No Land for China’s Farmers

Photos by Derrick Chang

A month and a half after it was gingerly put into place, China is struggling to find ways to cope with its new national property law. Despite 13 years in drafting and seven years of debate at the National People’s Congress, few analysts expect that the law will actually change the system of land ownership or ease what appears to be endemic rural unrest.

For instance, on a national level, although the law calls for a unified land registration system, the Construction Ministry and Ministry of Land and Natural Resources are blocking its implementation by not cooperating in drawing one up, says Wang Cailiang, the head of the Cailiang Law Firm in Beijing.

“A lot of this information is inaccessible or secret,” Wang says. “A person who wants to buy a house has no way of knowing the resources held by a developer, increasing his risk. The organization to run such a registry has not been established. We need the State Council to step in and enforce the law that has been passed,” he said.

The fact is that despite the country’s unrelenting march towards a market economy, government ownership of the land is such an elemental part of China’s socialist character that the framers were unable to alter the fact and ministries are ignoring the law. In an indication of how controversial the law is, Premier Wen Jiabao did not even mention it in his two-hour opening speech to the 17th Party Congress in October.

Even though Beijing remains deeply concerned about rural poverty and unrest, the government ignored the plight of land-insecure farmers at the behest of the old guard, who have lost dialectical battle after battle since Deng Xiaoping took power in 1978 and set China on its course towards a market economy. For them, private ownership of property would have been the last betrayal of the Maoist revolution. Hundreds of scholars and retired officials signed a petition against the law.

The issue was so sensitive that the Propaganda Department ordered China’s leading economic magazine, Cai Jing (Finance & Economy), to stop the distribution of an issue with a cover story on the law ahead of the vote in the NPC in March. The opponents also won a concession which left intact the supremacy of public ownership. “The nation is in the first stages of socialism and should stick to the basic economic system in which public ownership predominates, co-existing with other kinds of ownership,” the law states.

Whatever relief the law grants is beamed more to business owners of urban property who want better security for their assets and to give private property the same status as state property. Instead of granting property rights, the law says that state-owned property includes natural resources and all infrastructure. It stipulates that any individual who transfers state property at a low price, illegally shares it in conspiracy or places a charge on it without authorization can be prosecuted. China’s 700 million farmers get 30-year land-use rights and “may have the contract renewed in accordance with the relevant provisions of the state,” according to the law. By contrast, the law grants urban usage rights for up to 70 years.

Because farmers cannot own land, they also cannot mortgage their plots to obtain bank loans, leaving them unable to raise long-term capital to invest in supplies and equipment to raise production. Nor can they sell the land or change its status. That is a major factor in what is becoming one of the world’s worst disparities between rural and urban incomes. In 2006, according to a study by the US-based Cato Institute, income polarization accelerated, with the average Chinese farmer making only US$450 annually, and 35.5 million rural residents earning less than US$120 against US$1,586 a year for urban residents.

In the countryside, opponents of the law are driven less by ideology than money. Local authorities have the power to confiscate land in “the public interest,” a loophole which enables officials to simply take land for commercial, industrial or residential use. It is seizures like this, often done at short notice and with little or no compensation, that provoke violence as farmers confront police, developers, landlords and hired thugs. According to one study, in the first nine months of 2006 China reported 17,900 cases of “mass rural incidents” in which 385,000 farmers joined protests, most of them over illegal land appropriations.

In one such incident in December 2005 in Shanwei, Guangdong province, armed police were reported to have shot at least 20 villagers out of 300 who were protesting the confiscation of their land. In June 2005 in Dingzhou, Hebei province, six farmers died in a fight with 200-300 armed men in civilian clothes hired by those responsible for building a state-owned power station on their land. The incident was captured by the BBC and broadcast around the world.

For local governments, land is a valuable asset when it can be turned to commercial use. A single transfer of land to a developer or factory owner can bring a mayor or party chief a payment on which he and his family can live for the rest of their lives. It can also earn money the local government needs, a problem that became acute when Beijing reformed the tax system in 1994, giving the central government a higher share of tax revenue.

It is thus not in the interests of local governments for farmers to receive title to their land or legal rights that would make transfers more difficult. According to the Cato Institute, only 63 per cent of farmers have a written land contract or written land certificate for the 30-year rights to the plots they till.

Even if the law had been written more strongly in favor of private ownership, implementation is another major issue.

“Over the last 15 years, China has written some of the prettiest laws in the world,” said Jin Zhong, editor of Kaifeng (Open) magazine in Hong Kong. “But they are not enforced or enforceable. For that, you need institutions that oversee the police, the judiciary and the local governments and not a single source of power, as there is now.”