An Analysis of China's Land and Urbanization Issues

I. Macro differences mean China's problems must be observed and treated separately

First, before discussing China's rural land issues, I believe everyone must first grasp the three major differences that have emerged in China's development over the past three decades. The first is regional differentiation. Over the past few thousand years, China's regional differences have mainly referred to the north-south divide. Everyone knows there is a dividing line that splits China into northern China and southern China, namely the Yangtze River. North of the Yangtze, the Qinling Mountains and the Huai River further divide the region into two parts. Further north there is another dividing line, the Great Wall. South of the Yangtze is divided into the region north of the Nanling Mountains and the region south of the Nanling Mountains. When thinking about north and south China, there are these four lines. The core lines are the Huai River and the Qinling Mountains, known in ancient times as the northern wheat zone and the southern rice zone. How oranges grown south of the Huai River differ from those grown north of the Huai River is the most classic story. Different planting structures give rise to different dietary structures, different cultures, and even different temperaments among people. Beyond the Great Wall, nomadic peoples moved with the water and grass, and their way of life and habits of thought differed even more greatly from those south of the Great Wall. The two ways of life - moving with water and grass and nomadism, versus settlement and farming - held a very important place in the official histories. So the regional differences spoken of in the past referred to the north-south issue.

The 30 years of reform and opening up brought important changes, and regional differentiation increasingly became the difference between the east, central and western regions. This was a change of the modern era. In modern times it began from the coast. After the First Opium War, five ports were opened to trade. The Second Opium War extended the treaty ports northward from Shanghai to the Tianjin and Yingkou area, and along the Yangtze River to Nanjing, Wuhan and Chongqing. In other words, the entire eastward spread of Western learning was advanced through the coastal and riverine areas. "River" refers to the Yangtze River, because the Yellow River is not a river navigable along its entire length, whereas the Yangtze can be traveled upstream all the way from its estuary, expanding along its tributaries. Therefore, the entire start of China's modernization began from the riverine and coastal areas. In other words, the differences between the east, central and western regions are related to the driving of China's entire modernization process. This difference narrowed somewhat during the first 30 years of the planned economy, when the central government, considering the issue of coastal war preparedness, pushed industrial layout deeper into the central and western regions, and commercial activity followed accordingly. The 30 years after reform and opening up were about opening to the outside world, with foreign capital introduced into China, and labor-intensive capital and its industries laid out along the coastal areas - first Hong Kong capital in Dongguan and the Guangdong area, the second wave being Taiwan capital, then South Korean and Japanese capital, still along the coastal areas, and then gradually pushing westward. Therefore, China's regional development differences widened during the 30 years after reform and opening up. Such regional differences are also relevant when we discuss the land system and urbanization.

The second is the wealth gap, that is, the polarization between rich and poor and class differences. This polarization mainly occurred in the market and capital spheres, not on the land - of course, this land refers to agricultural land, not including the use of agricultural land converted to non-agricultural use. The starting point of reform and opening up was 1982, when China abolished the commune system, and land established a new village-based collective ownership and household contract rights. Of course, how the value-added portion arising from agricultural land use and non-agricultural use is distributed is the most disputed area of these 30 years, and is also a complex phenomenon. I believe it cannot be generalized to say that the system or a particular group deprived the countryside. In fact, in different periods, different regions and different stages of development, farmers' compensation situations were different. For example, during the Olympics, the demolition near the Bird's Nest is estimated to have involved tens of thousands of farmers, and the compensation standards there were very high, with farmers becoming rich overnight through demolition. So talking about the wealth gap is relatively complex.

