Chinese land reform efforts move ahead with more fits than starts

Editor’s Note: This story is part of a series from PRI’s The World, China Past Due.

Chengdu, capital of Sichuan, has long been known for its tranquil parks and teahouses, its spicy food and salty humor.

It’s also known, these days, as one of two cities, along with Chongqing, running pilot projects that are meant to strengthen rural land rights for farmers, at a time when land grabs — usually by local governments — is one of the top causes of social unrest in China.

One part of the project is to survey and demarcate land, so individual households can get written title for their land rights.

“The land originally belonged to the farmers, right? So we should return rights to the land to them,” said Chen Jiaze, vice president of Chengdu’s Chinese Academy of Social Sciences, who advised the local government on land reform. “Then they can invest more in the land, so their harvests will be better, or they can sell the land rights or use them as collateral, so they can do something else to improve their lives.”

Tell that to Chengdu area farmer Hu Jinqiong, 44, who surveys an empty patch of land in a newly developed neighborhood in Shuangliu county, not far from the airport. Her frail, aging in-laws stand near a pile of rubble, looking forlorn. Hu says her family had a house here for generations, until the local government took the land and demolished the house five years ago.

“I had a pretty comfortable life until then,” Hu said. “I rented out spare rooms in the house, and made more money in one year than the local government offered me in total compensation.”

Hu says she refused to sign any agreement, or take any money, but thugs came along and beat her up and tore down her house anyway. And that’s despite the fact that Hu had a property rights certificate for her house.

“Land is a farmer’s life,” she said. “Yet, they can just grab our land. It’s too easy for them.”

Hu has been fighting for just compensation ever since her land was taken, trying in vain to get her case heard in court. Many Chinese courts refuse to take cases involving government acquisition of land. Not coincidentally, judges and other court employees are paid by local governments. Meanwhile, Hu’s land sits vacant; local governments have been known to sit on acquired land until property prices spike, and then sell it to developers.

Throughout China, some 40 million farmers have lost their land in similar grabs. A 2011 survey by the Seattle-based land rights advocacy group Landesa and People’s University in Beijing, found that 43% of farmers surveyed in 17 provinces had been victims of land grabs. Nearly a quarter of those did not receive any compensation. Those who did were given an average of $3,000 per mu (a Chinese unit of land equivalent to 0.16 acres). The local governments that acquired the land then turned around and sold it for, on average, 40 times more.

“We found that many of these land transfers had not been done properly, in legal terms,” said Gao Yu, Landesa’s China country director. “More than 60 percent of these were done under a degree of coercion, either by local governments directly or through their agents.”

Some government officials see little problem with this. As they view it, the Communist Party originally gave land rights to farmers as a kind of welfare, ending a feudal system of wealthy landlords and impoverished peasants. The land was never farmers’ outright, under Communist Party rule, only theirs to use. So if the local government sees a better use for it, the reasoning goes, it has a right to take it, as long as it compensates farmers for the money they could have made on harvests.

And local governments, in recent years, have seen a much better use for rural land — using land sales to fund local government budgets.

“Local governments run a chronic deficit,” said Tom Miller, author of the book “China’s Urban Billion.” “They are obliged to provide at least 80 percent of the funding for social security. And they’re the ones who invest in physical infrastructure as well. But in the mid- to late-1990s, China changed its fiscal system, reformed it dramatically, because at the time, the central government was short of cash. And so now, a lot of the money that’s collected locally is transferred to the central government. Some of that money then comes back as fiscal transfers. But local governments are constantly struggling to make ends meet. “

That’s where land sales come in.

“In some areas, 80 percent of the local government budget is from land sales,” said Gao Yu of Landesa. “And across the nation, you could say that 40 percent of local budgets are financed by land sales.”

Much of this, he says, comes from taking rural land for urban development.

Chen Jiaze of the Chengdu Chinese Academy of Social Sciences says if local governments really wanted to serve the people, they’d support land reform.

“But as you know, in China, local governments have another task,” Chen said.

And that is to turn in impressive economic growth figures — with local leaders competing against each other for kudos, and promotions. Many enrich themselves along the way.

“So, if this land reform happens, who is the loser?,” Chen asked, in a refreshing burst of candor. “It’s the local governments. Because the growth of cities depends on the sale of land. If you really respect the land rights of farmers, the price will be much higher. If the price is fair, how can the government get a profit?”

Chengdu’s experimental system is actually designed to help developers as well as farmers. Giving rural households individual title to land rights, makes possible a market for their legal sale both to agribusinesses looking to consolidate small farms into bigger, more efficient ones, and to urban developers.

The problem for developers is that the central government has drawn a red line on how much of China’s limited agricultural land can be absorbed by urban expansion. To be able to continue to expand, Chengdu and Chongqing have come up with a clever land trading system.

