Impacts of China's Rural Land Policy and Administration on Rural Economy and Grain Production

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607Impacts of Chinas Rural Land Policy andAdministration on Rural Economy and Grain ProductionHongye Zhang1 and Xiaofeng LiInstitute of Geographic Sciences and Natural Resources Research, Chinese Academy ofSciencesXiaomei ShaoChina Land Surveying and Planning InstituteAbstractThe distinctive changes in Chinas rural land policy and administration have exerted significant impactson Chinas rural socioeconomic development and grain production, either positively or negatively. Thisarticle reviews the changes of Chinas rural land policy and administration in the recent 5 decades.After the land reform accomplished in 1952 and the peoples commune system implemented during19521978, China adopted a house responsibility system, which was proven to be effective for increas-ing grain output and peasants income. Yet, it preserved the urbanrural dichotomous economy, formedin the peoples commune era, which placed agriculture in a secondary position. The low efficiency inagricultural production and the small-scale household management, under the current rural land policyand administration, stimulated the transfers of agricultural laborers to the nonagricultural sectors andcultivated land to urban land. Grain production and cultivated land protection in China are conductedmost times under the political mandates rather than the economic guidance. Although the previous ruralland policies and the strict residence registration helped China to avoid problems prevailing in primecities of other developing countries, compulsorily asking peasants to grow more grain and to stay in theirnative land resulted in outstanding social injustice, vulnerable grain production systems, and povertyin rural areas. There are also outstanding conflicts among the interests of central government, localgovernments, collectives, and peasant households. More flexible rural land policies and more strict cul-tivated land administrations could be solutions for improving the profitability of grain production andprotecting the rapidly declining cultivated land. Compensations for the low profitability in grain pro-duction are also needed to encourage an increase in grain output and rural economy.IntroductionChinas rural land policy and rural land administrative system experienced sig-nificant changes since the founding of the Peoples Republic of China in 1949.Chinas rural land policy and its reforms, together with the administrative systemimplementing the policy, have been unique in the world and exerted great impactson Chinas grain production and rural society and economy. Because of the largepopulation and scarce arable land per capita, arable land is the most valuableresource in China. In the Old China in the 1930s and 1940s, 50 to 60% of thearable land was owned by landlords, who did not work on the land and lived onrents collected from tenant-peasants and farm laborers (Wen, 2000). The rents wereso high that they could make up 40 to 50% of the outputs from the land (Zhang,2002). A policy to confiscate land from the landlords and to allocate it to those whowork on it was proposed by the communist party during 1930s, and implementa-tion of this policy evolved as an agrarian revolution, which helped the party toeventually win the power of the country. The implementation of this policy wasReview of Policy Research, Volume 23, Number 2 (2006) 2006 by The Policy Studies Organization. All rights reserved.completed in 1952, and afterward China experienced a period of cooperative trans-formation of agriculture and peoples commune during 19521978. From 1979, thehousehold responsibility policy that resulted in profound changes in Chinas economyand society was adopted, and minor modifications were continuously made to itduring the implementation. The responses of grain production and rural societyand economy to these reforms were significant.China used to declare itself an agricultural country and now is facing a queryon whether it has the ability to continuously feed its growing population with therapidly declining cultivated land (Brown, 1995; Smil, 1995). China needs a moreefficient rural land policy to encourage increase in grain production and ruraleconomy. Household responsibility policy has been proven to be effective for increas-ing grain output and peasants income, but it encountered many new problems inthe development of society and economy. The area of land for each family was only about 0.55 hectares on average in 2002 (Editorial Committee of Chinas Agricultural Yearbook [ECCAY], 2003), and peasants income grew much slowerthan nonagricultural workers (Du, Tang, & Zhang, 2002). In the last 2 decadeslarge numbers of agricultural laborers left their land to work in cities. In 2001, the number of peasant workers in cities was 88.1 million (Chen, 2003). Collectivesown the rural land in China, and peasants only have use right under the householdresponsibility system. Collective is an obscure definition, and in most cases it iseasier to find people who share the benefits from the land than to look for thosewho are responsible to protect it. It was argued (Lin & Ho, 2003) that Chinese government has been preoccupied by two overarching political mandates over thelast 5 decades: to feed the ever-growing population of the nation so as to maintainsocial stability and to develop an industrialized economy strong enough to defenditself. Yet, there appears to be another more difficult task: to increase the incomeof the 230 million households in the rural areas. The profitability of grain pro-duction needs to be improved to stimulate peasants to grow more grain and toprotect the land. The grain price in China is roughly the same as or even higherthan that in the world market. Chinas high-cost and low-efficiency grain produc-tion will face a strong competition in the world market after entering the WorldTrade