Property Portfolio-The Construction of Chinese Rural Land System
|Course||Population, Resources and Environmental Economics|
|Keywords||rural land policy property portfolio two-tier model|
This paper explores questions arising from rural land policies in China, a country on the way toward becoming a major economy in the new era, and one beset by a host of pressing issues, among which agriculture, peasants and rural areas stand out. Much current debate in academia ascribes China’ s agriculture-related problems to its rural land policies——institutions about land ownership and use that are recognized as having a direct hearing on people’ s welfare, social development, and the prosperity or otherwise of anation. Therefore, reforming China’ s rural land policies is of vital significance if the government is to modernize agriculture, increase peasants’ income and maintain stability in rural areas. After decades of reforming and restructuring since the founding of the People’ s Republic in 1949, China now has a set of rural land policies with "Chinese characteristics", as distinct from that of any other time and any other country, i.e., collective ownership, household responsibility system, regular and irregular reallocation, limited alienation and transference, controlled disposal and appropriation with moderate compensation. These charactiritics feature heavily in scholarly research as well as academic debate.A process model of institutional innovation in property right portfolios is developed for examining China’ s rural land policies. Institutional factors, it is argued, must be considered alongside resource endowments, technology and preferences, which are the three pillars of economic theories, since the combination of land, labor and capital can only be most productive within a well-designed policy framework. As the driving force and a natural consequence of social development, division of labor and institutions are analyzed in parallel with a view to establishing the relationship between the two. And it is found that property right powers follow a course of continuous evolution, integration, disintegration, extension and reintegration along with human progress and social progress in terms of labor division, science and technology. Based on a knowledge of this continuous process, which I shall term as "property right portfolio" in this project, a process model is built for demonstrating institutional innovation in property right portfolios, as distinct from other institutional innovation models. A preliminary study is made of labor division as a major factor in the extension of property right powers. However, considering the focus and thesis of this project, division of labor ceases to be a major concern after having established its relationship with property right and institutions, and particularly, its connection with institutional changes in the course of property right evolution.Within the process model paradigm, a study is conducted of rural land policies adopted since the founding of the People’s Republic. Five paradigmatic aspects are recognized and discussed by way of subtopics. Firstly, in the light of property right portfolio, a general trend of China’s rural land policy changes is outlined by describing and investigating from a new perspective each and every land policy change after 1949, highlighting, in particular, institutional breakthroughs since the initiation of the household responsibility system more than 20 years ago, and rules behind these changes identified. Secondly, an investigation is made of the three key issues regarding rural land policies: i. e., a) from the perspective of property right, the dynamics of the competing interests of the state and the peasants as equal players, the implications of and the correlation between the interest curves of the two parties as well as the interaction between the two parties over land policy changes; b) from the perspective of land transference, the underlying mechanism, the right to transfer and the way transference is handled; and c) from the perspective of land acquisition, the property right relations exhibited in the acquisition---alienation process are studied and explained by rent-seeking, thereby pinpointing current land acquisition practices as the culprit for harming peasants’ interest apart from creating the "price scissors" between farm produce and industrial products. Thirdly, the disequilibrium in current rural land policies is analyzed both internally and externally with a view to contributing to policy reforms and innovations. Fourthly, the implications of institutional innovation for the state and for the peasantry are discussed in a contrastive study. From the perspective of the state, institutional change is a welcome option; yet for any change to be successful, past experiences and new situations must not be overlooked and equality and efficiency must be well balanced in devising any new policies. It is also argued that the North Paradox has a tenacious hold on rural land practices, so much so that reform can only be implemented in a gradual and piecemeal manner. In addition, time lag bears unfavorably on institutional reform. Peasantry-wise, the balance of interests, interest incentives and the overall objective of the government are at variance. Any institutional innovation is bound to be strongly influenced by altruism, sectarianism, clanism, egalitarianism, totalitarianism, and other informal institutions inherent in rural communities. Moreover, peasants are increasingly assertive of their property rights, hence their right to derive income from their land, which suggests a clear direction for institutional change regarding rural land. Fifthly, as a preparation for subsequent discussions, the four possible approaches to institutional change, namely, state ownership, collective ownership, private ownership and mixed ownership, are examined with the following conclusions: policy change initiatives cannot be evaluated without considering the behavioral assumptions of the target population; investigations of rural land practices cannot be fruitful without taking into account peasants’ attitude or the lack of it toward institutional change; problems concerning land policies, particularly property right holders cannot be studied with any success if the characteristics of rural land and agriculture are overlooked; issues regarding institutional innovation have to be studied in their historical context; and, lat but not least, informal institutions are an influence to be reckoned with in any research on institutional innovation.A model is proposed featuring state ownership and household tenure. Following a study of the evolution of China’ s rural land policies and an analysis of the deficiencies of current practices, both of which are based on the process model, it is proposed that ownership itself is not determinant of economic behavior, hence collective ownership can be abolished in view of the developmental tendency of rural land ownership and tenure, the township and/or village council’s incapacity to represent peasants as a whole, as well as the possible benefits such an abolition will bring to peasants. In conclusion, a dualistic theoretical framework featuring "state ownership, household tenure" is established for guiding rural land institutional reform. Such a framework delineates the respective rights of the holder and owner of land, with the former holding the tenure and the latter the title. For this model to succeed, collective ownership of land ought to be abolished and replaced by state ownership, tenants’ right of use (such as tenure, management, derivation of income, transference and disposal) should be expanded, and, accordingly, the rights of the title holder (the state) has to be clearly defined. Ownership thus is understood in the conventional sense, and tenure delineated with respect to the rights and responsibilities of the owner, the user and non-owners. Additionally, rules governing the two-tier policy are discussed from the macro, micro as well as the property-portfolio perspective. The dissertation concludes with concrete measures and supplementary reforms suggested for the paradigm.