China's Rural Economy and the Rule of Law

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<ul><li><p>This article was downloaded by: [University of Hong Kong Libraries]On: 10 October 2014, At: 14:28Publisher: RoutledgeInforma Ltd Registered in England and Wales Registered Number: 1072954 Registeredoffice: Mortimer House, 37-41 Mortimer Street, London W1T 3JH, UK</p><p>Survival: Global Politics and StrategyPublication details, including instructions for authors andsubscription information:http://www.tandfonline.com/loi/tsur20</p><p>China's Rural Economy and the Rule ofLawElizabeth PondPublished online: 29 Sep 2011.</p><p>To cite this article: Elizabeth Pond (2011) China's Rural Economy and the Rule of Law, Survival:Global Politics and Strategy, 53:5, 89-106, DOI: 10.1080/00396338.2011.621635</p><p>To link to this article: http://dx.doi.org/10.1080/00396338.2011.621635</p><p>PLEASE SCROLL DOWN FOR ARTICLE</p><p>Taylor &amp; Francis makes every effort to ensure the accuracy of all the information (theContent) contained in the publications on our platform. However, Taylor &amp; Francis,our agents, and our licensors make no representations or warranties whatsoever as tothe accuracy, completeness, or suitability for any purpose of the Content. Any opinionsand views expressed in this publication are the opinions and views of the authors,and are not the views of or endorsed by Taylor &amp; Francis. The accuracy of the Contentshould not be relied upon and should be independently verified with primary sourcesof information. Taylor and Francis shall not be liable for any losses, actions, claims,proceedings, demands, costs, expenses, damages, and other liabilities whatsoever orhowsoever caused arising directly or indirectly in connection with, in relation to or arisingout of the use of the Content.</p><p>This article may be used for research, teaching, and private study purposes. Anysubstantial or systematic reproduction, redistribution, reselling, loan, sub-licensing,systematic supply, or distribution in any form to anyone is expressly forbidden. Terms &amp;Conditions of access and use can be found at http://www.tandfonline.com/page/terms-and-conditions</p><p>http://www.tandfonline.com/loi/tsur20http://www.tandfonline.com/action/showCitFormats?doi=10.1080/00396338.2011.621635http://dx.doi.org/10.1080/00396338.2011.621635http://www.tandfonline.com/page/terms-and-conditionshttp://www.tandfonline.com/page/terms-and-conditions</p></li><li><p>According to the statistics, Pan Kebiao should be unhappy. As a Fengyang county peasant, he is at the wrong end of Chinas highly inequitable distri-bution of wealth. Urban Chinese now earn, on average, 3.23 times as much as Pan and his 700 million fellow farmers, a disparity on a par with the United States, Latin America and Russia, and a stark contrast with more egalitarian Europe and Japan.1 </p><p>Yet Pan is content, even ebullient. The decollectivisation of Chinas farm-land that started surreptitiously in Fengyang county in Anhui province 33 years ago has let him grow and sell more wheat and rice, trade in his water buffalo for a small tractor to plow his eight-tenths of a hectare, and even, this past January, buy a Xiali car and earn extra money as a odd-job driver between planting and harvest. He is not sure whether he actually possesses the paper contract for his renewable and transferable 30-year lease from the local government, but he has no doubt that the land rights will be his to bequeath to his niece. Nor does he worry about urban seizure of contiguous cropland in this still predominantly rural county.2 </p><p>Qian Yunhui, by contrast, was extremely discontented with the lot of the farmers he was responsible for as a local Communist Party leader. His village of Zhaiqiao was too close to urban sprawl. While Chinas rapid industri-alisation had made it the worlds largest manufacturer and second-largest economy, it also spurred land grabs by hard-pressed city administrations that suddenly had to provide apartments, roads, water and electricity for </p><p>Chinas Rural Economy and the Rule of Law</p><p>Elizabeth Pond</p><p>Elizabeth Pond is a Berlin-based journalist and author. </p><p>Survival | vol. 53 no. 5 | OctoberNovember 2011 | pp. 89106 DOI 10.1080/00396338.2011.621635</p><p>Dow</p><p>nloa</p><p>ded </p><p>by [</p><p>Uni</p><p>vers</p><p>ity o</p><p>f H</p><p>ong </p><p>Kon</p><p>g L</p><p>ibra</p><p>ries</p><p>] at</p><p> 14:</p><p>28 1</p><p>0 O</p><p>ctob</p><p>er 2</p><p>014 </p></li><li><p>90 | Elizabeth Pond</p><p>their burgeoning populations. Yueqing town officials expropriated farm-land belonging to Zhaiqiao villagers in 2004 and built a power plant on the site without, according to local media and bloggers, compensating peasant leaseholders. For six years Qian objected, petitioning local and national offi-cials and organising peasant protests. He served two stints in jail, and in December 2010 he was killed in, according to local media, a staged truck accident.3</p><p>Pan and Qian illustrate the positive and negative impact of Chinas meteoric economic rise on the peasants who still constitute a majority of </p><p>Chinas 1.3 billion people, and their experiences reflect, in microcosm, Chinas tentative steps away from reliance on personal power connections toward, perhaps, the rule of law as the arbiter