The intention to embark on a more balanced, sustainable growth path is reflected in China’s structural adjustment effort to invigorate rural economy and rely on domestic demand and investment as drivers for future growth. The reform measures, if successful, will help bridge the widening regional and rural-urban disparity, serving as a vehicle for addressing social and political instability. However, this daunting task involves mobilising productive factors as well as fostering favourable conditions for rural economic development.
It also requires providing the vast rural population a reasonable social safety net so that precautionary saving can be translated into consumption and investment on the other.
Land issues encapsulate many of modern China’s fundamental contradictions. Whilst land rights are a key productive factor to rural development and urbanisation, they are heavily restrictive, though poorly enforced.
Due to institutional rigidities, land consolidation is rare and land-labour ratio is kept artificially low. Illegal land requisitions take place in the order of tens of thousands a year. Meanwhile, rural land cannot be used as collaterals to obtain bank loans to relax credit constraints facing rural households.
To resolve land issues, the government has to deal with the systematic problems embedded in rural economy, ranging from an underdeveloped rural financial sector to the restrictive hukou system. That way, primary productive factors, such as land, labour and capital can more more efficiently allocate resources.
So, does the government have to develop an urban-rural integrated socio-economic system to accommodate the huge population of migrants currently flowing to urban centres? All these issues imply that the government must finally tackle the urban-rural dualism which is at the core of many institutional bottlenecks that hinder China’s progress.
The degree of complexity and the scope of challenges this reform presents cannot be overestimated. On top of that, the current global jitters are likely to be a distracting factor to the reform effort, making any transition in China’s development strategy a difficult uphill battle. If we look at the current reform effort in the great scheme of things, the transition of development strategy needs to be discussed within the framework of long term issues such as climate change, and the balance between environmental goals and industrial development in general.
Tao (Sherry) Kong is a Research Fellow, RSSS, ANU. [homepage]
Tao.
your analysis on the issue is quite good, and I myself see this as a positive step for many.
Where I am having a problem though is in how this will work. right now, you have migrant labor that moves from the farm to the city, and this is surely going to continue as better jobs can be found in the city vs. the farm.
The problem though is that when this happens (current day), laborers move into danwei’s. Members of the opposite sex, spouses included, are often not allowed to live within the dorm, and neither are children.
So, with a system set up to support the able bodied to move to the city with grandparents and children behind, I just do not see how this hurdle can be overcome. How, migrant laborers will begin to rent a space large enough for the entire family, and move off the family plot, to a job in a factory that most do not consider their long term career (migrant labor typically stays less than 5 years).
Thoughts?
R
http://www.allroadsleadtochina.com
http://www.china-crossroads.com
Richard, I’m very glad to see you link the land reform with migration process, which is precisely my colleagues and I are working on at the moment (http://rumici.anu.edu.au). It is a big question mark how these new initiative will affect migration decisions and China’s rural development in general. Especially, in short run, given the harsh conditions facing export oriented enterprises, the urban ‘push’ factors may be dominant and adversely affect rural-urban labour migration.
In medium and longer term, to resolve the migration problems as what you pointed out, i.e. family migration requires a rural-urban integrated social welfare system, which needs the current rural-urban disparity to be addressed somewhat first. We are currently looking at how migrants’ wellbeing, their children’s health and eduation as well as the rural left-behind community are affected by this great migration movement.
Lastly, just a quick question, if you don’t mind, would you please share your source of information about the duration of migration as less than 5 years. With some recent preliminary study, my calculation is that most migrants actually spend longer than 5 year s in cities since their first migration.
Since the above little piece was posted, I have benefited from comments from a number of very informed readers. A series of discussions on the interpretation of the Communiqué of the Third Plenary are particularly informative. Just as a follow-up, I thought I could provide a few ideas as food for thought here.
Firstly, it is important to clarify that what is formally allowed by the government is for farmers to transfer, rather than to trade land use right. Therefore, the focus of the new measures is to protect farmer’s rights which have been often compromised in practice.
Secondly, it is also useful to emphasize that although the land reform policy does encourage, to some extent, market-based specialized agricultural organization through land consolidation, investment of big city investors in agriculture is not explicitly encouraged in the Communiqué. And this goes back to the first point. After all, as a very insightful comment points out, “it is not about ‘buying’ land use right”.
Lastly, there is undoubtedly still a long way to go before the market-based organizations of agricultural production can be fully established. To provide a market for productive factors (e.g. land, labour and capital) across city and the countryside requires a rural-urban integrated institutional setup. This once again calls for adjustment of the system rather than modifying one or two parameters.
The major announcement of the communique is allowing farmers to transfer their land-use rights, which have been in practice for many years. The Third Plenum Meeting merely upheld an existing practice rather than announcing anything new.
A critical point not mentioned in the article is the government-designated minimum amount of land that must be used for growing food crops–which is 18.5 billion mu–in order to achieve the grain self-sufficiency policy. To me, this is one of the most perplexing puzzles about China’s agricultural policy: why doesn’t it import more grains instead of hoarding land for farming given the enormous opportunity costs? I have a feeling that the lesson of the “Great Leap Famine” is deeply ingrained in the minds of the policymakers. The regime cannot face the vague thought of yet another famine should anything goes wrong on the front of international food trade.