Development of land rental markets in rural Zhejiang: Growth of off-farm jobs and institution building

China Quarterly

Volumn , Issue 180, 2004, Pages 1050-1072

  Zhang, Qian Forrest ^a   Qingguo, Ma ^b,c   Xu, Xu ^b,d  

^a YALE UNIVERSITY   (United States)

^b ZHEJIANG UNIVERSITY   (China)

^c WENZHOU UNIVERSITY   (China)

^d ZHEJIANG PROVINCIAL PEOPLE'S HOSPITAL   (China)

Author keywords

[No Author keywords available]

Indexed keywords

INSTITUTIONAL DEVELOPMENT; LAND MARKET; OFF-FARM EMPLOYMENT; RURAL ECONOMY;

ASIA; CHINA; EASTERN HEMISPHERE; EURASIA; FAR EAST; WORLD; ZHEJIANG;

EID: 14044265599     PISSN: 03057410     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Article

References (96)

1. See, for example, Vaclav Smil, "China's agricultural land," The China Quarterly, No. 158 (June 1999) pp. 414-429.
2. Xiaolin Guo,"Land expropriation and rural conflicts in China" The China Quarterly, No. 166 (June 2001), pp. 422-439
3. Yongshun Cai, "Collective ownership or cadres' ownership? The non-agricultural use of farmland in China," The China Quarterly, No. 175 (September 2003), pp. 662-680.
4. See, for example, Goo Li and Scott Rozelle, "Village leaders and land-rights formation in China," American Economic Review, Vol. 88, No. 2 (May 1998), pp. 433-38;
5. Shouying Liu, Michael R. Carter and Yang Yao, "Dimensions and diversity of property rights in rural China: dilemmas on the road to further reform," World Development, Vol. 26, No. 10 (October 1998), pp. 1789-1806;
6. James Kai-sing Kung, "Common property rights and land reallocation in rural China: evidence from a village survey," World Development, Vol. 28, No. 4 (April 2000), pp. 701-719;
7. Peter Ho, "Who owns China's land? Policies, property rights and deliberate institutional ambiguity," The China Quarterly, No. 166 (June 2001), pp. 394-421;
8. Loren Brandt, Jikun Huang, Guo Li and Scott Rozelle, "Land rights in rural China: facts, fictions, and issues," China Journal, No. 49 (January 2002), pp. 67-97.
9. See, for example, Xiao-yuan Dong, "Two-tier land tenure system and sustained economic growth in post-1978 China," World Development, Vol. 24, No. 5 (May 1996), pp. 915-928;
10. James Kai-sing Kung, "Off-farm labour markets and the emergence of land rental markets in rural China," Journal of Comparative Economics, Vol. 30, No. 2 (June 2002), pp. 395-414;
11. Brandt et al., "Land rights in rural China."
12. See Article 4 of the Land Management Law, revised and promulgated on 29 August 1998.
13. For discussions on markets for unused land and construction land in rural China, see Samuel P. S. Ho and George C. S. Lin, "Emerging land markets in rural and urban China: policies and practices," The China Quarterly, No. 175 (September 2003), pp. 681-707
14. Huang Xianjin and Qu Futian, "Woguo nongcun tudi shichang jianshe yu fazhan yanjiu" ("A study of the construction and development of land markets in rural China"), working paper, Nanjing University (July 2002).
15. See Article 10 of the PRC Constitution (1982).
16. See Ho and Lin, "Emerging land markets," p. 683. According to the authors, 97% of state-owned land in rural China is pasture or forest.
17. Because the individualized land-use rights are restricted, so are the transfer rights. Most importantly, the new Rural Land Contract Law (RLCL) explicitly prohibits the transfer of agricultural land to non-agricultural use by individual parties. See Articles 17 and 33 of the RLCL.
18. In the literature, the allocation of land rights by rural collectives is also referred to as the "primary land market," while the exchange of allocated land rights is referred to as the "secondary market."
19. See, for example, Ho and Lin, "Emerging land markets." We find using ,"market" to describe the administrative allocation of land rights somewhat problematic and therefore do not use this distinction.
