China pulls the trigger on rural land reform

ASIA: “Land reform in China: Promises, promises; A ‘breakthrough in land reform? Or a damp squib?” The Economist, 18 October 2008.

ARTICLE: “China Enacts Major Land-Use Reform for Farmers: An effort to raise countryside incomes and reduce the sharp rural-urban divide,” by Jim Yardley, New York Times, 20 October 2008.

EDITORIAL: “Land reform in China: Still not to the tiller: A timid approach to an issue of burning concern to one-eigth of the world’s people,” The Economist, 25 October 2008.

WORLD: “Chinese cash in on new land opportunities: Government aims to boost rural incomes by allowing farmers to rent land or form cooperatives,” by Calum MacLeod, USA Today, 7 November 2008.

The Economist is a bit down on the recent Chinese land reform act, saying that it doesn’t really get at the problem of government officials grabbing land regularly at no compensation and then pursuing development.

For now, the land will remain collectively owned, leased to peasants on 30-year deals. But because there is no true ownership, it cannot be mortgaged or sold.

So where is the upside?

As Yardley notes, the current system assigns peasants small plots. Now they’ll be able to subcontract, lease or swap them in a market set up for this purpose, so now the renters can become rentiers. The hope is that larger, more efficient farms will naturally arise, but I can’t say how optimistic that hope is. We will just have to see.

Deng’s innovation (copied from locals experimenting) was to break up the collective’s employment of the land, but not its ownership.

So a couple of steps forward from that but hardly the “landmark” breakthrough touted by the regime.

In the USA Today piece, two good additional points.

First comes from Li Peng of the Rural Development Institute:

China is the opposite of the USA, which has an abundance of capital and land. In China, labor is abundant, but it is short of land and rural capital.

The Party orders more rural banks be set up to help deal with the lack of capital and, if bigger farms end up being the norm, labor will be displaced toward the cities. The problem will be, they won’t be coming with money in hand from sales.

An Australian expert on Chinese ag says not to expect big U.S.-style ag biz any time soon, because (this is not a quote) “for people in the countryside, land is their safety net, unlike residents in big cities who have access to government programs and payouts.

As the Economist editorial ends up:

It is a shame that such a reform [making collective leadership a competitive job not reserved for the party] is not on the cards [must be a British version of “in the cards”]; and that, even without it, the party’s approach to land reform is so timid. But, recalling those epochal reforms of 30 years ago, it is worth remembering that they too tended to come in baby steps rather than great leaps, and often were formulated retrospectively. In tiptoeing gingerly around one of the last Maoist shibboleths—collective landownership—the party may yet be sowing the seeds of the rural transformation it promises.

So optimism tempered by recent history.