Organization. Such problems have attracted serious attentions and discus-sion, and may result in further modifications to Chinas rural land policy in thenear future.Research on Chinas agricultural land and grain production has focused previ-ously on the impacts of cultivated land loss and degradation with respect to eco-nomic development (Yeh & Li, 1999), agricultural productivity (Ash & Edmonds,1998; Xu, 1999), food security (Brown, 1995; Yang & Li, 2000), and land use andenvironment (Edmonds, 1994; Ho, 2000; Muldavin, 1997). The recent studies onChinas land policy concerned mostly the urban land (Ding, 2003; Yang & Wu,1996; Zhang, 1997), and reforms of Chinas rural land policy and rural land admin-istration, which were the most powerful driving forces for the changes in Chinascultivated land and grain production, have not been thoroughly investigated. It isworthwhile to probe into the impacts of reforms of Chinas rural land policy andchanges in the land administrative system on Chinas grain production and ruralsocioeconomic development. The rest of this article is organized in five sections,the first and the second of which present an overview of the changes in Chinas608 Hongye Zhang, Xiaofeng Li, and Xiaomei Shaorural land policy and a brief description of the governmental rural land adminis-trative system, respectively. The third and the fourth sections discuss the impactsof rural land policy and administration on grain production and rural economyand society, and discussions and conclusions form the fifth section.An Overview of Changes in Chinas Rural Land PolicyThe Land Reform Campaign During 19491952 and the Cooperative Transformationof Agriculture and the Peoples Commune During 19521978Land was equally allocated to peasants who have both the ownership and the rightto arrange its production. The only duty they must fulfill was to provide a certainamount of Gongliang (agricultural tax paid in grain) to the government. The ownersof land were the households of peasants. The households of peasants were underthe jurisdiction of village governmental office, and land could not be sold and transferred.The cooperative transformation of agriculture started with the formation ofmutual aid groups in which several families helped each other in managing theirlands, and the transformation reached its high point in 1956. The mutual aid groupwas soon replaced by elementary agricultural producers cooperatives, in which distrib-ution was according to the amount of work each member did and the amount ofland contributed. Both mutual aid groups and elementary agricultural producerscooperatives were organized in accordance with the needs and wishes of the peas-ants, who had the full right to decide to join in or withdraw from the organiza-tions. The peasants in mutual aid groups and elementary agricultural producerscooperatives still had their land rights.The elementary agricultural producers cooperatives were soon developed intoadvanced agricultural producers cooperatives and peoples communes in the late 1950s.In the advanced agricultural producers cooperatives and peoples communes,agricultural production was no longer run by individual households and wasmanaged by production teams containing many more households than mutual aidgroups and elementary agricultural producers cooperatives, which were usuallycomposed of fewer than 20 to 30 households. Peasants could not withdraw fromadvanced agricultural producers cooperatives or peoples communes, which weresometimes composed of more than 1,000 households (Zhang, 2002). The rural landadministrative system of peoples communes (Figure 1) was so complicated that itwas impossible to implement the principle of distributing according to the amountof work each member did and dividing works according to peasants skills. Landunder the peoples commune system had a three-level ownership by the commune,the production brigade, and the production team, with the production team as the basic accounting unit. Consideration of the amount of land contributed in thedistribution of grain and cash became impossible as well, because land rights were obscure. Peasants actually lost their land again after they joined a peoplescommune. The peoples commune was both an economic organization that decidedthe management of land and an administrative agent that implemented the gov-ernments policies.Impacts of Chinas Rural Land Policy 609In the late 1950s, China started a very strict residence registration system(Hukou), in which agricultural residents and nonagricultural residents were distin-guished. In the beginning, it was only a way to identify people who lived in ruralareas from those in towns and cities, but from the early 1960s, changing identityfrom agricultural resident to nonagricultural resident became more and more dif-ficult. Hukou even obstructed people from moving from one city to another, espe-cially to the large cities. Under the Hukou system, peasants and their descendantscould not leave the land where they lived, and were prohibited from doing anyother jobs. It was almost impossible for the young people in the rural areas to moveto cities unless they fulfilled military service or went to universities.Changes in Chinas Rural Land Policy and Administration After 1979After 1979, the peoples commune system was dismantled and a new rural landadministrative system was formed under the household responsibility system. Under thecurrent rural land administration, the collectives, which are usually the villages,own the land, and the households in the collectives have the use right by contracts.Agricultural production was changed from collective management to responsibilitysystems. The system evolved from the responsibility with fixing output quotas ona group basis under the peoples commune to the responsibility with fixing outputquotas on a household basis under the peoples commune, and eventually to thehousehold responsibility system under a village. The formation of the new