Why is urban-rural integration not about capital freely going to the countryside?

At present there is a widespread view that urban-rural integration means letting farmers freely enter the cities and capital freely go to the countryside. Only by doing so, it is said, can the principles of a market economy truly be realized, can the market play a decisive role in resource allocation, and can resources be allocated most efficiently, liberating productive forces and developing China's economy.

This view contains a serious misconception.

China's current urban-rural relationship can be said to have continued from the urban-rural dual structure formed during the planned economy period. After reform and opening up, the state is providing ever more safeguards for farmers to freely enter the cities, and farmers who move to the cities are beginning to obtain various rights increasingly close to those of the urban population.

On the other hand, the state is increasingly withdrawing from providing various privileged guarantees to the urban population and leaving these to be resolved by the market. While farmers who move to the cities begin to obtain rights equal to those of urban citizens, the value of urban citizens' rights is also declining.

Precisely for this reason, whether farmers who move to the cities can live decently in the cities mainly depends on whether they can obtain stable employment and relatively high income through the market, and cannot come from guarantees provided by the state. What the state can provide can only be minimum basic guarantees, and it cannot provide most people with high-level guarantees for a decent life.

China's advantage is that farmers may freely enter the cities. If they are lucky, the whole family moves to the city and lives decently there. If they are not lucky enough, they can choose to return to their home villages. Farmers' right to return to their villages is their most basic human right. Preserving farmers' right to return to their villages gives farmers who move to the cities a way back if they fail, and hope in life. Precisely because farmers who fail in the cities can return to their villages, pressure and conflict within the cities are alleviated, enabling the cities to maintain social order and political stability.

The reason farmers can freely return to their villages after failing in the cities is that in rural areas they have land contractual management rights, homestead land, and housing. If they did not have land contractual management rights, homestead land, and housing, they could not return to the countryside again. Therefore, farmers' land contractual management rights, homestead land, and housing constitute their basic guarantees and social insurance, and are their bottom line for survival.

Now policy advocates urban-rural integration, and some people understand this as capital being able to freely go to the countryside. Some also believe that farmers' land contractual management rights, homestead land, and housing are farmers' property and the key to farmers obtaining property income, and should be mortgageable and usable as collateral, and some even believe they can be traded, thereby enabling farmers to obtain cash income.

According to these people's understanding, letting farmers obtain their first pot of gold for living decently in the cities by cashing in land contractual management rights, homestead land, and housing is beneficial to farmers. Both parties to the transaction believe it benefits them, and therefore the efficiency of resource allocation will be improved. This is the typical argument of certain economists.

However, when capital freely goes to the countryside, what it obtains there in the form of land contractual management rights, homestead land, and farmers' housing is at most a means for surplus urban capital to preserve and increase value, and one more leisure destination for urban citizens who buy houses in the countryside. Yet it causes farmers who lose land contractual management rights, homestead land, and housing to be unable to return to their villages even if they fail in the cities, thus losing their last way back in life, the last place where they can settle down and make a living.

The core of this is that land contractual management rights, homestead land, and housing are farmers' basic guarantees and social insurance. Can basic guarantees be freely traded?

At present the cities have enormous surplus capital. Once capital can freely go to the countryside, farmers' land contractual management rights, homestead land use rights, and housing may be brought into free transactions. Farmers who obtain their first pot of gold rush to the cities. Those among them who are lucky will live decently in the cities, while some farmers who move to the cities will fail. After failing, with no way back, they will fall into hopeless urban slums, which will become a serious social problem.

We must be vigilant against the current discourse packaged in concepts such as giving farmers land property rights and the free flow of market factors, and we must prevent capital from encroaching on farmers' last bottom line for survival.

Only when farmers have a way back does China have a way forward.