20. James Kai-sing Kung, "Equal entitlement versus tenure security under a regime of collective property rights: peasants' preference for institutions in post-Reform Chinese agriculture," Journal of Comparative Economics, Vol. 21, No. 1 (1995), pp. 82-111.
21. Figures reported indifferent studies vary. The average frequency reported in Liu et al., "Dimensions and diversity of property rights," is 1.1 by 1994 for a four-province sample.
22. Brandt et al., in "Land rights in rural China," report an average of 1.7 reallocations for an eight-province sample by 1997.
23. Zhu Qiuxia, in Zhongguo dalu nongcun tudi zhidu biange (Changes in the Rural Land System in Mainland China) (Taipei: Zheng zhong shuju, 1995), reports an average of 1.33 reallocations by 1991 from a survey of seven counties in Jiangsu. Another nation-wide survey conducted in 1990 finds that 76.7% of villages had one reallocation, while 4.3% had three or more,
24. see RDRC (Rural Development Research Centre), "1984-1988 man liangshi shengchan de weiguan tanshi" ("A microscopic investigation of grain production during 1984-1988"), Zhongguo nongcun jingji (Chinese Rural Economy), No. 3 (March 1990), pp. 16-24.
25. See Mark Brenner, "Reexamining the distribution of wealth in rural China," in Carl Riskin, Renwei Zhao and Shi Li (eds.), China's Retreat from Equality (Armonk, NY: M. E. Sharpe, 2001), p. 245-275.
26. When land is measured in physical unit, the Gini index of land distribution dropped from 543 in 1988 to A31 in 1995. The same study also found that when land is measured in value terms of agricultural output, the distribution is more equitable, but there is a slight increase over time: the Gini index rose from .310 in 1988 to .393 in 1995.
27. Chen Xiwen and Han Jun, "Ruhe tuijin nongmin tudi shiyongquan heli liuzhuan" ("How to promote rational circulation of peasants' land use-rights"), Zhongguo jingji shibao (China Economic Times , 20 April 2002.
28. Rural Cooperative Economic Study Group, Ministry of Agriculture, "Guanyu Zhongguo nongcun hetong anpai he hezuo zuzhi de diaocha" ("A survey of contractual arrangements and cooperative organizations in rural China"), Nongye jingji wenti (Problems in Agricultural Economy), No. 8 (1991), pp. 33-40.
29. Also see Dong, "Two-tier land tenure system."
30. Chen and Han, "Promote circulation."
31. Brenner, "Reexamining the distribution of wealth," p. 269.
32. Chen and Han, "Promote circulation";
33. Kung, "Emergence of land rental markets";
34. Zhang Zhaoxin, "Zhongguo nongcun tudi liuzhuan shichang fazhan jiqi fangshi" ("Development of land circulation markets and its patterns in rural China"), Zhongguo nongcun jingji, No. 2 (February 2002), pp. 19-24.
35. See CARD (Centre for Agricultural and Rural Development, Zhejiang University), "Nongcun tudi liuzhuan: xin qingkuang, xin sikao" ("Rural land circulation: new situations, new thoughts"), Zhongguo nongcun jingji, No. 10 (October 2001), pp. 10-18.
36. See, for example, Jiang Changyun, "Nongcun tudi yu nongmin de shehui baozhang" ("Rural land and the welfare provision for peasants"), Jingji shehui tizhi bijiao (Comparative Studies of Economic and Social Institutions) (January 2002);
37. Tang Fuyong, "Sichuan: pintu diqu tudi liuzhuan chayi da" ("Sichuan: large gap between rich and poor areas in land circulation"), Zhongguo jingji shibao, 21 May 2002; " Jiangxi sheng Yichun: tudi liuzhuan chuangchu xinlu" ("Yichun, Jiangxi province: new paths opened in land circulation"), Guangming ribao (Guangming Daily), 29 June 2001;
38. Yiyang Municipal Statistical Bureau, "Dui Yiyang shi nongcun tudi liuzhuan qinkuang de diaocha" ("An investigation of land circulation in rural Yiyang") (22 January 2003), accessed on the internet at http://www.hntj.gov.cn/sxfx/yiyfx/200302090022.htm.
39. Central Committee of the Chinese Communist Party, "Guanyu zuohao noughu chengbao tudi shiyongquan liuzhuan gongzuo de tongzhi" ("Notice about correctly regulating circulation of use-rights of contracted land among rural households"), Zhongfa, No. 18 (2001).