systemtook about 4 years and was completed by 1983. In 1984, the system of householdresponsibility was fully confirmed by the government and was widely adopted inthe country, and the term of land use right was confined to 15 years.610 Hongye Zhang, Xiaofeng Li, and Xiaomei ShaoCentral governmentProvincePrefectureCountyCommuneProduction brigadeProduction teamOwners of landFigure 1. Chinas rural land administration and ownership under the peoples commune systemWhat happened in 1979 was that the central government decided to strengthenthe independent rights of the production teams. Five rights were granted to theproduction teams, including the right to select productive crops suitable to localconditions, the right to adopt proper measures to increase output, the right tomake rational decisions for management and administration, the right to distrib-ute products and cash according to their wishes, and the right to reject theimproper instructions from the administrative agents. The responsibility systemwas actually a spontaneous choice by the production teams when they had the rightto do so. The responsibility system, fixing output quotas on a household basis, wasattempted several times during the peoples commune era in the early 1960s, and was proven to be very effective in recovering the agricultural productivitydestroyed by the quick cooperative transformation, but it was politically denied and criticized soon after its short appearances (Zhang, 2002). There were readyexperiences to learn and administrative arrangements to follow when the pro-duction teams started responsibility systems in 1979, and by the end of the yearmore than half of the production teams in the country had applied various kindsof responsibility systems. In June of 1982, the figure rose to 99.2% (Zhang, 2002).The per unit area grain output under the responsibility system was nearly 25%higher than under the original arrangement. Requirements of transferring landuse rights occurred because of the shift of labors. In some places land left by thepeasants working in cities was abandoned or poorly managed. These peasantsinstead fulfill their duties of growing certain amounts of grains by buying them inthe market using money earned in cities. Other peasants also lost their interest in growing grains and went more frequently to cities to earn their extra money.Cultivated land would not be properly protected and managed if its use right couldnot be transferred to the peasants who are interested in growing more grains.In November of 1993, which was about the end of the first 15-year term of landuse rights granted, the central government formulated that household responsi-bility should be a basic system in Chinas rural economy and should remain long-term, and the land use right term was prolonged for another 30 years. In orderto avoid reductions in dimensions of the household management, it was stipulatedthat the area of land would remain even when the members of families changed.Permission was also granted for transferring land use rights and for expandingmanagement dimensions (Song, 2000). In 2002, legislation was made for house-hold responsibility and contracts for rural land use rights, in which the land useright term was regulated to be 30 years.The following issues, which are related to the changes in rural land policies andland administration in China, might also contribute greatly to changes in grain pro-duction. (1) To improve the efficiency of agricultural production, transfer of surplusrural labor from agricultural to nonagricultural sectors was encouraged by the government since 1978. (2) A strategy to optimize the structure of rural economy and agriculture was proposed in the late 1990s, which encouraged the develop-ment of nonagricultural industries in the rural areas, the improvement of thequality of products, and the rationalization of the layout and distribution of agri-cultural production. A more diversified agriculture was believed to help increasethe income of rural households. The grain-sown area declined to 100,000 hectaresin 2003 from 114,000 hectares in 1998 because more land was used for other crops.Impacts of Chinas Rural Land Policy 611(3) During 19982003, China implemented a policy of returning farmlands to forests or grasslands for the purpose of rehabilitating ecological conditions in the marginal areas. It was estimated that returning farmland to forests or grasslands resulted in a reduction of 100 million hectares in cultivated area (Fan et al., 2003).A Brief Description of Chinas Governmental Rural Land AdministrationThere are four governmental departments involved in rural land administration:the Land and Resources Ministry (successor of the State Land AdministrationBureau), the Agricultural Ministry, the State Bureau of Forestry (successor of Min-istry of Forestry), and the Ministry of Water Resources. The main responsibilitiesof these departments related to rural land administration and their vertical hier-archies with subordinate bureaus and offices in all branches of provincial, prefec-ture, and county governments are shown in Figure 2.612 Hongye Zhang, Xiaofeng Li, and Xiaomei ShaoThe State CouncilState Bureau ofForestryAgriculturalMinistryMinistry of WaterResourcesMinistry of Landand ResourcesCounty governmentCounty Bureau ofForestryCounty Bureau ofAgricultureCounty Bureau ofWater ResourcesCounty Bureau ofLand and ResourcesProvincial government Provincial Bureauof ForestryProvincial Bureauof Agriculture Provincial Bureau of Water Resources Provincial Bureau ofLand and ResourcesPrefecture government Prefecture Bureauof ForestryPrefecture Bureauof AgriculturePrefecture Bureauof Water ResourcesPrefecture Bureau ofLand and ResourcesGrainproduction,rural economy,farmlandprotectionEnvironmentalprotection, landdegradationcontrolLandadministrationand farmlandprotectionErosionprevention,irrigationworksFigure 2. Chinas governmental rural land administrative systemThere was no a specialized governmental agent