the city his parents and his 7 year old son live at their hometown house in June 2007, Dali city government auction land at 3.75 million RMB per mu. 12

Path to A Unified Land Market De facto property rights to de jure property rights During 1962-1977, many de facto private farm land usage took place in various parts of China. Before the law was changed in 1987, de facto transfers of land to foreign investors in southern China already took place. Since late 1990s, housing projects with informal land rights ( 小产权 ) were booming surrounding a few major ci,es. Since 2003, central government has chartered several reform experimental zones to find a way for a unified land market. 13

Step 1, Delinea$on of Rural Land Rights Chengdu s case During 2008-2010, In Chengdu, a city with 5 million rural residents, all rural land, including farmland, forestland, housing land, and the other construc,on land, had been re- measured, registered, and been issued official property deeds. 17 14

Contract tenure: Long term Total size = 2.94 mu (actual size) This household has 3 pieces of agricultural land Total size = 2.70 mu (old record) 15

Clearly shows who are the neighbors With coordinates 16

Step 2, Rights to Transfer Legalized 17

20 mn RMB per mu 2 mn per mu 0.2 mn per mu City Centre Suburb! Countryside 20

New Village (20 mu of construction land) Rural! Housing area! (50 mu of rural construc$on land) 21

20 mn RMB per mu 2 mn per mu 0.2 mn per mu City Centre Suburb! Countryside Rural construc,on land 22

Summary of rural land transactions Land type Location Estimated # of farmers Supply side Demand side Transaction type User-rights tenure Implied price 1 Agricultural countryside 10 Farmer Farmer negotiation 15 years 3.2 2 Agricultural countryside 500 Farmer Firm negotiation 15 years 3.2 3 Agricultural countryside 20 Village Village negotiation unlimited 3.0 4 Agricultural/Construction close to city 1000 Farmer Government expropriation unlimited 5.4 5 Agricultural countryside 15 Farmer Government expropriation unlimited 1.6 6 Construction close to city 100 Farmer Citizen illegal private transaction unspecified 100.0 7 Construction countryside 1 Farmer Farmer legal private transaction 50 years 66.0 8 Construction countryside 2000 Farmer Citizen legal private transaction 40-70 years 39.0 9 Construction countryside 1 Farmer Citizen legal private transaction 50 years 164.0 10 Construction countryside 1 Farmer Citizen legal private transaction 50 years 231.0 11 Construction close to city 3 Village Firm competitive auction 40 years 130.0 12 Construction countryside 60 Village Firm competitive auction 50 years 38.0 13 Construction (quota) countryside 100000 Farmer Government rationing unlimited 15.0 14 Construction (quota) countryside 4000 Farmer Firm competitive auction unlimited 72.5 15 Construction (quota) countryside 1000 Farmer Firm competitive auction unlimited 30.0 16 Construction (quota) close to city 257 Farmer Government rationing unlimited 39.0 17 Construction (quota) countryside 200 Village Firm negotiation unlimited 35.0 18 Construction (quota) countryside 20 Village Firm negotiation unlimited 40.0 19 Construction (quota) countryside 30 Farmer Village negotiation unlimited 80.0 Note: price is measured in 10,000 RMB per mu, 1 mu = 667 m2) 29

Summary of transactions Land type Location Estimated # Supply Demand side Transaction type User-rights Implied of farmers side tenure price 1 Agricultural countryside 10 Farmer Farmer negotiation 15 years 3.2 2 Agricultural countryside 500 Farmer Firm negotiation 15 years 3.2 3 Agricultural countryside 20 Village Village negotiation unlimited 3.0 4 Agricultural/Construction close to city 1000 Farmer Government expropriation unlimited 5.4 5 Agricultural countryside 15 Farmer Government expropriation unlimited 1.6 6 Construction close to city 100 Farmer Citizen illegal private transaction unspecified 100.0 7 Construction countryside 1 Farmer Farmer legal private transaction 50 years 66.0 8 Construction countryside 2000 Farmer Citizen legal private transaction 40-70 years 39.0 9 Construction countryside 1 Farmer Citizen legal private transaction 50 years 164.0 10 Construction countryside 1 Farmer Citizen legal private transaction 50 years 231.0 11 Construction close to city 3 Village Firm competitive auction 40 years 130.0 12 Construction countryside 60 Village Firm competitive auction 50 years 38.0 13 Construction (quota) countryside 100000 Farmer Government rationing unlimited 15.0 14 Construction (quota) countryside 4000 Farmer Firm competitive auction unlimited 72.5 15 Construction (quota) countryside 1000 Farmer Firm competitive auction unlimited 30.0 16 Construction (quota) close to city 257 Farmer Government rationing unlimited 39.0 17 Construction (quota) countryside 200 Village Firm negotiation unlimited 35.0 18 Construction (quota) countryside 20 Village Firm negotiation unlimited 40.0 19 Construction (quota) countryside 30 Farmer Village negotiation unlimited 80.0 Note: price is measured in 10,000 RMB per mu, 1 mu = 667 m2) 30

Step 3 Build A Public Market for Rural Land 2008 年 10 月 13 日, 全国第一家农村产权交易所在成都成立 33

Land Reform in the Future Recent Decisions of The Third Plenary Session of the 18th Central Commihee of the Communist To leave the market to play the decisive role in resource alloca,on to grant farmers more property rights to enhance equal exchange of factors of produc,on between urban and rural areas and balance alloca,on of public resources between them to speed up the improvement of modern market system It is possible that a na,on- wide, united rural- urban land market could emerge by 2020. 34