Securing Land Rights for Chinese

Farmers: Results and Implications

from a 2008 Nationwide Survey

Roy Prosterman Zhu Keliang

A Presentation at the Cato Institute

April 6, 2009
Benefits of Secure, Long-term
Land Rights

Investment in land

Increased and diversified

production

Growth of farm incomes

Much higher levels of

consumption of goods and
services
Success Story Across Taiwan Strait

Taiwans average annual rice yields jumped 60

percent and farm income 150 percent in the
decade following the successful land to the
tiller program of 1949-53.

Secure and marketable land rights provided the

capital that enabled farmers to transform
themselves into entrepreneurs and consumers.

South Korea and Japan enjoyed similar

successes in their countrysides following land-
tenure reforms after World War II.
Rural Chinas 750 Million People
Lag the Cities Badly
The worsening rural-urban income disparity (1: 3.33)

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URBAN RURAL
A Brief History of Land Reform in
Modern China
1949-1956: individual farming, with full private
ownership to farmers
1956: introduced collective farms and vast famine
ensued
1979-1984: break-up of collective farms with limited
use land rights to farmers, resulting in major
increases in grain production and income
But farmers land use rights were insecure
(readjustable) and short-term
Leading to measures to boost farmers security
A 1993 policy extended farmers use
rights to 30 years, which was written into
laws in 1998 and 2002.
The 2007 Property Law further bolsters
the formal security of land rights
The Fourth Nationwide Survey on
Farmers 30-year Land Rights
Jointly done in mid-2008 by RDI, Renmin University
(Beijing), and Michigan State University.
1773 rural households in 1656 villages of 17
provinces.
 Incomplete Issuance of Land Documents

59% of rural households have been issued

contract, certificate, or both
But 41% still lack any document
Of the issued documentation, the vast majority
fails to record wifes name as equal right-holder
 You May Farm the Land for 30 Years
Or Until a Land Readjustment

Since 30 year rights introduced, 34% of villages

have carried out readjustments (or re-
allocations) of farmers landholdings, vast
majority of them illegal

But the trend may be slowing down:

In our 2001 survey, figure was 18%
In 2005, figure was 30%
So 34% in 2008 suggests the pace of
new readjustments is slowing
 You May Farm the Land for 30 Years
Or Until a Land Taking by State
29% of farmers say that their villages have
experienced a land taking.
On average, the per-hectare compensation paid
to collectives is six times than what is paid to
land-losing farmers
More than 2/3 of farmers were dissatisfied with
compensation
Poor Awareness of Good Laws and
Policies

64% have heard of the

2002 Rural Land
Contracting Law

39% have heard of the

campaign to restrict land
takings for non-
agricultural purposes
 The Emerging Land Market

About 15% of farmers have transferred out

land rights.

Only a minority of transactions (37% for

transfers out) involve compensation; but for
transfers that involve cash payment, rent levels
are substantially higher than in 2005.

Capitalized at 5%, this flow of rents to farmers

in market transactions would imply a value of
about $10,700/hectare, or potentially $1.3
trillion for Chinas total farmland. These are
encouraging, but still early signs of dead
capital coming to life.
 When Rights are Secure, Farmers invest

Almost one-quarter of farmers have now made

one or more of six named long-term
investments in their land.

Investments made per 100 households per year

0
1994-1997 1998 1999-2002 2003-2006 2007-2008
 When Rights are Secure, Farmers invest

The correlation between investments and

possession of land documents:
The rate of investments made by
farmers without any document: 21%
The rate of investments made by
farmers with both contract and
certificate: 31%

Local publicity of land rights is also

correlated to investments made
 Measures Needed Now to Improve
Farmers Land Rights and Jump-Start the
Rural Economy

Ride on the momentum created by recent

policy announcements that farmers land rights
will not only be for 30 years, but also will
remain unchanged for a long term, moving
closer to perpetual rights

The implementation of law and policy on the

ground is key. We see at least six such
measures as having high priority
1. Allow automatic renewals of the
present 30-year term

The best way of embodying the new policy

into law is to make the present 30-year term
automatically and repetitively renewable

the 2007 Property Law already allows

renewal according to national law;
pending revision of the Land Management
Law can become the national law referred
to.
2. End all Land Readjustments

If long term without change means

anything, it must be interpreted as long
term without readjustments and written
into formal law.

All of the worlds modern and

most productive agricultures --
including small-farm agriculture
as in Taiwan and South Korea -
- operate without any such
mechanism as readjustments.
3. Publicity, Publicity, Publicity
Empower farmers with knowledge through
grassroots publicity
Also consider legal aid and education

RDI has recently

established Chinas first
barefoot lawyer
program, a Legal Aid &
Education Center in
Guangxi, exclusively
devoted to the protection
of farmers land rights
4. Issue Land Documents to Farmers
About 80 million farm households (over
40%) still dont possess any kind of
documents, and accordingly their rights are
made temptingly susceptible to violations
and abuses

Set realistic
goals to get
documents issued
and hold local
officials
accountable
5. Reform the Land Takings Regime

Greatly improve compensation standards

and ensure fair compensation is paid
directly to affected farmers

Improve procedural safeguards and

transparency
6. Assurance for Womens Land Rights

Despite legal equality of such rights,

womens land rights are typically not
referred to in land documents
Record both names in the new contracts
and certificates to be issued
 The Question of What If

Starbucks: 340 stores in China, 10% of its

global sales

Microsoft: $700 million in revenue from China

in 2007

Boeing: sold about 1,000 Boeing planes to

China so far. Boeing predicts China will buy
another 3,500 planes in the next 20 years

General Motors: has been the top car-seller

for five consecutive years in China and sold 1.1
million new cars in 2008
 Imagine what an increase in income for 750
million people, when given secure land rights,
would mean for the global economy?

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URBAN RURAL
Securing Land Rights for the Worlds Poorest

Headquarters Office: Seattle (Washington)

Field Offices: Beijing (China), Nanning (China),

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