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Chinese land system at a critical time
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The current land law has become the scourge of nearly all the most serious economic, social and political problems in China. This shows that China’s land system critically needs complete and radical reform.


The land issue has reached epidemic proportions, embroiling more than a few local government officials, real estate developers and even ordinary farmers who have an urge to try to muscle in on land earnings. The severity of the problem requires immediate resolution, according to a recent China Newsweek report.


Impulse to reach for more power on land-ownership rights


In recent years local governments have become the epicenter of the land dispute cases as bureaucrats are bought off during routine transactions.


From October 2006 to the early 2007, about 1,500 officials were punished for illegal conduct concerning land deals, including even some senior officials. Some illegally expropriated collective farmland and then distributed it for improper use. Others even colluded with dishonest companies, undermining the interests of both farmers and urbanites.


The major culprit has been identified as the local governments’ one-sided pursuit of GDP growth and fiscal revenue, two economic targets that obsess local officials. To this end, they hold out parcels of land as carrots in order to siphon off investment and then set off a real estate boom in the city.


Since the middle 1990s, tax reforms have put pressure on local governments to scout out revenue sources. One response has been to grab rural land for development projects that generate fees and taxes. But the local land-ownership rights appear very obscure for lack of any legal endorsement. Technically, land ownership belongs to the central government; these officials should oversee land management when alerted of any malpractice inside local governments.

The central government has begun to straighten out the land tangle by placing limits on local governments that act too liberally with their power. The central government has bared its teeth, framing up stern laws and policies, as well as setting up a supervision mechanism so that anyone defying the law cannot escape.


Significantly, a clear line must be drawn between the central and local governments when it comes to land-ownership rights and a scientific incentive system requires forging. Otherwise the supervision mechanism regarding land use becomes moot.


The blame also lies with the real estate developers who act as accomplices in these cases.


Currently, various local governments are monopolizing land for construction use. They delegate home construction franchises to the real estate developers (who then create jobs) and stimulate the economy, thus producing a cash cow by contributing large dollops of wealth into local coffers. Furthermore, by entering into partnerships with real estate developers these venal local officials greatly enrich themselves.


The surge in real estate has created a new class of Chinese tycoons. Many have amassed billions of dollars but they are often considered greedy and ferocious.


In China, farmers still fall under a village collective system that forbids them to own, buy or sell the land they till – and that often leaves them powerless to keep it. Farmers have been excluded, unable to sell their own land, even though urban expansion has made outlying farmlands an inviting target.


It has often proved easiest and cheapest for these governments to appropriate rural farmland and pay farmers a pittance in compensation.


But now some farmers are organizing to prevent losses and battling for more profits in land transactions. They have taken a bite into the market, transforming themselves into "urban villages" that rent land for profit. Some have even taken the liberty of selling land directly to the real estate developers. In this way, they swap the land for higher profits – much more than the compensation they would receive for their requisitioned land.


Such an act usually gets a tacit nod from the local governments while simultaneously encountering entrenched opposition from the provincial and state governments, because it will generate chaos in the real estate market and compound the ominous land situation.


Social upheaval has caused rural villages in flux to head en masse to urban areas. Some villages have deeded their land-use leases in perpetuity to farmers, while others empower themselves to make land trades.


Academics have encouraged farmers to have a stab at the current land system. Many professors have reached consensus, stating that farmers should be entitled to more land rights. They perceive activating land as significant for the market economy. Unfortunately, any such systematic reforms always encounter ticklish situations.


What the central government should do


Land seizures have become so rampant that central government officials are alarmed. Many feel the arable land squeeze threatens China's ability to feed itself. They have clamped down on farmland transactions, ordered a freeze on various economic development zones chewing up farmland and cracked down on anyone defying these regulations.


The central government’s well-intended measures have also spawned other woes, ranging from government monopolies to high housing prices. In recent years local governments have become the only beneficiaries in the large-scale appropriation of farmland for housing and factory construction, while millions of farmers are left landless. This remains the leading cause of rural unrest.


Land reforms should be directed at diverting more land rights to the people – not to the local governments, said the China Newsweek report.


Land reform must soon be regulated high up on the government agenda.


( by He Shan, January 9, 2008)

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