China Reforms Land Ownership Laws

October 29th, 2008 | Sources: Economist, NY Times


Last Sunday Xinhua, China’s state-run news agency announced that Communist Party leaders approved a historic land reform policy allowing farmers to lease, exchange or transfer land-use rights for the first time.

The major economic reform capped a week of speculation after leaders hinted at breakthroughs in their thinking about rural property rights.

The new policy allows peasants to consolidate small, inefficient plots into larger, more productive combines, monetize their property in other ways and achieve significantly increased income for the first time in decades. It is also likely to increase per capita agricultural output just as domestic demand for food has surged.

Until now, Chinese farmland had been owned collectively. Local party officials could, at their discretion lease land to peasants on 30-year contracts but the land could not be mortgaged, traded or sold. Worse, the local officials often repossessed land for urban expansion projects without compensating the farmers.

The government’s announcement was timed to correspond with the 30th anniversary of China’s last major land reform policy initiated by Deng Xiaoping. Those reforms triggered a brief jump in rural income, but this has stagnated for two decades while urban income has exploded.

The marked rural-urban income discrepancy and the corrupt practices of local officials had triggered hundreds of protests from Chinese farmers as well as a mass exodus into its cities. Despite the migration, more than 700 million Chinese still live in rural areas.


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