40. The central leadership has been permissive toward land-rights exchange all along. The No. 1 Document in 1984 allowed villagers to " personally negotiate a transfer" of contracted land, with the consent of the collective.
41. See "Circular of the Central Committee of the Chinese Communist Party on rural work during 1984," The China Quarterly, No. 101 (March 1985), pp. 132-142.
42. Both the Constitutional Amendments passed in 1988 and the Land Management Law legislated in the same year sanctioned the circulation of land use rights. But these previous regulations offered few specific guidelines. Furthermore, the legal status of cross-village exchange remained ambiguous until the 1998 revised Land Management Law sanctioned it.
43. See Ho and Lin, "Emerging land markets."
44. Since rural areas are the object of the study, the urban centres of the prefecture-level regions were excluded from the selection.
45. To put these figures in perspective, for the entire province, in 2001, the per capita GDP is 14,655 yuan, the off-farm share of GDP is 89.3%, and the per capita income for rural residents is 5,325 yuan.
46. See Zhejiang tongii manjian 2002 (Zhejiang Statistical Yearbook 2002 (Beijing: Zhongguo tongji chubanshe, 2002).
47. Alan de Brauw, Jikun Huang, Scott Rozelle, Linxiu Zhang and Yigang Zhang, "The evolution of China's rural labour markets during the reforms," Journal of Comparative Economics, Vol. 30, No. 2 (June 2002), pp. 329-353.
48. See Kung, "Emergence of land rental markets," p. 399;
49. CARD, "Rural land circulation";
50. Zhang, "Development of land circulation markets"
51. Kung, in "Emergence of land rental markets," finds that grain quota has non-significant effect on rental transactions.
52. Brandt et al., in "Land rights in rural China," p. 87, present descriptive data suggesting the negative effect of grain quota on land rental activities. But that evidence, as the authors concede, is not conclusive.
53. I b i d.
54. Kung, "Emergence of land rental markets."
55. We excluded grain quota from the analysis. In 2001, Zhejiang became the first province in the nation to experiment with the full dismantling of grain procurement plans. Therefore, our survey did not collect information on grain quota.
56. There are eight cases that have both rented in and rented out land. We examined them case by case and found that all of them rented in considerably more land than they rented out. We categorize them as lessee families.
57. We we grateful to an anonymous reviewer or pointing this out.
58. See, for example, William L. Parish, Xiaoye Zhe and Fang Li, " Non-farm work and marketization of the Chinese countryside," The China Quarterly, No. 143 (September 1995), pp. 697-730;
59. Lisa A. Keister and Victor Nee, "The rational peasant in China: flexible adaptation, risk diversification, and opportunity," Rationality and Society, Vol. 13, No. 1 (2000), pp. 33-69.
60. See de Brauw et al., "Evolution of rural labour markets," pp. 337 and 345.
61. We thank a reviewer for pointing out the significance of this development.
62. Kung, "Emergence of land rental markets," p. 412.
63. The supply-driven dynamics only applies to market-mediated land exchanges, not land reallocations. Since land reallocations were administered by village authorities, demand for land emanating from a large number of villagers can and did lead to movements of land rights.
64. Dong, "Two-tier land tenure system," p. 920;
65. Brandt et al., "Land lights in rural China," p. 90.
66. Karl Polanyi, "The economy as instituted process,"
67. in Karl Polanyi, Conrad M. Arensberg and Harry W. Pearson (eds.), Trade and Market in the Early Empires (New York: Free Press, 1957 , p. 251.
68. In fact, an argument could be made here, following Oliver E. Williamson, "Markets and hierarchies: some elementary considerations," American Economic Review, Vol. 63, No. 2 (May 1973), pp. 316-325, that administrative reallocation prevailed because it incurred lower transaction costs than market exchanges.
