5. Property Rights of Agricultural Land and Land Requisition System: A Major Reform Faced by Urbanization

Coase (1937, 1960), North(1990).

North (1990).

Barzel (1989), Libecap (1989a, 1989b), Eggertsson (1990), North (1990), Alston et al. (1996).

Cheung (2002).

For example, the State Council Development Research Center (SCDRC) predicts that China’s urbanization index will reach 60% by 2020.

The two laws will be abbreviated as LLCRA and LAL from here onwards.

“Article 34. The contractor shall have the right to make his own decision, according to law, on whether to transfer the rights to land contractual management and on the means of the transfer. “Article 10. The State protects the transfer of the rights to land contractual management, which is effected according to law, on a voluntary basis, and with compensation.”.

There is an exception to this Article, which will be quoted and analyzed later.

“A construction unit that wishes to use state-owned land shall get it by such means of compensation as assignment” (Article 54). “A construction unit that obtains right to the use of state-owned land by such means of compensation as assignment shall, in accordance with the rates and measures prescribed by the State Council, pay, among other charges, compensation for use of land such as charges for the assignment of land-use right, before it can use the land” (Article 55).

The public reports used in this section include: “Dengfeng City (Henan Province) Government intercepts compensation of nearly 10 million yuan for land acquisition” by Xinhua News Agency Zhengzhou, July 8, 2003; “Dengfeng, Henan decided to return the intercepted compensation for land acquisition” by China Youth Daily and Xinhua News Agency Zhengzhou, July 13, 2003; “Investigation on the land acquisition compensation by Dengfeng Railway” by Journalist CHEN Lei, Weekend, July 23, 2003; “The Henan shrinking compensation for land acquisition in Dengfeng” by CCTV Economic Half Hour, July 25, 2003; “Investigation on the farmers’ land acquisition compensation by Dengfeng Railway” by Journalists ZHAO Ping and DONG Zhaowu, China Business News, September 8, 2003.

1 mu = 666.67 m².

Ellickson (1993: 6).

For example, the 1998 LAL stipulates: “After the land requisition compensation and resettlement scheme is determined, the relevant local government shall make a public notice and draw opinions from the land-expropriated rural collective economic organizations and farmers.” (Article 48), and “the land-appropriated rural collective economic organization shall disclose the income and expenditure situation of the compensation fee for such expropriated land to its members, and accept surveillance” (Article 49).

The public reports used in this section include: “The Aftermath of Southeast Auto Town Land Acquisition” by Reporter ZHENG Xueqin, 21st Century Business Herald, June 30, 2003; “What Did the Farmers Gain from the Modernization of Qingkou Town” by Zhao Yan, Jiang Jiansheng, Chen Chunhua, etc., China Reform, December 8, 2003.

The public reports used in this section include: “The Intensified Dispute over Land Acquisition in Maichen Town, Xuwen County”, Jiao Huidong, Life Times, December 24, 1998; “The Pain of Losing Land: A Four-Year Review on the Dispute over Land Acquisition at Maichen Town”, Zhang Wen and Chen Yong, South Reviews, December 10, 2001.

On May 5, 1997, the State Land Administration issued a “Notice on Freezing Farmland Occupied by Non-Agricultural Construction Projects”, which stipulates to freeze the farmland occupied by non-agricultural projects for one year from April 15, 1997 to April 14, 1998. During this period, only the State Council has the authority to approve farmland for non-agricultural construction projects that have already been included in the annual asset investment plan of the state, or provinces/autonomous regions/municipalities and are in urgent need of construction. It was surprising and incredible that Zhanjiang Municipal Bureau of Land Resources ignored this notice, overstepped their authority and gave approval to the land for construction. The heads of the relevant departments of the bureau excused themselves in an interview in November 1998 by saying: “when we were at the job site, we saw that town government was not occupying any farmland. We didn’t know if they occupied the farmland for the project construction or not. But the application from them says it’s not farmland, so what we have approved is not farmland.

In fact, as early as October 1997, the Xuwen County Transportation Bureau opened a fruit and vegetable market in the western Maichen Town, which was quite able to serve as a fruit and vegetable distribution center. However, due to the obstruction by certain officials, this market stayed idle. When the reporter came here this time, he only saw cattle grazing at the empty “market”. Therefore, many villagers were outraged: “They (the town government) had no intention to build a fruit and vegetable market. Clearly, they only wanted to make money by speculation and selling the land!”.

The survey materials used in this section include: “Investigation on Nanhai Land Joint-Stock System”, LIU Shouying et al., SCDRC; Bledsoe and Prosterman (2000).

Guangdong Provincial People’s Government Document [2003] No. 51.

The public information used in this section include: “‘Land Revolution’ in Kunshan” by Cai Wei, the Bund Pictorial, June 2003; “Fully Leveraging Land Polices is the Most Powerful Secret for Villages in Shanghai with Output of over RMB 100 Million”, HE Lidan et al., the Bund Pictorial, August 22, 2003.

The “old works” mainly refer to the author’s special column “Farmer’s Income is a Series of Events” in the 21st Century Business Herald, 2001; later the article was included in Income is a Series of Events, Arcadia Press, 2003 and China Development Press, 2004.

Alchian (1965: 816–829).

See Chen Xiwen’s speech at the press conference on the release of Document No. 1 of 2004.