Retreat from equality or advance towards efficiency? Land markets and inequality in rural Zhejiang

China Quarterly

Volumn , Issue 195, 2008, Pages 535-557

  Zhang, Qian Forrest ^a  

^a NONE

Author keywords

[No Author keywords available]

Indexed keywords

AGRICULTURAL LAND; EFFICIENCY MEASUREMENT; INCOME DISTRIBUTION; LAND MARKET; REGRESSION ANALYSIS; RURAL AREA; RURAL ECONOMY;

ASIA; CHINA; EURASIA; FAR EAST; ZHEJIANG;

EID: 51849133592     PISSN: 03057410     EISSN: 14682648     Source Type: Journal    
DOI: 10.1017/S0305741008000763     Document Type: Article

References (66)

1. 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 (2003), pp. 681-707. Under collective ownership, only land use rights, not ownership, are contracted to rural households and exchanged on markets and, therefore, all markets for arable land in rural China are land rental markets. In this article, "land markets" refer to such land rental markets, and "land distribution" and "land exchange" refer to land use rights.
2. 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
3. and Louis Putterman, Continuity and Change in China's Rural Development (New York: Oxford University Press, 1993).
4. Xiwen Chen and Jun Han, "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, p. 4.
5. Ibid.
6. James Kai-sing Kung, "Off-farm labor markets and the emergence of land rental markets in rural China," Journal of Comparative Economics, Vol. 30, No. 2 (2002), pp. 395-414.
7. 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 (Chinese Rural Economy), Vol. 2001, No. 10 (2001), pp. 10-18.
8. Scott Rozelle, Jikun Huang and Keijiro Otsuka, "The engines of a viable agriculture: Advances in biotechnology, market accessibility and land rentals in rural China," China Journal, No. 53 (2005), pp. 81-111, cite 10% participation rate in land markets from a 2003 national representative survey.
9. For Chinese literature, 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) (2002)
10. and "Jiangxi sheng Yichun: Tudi liuzhuan chuangchu xinlu" ("Yichun, Jiangxi province: New paths opened in land circulation"), Guangmin ribao (Guangmin Daily), 29 June 2001.
11. This article thus will not discuss the institutional evolution from administrative allocation to market transaction or give a causal analysis of determinants of household participation in land markets. For a discussion on those topics and description of transaction methods used in land markets, see Q. Forrest Zhang, Ma Qingguo and Xu Xu, "Development of land rental markets in rural Zhejiang: Growth of off-farm jobs and institution building," The China Quarterly, No. 180 (2004), pp. 1050-72.
12. For a detailed description of sampling methods and descriptive statistics of the sample, see ibid.
13. A methodological note: Rather than excluding cases with missing values (mostly on household members' employment status), I assigned either sample means or household averages (for continuous variables) or valid zeros (for dummy variables) on the relevant variables. I then included a dummy variable identifying these cases in the models to avoid influencing parameter estimates with these substitutions. There are 136 such cases.
14. Ho and Lin, "Emerging land markets."
15. Wang Weiguo, "Land use rights: Legal perspectives and pitfalls for land reform," in Peter Ho (ed.), Developmental Dilemmas: Land Reforms and Institutional Change in China (London: Routledge, 2005), pp. 62-88.
16. See, for example, Kung, "Equal entitlement versus tenure security";
17. 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 (1998), pp. 1789-1806
18. and Qiuxia Zhu, Zhongguo dalu nongcun tudi zhidu biange (Changes in the Rural Land System in Mainland China) (Taipei: Zheng zhong shu yu, 1995). The exact principle of land distribution varied across localities. Some villages distributed land equally by household population, others by household labour force, still others by some combination of household population and labour force.
19. Liu et al., in "Dimensions of property rights," for instance, found the percentage of villages using these three principles to be 16.7, 26.7 and 53.3, respectively, with only 3.3% using some unidentified other methods.
20. Guo Li and Scott Rozelle, "Village leaders and land-rights formation in China," American Economic Review, Vol. 88, No. 2 (1998), pp. 433-38
21. Liu et al., "Dimensions of property rights";
22. and Loren Brandt, Jikun Huang, Guo Li and Scott Rozelle, "Land rights in rural China: Facts, fictions, and issues," China Journal, No. 49 (2002), pp. 67-97.
23. See ibid. for discussions on the diverse forces driving land reallocation.
