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Land Grab Here and Real Estate Market There

Matthew Erie
Cornell U

On March 16, 2007, the Fifth Plenary session of the Tenth National People’s Congress (NPC), the main legislative body of the People’s Republic of China (PRC), passed a Property Law which will confer private property rights for the first time since the founding of the PRC. The Property Law follows a decade-long debate and a rare six readings by the NPC as to the place of private property rights in the post-socialist country.

While political elite debate for or against the Property Law, it is questionable whether the new law will address the most pressing cause of social unrest in China today—illegal land takings and land disputes. As such, the legislation has implications for the nearly 800 million farmers in China.

Fazhi Faith in a Weberian World
Since 1978, which marked the commencement of the reform era, the PRC has seen a turn to the “rule of law” (fazhi) and a “socialist market economy” in a massive state-led project of modernization. Reforms have seen record-setting results. Over the past 30 years, China has outpaced all other countries in its economic growth, with 2006 growth showing a decade high of 10.7% with little inflation while attracting direct foreign investment at a rate that is second only to the US. The drive to modernize, however, has come at significant cost as the country faces extreme inequality in distribution of income, uneven development between the eastern seaboard and the inland interior, and widespread disparity in standard of living between urban cores and the countryside.

The regime has positioned legislation as the corrective to social and economic inequalities. The Property Law follows a long list of legislation passed over the last two and a half decades. Marxist-Leninist ideology and the charismatic leadership of Mao Zedong, the founder of the Chinese Communist Party, have, in the reform era, given over to a Weberian view of law grounded in the rational-legal authority of the post-reform government. Zhu Suli, dean of Peking University Law School, remarks that law in today’s China is imbued with a kind of “public faith.” Fazhi, however, serves more as an ideology of Party-state legitimacy than as a legal evolution of and for the Chinese population, the majority of whom are farmers.

Post-Socialist Transitional Economies
Much of the deliberations on the Property Law have focused on the sensitive issue of land takings. Currently, the state owns all urban land and the agricultural collective owns all rural land. Farmers are given usufruct rights to the land via contracts for a duration of 30 years. According to relevant sections of the PRC Constitution and applicable laws, the agricultural collective owns all rural land, but the state can expropriate land from the farmer in the name of “public interest” with “adequate compensation.”

Despite a framework of prohibitory laws, the past several years have seen an increase in illegal takings. While “public interest” remains undefined, local governments often collaborate with private commercial developers to seize land in the name of the state and then sell it to developers for a windfall profit. Under current real estate law, rural land does not have value but once the state expropriates land, it accrues market value and can be conveyed as a commodity. Further, during most state development projects, farmers are not compensated for loss of land.

Consequently, the Ministry of Public Security reported in January 2006 that there were 87,000 protests and other “mass incidents” related to land loss in 2005 which was an increase of 6.6% from 2004 and 50% from 2003. A report from the Ministry of Labor and Social Security stated that 40 million farmers lost their land over the past decade due to urbanization and another 15 million will suffer the same fate in the next five years.

Not unlike American law which developed alongside industry in the late 19th and early-20th centuries, Chinese law is designed to secure and maximize the wealth of a new class of entrepreneurs. Moreover, the modernization drive, consisting of the twin engines of law and industry, is defined against rural culture.

Elite Political Discourse
Since the first draft of the Property Law was submitted to the NPC in 2002, members of the PRC Congress and academia have formed two camps: the neoliberals and the New Left. The former claim that private property rights are vital to provide legal guarantees and incentives for marketization. They further claim that the Property Law makes provisions to provide greater security for land tenure and farmers’ land use contracts. The latter counter that the draft will not increase social mobility but rather legitimize social stratification and exacerbate inequality. Moreover, they argue the draft conflicts with the constitution which holds collective ownership of property as sacred and inviolable. They claim that privatization will create a new land-owning class that is an anathema to socialism.

China’s modernization project extends as far as Kasghar (Xinjiang Province), the westernmost city of mainland China. Here, against a backdrop of quick-and-ready construction and frenetic urbanization, Uyghur farmers transport their goods to be sold at the Sunday bazaar. Photo courtesy of Matthew Erie

While the draft contains specific provisions to protect farmers’ contract rights, it is unlikely the Property Law will in itself alleviate social unrest caused by land grabs. Under the draft, private property rights can be conveyed by state action only and farmers occupy the weakest purchasing position to access such land. Moreover, it is often their farmland, the collective-owned land to which they have use rights, that is converted to urban land via state requisition. It is most likely that faith in legislation alone will not provide secure land tenure and end violence in the countryside. Rather, political reform at the local level in conjunction with legal reform can provide central government supervision and authorization for local governments’ land takings.

The Materiality of Land
Neither side of the debate in drafting the Property Law seems attuned to the reality of China’s farmers. The pro-marketization policies of the neoliberal favors the accumulation of wealth in the hands of a few while the New Left harkens back to socialism of the Soviet era that has been bypassed by nearly 30 years of rapid social transformation.

In many respects, however, China is still an agrarian state. Land tenure is important not only in the economic capacity of means of production, but it is immanent in the process of reproducing rural culture. While the reform era regime has prioritized growth over equity, it may be that a property rights regime that safeguards farmers’ rights to land will mitigate the increasing violence in the countryside, surely the greatest threat to Chinese “modernization.”

Matthew Erie is currently a PhD candidate in anthropology at Cornell University and a second-year law student at the University of Pennsylvania Law School, where he is conducting research on China’s emergent property regimes. The author can be reached at mse22@cornell.edu.