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ECONOMY-CHINA: Flirting With Land Tenure Reforms

Antoaneta Bezlova

BEIJING, Oct 13 2008 (IPS) - Faced with a deepening global financial meltdown, the Chinese communist party is contemplating far-reaching internal reforms capable of insulating the country from the worst effects of the crisis such as by loosening its grip over land ownership.

Chinese leaders plan to relinquish partial control of the country’s most important asset – the land, and allow peasants more freedom to lease or transfer their land use rights.

The idea is to stimulate domestic demand and expand China’s underdeveloped internal market to counter the global economic slowdown that has dried up orders for Chinese exports. Freeing up rural productivity is also seen as the only way for China to guarantee long-term food sufficiency for its 1.3 billion people.

The leadership, led by president and party chief Hu Jintao, released a communiqué on Sunday at the end of a four-day, high-profile party meeting, which approved the reform plan.

"We must depend on ourselves …add impetus to expanding domestic demand, especially consumer demand, and maintain a stable economy and stable financial and capital markets," it said.

The meeting acknowledged that the country faced greater challenges because of the global financial crisis, which would amplify the "contradictions and problems" of its own economy.


"We must solidify and strengthen the status of agriculture and place as top priorities the running of the nation and resolving once and for all the basic problem of food for hundreds of millions,’’ the document said.

For a country which remains nominally committed to the pursuit of socialism, the idea of privatising the land sounds so radical that party ideologues have opposed even the use of the term "private land ownership".

The party plenum document speaks of "mind emancipation" in regard to rural reform without giving any details on the new land regulations. More specifics are expected to emerge in coming days but the plan would be implemented only after the National People’s Congress – China’s parliament – approves it at its annual session next March.

"It will not be easy to realise a full and genuine privatisation of rural land," Guo Shutian, a senior agricultural policy official told the 21st Century Economic Herald. "For one, it would take a revision of the Chinese constitution. The biggest obstacle though remains ideology. Private ownership of the land is still unacceptable to many party members".

After coming to power in 1949, the communist power banned the private ownership of land, insisting that rural land belongs to the "collective". When economic reforms began in the late 1970s, the party started giving peasants 30-year leases to use the land but it did not allow them to individually sell those land rights or borrow money against them.

As a result, the countryside has lagged behind the rest of the country in development. Reformers discarded collective ownership in the rest of the economy, creating conditions for China’s astonishing economic boom in the last 20 years. But, in the villages, where farmers till small land plots and lack access to bank loans, incomes have stagnated.

Last year for instance, the average city dweller received an income that was 3.33 times larger than those in the rural areas. According to agriculture minister Sun Zhengcai, the income disparity amounted to 9,646 yuan (US dollars 1,418), marking the largest income gap since the reform and the opening up of China in 1978.

Inequality has spawned migration with hundreds of millions of farmers leaving the land to seek better lives in the nation’s quickly developing urban centres. But while many plots of farming land had become idle, pressure on the land to produce food has continued to grow. Some 450 million, or 35 percent of China’s 1.3 billion, now live in the cities. By 2050 the urban population is expected to reach 800 million.

Allowing farmers to lease their land to bigger farm contractors would open the doors for the introduction of modern farming and maximise land productivity, advocates of the land reform say.

"The reform would create both an economy of scale – raising efficiency and lowering agricultural production costs – but also resolve the problem of idle land left by migrants to the cities," argues Lu Zixiu, an expert on rural affairs in Anhui province where farmers have been allowed to experiment with leasing their land rights.

But even liberal reformers are worried that unregulated land transactions could lead to the reemergence of the hated landlord class, which the 1949 communist revolution claimed to have exterminated.

Social tensions in the countryside are rife and the majority of them are caused by land abuses. The agriculture ministry says that in 2006 there were 130,000 registered cases of land abuse in the countryside. In 2007 the official number had risen to 170,000.

One school of thought believes China should retain state ownership of the land extending instead the land leases to 70 years, which it argues would allow households to plan long-term for their livelihood.

"It makes a difference to the peasant family whether they have the land just for 30 years or for much longer," says Lu Xueyi, sociologist with the Chinese Academy of Social Sciences.

Researchers are uncertain though whether the new land policy contains even this change from the current status quo. Commenting on the approved reform, State Council researcher Xu Xiaoqing said the emphasis is on stability.

"There are no radical changes to the existing policies – only a guarantee that the government would support farmers’ efforts to profit from their land rights by leasing or transferring them," Xu told Beijing’s Xinjingbao newspaper. "I don’t think there will be a big departure from the household-contractibility system because land management on a big scale is not suitable to China’s conditions".

 
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