Associate Professor Xiaoyang Zhang summarises the debate over the pros and cons of privatising rural land ownership in China, setting out the arguments for and against privatisation and outlining the Chinese government’s position

Zhang, Xiaoyang

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9Amicus Curiae Issue 92 Winter 2012As far as China’s land system as a whole is concerned,two basic principles should be borne in mind: (i)land in China is in public ownership (land itself is notpermitted to be privately owned); and (ii) land use rightscan be in private ownership, and under normalcircumstances are permitted to be obtained and transacted.Urban land is owned by the state (Constitutional Law, art10, para 1; Property Rights Law, art 47; LandAdministration Law, art 8, para 1). Rural land and the landin suburbia are owned by rural collective organisations,unless otherwise provided by the law that it is owned by thestate (Constitutional Law, art 10, para 2; Property RightsLaw, art 47; Land Administration Law, art 8, para 2). Therelevant provisions contained in the Constitutional Law1982, the Land Administration Law 1986 and the PropertyRights Law 2007 are, in most circumstances, of closestrelevance to the issues pertaining to China’s land system.The privately-held rural land was ceded by peasants torural collective organisations as the result of thecollectivisation campaign accomplished in the 1950s thatultimately gave rise to the dismantling of private ownershipof China’s rural land. The market-oriented economicreform, a masterstroke from China’s paramount leaderDeng Xiaoping, was launched in the late 1970s. Theeradication of bottlenecks that hindered the reform wasspearheaded by carrying out the rural reform first; it wasdepicted as a “household responsibility system” to replacethe regime of the people’s communes.Since China’s rural land is owned collectively by ruralcommunities other than that held privately by individualpeasants, the household responsibility system needs tooperate on the basis of a farmland contracting system, underwhich peasants enter into contracts with rural collectiveorganisations to acquire a legitimate right to use land forengaging in agricultural activities. Within the contractperiod, the land use right can be transferred, swapped orsub-let; but the land in question normally cannot be usedfor non-agricultural purposes (Property Rights Law, art128). Under the Land Administration Law, the contractperiod is capped at a maximum of 30 years (art 14, para 1).However, under the Property Rights Law which waspromulgated far more recently, when the current contractperiod ends, the peasant in question will be entitled tocontinue contracting the land presently in his possession(art 126, para 2). Moreover, each rural family is entitled tobe allocated a piece of land to build a house and live in it;if the land given is destroyed due to a destructive force ofnature, the family affected will be allocated the land afresh;but if the house is sold or rented out by the land user, theland user will not be eligible to be granted another piece(Land Administration Law, art 62, para 1 and 4; PropertyRights Law, arts 152 and 154). The law prescribes nolimitation on the length of time within which a rural familymay use the land on which their dwelling house is located;from this can be surmised that their occupancy of the landcould last for an unlimited period of time.Since the tenure can patently be an unfixed andextremely lengthy one, the nature of China’s rural land useright has sparked fierce debate over re-structuring thecurrent system by reviving privatisation.ARGUMENTS IN FAVOUR OF PRIVATISATIONAdvocates of privatisation hold that to achieveurbanisation and modernisation in rural areas, landownership must be privatised. The key reasons they putforward include the following three arguments.First, privatisation would lead all rural land, including theland that stays idle and land allocated to peasants forestablishing their dwellings, to become lawfully purchasable.Those peasants no longer deeming the land as a necessity forthem may get rid of it for a gain. Chinese urban residents arecurrently prevented from purchasing houses built byindividual peasants on their allocated home land, as the landis legally owned by the rural collective; if they covertlybought such houses, they would still not be able to hold legaltitle to the houses. Privatisation could address this problem.Second, once privatisation allows rural houses to be soldon the open market, substantial price differences betweenrural and urban houses could contain or slow down the risein house prices in major Chinese cities. This is against thebackdrop that outrageous urban house prices are showingno apparent sign of imminent decline, albeit thegovernment has taken various measures to try to clampdown on the soaring prices.Third, privatisation would stimulate private investmentin the agricultural sector. Once rural land is privatised andallowed to be sold, let, or treated as capital, this couldContemplating privatisation ofChina’s rural land ownershipby Xiaoyang Zhang10Amicus Curiae Issue 92 Winter 2012eventually give rise to an increase in land value, anenhancement of production