Economic Logic of Development and Value Basis of Reform of China’s Rural Land System

Yalan HE

Central University of Finance and Economics, Beijing 100081, China

Abstract The historical changes of China’s rural land system show that the allocation of rural land rights, as the most important agricultural production relationship, has a huge effect on the development of productivity. The essence of the rural land system is the allocation of rights. At this stage, China’s agricultural development is facing a series of challenges such as agricultural modernization, food security issues and arable land issues, and the reform of the rural land system is imperative, of which the focus is still on the enrichment and deepening of rural land rights. Based on this, the decisive role of the market in the allocation of rights is introduced and brought into play. While striving for development and efficiency, attention must also be paid to the security function and fair value of rural land.

Key words Rural land system, Rights allocation, Security function, Fair value

1 Introduction

The rural land system of China, as an ancient agricultural country, is in a crucial position in the agricultural development process, and the allocation of rural land rights is the essence of the rural land system. Since the reform and opening up, China’s economy and society have developed rapidly, and socialist construction has achieved gratifying achievements. However, China’s rural land development still faces a series of challenges such as agricultural modernization, food security issues and arable land issues. Therefore, reform of China’s rural land system is imperative. The focus is on the enrichment and deepening of rural land rights. On this basis, the decisive role of the market in resource allocation will be introduced and brought into play. While striving for development and efficiency, attention should also be paid to the security function and fair value of rural land. During the reform process, the rural land system must not only achieve surface fairness, and instead, it should further achieve sustainable fairness. The realization of this kind of fairness mainly relies on the system to create a platform for farmers to live and develop fairly, so that they can obtain the corresponding development conditions with their own capabilities. Security and fairness are the embodiment of the socialist nature of China. The development and efficiency of agricultural production must not be at the expense of security and fairness. This has a bearing on the well-being of the people and the orderliness and stability of the society, and is the value basis of China’s rural land system reform.

2 Economic logic of development of China’s rural land system

The history of the development of China’s land system is a history of the allocation of rural land rights. In ancient society, the rights structure of the rural land system was a continuous development process. Farmers are the foundation of social development. States need to rely on farmers’ labor to support them. The rural land system is embodied in the allocation of rights between states and farmers. States maintain and consolidate the domination and promote the balance between agricultural productions through adjustment of rights. The gradual separation of ownership and use rights, the emergence of private ownership, and the continuous deepening of use rights have appeared in success. In modern society, the rights structure of the rural land system has gradually matured. The allocation of rural land rights is more for political and production purposes.

2.1 Allocation of rural land ownership and use rightsDuring the Xia, Shang and Zhou dynasties, all the land was owned by the kings. The monarchs enjoyed all rights to the land, including ownership and use rights. In order to promote the development of social productivity, the ancient emperors adopted a way that could not only retain the ownership of the land but also promote the direct integration of land and labor to deal with land issues. Thus, the enfeoffment system came into being. The land ownership was separated from the use right. The ownership belonged to the king, and the use right belonged to the aristocracies and village communities[1]. In the Spring and Autumn Period and the Warring States Period, the use of iron farm tools and the emergence of cattle farming had provided favorable conditions for people to reclaim wasteland. In order to expand their economic strength, the vassal states continued to reclaim wasteland and promote the development and management of private land to ensure that the states benefited from it[2]. In the two thousand years of feudal society after Qin Dynasty, there had always been two different types of land ownership, public land and private land. The ownership of the former belonged to the state, while the ownership of the latter belonged to individuals or families[3]. Land ownership had evolved from "unary" to "binary". The state allocated land to individuals, so that farmers could take root and reproduce on the land, the society could develop steadily, and the state could obtain interests through the collection of taxes. At the same time, macro-control measures were adopted to limit the excessive concentration of private land. With the further development of society and economy, the form of land use rights had also been diversified, and the lease system and the perpetual system appeared. In the development of land system, there is a law that does not follow people’s will, that is, once the land is occupied for a long time, it will inevitably lead to land private ownership and land merger[4]. At the end of feudal society, landlord’s land ownership had become the main form, and the content of use rights had been deepened. With the development of the landlord economy and tenant farmer economy, the division of land ownership had appeared. The renter and the tenant each had emphyteusis and superficies. Superficies can be surrendered in various ways[5]. Landlords had ownership of land; and tenants had use rights of land, which could be freely sold and transferred. Landlords had no right to ask who were cultivating the land, and instead, they only focused on collecting rent.