The third difference is local fiscal disparity. In the 1980s and 1990s, the central government adopted a policy of delegating power and granting profits to localities. Local fiscal expenditure was determined by their own fiscal revenue - the so-called fiscal lump-sum contracting system. Its advantage was that each local government had to go out and make money itself; the more money you made, the more fiscal expenditure you had. Those unable to make money made money from farmers, so farmers were squeezed very hard - this is what I wrote about in "China by the Yellow River." In 2004 and 2006, after the nationwide cancellation of farmers' burdens, the finances of agriculture-dominated counties and townships became very strained, basically relying entirely on central fiscal transfer payments to barely survive. In other words, an important observation point for understanding today's China is that fiscal differences between different provinces, between different cities within the same province, between different counties, and between different townships within the same county are extremely large, which has given rise to various different local government mentalities and practices. In 1996, I went to Germany and discussed this issue with a German China expert. I had not previously noticed this issue. He said that your China is a unitary state, while our Germany is a federal state. The situation around the world is that the ability of unitary states to coordinate public finances at all local levels is generally stronger than that of federal states. He had studied many countries, and none were like China, where the public finance differences among localities in a unitary state could differ by up to a hundredfold. He said he had always been unable to understand how such large fiscal differences could be maintained within one country without splitting apart. We in China rarely realize this problem, nor do we realize its relationship to national integration and division.

So, China's differences are too great. I increasingly dare not say how China is or how migrant workers are, because the internal differences are so great that it is very difficult to make a judgment with generalized language.

II. Potential problems in the land system and future agricultural development

The first issue of the land system is whether land ownership should be privatized. To discuss this issue, one must start from 1982 to 1983, when the commune system was abolished and a village-based collective ownership system with the village as the main body was established. The commune period refers to 1958—1982. From 1958—1962 it was called the period of large communes. In 1962, the Sixty Articles of the Agricultural Outline determined the small commune. This was maintained until 1982, a full 20 years. As the most important means of production, land - how was this ownership system stipulated? At the time it was stipulated as "the team as the basis, three levels of ownership." What did the so-called "team" refer to? It referred to the production team. So what was the production team? The basis of China's production teams mainly referred to natural villages. In the south, 60%—70% of natural villages ranged in size from 20 households—60 households. Of course, some river-and-lake villages had five or six hundred households, and in the mountains, some had two or three households. The proportion in the north was slightly smaller. Determining the production team as the basis was in effect determining the natural village as the basis; large natural villages were divided into several production teams. Smaller natural villages - three households here, five households there - might be merged into one production team. Everyone knows that natural villages formed naturally, basically through blood relations and their reproduction. So generally, a natural village usually had one surname; a natural village was in fact an extended family. We have always believed that history was a world-turning revolution, but this tradition was maintained. The period of large communes violated this tradition; the production organization and accounting units far exceeded the natural village, and farmers' interests beyond the natural village all became blurred. Labor was allocated across the whole county, production organized across the whole county, distribution carried out across the whole county, creating a big communal pot, and everyone lost their enthusiasm.

In the south - at least in Jiangxi, which I have researched - a brigade in the past governed on average 11 natural villages. As mentioned earlier, natural villages continued naturally; it was a clan, mostly dominated by one surname. If you go to the countryside to do research, whenever a natural village has many surnames, you can generally conclude that this natural village formed very recently - perhaps after the Taiping Heavenly Kingdom, when the land there was gone and people from the surrounding villages came together to form the natural village. If it is dominated by one surname with one or two miscellaneous surnames, you can probably conclude that these people were the settlement place of long-term laborers during land reform, who were originally from other villages. Such natural villages, with the small team as the basis, with land use rights entirely controlled by the village and with the family as the unit, were naturally stable. With these dozens of households, how much was produced in a year, labor mutually supervised, how distribution was carried out - the freeloader problem could basically be solved, because everyone was a fellow villager; if you did not work, someone else would. So this system was stable for 20 years, because it conformed to the general interests of farmers.

