Caixin
Feb 26, 2013 07:08 PM

Urbanization of the People Must Follow That of the Land

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Urbanization has been a hot-button topic since the Communist Party's 18th National Congress in November, as it has been identified as the most important public policy direction for the new government.

What policy-makers noticed is that urbanization might hold the key for the next phase of development. In 2011, the country's urbanization rate hit 51.27 percent. This means that for the first time in history, more of China's population lives in cities than in rural areas.

The core of urbanization lies not only in large-scale city building and expansion of industrial parks, but also in the great migration of people from farm villages into cities.

In 2011, the total number of migrant workers moving into cities hit 253 million. The reasons are simple: There are more opportunities, a more comfortable life, better education, better hospitals, more convenient communications and more cultural diversity in cities. And there is more money, too. The Chinese rural per capita income in 2011 was 6,977 yuan, much lower than even the per capita disposable income in urban areas that year, 21,810 yuan. For these reasons, most rural migrants never plan to return to their villages.

Without plans to turn rural workers into urban citizens, urbanization can only become yet another round of massive land grabbing and city-building that has happened around the country for the last decade. This will create more people without roots who can neither integrate with their new urban environment nor return to their village. The next phase will no longer be only urbanization of the land, but of people.

Locked Land

Many migrants enter cities as low-end laborers. The first thing they lack upon arrival is enough money to set themselves up in the city. Their most important possession – land – cannot be used in their process of turning into an urban dweller.

Under the current land system, farmers have use rights of two kinds of land. The first is land contracted out for agricultural production, and the second is land needed to construct a homestead. The ownership for both of these parcels is held by the village collective.

The Contracting of Rural Land Law of 2003 for the first time gave farmers the legal guarantee of contracted use right for 30 years, and it also allowed them to transfer contracted land, transfer titles of land and rent land.

On the other hand, the sale and rental of homesteading land has long been legally restricted. Only if the village collective agrees can a farmer transfer his title, but then only within the village, never on the open market. The property rights of Chinese farmers have thus been confined within their land.

For farmers living near urban areas, the value of their land has grown as cities have expanded. The single method available to these peasants to legally profit from their land is to sell it to the government.

The law stipulates that any land demarcated for urban expansion is the property of the state. Only after peasant land has been expropriated by the government can commercial properties been built upon. In this monopolistic market, city governments buy land cheap and sell high, making massive profits in the transaction.

The low remuneration for expropriated land has come under intense scrutiny of late.

Huang Xiaohu, vice chair of the China Land Science Society, said that when the government takes agricultural land, whether it is slated for a construction of a building for public services or for commercial projects, its original users are compensated based on a multiple of the agricultural output of the plot, not the market price of the land. Prices are fixed by the government, and peasants have no say.

Excessively low compensation for land has become the source of heated conflict. In 2011, approximately half of all collective incidents were set off by local governments forcing people off of their land.

Excessively low land compensation costs have also been a cause of the low efficiency of urban development.

Huang said that as the low costs of expropriating rural land made the government unwilling to tackle urban land with development potential, which involves more expensive spending on relocation. The result is expanding cities – the per capita land area in Chinese cities was 134 in 2008, or 14 percent larger than in 2008.

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