“This land credit policy allows people to vacate their homesteads, to demolish them, to turn the land underneath into farm land, and then move into consolidated housing either on the edge of their village or in towns and cities,” Miller said. “So the idea is, if farmers turn their old homes into farmland, and then move into tower blocks, you get a net gain in farmland.”

It works kind of like carbon trading. Because extra agricultural land has been created — somewhere — developers can bid for the right to build on an equivalent amount of land close to the city. In principle, farmers get compensated fairly along the way.

To make this possible, rural land, which has for decades been owned collectively, by all members of a village, needs to be given individual title. That means it has to be surveyed and demarcated, with any outstanding disputes resolved. The central government says this will happen throughout China over the next five years — at a cost of almost $3 billion.

Chengdu is supposed to be a success story, years ahead in the process, since both it and Chongqing started their pilot projects in 2007. But when Chen Jiaze, of Chengdu’s Chinese Academy of Social Sciences, seemed a bit nervous that I planned to travel the next day to a rural area where individual land titling was supposed to be completed, and talk to farmers about how this has changed their lives and prospects.

“You’re just going to go and talk to them, without arranging it in advance,” he asked. “But — they need to prepare!”

One of the farmers, Meng Guiyi, found this amusing.

“When reporters come to my village, Wayao, local officials get their relatives or friends to pose as farmers, and say whatever the government wants people to hear,” he said.

What he wants people to hear is that, while Wayao has been cited as a success story, you can’t prove it by him. Yes, he says, he and other Wayao villagers now have individual title to their land. That didn’t stop local officials from forging their signatures on a contract in July 2012, agreeing to sell their land rights at a minimal rate. Even then, the local government wasn’t going to pay for at least a year, until the farmers gathered and protested.

There’s a lot of that going on in China. In the same country, Shuangliu, angry villagers confronted police in January, after finding out that land they’d leased to a golf course for 20 years was quietly sold to developers, and villagers got nothing. Shuangliu is now one of China’s wealthiest counties, because of the revenues it has raked in from land sales. Tens of thousands of other such land-related protests erupt every year.

The Chengdu government did not make anyone available to talk about land issues, despite repeated requests over several weeks. The central government has launched investigations against several former Chengdu officials for corruption related to land sales, including the former deputy party chief, Li Chuncheng. Li had been involved in a controversial project to build a $10 billion petrochemical plant on the outskirts of Chengdu. He’d also angered then-Premier Wen Jiabao by building and then moving into a swanky $170 million government building, soon after the 2008 earthquake that killed some 88,000 people. Wen made him move out of the building, sell it, and put the money in the earthquake relief fund.

China’s new government has made it a top priority to crack down on corruption, knowing its credibility and legitimacy is at stake.

When China’s Communist Party came to power in 1949, it promised to save China’s farmers from oppressive landlords, and give them fields of their own to farm. That worked for a few years, until the State took back the land and introduced collective farming. Then came a politically-caused famine that killed some 40 million people, the upheaval of the Cultural Revolution and, finally, the economic reform era, which returned to individual households the right to farm and profit from their own land. With that, agricultural productivity shot up 80 percent.

Land grabs are exacerbating an already dangerously wide rural-urban income gap. In the cities, the state owns the land, but individuals can buy 70-year property rights to a building or apartment — which has created significant wealth. In the countryside, village collectives still own the land. The Party says this protect farmers.

“But what it effectively means is … it puts power into the hands of the village chief, or whoever else can be bribed,” Miller said. “And in actual fact, it doesn’t protect individual farmers at all.”

What it does do is preserve a bastion of a Communist command economy that’s now out of step with China’s capitalist aspirations. And it provides cover for local governments to step in and claim eminent domain.

But there’s one glaring problem. Even leaving aside issues of fairness and social stability, local officials will eventually run out of land to sell to developers. A much more sustainable way to fund local government budgets is to educate and enable the rural population to make more money, which can be taxed.

Outright private ownership of land might be one way to do that, but even Landesa’s Gao Yu says, that’s not going to help farmers much, until the rest of the system changes to support their rights — like, having courts be independent of the local governments that seize land. Meanwhile, he says, actually honoring existing rights would be a huge step forward, for farmers, and also for the government’s broader objectives.

“If farmers have land rights they can count on, our survey found they’re 90 percent more likely to make investments in their land,” Gao Yu said.

That makes the land more productive, which gives farmers bigger profits, so they’ll have more to spend on consumer goods. And the government desperately wants Chinese to spend more on consumer goods. So, as the government likes to say, it’s a win-win.

But many farmers don’t feel they’re winning at all. Over spicy homecooked Sichuanese fare, farmers in Shuangliu County, each with an unresolved land dispute, seethed as they exchanged stories of thwarted attempts to seek fair compensation, of being beaten up, detained, and treated like dirt.

“One local official told me, the government is like a blanket, and you people are like the fleas underneath it,” one female farmer said. “No matter how hard the fleas try, they can’t throw off the blanket.”

That isn’t stopping them from trying.