2.2 Rural land rights allocation and political purposesChina’s modern society is in a semi-colonial and semi-feudal era. The social situation is complicated and the struggle is fierce. The development of the rural land system includes inevitably consideration of political purposes. In the late Qing Dynasty, facing the stormy situation, in 1907, the Qing court formulated theDraftoftheQingDynasty’sCivilLaw, which established a land rights system and divided land rights into ownership and other property rights. The former included individual ownership and common ownership, and the latter included usufructuary rights and security rights. It also further distinguished the superficies, emphyteusis and easement, as well as mortgage, pledge and land debt, greatly enriching the content of the rural land system. The land rights were established in legal form. In 1910, theNewCriminalLawofQingDynastywas promulgated. It confirmed the supremacy of imperial power and the ownership of land by the emperor, but it no longer distinguished banner land, civilian land and minority land, treating all land equally[6]. As the previous differential treatment caused dissatisfaction from all walks of life, this could be regarded as a formally equal distribution of peasants’ land rights to alleviate social conflicts and continue the rule. In Republic of China, the government’s general idea of the land system was implemented in accordance with theThreePrinciplesofthePeopleproposed by Sun Yat-sen, that is, equalizing land ownership and approving land prices to allow farmers have their own land. A series of laws and regulations were issued. Thus, each farmer could freely exercise land rights and enjoy land benefits to alleviate the uneven distribution of land rights and heavy rents at the time. The purpose was to consider the development of agriculture, and more importantly to maintain social stability and win the support of peasants for the new government. However, although the land program represented by the radical bourgeoisie was revolutionary and advanced in its claims, the method it claimed to achieve this radical land programme was reformist, making it difficult to realize[7]. After Sun Yat-sen’s death, instead of inheriting the idea of equalizing land ownership, the Kuomintang government departed from its basic spirit, making contradiction between land ownership and land use increasingly acute. The land issue at this time was not only an economic issue, but also a social issue and a political issue[8].

At the same time, in the revolutionary bases, theJinggangshanLandLawandXingguoLandLawwere approved. The ownership of all land belonged to the government. The land was evenly distributed to the farmers according to the population. After acquisition of land, farmers’ enthusiasm for production and revolution was greatly mobilized, and Chinese Communist Party has also received enthusiastic support from farmers. After the outbreak of the Anti-Japanese War, in order to unit every force that could be united to resist Japan, the Central Committee of the Communist Party of China adopted the land policy that peasants payed rent and interest and landlords’ rent and interest were reduced. After the victory of the Anti-Japanese War, the Chinese Communist Party promulgated theOutlineLandLawofChinain 1947. The feudal land system has been completely abolished. Land is evenly distributed according to the population or population (half)+production members (half). Land will not be distributed to new born, and land of the dead will be not repossessed. Land registration began to be implemented to confirm farmers’ ownership of land[9]. This is the endowment of farmers’ personal liberation and land rights, and is determined by the class attributes of the Chinese Communist Party.

2.3 Rural land rights allocation and production purposesAfter the founding of new China, the development of China’s rural land system mainly revolves around the purpose of developing production. If the privatization of farmland property rights during the land reform period was a political need, the ensuing land collectivization is not only a political need but also an economic need. After the founding of new China, the beliefs of all parties reached a high degree of consensus, that is, to realize the prosperity of the country and the people as soon as possible, and transition to communism finally[10]. Farmer’s land ownership can no longer meet the requirements of production. On the one hand, the economic capacity of individual farmers is weak. They are unable to invest in agricultural production, and instead, they continue the development of agricultural production by their own manual labor without the advancement of technological progress. The efficiency of such small-scale farmers is still relatively low[11]. Individual farmers have limited production capacity, and they need to rely on collective power to increase productivity. On the other hand, at the time, China also faced the goal of developing industry like the Soviet Union, and it needed agricultural support. Stimulated by this purpose and demand of rapid development, China’s land rights have gradually moved from individual ownership to collective ownership. At first, people’s commune system was gradually formed. The original individual ownership was replaced by a highly centralized public property right, and the structural transformation of the unification of the "four powers" had been completely realized. However, this large and comprehensive organization form of property rights neither conforms to the characteristics of agricultural production such as scattered operation space, long production cycle and difficulty in measuring operation quality nor meet the reality that agricultural production methods are still very backward. The consequence is a serious disorder in the relationship of property rights. The administratively ordered and militarized production and organization form and the semi-supply and egalitarian distribution method make the property rights structure’s incentive function seriously insufficient[12], not only failing to achieve the expected production goals but also lowering the production efficiency.

Subsequently, the highly centralized model was adjusted, and rural land rights were appropriately decentralized. Rural land ownership of "three-level, brigade-based" was implemented. The land was collectively owned. All means of production and all public property were collectively owned without compensation[13]. However, this right allocation still had flaws. The influence of production brigades and communes on the structure of property rights was often implemented through administrative or economic interventions or restrictions on production brigades. The production brigades had no right to dispose of the land assets they own or fully autonomous right to use all the land they own, and the right to profit was also severely restricted or even violated[14]. The subject of agricultural production was separated from the subject of agricultural property rights, and the management and benefits of agricultural production were constrained by the communal organization system of "integration of government and society". This made it difficult for the farmers represented by production brigades to enjoy the rights to agricultural land. As a result, the enthusiasm for production was low, and the level of efficiency was also very low. Subsequently, China further explored the property rights structure to promote the development of agricultural production. The single system of land ownership by farmers and collectives was abolished. The ownership of agricultural land was separated from the right to use. The "family contract responsibility system" was gradually developed. Farmland was contracted to households. Collectives owned the farmland, and farmers enjoyed the right to use, which greatly aroused the enthusiasm of farmers for production. Farmers obtained the full share of the marginal rate of return for their efforts, and supervision costs were also saved[15]. The professionalization, commercialization, socialization and modernization of agricultural family management, the accumulation of capital, the advancement of technologies, and moderate expansion of scale were all promoted[16].