In theory, land was based on the team with three levels of ownership. The team was the production team, the brigade was one level of ownership, and above that was the commune, which was also a level of ownership. The former commune was both a commune and a level of political power below the county. Political power extending down to the county was proposed in the late Qing, developed in the Republic of China period, and completed in New China. In the past, after the Sui and Tang dynasties, political power did not extend down to the county, and below that rural self-governance was left in place. During the Qin and Han dynasties, political power did extend down to the county, with a township-level institution established below the county. So when we read the "Book of Han" or the "Records of the Grand Historian," we can read of Han dynasty XX commandery, XX county, XX township, XX li. This is similar to the addresses we now write on letters to our hometowns - for example, XX commune, XX village, Longyou County, Zhejiang Province. This formulation is exactly the same as in the Han dynasty. Li is the village, that is, a natural village.

After the abolition of the commune, land ownership contracted at both ends: the ownership at the team level contracted toward the village, and the ownership at the commune level also settled toward the village, so land became village collective ownership. The so-called farmer, strictly speaking, is a villager, and this villager is a co-owner of the village collective ownership and also a contractor of the village collective ownership. When we speak of farmers, it is actually a status group, not a class concept, nor a stratum. This is a very important concept of Max·Weber, which is distinguished from class and also from stratum. This group is defined by belonging to a certain village and by possessing land. Understood this way, migrant workers are not a class but a status group. This group is defined by their respective villages. The reason he becomes a villager of XX village is because he has land in the village. For a villager of this village to become a villager of that village is legally impossible. Villagers are enfeoffed among themselves - enclosing the land and establishing a villager qualification. So to understand all farmers, you must restore them to which province, which county, which township, which village they are villagers of. They are villagers.

After 1998, the second change in the land system stipulated that it would remain unchanged for 30 years. The 17th Party Congress stipulated that land would remain unchanged for the long term. The 18th Party Congress later continued this formulation, calling it "permanently unchanged," and later there was also "no increase at birth, no decrease at death." Please note its sociological significance. What is the sociological meaning of this economic institutional arrangement? It means that if a girl from village A marries into village B, although this girl becomes a daughter-in-law of village B, she has no land, so in theory she is not a villager of this village. Thus villagers, because of the land ownership system, are enfeoffed in their original village. In this way, how is the mobility of farmers possible? The intention of this institutional arrangement was to protect farmers and also to protect agriculture. It assumed that you have a plot of land, you belong to this village, you go out to work to earn extra income, and if you cannot find work you can go back. You have the guarantee of land security; it cannot be bought or sold, cannot be mortgaged, and always belongs to you. Then, with the village as the unit, medical security and the new cooperative medical care were established. Not long ago I went to Hangzhou to do research. A little south of Xixi Wetland, labor was introduced on a large scale; the registered local population was only 28,000, while the non-local population was 58,000, and the land of several villages was entirely urbanized. In 2006, Wang Guoping, then Party Secretary of Hangzhou, fearing that too much land would be requisitioned and farmers would have no security, stipulated that 10% of requisitioned land would belong to the village, namely village collective construction land. Farmers' land also belonged to the farmers, and farmers could build houses; what was originally two-story could be built into five-story. Such houses generated rent, a stable 30,000 to 40,000 up to 200,000 to 300,000 yuan per year in rent, depending on whether it was good or bad. The village collective construction land could be used to build factory buildings and commercial-residential buildings, rented out, also generating rent each year, and this rent was to be distributed as dividends. However, once there were dividends, the problem arose: who exactly is a villager? If you are a villager you can get dividends; if not, you cannot. They argued for three years and just recently figured it out. Are those who married out included? Are those who married in included? Are those who brought in a live-in son-in-law included? Are the dead included? Are the newly born included? Of course there are problems here; I will not elaborate. So, to understand rural issues, everyone should start from the land system. To understand the arrangement of the land system, on the one hand it protects farmers, but on the other hand it also constrains farmers. In other words, the other side of rights is responsibility; rights without responsibility do not exist, and protection without constraint does not exist either. So far, is it constraint greater than protection, or protection greater than constraint? We have no way to give a universal answer. So when you think of farmers, do not think of undifferentiated farmers - no. He belongs to a certain village; he is a villager. Farmers are defined as villagers. Villagers have a collective character, and the reason they have a collective character is that the land is collectively owned, and they can contract it.