efficiency, and an enlargementof production scale.OPPOSING VIEWSOpponents to privatisation also put forward threearguments.First, the success of urbanisation in history achieved bymature western economies was to a large extentattributable to the consequences of colonialisation andcolonial expansion carried out by the countries involved.This is definitely not a model for China to imitate.Second, in today’s China only when peasants’ freedomto leave home and find work in urban regions, as well astheir freedom to return home and re-engage in agriculturalwork, could both be ensured would they be able to sustaina reasonable standard of living. If privatisation becomesreality, private rural land could easily fall prey to venturecapitalists engaged in land expropriation, leading landlesspeasants to leave home and migrate to cities; such asituation could easily result in the massive emergence ofimpecunious communities in urban regions.Finally, there is no strong evidence that a clearcorrelation exists between private land ownership and acorresponding surge of investment in agriculture. Mostagricultural goods produced in China are supplied todomestic consumers other than for export. If land isprivatised, an inflow of external capital (eg foreign capital)may have the effect of decreasing the portion of economicpie currently enjoyed by Chinese peasants.THE GOVERNMENT’S POSITIONThe Chinese government has once before unveiled itsstance on the issue of privatisation in 2008, and under itthe system of collective ownership of rural land wouldremain unchanged.In 2011, Chinese Premier Wen Jiabao expounded on theimportance of safeguarding Chinese peasants’ legitimaterights against infringement. In his article on China’sagricultural development, Wen emphasised the inviolabilityof any property right granted to peasants (particularly theright to use the land contracted from rural collectives, theright to use the land upon which peasants’ dwellings areconstructed, and the right to share the benefits derived fromwhat rural collective organisations have earned from theiractivities). He pointed out that any such right shall not bedeprived of under any circumstances, even in the event thatit might no longer have a significant bearing on a peasant’slife, and regardless of whether the peasant concerned stillcurrently remains domiciled in his rural hometown.CONCLUDING REMARKSAlthough advocates of privatisation strive for what seemsto be a forlorn hope, the debate over the pros and cons ofprivatising rural land ownership continues. At some point inthe future, this may spur a new round of argument over theissues involved. When the view is put forward that one ofthe original purposes of the Chinese revolution was torealise an ideal of letting each and every peasant have a pieceof land which he could eventually own, this casts doubt onwhether a line has been drawn under the contentious issueof rural land ownership. Even though private ownership islegally unavailable at the moment, advocates of privatisationmay set another goal, the attainment of which would at leastlead to the right of usufruct over rural land in China comingclose to de facto ownership.Xiaoyang ZhangAssociate Professor (Business Law), Lee Shau Kee School of Business &Administration, The Open University of Hong Kong.REFERENCESXuefeng He, ‘Land must not be privatised’ (Chinese),2010, http://www.aisixiang.com/data/38046.html.Immanuel C Y Hsu, The Rise of Modern China (Chinese), TheChinese University Press 2002.Reeitsu Kojima, “Agricultural Organization: New Forms,New Contradictions” in Y Y Kueh and Robert Ash (eds),Economic Trends in Chinese Agriculture, Clarendon Press,1993.Shanguang Kong, “Securitisation and privatisation of ruralland” (Chinese), 2005, http://www.chinavalue.net/Finance/Article/2005-3-21/3565.html.Zhe Kuai and Fuyou Cai, “Privatisation of China’s ruralland is the road that must be taken towards tacklingthree agriculture-related big issues and achieving mod-ernization” (Chinese), 2007, http://www.zgxcfx.com/Article/1951.html.Yue Ma, “A reflection on rural land ownership” (Chinese), 2009http://www.chinareform.org.cn/cirdbbs/dispbbs.asp?BoardID=11&ID=215923.Carl Riskin, China’s Political Economy – the Quest forDevelopment Since 1949, Oxford University Press, 1988.Xing Su, The Economic History of New China (Chinese),Central Party School Press, 1999.Jiabo Wen, “China’s agriculture and the paths of ruraldevelopment” (Chinese), 2012 http://www.agri.gov.cn/V20/ZX/nyyw/201201/t20120117_2458139.htm.Tiejun Wen, “Why shouldn’t China privatise rural land?”(Chinese), 2009, http://www.aisixiang.com/data/24349.html.Elizabeth Wright, The Chinese People Stand Up, BBC Books,1989.Decai Yang, A New Study on Chinese Economic History(Chinese), Economic Science Press, 2009.Meng Zhang, “Privatisation of land ownership is the road thatmust be taken towards meeting the objective of reform andopen-up” (Chinese), 2009, http://www.zgxcfx.com/Article/13306.html.Wang Jianxun, “Land privatisation will definitely lead to afall in urban house prices” (Chinese)http://business.sohu.com/20091219/n269066968.shtml.

Contemplating privatisation of China's rural land ownership

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