69. See Yuan Yaping, "Tudi xintuo duofang shouyi" ("Land trusts benefit many"), Renmin ribao (People's Daily), 18 June 2001, p. 2;
70. "Shaoxing xian tudi liuzhuan huode sanying" ("Land circulation in Shaoxing county led to three-way wins"), Shaoxing Daily, 17 January 2MI p. 1.
71. The survey reported in CARD, "Rural land circulation," p. 14, finds the same result.
72. The average farm size in the Zhejiang sample is only 6 mu, less than 1 acre.
73. See Chen Fang and Pan Haiping, "Tudi liuzhuan bu neng wushi nongmin yiyuan" ("Land circulation cannot ignore peasants' interests"), Xinhua News Agency, 24 December 2001;
74. Song Bing and Chen Fang, "Zunzhong nongmin yiyuan, guifan tudi liuzhuan: dangqian nongcun tudi liuzhuan wenti zongshu" (" Honour peasants' interests, regulate land circulation: a review of current problems in rural land circulation"), Zhongguo jingji shibao, 27 July 2001.
75. Central Committee, "Correctly regulating land circulation."
76. Also see "Renzhen luoshi nongcun tudi shiyongquan liuzhuan zhengce" ("Seriously implement policies regarding circulation of rural land use-rights"),
77. Renmin ribao, 10 January 2002, p. 2;
78. "Nongmin tudi shiyongquan liuzhuan xu jiji wentuo" (" Circulation of peasants' land use-rights should proceed actively yet steadily"), Renmin ribao, 9 September 2002, p. 9.
79. Articles 34 and 35 of the RLCL.
80. The number is reached by adding figures of renting from within the same villagers' group, the same village or from the village authority in the last row of Table 7.
81. See Dong, "Two-tier land tenure system," for a review and critique of this literature.
82. Also see related discussions in Brandt et al., "Land rights in rural China."
83. Kung's study, "Emergence of land rental markets," draws the same conclusion. Kung convincingly showed that household decisions regarding off-farmjobs and land rental are not made jointly, but are exogenous.
84. This is not to imply that the demand-regulated transfer is the only process going on. Not every farmer leaving agriculture is responding to actual demand in the off-farm sector. Many were not successful in finding off-farm jobs, nor did they rent out their land rights. But the labour demand in the off-farm sector is the dominant force.
85. This sequence is observed in many developing contexts. See, for example, Klaus Deminger and Gershon Feder, "Land institutions and land markets," The World Bank Policy Research Working Paper, No. 2014 (November 1998), pp. 1-44.
86. For China's own experience after the Land Reform, see Zhu, Changes in Rural Land System
87. Vivienne Shue,Peasant China in Transition: The Dynamics of Development toward Socialism, 1949-1956 (Berkeley, CA: University of California Press, 1980). For cases in post-socialist Eastern Europe,
88. see Ivan Szelenyi (ed.),Privatizing the Land: Rural Political Economy in Post-Communist Societies (London: Routledge, 1998).
89. Deininger and Feder, "Land institutions."
90. The efficiency gain from land concentration is far from certain. In fact, the credit market often functions in a way that concentrates I and to larger holders with lower productivity.
91. See, among others, Deninger and Feder, "Land institutions;"
92. Dong, "Two-tier land tenure system."
93. See, for example, Eddy Lee, "Egalitarian peasant fanning and rural development: the case of South Korea," in Dharam Ghai, Azizur Rahman Khan,
94. Eddy Lee and Samir Radwan (eds.),Agrarian Systems and Rural Development (New York: Holmes & Meier, 1979), pp. 24-71, on the South Korean experience.
95. This is also the case in some late-industrializing countries, where expropriation of peasant land had to start first to create a supply of proletarianized labour force for industrial employment.
96. See, for example, Giovanni Arrighi, "Labor supplies in historical perspective: a study of the proletarianization of the African peasantry in Rhodesia," Journal of Development Studies, No. 3 (April 1970), pp. 180-234.