24. Liu et al., "Dimensions of property rights"
25. and James Kai-sing Kung, "Common property rights and land reallocation in rural China: Evidence from a village survey," World Development Vol. 28, No. 4 (2000), pp. 701-19.
26. See, for example, Xiaolin Guo, "Land expropriation and rural conflicts in China," The China Quarterly, No. 166 (2001), pp. 422-39
27. Yong-Shun Cai, "Collective ownership or cadres' ownership? The non-agricultural use of farmland in China," The China Quarterly, No. 175 (2003), pp. 662-80
28. and Peimin Lou, "A case study on the settlement of rural women affected by land requisitioning in China," Journal of Contemporary China, Vol. 16, No. 50 (2007), pp. 133-48.
29. See, among others, Keith Griffin and Renwei Zhao (eds.), The Distribution of Income in China (New York: St Martin's Press, 1993)
30. Azizur Rahman Khan and Carl Riskin, "Income and inequality in China: composition, distribution and growth of household income, 1988-1995," The China Quarterly, No. 154 (1998), pp. 221-53
31. and Azizur Rahman Khan and Carl Riskin, Inequality and Poverty in China in the Age of Globalization (New York: Oxford University Press, 2001).
32. Terry McKinley, "The distribution of wealth in rural China," in Griffin and Zhao, The Distribution of Income in China, pp. 116-34.
33. Mark Brenner, "Reexamining the distribution of wealth in rural China," in Carl Riskin, Renwei Zhao and Shi Li (eds.), China's Retreat from Equality: Income Distribution and Economic Transition (Armonk, NY: M. E. Sharpe, 2001), pp. 245-75.
34. Ibid. p. 252.
35. Even in the most recent wave of the CHIP survey (2002), Azizur Rahman Khan and Carl Riskin, "China's household income and its distribution, 1995 and 2002," The China Quarterly, No. 182 (2005), pp. 356-84, still find that land remains highly equally distributed on the national scale, to the extent that "land in irrigated unit was absolutely equally accessible to all income groups" (p. 364). However, such a national comparison may not be able to detect increasing inequality in land distribution at the provincial level.
36. I also tried ranking cases not by household land holding but by land per capita. The distribution is in fact slightly more unequal in that case.
37. The Gini index is scaled to vary from zero to one, zero representing no inequality and one representing a maximum possible degree of inequality. The conventional wisdom is that any change in the Gini index of 10% or greater is considered significant, although it is not possible to establish statistically that a 10% or larger difference is significant. See Khan and Riskin, "Income and inequality in China," p.238 for a discussion.
38. In their responses to the questionnaire, 71.3% of households who acquired land selected "farming is profitable and can increase family income" as a reason for expanding farming, 29.3% selected "having surplus labour in the family," and 7% chose "helping out relatives." Among the households who relinquished land, the most frequently cited reason for doing so is "farming is not profitable" (47.5%), followed by "lacking farm labour" (25.7%). As discussed later, in rural Zhejiang, where off-farm jobs are plenty and financially more rewarding than farming, competition for farm land is not intense. In fact, cadres showed little interest in acquiring farm land through markets. Of all the 138 households who acquire land in the sample, only five were cadre households. However, as one reviewer pointed out, in other areas where there were few alternatives to farming, or where more valuable land such as forest land is available on the market, cadres may engage in land grab through land markets. For a causal analysis of determinants of households' participation in land exchange, see Zhang, Ma and Xu, "Development of land rental markets."
39. Azizur Rahman Khan, "The determination of household income in rural China," in Griffin and Zhao, The Distribution of Income in China, pp. 95-115.
40. Ping Zhang, "Rural interregional inequality and off-farm employment in China," in Riskin, Zhao and Li, China's Retreat from Equality, pp. 213-26.
41. All models in Table 4 are run on sub-samples. The farm-income sub-sample (N=823) contains only those households that had land under cultivation and derived any income from agricultural sources. (Household-consumed grain is not counted toward farm income.) Similarly, off-farm income sub-sample (N=803) only contains households that had members engaging in off-farm employment and deriving income from off-farm activities.
42. The omitted category is Dongyang county in the interior, the least developed in the sample.
