HONG KONG - Thirty years after the launch of economic reforms in China, the
government will to all intents and purposes privatize farmland, making a last
departure from the state monopoly of socialism.
The 17th Central Committee of the Chinese Communist Party (CCP) begins its
four-day third plenary session today to endorse new policy principles about
rural reforms with a focus on allowing the country's 800 to 900 million farmers
to freely transfer their land-use rights - effectively letting them freely
trade their farmland.
The major policy change was revealed ahead of the meeting of the party elite by
President Hu Jintao, who is also general secretary
of the CCP, on September 30 when visited Xiaogang village, in the eastern
province of Anhui.
Hu was quoted by state media as saying that farmers will soon be allowed to
transfer their land-use rights. "Not only must the current farmland contract
system be kept stable and permanent, we must also grant farmers more rights and
protect their rights to contract and manage land," Hu was quoted as saying. "At
the same time, if farmers want to, we'll allow them to transfer land contracts
and management rights through various means to appropriately develop
larger-scale operations."
In plain language, farmers will be allowed to freely dispose of farmland they
have contracted from the government, either re-contracting it to others or
selling it.
Hu stopped short of using the term "trading" or "selling" to refer to the
transfer of land-use rights because privatization of land is not permitted
under the Chinese constitution, which stipulates all land resources are owned
by the state. Because of this, the public ownership of land has been seen as
the last symbol of socialism.
But this constitutional stipulation has been largely bypassed in cities. China
began to privatize housing in cities in early 1990. One of the major obstacles
was how to privatize land. In this regard, the colonial practice in Hong Kong
was borrowed. There, all land belonged to the crown but the subjects could rent
land from the crown for a certain period, say up to 99 years.
The practice continues after the handover in 1997 under the "one country, two
systems" agreement between China and the UK, with the role of the crown
replaced by the government of the Special Administrative Region (SAR). So in
mainland Chinese cities today, the "buyer" of a house or an apartment only
rents from the state the right to use the land on which the property is built
for a certain period (for residential housing, normally 75 years). When the
owner sells his house, he also transfers the land-use right to the new buyer.
In this sense, urban land, or the rights to use it in legal terms, is tradable.
But farmers, who can contract land to farm for up to only 30 years, are not
allowed to transfer their land-use rights or use them as collateral for loans.
Local governments can at any time take back farmland "on behalf of the state".
Requisition from farmers without adequate compensation has been the main cause
of mass protests in recent years.
To enable the new policy to work in practice, the party policy-making meeting
is expected to decide on whether to extend the period for a farmland contract,
perhaps to 70 years. So, as long as a farmland contract is valid, the rights of
the farmer concerned are fully protected. Under the new policy, whoever wants
to acquire farmland must negotiate with the owner(s). In other words, farmers
will enjoy the same rights to use their land as city residents.
It is by no means coincidental that He unveiled the new policy principle in a
visit to Xiaogang village.
In early 1978, 18 farmers in Xiaogang village including local party members
risked their lives to sign a secret agreement to divide People's Commune-owned
farmland into pieces for families to farm. At that time, this could be seen as
"counter-revolutionary" and undermining socialism - a serious criminal offence.
Their move, however, was supported by paramount leader Deng Xiaoping, who had
just made his third and final political comeback.
And at the end of that year, the CCP's then 11th Central Committee held its
third plenum to endorse Deng's proposal to launch the economic reform and
open-door policy. Xiaogang's experience was soon promoted to the whole country
with all farmland contracted to peasant families under the so-called "family
responsibility system".
Xiaogang thus is seen as being in the vanguard of economic reforms, and the
secret agreement with the red finger prints of the 18 farmers is now in the
Museum of the Chinese Revolution in Beijing.
Hu's decision to use the third plenum of the 17th Central Committee, in a year
that marks the 30th anniversary of reform and opening up, to set the new land
reform policy suggests he wants to show that a major breakthrough can be
achieved to continue the endeavors started by Deng, analysts said. Politically,
ideologically and economically speaking, the virtual privatization of farmland
is certainly a breakthrough.
The current farmland management system has led to widespread social discontent.
China's economic boom has fueled hunger for land for industrial and commerce
use, and without secure land rights millions of farmers across the country have
been evicted from their land to make way for roads, factories and luxury
housing, often with very little or no compensation. Rural plots are often
expropriated by local officials for lucrative sales to property developers.
China's leaders are well aware of the problem and have acknowledged that
illegal land seizures are a major source of instability in the countryside.
According to official statistics, there were 74,000 "mass incidents" or public
protests in 2004, with 3.7 million people taking part. In 2005, the number of
protests with at least 15 participants totaled 87,000, growing to 90,000 in
2006. Many such protests have been sparked off by unfair land requisitions.
The CCP realizes that, unless it acts to protect the rights of farmers, the
legitimacy of its rule could be challenged, said Beijing-based historian Zhang
Lifan, a former researcher with the Chinese Academy of Social Sciences (CASS).
"From a historical prospective, the rise and fall of every dynasty has been
related to farmers and land," Zhang said. This policy "will be conducive
towards stabilizing the countryside and winning the hearts of farmers".
Many Chinese have questioned the inequality that resulted from the economic
reform over the past three decades - while bringing the country an
unprecedented amount of wealth, it also created a vast rich-poor gap,
especially between cities and the countryside.
Official data from 2007 showed China's Gini Coefficient, which measures the
inequality of income distribution, has surpassed the warning level of 0.4. The
poorest 20% of the population own 4.7 % of the country's wealth, while the
richest 20 % possesses 50%, according to United Nations figures.
The new farmland policy will finally enable China's impoverished peasants to
profit from their land, analysts say.
"The capitalization on farmland will ... let farmers benefit from their land's
industrialization and urbanization," said Hu Xingdou, professor of economics at
the Beijing Institute of Technology. "Profits from land have been going to
property developers and officials, but [under this policy] the income would go
to the farmers."
Uneven distribution of wealth between the cities and the countryside also means
China has been unable to develop its rural economy and stimulate domestic
demand for its goods. Lu Xueyi, a retired professor at CASS and an expert in
rural issues, said the inefficient production methods in the countryside must
be changed to revive internal demand.
"There is a lot of demand in the countryside but 70% of the population is too
poor to afford things like television sets, clothes, and so forth," he said.
"Only when reform is carried out and rural income is increased and development
speeds up, will you generate internal demand."
Rural labor constituted 40.8% of the country's total workforce last year, yet
agriculture accounted for only 11.3 % of the country's total gross domestic
product (GDP) of 24.66 trillion yuan (US$3.61 trillion), he said.
With up to 900-million rural population sharing this 11.3% of national wealth,
"how could peasants not be poor? How can they survive unless reform is
implemented?" he asked.
Even so, analysts said the implementation of the new rural land reform policy
will need new legislation and matching administrative measures to adjust the
red tape that surrounds Chinese people concerning where they are born and work.
Otherwise farmers would still be exploited and unable to benefit from their
land.
For example, even if a farmer manages to sell his land in the countryside, if
the household registration system does not give him the full rights to work and
own property in the city he then lives in, he would still have no protection
for any enterprise or investment he took part in using money released from his
land rights.
"If the political and legal system offers no protection, I would doubt the [new
policy's] effectiveness," said Zhang Lifan.
Verna Yu is a journalist based in Hong Kong.
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