of social and economic conflict. Not that premier Deng Xiaoping intended such legal consequences three decades ago when he launched his pragmatic market reforms in Fengyang county. Those </p><p>consequences came after his death, from the dynamic he started. First came a rural miracle that lifted an astounding half a billion peas-</p><p>ants out of extreme poverty, and then the better-known miracle of high-rise Shanghai and Beijing, with their new urban billionaires and a middle class numbering in the hundreds of millions.4 Along the way came a progressive codification of rural land-rights law, with fledgling lawyers emerging to contest illegal municipal expropriation of cropland, though they sometimes paid for their audacity in prison. </p><p>The decollectivisation of the planned economy soon brought the dis-parity between rich and poor to one of its lowest levels in Chinese history, through a fast-rising standard of living rather than the equality by famine earlier wrought by Mao Zedongs rapacious confiscation of grain. Land-rights reform cut Chinas rate of extreme poverty from 65% to 4% between 1981 and 2007, and a realistic target was set of full elimination of want by 2015 in what World Bank economists praised as the most rapid poverty reduction in human history.5 Dengs grant to farmers of secure tenure on their plots not only gave them a source of discretionary income, but also made China the worlds largest agricultural producer by the end of the </p><p>They paid for their audacity in prison</p><p>Dow</p><p>nloa</p><p>ded </p><p>by [</p><p>Uni</p><p>vers</p><p>ity o</p><p>f H</p><p>ong </p><p>Kon</p><p>g L</p><p>ibra</p><p>ries</p><p>] at</p><p> 14:</p><p>28 1</p><p>0 O</p><p>ctob</p><p>er 2</p><p>014 </p></li><li><p>Chinas Rural Economy and the Rule of Law | 91 </p><p>twentieth century.6 Now it is playing a pioneering role in establishing rule of law in a land that is far more used to instrumental, top-down rule by law, as Communist officials term it in English.</p><p>Maos legacy and Dengs reforms The Communists won their civil war with the Nationalists in 1949 in part by promising to dispossess big landlords and give peasants private owner-ship of equal plots. As the party fulfilled its promise, the average farmers income rose by 85%, and harvests by 70%, with total grain production in 195657 amounting to close to 200m tonnes.7 </p><p>At that point the experiment ended abruptly; the Communists re- appropriated land to form huge communes of 4,000 families each. The states monopoly buyer even confiscated seed grain and family food stores, induc-ing the worst man-made famine in history. From 1958 to 1962 at least 45 million peasants died prematurely. Excess deaths reached 6% of the popula-tion in Anhui province and a horrifying 25% in Fengyang county, as militias slaughtered starving peasants who dared to eat rice in their paddies (like locusts, eyewitnesses said) before grain collectors could confiscate it. Some 20m peasants nationwide moved, illegally, to the better-fed cities, but the vast majority were chained to their villages by the hukou registration system that barred them from moving their residence.8</p><p>After Mao died in 1976, it took Deng two years to defeat his ultra-left rivals and break up collective farming. Deng deliberately began his opening up to market reforms in the countryside, endorsing a clandestine meeting of 18 peasants in Xiaogang village in Fengyang county in 1978. Risking accusations of counter-revolution and their very lives, the 18 affixed their thumbprints to an agreement to re-divide communal farmland into individ-ual plots under household contracts, according to the reverent narrative posted in the Xiaogang museum. At the time, Chinas main export was still hogs bristles.</p><p>The pilot was deemed a success. In 1979 the Chinese Communist Party Central Committee stopped labelling landlords, rich peasants and their children enemies of the people and substituted the idea of economic development for the principle of class struggle.9 In 1981/82 the Household </p><p>Dow</p><p>nloa</p><p>ded </p><p>by [</p><p>Uni</p><p>vers</p><p>ity o</p><p>f H</p><p>ong </p><p>Kon</p><p>g L</p><p>ibra</p><p>ries</p><p>] at</p><p> 14:</p><p>28 1</p><p>0 O</p><p>ctob</p><p>er 2</p><p>014 </p></li><li><p>92 | Elizabeth Pond</p><p>Responsibility System was adopted nationally, a tacit acknowledgement of the success of smallholding land reform in Japan, Taiwan and South Korea after the Second World War. Private property remained taboo, but new guarantees of tenure of long-lease land rights would grow over the years to approximate private property rights.</p><p>With this, the Chinese economy began its three-decade run of 10% annual growth. Grain production rose 8.6% per year and soon returned to 1950s levels. By the end of the twentieth century Chinas yields per hectare were well above the world average, with wheat yields higher than the US average.10</p><p>In a way, Chinas stunning industrialisation, compressing a process that took the West one-and-a-half centuries into one-and-a-half generations, is less surprising than this incipient bridging of the Middle Kingdoms </p><p>urbanrural divide. In the countryside as well as the city, Beijings economic rise has defied Western development orthodoxies. It has demonstrated that long-term lease-hold of state-owned cropland can respond to market incentives as if it were private property. It showed, as Harvard sociologist Martin King Whyte put it, that life-long communist bureaucrats could successfully direct the transformation from an increasingly inefficient cen-</p><p>trally planned system to a vibrant market economy.11 And it has spurred a rights-awareness movement that could be a precursor to eventual rule of law, especially with the nearby example of thriving democracy in Taiwan.