43. b - 1) to give the percentage change in the dependent variable caused by one unit change in the independent variable.
44. William L. Parish, Xiaoye Zhe and Fang Li, "Nonfarm work and marketization of the Chinese countryside," The China Quarterly, No.143 (1995), pp. 697-730
45. and 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.
46. Kung, "Off-farm labor markets and the emergence of land rental markets in rural China" and Zhang, Ma and Xu, "Development of land rental markets."
47. A technical note: These farm-operation variables may be jointly determined with the dependent variable by some unobserved variables - such as farming skills - giving rise to endogeneity in the model. I therefore do not rely on this model to interpret the effect of land markets on farm income, but only use it to examine the effect of land holding. What may alleviate this concern of endogeneity, however, is that the unobserved variables that may jointly affect income strategy and the dependent variable, such as farm skills, can be captured by the household type variables.
48. Because of the right skewed distribution of farm size, its natural log was used. Since the dependent variable is also log-transformed, the coefficient for the log-transformed farm size variable can be interpreted as the percentage change in household farm income resulting from 1% change in farm size.
49. Zhang, Ma and Xu, "Development of land rental markets.
50. The literature on this topic is vast. For some representative examples, see Parish et al., "Nonfarm work and marketization of the Chinese countryside"; James Kai-sing Kung and Yiu-fai Lee, "So what if there is income inequality? The distributive consequences of nonfarm employment in rural China," Economic Development and Cultural Change Vol. 50, No. 1 (2001), pp. 19-46
51. and Andrew G. Walder, "Income determination and market opportunity in rural China, 1978-1996," Journal of Comparative Economics, Vol. 30, No. 2 (2002), pp. 354-75.
52. On regional inequality, see Yehua Dennis Wei, "Multiscale and multimechanisms of regional inequality in China: Implications for regional policy," Journal of Contemporary China, Vol. 11, No. 30 (2002), pp. 109-24 and Khan and Riskin, "China's household income and its distribution." On effects of migration on rural inequality,
53. see C. Cindy Fan, "Rural-urban migration and gender division of labor in transitional China," International Journal of Urban and Regional Research, Vol. 27, No. 1 (2003), pp. 1-24 and Lei Guang and Lu Zheng, "Migration as the second-best option: Local power and off-farm employment," The China Quarterly, No. 182 (2005), pp. 22-45. On gender inequality, see Lou, "Settlement of rural women affected by land requisitioning."
54. Khan and Riskin, "China's household income and its distribution," p. 364.
55. One estimate, Brandt et al., "Land rights in rural China," puts the loss caused by misallocation of land across households at 8% of median household income for medium-sized farms and nearly 10% for small farms.
56. However, if household labour is already fully utilized, then increasing farm size - but not to the point that allows mechanization - will not bring significant improvement in labour productivity. I am indebted to a reviewer for this point.
57. Alan de Brauw, Jikun Huang, Scott Rozelle, Linxiu Zhang and Yigang Zhang, "The evolution of China's rural labor markets during the reforms," Journal of Comparative Economics, Vol. 30, No. 2 (2002), pp. 329-53.
58. Zhang, Ma and Xu, "Development of land rental markets."
59. Khan and Riskin, "China's household income and its distribution," p. 363.
60. Rozelle, Huang and Otsuka, "The engines of a viable agriculture," also find from a 2003 national representative survey that land markets tend to enhance both efficiency and equity. That study, however, is not based on regression analysis.
61. Simon Kuznets, "Economic growth and income inequality," American Economic Review, Vol. 45, No. 1 (1955), pp. 1-28.
62. Ivan Szelenyi and Eric Kostello, "The market transition debate: Toward a synthesis?" American Journal of Sociology, Vol. 101, No. 4 (1996), pp. 1082-96.
63. Kuznets, "Economic growth and income inequality," p. 18.
64. See, for instance, Karl Polanyi, The Great Transformation: The Political and Economic Origins of Our Time (Boston: Beacon Press, 1944).
65. Andrew G. Walder, "Markets and inequality in transitional economies: toward testable theories," American Journal of Sociology, Vol. 101, No. 4 (1996), pp. 1060-73.
66. Khan and Riskin, Inequality and Poverty in China.