3 Value basis of China’s rural land system reform

Farmland is not only the foundation of economic production but also the guarantee of farmers’ lives. The situation of agricultural production is forcing the reform of the rural land system, focusing on promoting development and improving efficiency. In addition, it must be clearly realized that farmland means more than benefits to farmers, and it is the foundation for farmers’ lives. Therefore, in the context of vigorously advocating the reform of the rural land system, it is believed that the value basis of the reform of China’s rural land system must not be ignored, security and fairness. This not only has the connotation of economic value concept, but also is based on the consideration of political and social factors. It has a bearing on the vital well-being of people’s lives and the stability and order of social structure.

3.1 Security function of China’s rural land system reformLand is the basic guarantee for the survival and living of farmers, and is the most reliable means of production that farmers can control. The security function of farmland is particularly precious. China is a socialist country, the people are the masters of the county, and the workers-peasants alliance is the foundation. China’s rural land reform should have political consideration for farmers’ security. In order to realize the security value of the reform of China’s rural land system, the farmers’ security should be divided into the following levels. First, on the basis of China’s existing household contract responsibility system, the basic rights of all farmers to existing farmland should be met. There should be no difference in nature or function of such rights, which should be endowed around the identity of farmers. Second, institutional guarantees should be given to farmers’ development aspirations in the reform of rural land, and it must never force the peasants off the land. For farmers who voluntarily leave the land, it should be guaranteed that they receive economically equivalent compensation and benefits for leaving the land and the necessary help and support in career development. Third, with the goal of integrated urban and rural development, the recognition of farmers’ status must be further ensured, and social insurance and welfare benefits must be effectively maintained. Fourth, institutional considerations are needed for farmers with production and living difficulties to guarantee their basic production and lives. Thus, the strong social value and political advantages of the socialist system are reflected. Fifth, the exercise of farmers’ rights must be guaranteed. There must be unimpeded channels to respond to their demands and reasonable ways to solve problems. It is necessary to enrich the rights of farmers and maintain them through the system.

3.2 Fair value of China’s rural land system reformWhat everyone in the household contract responsibility system has achieved is just the starting point. However, due to the shortcomings of the land property right system, in the process of land requisition led by urbanization, ensuring fair treatment of farmers is an important standpoint. Therefore, the reform of the rural land property rights system is to solve the issue of fairness in urban and rural land rights rather than to solve the issue of efficiency. In this sense, solving this biggest issue of fairness will inevitably promote the improvement of land efficiency[17]. Fairness and efficiency are two twin brothers. They are accompanied by dialectical unity. As mentioned earlier, a major driving force for China’s rural land system reform is efficiency. But while developing efficiency, the issue of fairness cannot be ignored. Fairness is the inalienable right given to farmers by the existing collective land ownership. Since membership guarantees everyone equal rights to collective land, there is no reason to blame farmers for their demands for fairness[18]. The rural land system should not only achieve surface fairness but also achieve sustainable fairness in the reform. The way to achieve this fairness is mainly to rely on the system to create a platform for farmers to live and develop fairly, and to obtain the corresponding development conditions with their own capabilities.

It includes the following levels. (i) Fairness in the starting point of farmers’ development. The reform of the rural land system should put farmers on the same starting line at the starting point. The enjoyment of rights is not differentiated by factors such as wealth, knowledge,etc. All farmers have the right to use farmland to meet their own survival and development. (ii) Fair conditions for farmers’ development. The reform of the rural land system is not to adjust agricultural production relations in isolation. It must create more supporting systems. Farmers have the right to choose the development path according to their own wishes, as well as the right to obtain the resources (e.g. financial services, agricultural machinery services and technical services) necessary for development through society. Development conditions ca vary from time to time. After all, the development level varies from region to region. This distinction cannot be set for individual circumstances. The conditions must be fulfilled fully and fairly. As for the actual application, it is not the content of the institutional arrangement. (iii) Fair development in urban and rural areas. China’s current urban-rural development system has resulted in cities being able to obtain more resources in construction and development. Relying on the advantage of resources, the gap with rural areas has been further widened. The reform of the rural land system should reasonably eliminate this gap to allow the rural areas to enjoy resources fairly. This kind of fairness is not simply fairness in terms of conditions. Instead, under the assistance of the decisive role of the market and the guidance of the government’s macro control, the countryside gains its own development advantages.