What institutional defects exist in rural property rights arrangements?
The most satisfying thing in the world is none other than steadily acting as a slave owner while packaging oneself as a savior. The most miserable thing in the world is none other than having one's bones sucked out while having to thank the master for his grace.
Who gets the most satisfying thing, I do not know, but the most miserable thing has undoubtedly fallen on the heads of contemporary Chinese farmers. Today they exempt you from a trivial agricultural tax, tomorrow they give people over 60 a monthly pension of 55 yuan, the day after tomorrow comes a drizzle of the new rural cooperative medical insurance, and even people over 90 (the average life expectancy in China is only 73) are still making a one-time supplementary payment of tens of thousands of yuan for pension insurance and then drawing a negligible monthly pension. People are already prostrating themselves in gratitude, yet they do not know that the most basic property rights beneath their feet have been avalanching and draining away, sometimes through earth-shaking land requisition, sometimes through silent blood loss——capital cannot irrigate the vast expanses of China's rural land.
In our magical country, the “three rural issues” of agriculture, rural areas and farmers have enduringly become the number one problem, and at any moment there are “worried about the country and the people” “spokespersons for farmers' interests” who, heavy-hearted and unfathomably profound, declare that farmers' land cannot be privatized and cannot be freely traded, otherwise once they sell their land and their business venture fails, they will lose their last old-age and unemployment security!
I find it very strange that people who say such absurd things are repeatedly honored as “spokespersons for farmers' interests” or “experts on the three rural issues”! Is it just like “democracy” here, which is actually “making decisions on the people's behalf”? One can very simply ask these “spokespersons for farmers' interests” and “experts on the three rural issues” with the same logic: can it be understood this way——your money cannot belong to you, otherwise if you spend it all, what will you eat for your next meal? Your house cannot belong to you either, otherwise if you sell it, where will you live?
Those experts, scholars and officials who emphasize that China's agricultural production must still rely on household workshops and that farmers' land cannot be freely traded, do they know that nine-tenths of the average income of Chinese farmers already comes from working for wages? Do they know there is an old Chinese saying: do not do unto others what you would not have done unto you? Would you yourselves be willing to be household-workshop farmers? If you are unwilling, yet forcibly promote such a policy, are you not afraid that land will lie fallow and Chinese people will have nothing to eat? Are you not afraid of divine retribution? Do you have no pangs of conscience?
Those muddle-headed “saviors” who assume that farmers will lose their land if land is freely traded, I ask you only one question: urban housing can be freely traded, so have urban residents fucking lost their housing? Do you want to treat farmers as fools, or use a fig leaf to cover the fact that you are liars?
If there had been no privatization of housing in 1998, and today urban residents in Beijing, Shanghai and other cities had no housing property rights and no right to buy and sell their own homes, everyone would still be poor, still proletarians. By the same logic, if farmers have no property rights over their homestead land and land, farmers will forever be poor. Talk of integrating urban and rural areas, first integrate the property rights of urban residents and rural residents, otherwise every year's Central Document No. 1 is crocodile tears! Never mind that ten consecutive years of Central Document No. 1 have been about the three rural issues; even a hundred consecutive years of emphasizing it as the number one issue would be useless. In countries and regions where land and farm houses are private and migration is free, the so-called three rural issues simply do not exist, nor is any basic farmland protection needed. China's situation is that it creates the problem itself and then hypocritically goes about solving it. If the root problem is not solved, you are just scratching an itch on the surface!
The inability to freely trade land, farm houses and homestead land is the chief culprit behind Chinese farmers being the poorest in the world, China's housing prices being the highest in the world calculated by purchasing power, China's most serious industrial convergence and overinvestment (cheap land for attracting investment), and China's most serious land abandonment (atomized agriculture with high risk and low income)! The property income of farmers in far suburbs is negative against the backdrop of urbanization, and surplus liquidity in society has no capital reservoir. Such a situation is unprecedented in Chinese history since 1949.
Saying that privatization of land and free trade would cause farmers to lose their land and large amounts of land to be converted to non-agricultural construction is slander that ignores basic facts! Do you take farmers and developers for fools? In fact, it is the existing land system that has caused over a hundred million farmers to lose their land, lose their jobs, lose social security and lack money, while land is excessively requisitioned at low prices. In early 2013 the Information Center of the Ministry of Land and Resources stated that over the past 8 years the average annual growth rate of national residential land supply was 3 times the growth rate of the urban population. Because officials' short-term behavior simply ignores the consequences, since the political achievements and real benefits are reaped by them, while the final high inflation and high waste are paid for by everyone.
