New Chinese Policy Draws Farmers Into Market Economy

October 13, 2008
Edward Wong

Chinese leaders approved on Sunday a policy that will in theory allow peasants to buy and sell their land rights, a move that sets in motion the nation's biggest economic reform in many years, according to a report by Xinhua, the state news agency.

The report did not immediately give details on the changes, but scholars and government advisers have said that the new policy would allow China's more than 800 million peasants to engage in the unrestricted trade or sale of 30-year land-use contracts that are given to them by the government.

The goal of the new policy is to stimulate market-driven business growth in the countryside and to narrow the huge income gap between people living in rural areas and those in the cities.

While China's cities have profited enormously from economic reforms first announced in 1978, the countryside has lagged further and further behind. Protests are common now throughout rural China, and the most common grievance centers around seizure of land by corrupt government officials.

According to some land-reform experts, the policy change would grant peasants more land security and inspire them to make better use of the small patches of fields that they now manage under the 30-year contracts. The ability to sell the contracts could also lead to the establishment of large-scale farms, which some economists say would help China's agriculture industry better compete in a global marketplace.

The Xinhua report came on Sunday evening, after four days of deliberation during the Communist Party's annual planning session. On Thursday, the first day of the session, party members began reviewing a draft of a plan detailing the land reform. The draft had been drawn up by the Central Committee.

"With rapid industrialization and urbanization, the violation of farmers' land rights happens all the time, as local governments make decisions for farmers instead of allowing farmers to decide for themselves," Song Hongyuan, the head of the Research Center for the Rural Economy in the Ministry of Agriculture, said in an interview. "Thus the government needs to improve the policy to fully protect farmers' interests."

Through state-run news organizations, the government has been signaling since the start of the month that the leadership was ready to announce a major policy shift on the issue of land use. On Sept. 30, President Hu Jintao, who is also the general secretary of the Communist Party, made a much-publicized visit to Xiaogang village in Anhui Province, during which he said farmers would be allowed to transfer their land contracts and management rights. Xiaogang is synonymous with land reform: A group of villagers banded together there in 1978 to quietly start a system of private farming that rejected the collectivization of Maoist-era China.

Their experiment was later lauded by Deng Xiaoping, the paramount leader who started China on the path of economic reform.

Rural land reform was actually at the forefront of that economic overhaul, as communal farms were divided up among peasants. But the peasants remained extremely restricted in their ability to trade or sell those new land-use rights. Meanwhile, land reform in the cities began to surpass the countryside, as the government granted urban residents the right to trade or sell their contracts.

A law passed in 2002 allowed farmers to engage in limited trades of their land-use contracts, but still kept many restrictions in place.

Advocates for land reform say that in order for the new system of land use to work properly, the Chinese government still has to ensure that rule of law is established and followed, especially by local government officials. This would curb the land seizures that have recently caused so many mass protests in the countryside.

"Implementation of the law is the key," said Keliang Zhu, a lawyer with the China research division of the Rural Development Institute, a group in Seattle that pushes for land reform for poor people around the world. "You have a much greater test in the future. We need to make sure to establish supporting institutions that will help to carry out laws and policies."

Zhu said that the government needed to educate farmers and local officials about what the law says about land rights. In addition, farmers should be given full documentation ensuring their rights to a piece of land, he said. Officially, the government claims that 80 to 90 percent of peasants have proper documentation, but in reality only half do, he said, citing recent statistics compiled by the Rural Development Institute.

Under the new system, the companies buying land-use rights from peasants probably will not easily be able to convert the land to some use other than for farming. Senior Communist Party officials often express reservations at allowing businesses unfettered access to China's land.

Peasants have long had an uneasy relationship with Chinese rulers over use of the land. Each dynasty has tried various ways of controlling and taxing rural land, which at various times has resulted in large-scale peasant rebellions. Sun Yat-sen, one of the founders of the modern nation-state of China, put land reform at the top of his agenda after the overthrow of the Qing Dynasty.

In the 1950s, Mao Zedong began herding China's farmers onto collectives, a move that resulted in widespread famine and is now considered one of the worst economic policies of the 20th century.

Huang Yuanxi contributed research.