</p><p>Deng, a wily peasant and survivor of lethal party infighting, began both economic and political adaptations to the requirements of a modern economy. The experiment of household responsibility in Fengyang county set the pattern for the trial-and-error procedure commonly identified with the Chinese aphorism of crossing the river by groping for stepping-stones.12 The shifts he wrought in the party structure and approach perpetuated the reform process after his departure from the political scene. In a bloodless displacement of elites, old ideologues were eased out by term and age limits on senior officials; bringing younger, better-educated professionals into the party bureaucracy; and stimulating an informal funnelling of alternative policy options into the halls of power by think-tank mandarins.13 </p><p>Beijings rise has defied development orthodoxies</p><p>Dow</p><p>nloa</p><p>ded </p><p>by [</p><p>Uni</p><p>vers</p><p>ity o</p><p>f H</p><p>ong </p><p>Kon</p><p>g L</p><p>ibra</p><p>ries</p><p>] at</p><p> 14:</p><p>28 1</p><p>0 O</p><p>ctob</p><p>er 2</p><p>014 </p></li><li><p>Chinas Rural Economy and the Rule of Law | 93 </p><p>The result could not have been more different from the post-Communist Russian evolution of a vertical power structure and top-down micromanage-ment. Instead, Deng re-moulded single-party governance to accommodate de facto decentralisation, competition between regional pilot projects before decisions on national programmes, and even, to some extent, dissenting voices on policy.</p><p>Extension of land tenureThe advance of individual land tenure, the centrepiece of Dengs rural reforms, was gradual. The first formal Central Committee policy document on agricultural land-use rights was only issued in 1984, after Dengs initial reforms had already lifted some 200m Chinese out of destitution and sub-stantially reduced the urbanrural gap to 1.8:1 from 2.5:1 in 1978, putting China firmly among the worlds more egalitarian nations such as Germany, Sweden and Japan.14 The document extended the tenure of farm families on their land for a period of 15 years during which their rights could not be terminated without their consent. It even gave lessees the formal (if unim-plemented) right to transfer their leasehold to others.</p><p>From the mid-1980s on, as rural economic growth decelerated and foreign investment flowed into the ShanghaiHong Kong corridor, the gap in income and standard of living between the nouveau riche urban coast and the hinterland again widened. By 2010 inequality had surpassed that of the United States.15 Yet farmers incomes and standard of living neverthe-less rose dramatically from their low base, while the land rights that assured their livelihood expanded incrementally. </p><p>In 1985, after a bumper 300m-tonne harvest convinced leaders that the countrys 7% of arable land could actually support its 1bn population, China eliminated obligatory production and sale of grain to the state. Beijing increasingly let the market set grain prices and raise farmers profits.16 Then, in 1993, despite Dengs retirement from politics the previous year, a party policy document extended agricultural leases to 30 years on expiry of origi-nal contracts. </p><p>In the mid-1990s, however, municipal land-taking was triggered as a side-effect of fiscal reform, as the central government reversed earlier allocations </p><p>Dow</p><p>nloa</p><p>ded </p><p>by [</p><p>Uni</p><p>vers</p><p>ity o</p><p>f H</p><p>ong </p><p>Kon</p><p>g L</p><p>ibra</p><p>ries</p><p>] at</p><p> 14:</p><p>28 1</p><p>0 O</p><p>ctob</p><p>er 2</p><p>014 </p></li><li><p>94 | Elizabeth Pond</p><p>of tax revenue, drastically cutting the share given to local administrations. This dried up the budgets of cities and towns just as they faced burgeoning infrastructure expenses to support the booming economy.</p><p>Since municipalities could not levy substantial real-estate taxes, they increasingly resolved their fiscal problems by expropriating adjacent farmland with little or no remuneration for the peasants, then leasing it to developers at a high mark-up. They could do this because all land in China is owned by the government. While the central government owns the bulk of the land, each city or township owns huge tracts that radiate tens of miles around urban agglomerations and incorporate neighbouring cropland. </p><p>Local bosses and the developers who profit from the transactions contend that urban expansion is inevitable and that the high prices for formerly rural land are, as in Western economies, driven by the added value from com-mercial investment. But activists for farmers whose land is taken with only paltry (or no) compensation base their protests not only on an appeal to common justice, but also on a novel assertion of statutory rights.</p><p>Although this a...</p></li></ul>