Today, the scourge of land concentration and farmers losing their land lies in privilege, not private rights. It is precisely the inadequate protection of the private property rights that farmers should have over land and farm houses that allows privilege to rampage like wolves and tigers into uninhabited territory! Return land to farmers; in urbanized areas farmers can grow houses instead of crops on their own land, and even if they sell the land at market prices, that is still better than having it forcibly requisitioned at low prices, right?
Zheng Zhenyuan, former director of the Planning Department of the former National Land Administration Bureau, wrote in the article “Reforming the Land System to Promote Industrialization, Urbanization and Urban-Rural Integration” (Part of the Collected Papers of the Reform Consensus Forum, November 16, 2012, Beijing, China):
“The 1982 Regulations on the Administration of Land for Urban Housing Construction stipulated that ‘retired, resigned and discharged workers and military personnel who return to their home villages to settle down, and overseas Chinese who return to their home villages to settle down’ as well as ‘non-agricultural households in market towns’ could, upon approval, obtain homestead land in rural areas to build houses. Article 41 of the 1988 version of the Land Administration Law still allowed urban non-agricultural household residents to use collective land to build housing, only with area limits and subject to approval and paid use. That is to say, before 1998 labor and homestead land were allowed to flow in both directions between urban and rural areas. But the 1998 version of the Land Administration Law retained the egalitarian welfare-distribution nature of rural homestead land use rights (one household could only have one homestead plot meeting the provincial area standard); it deleted Article 41. In 1999, State Council Office Document No. 39 explicitly prohibited the sale of farmers' housing to urban residents and prohibited urban residents from occupying farmers' collective land to build housing, that is, it prohibited the flow of rural homestead land use rights. (In 1998 China's urban housing began its privatization process——note by Dahuan)
“Large numbers of farmers went to cities to work, reaching about 88 million in 1998 and increasing to 160 million in 2011 (now more than 230 million——note by Dahuan), of whom 33 million went out with their whole families, and the ‘second-generation farmers’ who cannot go back account for about 40%. The rural labor force has moved away, but their homestead land and houses cannot be transferred out; a household in the same village already has one homestead plot, so it cannot buy, urban residents are not allowed to buy, and they are reluctant to hand it over, so it can only sit idle. Thus large numbers of ‘hollow villages’ have been created (now on average about 200 villages disappear every day——note by Dahuan). Rural houses cannot be sold, urban houses cannot be afforded, farmers settling in cities lack ‘original capital’ and this also drags down the citizenization of migrant workers, becoming a factor hindering population urbanization. If migrant workers cannot become urban citizens, their contracted land in rural areas also cannot be completely withdrawn. Although the Rural Land Contracting Law stipulates that contracted management rights can be transferred through the market, this market has never developed. If contracted land cannot be completely withdrawn, it also hinders the expansion of agricultural operation scale and hinders agricultural modernization.
“Using land requisition as the only channel for newly added construction land and requisitioning land at low prices has caused over a hundred million land-lost farmers to become impoverished, and has also built up a ‘land-selling finance’ worth trillions of yuan, widening the social wealth gap. Prohibiting collective land construction-use rights from entering the market and making land requisition the only legal channel for newly added construction land will inevitably violate the Constitution's provision that land may be requisitioned only ‘for public interest’, expanding the scope of land requisition and thereby creating nearly a hundred million land-lost farmers. Land requisition also follows the low-price requisition policy of the planned economy period, using reasons such as development rights (that is, construction land use rights) belonging to the state and appreciation belonging to the public, calculating land compensation fees according to the output value of the original use, and taking away trillions of yuan in development gains (that is, location rent appreciation) from collective land, causing 60% of land-lost farmers to become impoverished. Although the government several times issued policies to raise land requisition compensation fees, from a national average of 35,000 yuan per mu in 2003-2005 to 41,000 yuan per mu in 2009, during the same period land transfer fees rose from 218,000 yuan per mu to 519,000 yuan per mu, and the government took even more property income from the hands of collective farmers. This is the root cause of the frequent cases of forced requisition and forced demolition that have produced serious social problems in recent years.
“‘Land-selling finance’ strongly supported high-speed land urbanization and local economic development, and at the same time boosted local government investment fever and development-zone fever, incentivizing it to enclose and requisition more land, causing more land-lost farmers and further widening the urban-rural gap. Part of ‘land-selling finance’ flowed into developers' pockets, creating a batch of real estate tycoons; part became a source of rent-seeking and corruption for land-related officials, further widening the social wealth gap.”