for land administration until1986 when the State Land Administration Bureau was established and the LandAdministration Law was passed. Rural land administration has been partly underthe jurisdiction of the Agricultural Ministry, which takes the main responsibility forrural economy, rural land policy, and grain production. The State Land Adminis-tration Bureau was responsible for land policy reform, land allocation and acqui-sition, monitoring of land development, comprehensive land use plans, andimplementation of land laws (Ding, 2003). This bureau was also in charge of con-ducting more accurate land surveys since the late 1980s, which helped to clarifythe inadequate and inaccurate data in Chinas statistical yearbooks. The policyreforms undertaken by this bureau were more concerned with the transfer of landuse rights of the urban land, which was owned by the state. Preservation of farm-land and control of the illegal land conversion of farmland to urban land, however,were parts of the goals. The Basic Farmland Protection Regulation was passed in1994, which prohibited basic farmland conversion to nonagricultural uses andmandated counties and townships to designate the basic farmland protection dis-tricts in accordance with provincial farmland preservation plans (Ding, 2003). Astrategy of maintaining a dynamic balance of cultivated land was initiated in 1996(Zou, 1997) and written in the amended Land Administration Law in 1998. Thestrategy required provincial governments to take the responsibility to maintain adynamic balance of cultivated areas in their jurisdictions by compensating thelosses. The role of the State Land Administration Bureau was replaced by the Landand Resources Ministry, which was established in 1998 during the governmentalreorganization. The State Bureau of Forestry is responsible for the prevention ofland desertification and degradation. This bureau is in charge of opposing crop-ping into the marginal areas and rehabilitating the degraded land. Since 1998,returning farmland to forests or grasslands was conducted under the jurisdictionof this bureau. The Ministry of Water Resources is responsible for the preventionof erosion and the construction of irrigation projects.Unavoidable conflicts exist among the policies implemented by different gov-ernmental departments. For example, reclaiming new cultivated land for com-pensating the converted to nonagricultural purposes takes place mostly in marginalareas where a large amount of unused land is available, but it is prohibited due tothe high risks of degradation and erosion. Returning farmland to forests or grass-lands may result in the further decline of cultivated land and hence the decreaseof grain output. When grain supply is short, concerns about cultivated land willrise and cropping into the marginal areas will expand, which will subsequentlycause worse degradation and desertification, followed by ameliorations conductedby other departments. Destruction and amelioration take place in turns or at thesame time.Under the vertical hierarchy elaborated in Figure 2, significant discretion ininterpreting and implementing policies formulated by the central governmentexists at various levels of local governments. Deviations in implementing strategiesand policies at lower-level local governments occur frequently and the conse-quences are sometimes quite opposite to what the policies are designed for. Aprovincial governor responsibility system was introduced for grain production in1995, in which the sown area and output plans for grain production were restoredImpacts of Chinas Rural Land Policy 613in a jurisdiction to ensure the fulfillment of the output targets (Cui, 1995; Wang,1996). The sown area and output plans were more or less phased out based on thestatus in the previous years to avoid a sharp decline in grain-sown area.Projects for displaying the achievements of the local governors cost large amountof cultivated land. According to the data from the Land and Resources Ministry,the number of various development areas was above 5,000, occupying more than35 thousand square kilometers, and the number of development areas set up bylocal governments accounted for 43% (China Land and Resources Ministry[CLRM], 2003). Glorified urban constructions, which can clearly show economicadvances and give the appearance of modern cities, flourish all over the countrywith a low land use efficiency, causing dramatic losses of fertile soils. During19972002, about 6.4 million hectares cultivated land was lost (CLRM, 2003) andthe pure loss will be 4.1 million hectares if the newly reclaimed or restored culti-vated land is taken into account. The cultivated land decreased to 125,933 thou-sand hectares by the end of 2002, from 130,070 thousand hectares in 1996.Impacts of Chinas Rural Land Policy and Administration on Grain ProductionThe Impacts on Grain Production During 19491952The devotion of peasants to their land and grain production was high during19491952, and their preference was to stay on their land. Both agricultural andindustrial productivities were low at that time, and the difference between theincomes of peasants and industrial workers was not obvious. Grain output wasincreased steadily with the recovering of the economy after the civil war. Cultivatedland was regarded as the assets of peasants, and loss of it was very limited. In factthe national cultivated area was slightly increased in the 3 years after founding ofthe Peoples Republic of China, reaching 108 million hectares in 1952 (China StateStatistical Bureau [CSSB], 2001). The annual increases in grain and cotton outputswere 13.14% and 43.15%, respectively, in the 19491952 period (Zhang, 2002).The Impacts on Grain Production During 19521978In the mutual aid groups and elementary agricultural producers cooperatives,peasants continued their interest in producing more grains because the income wasdistributed according to the amount of land and work. The national output ofgrains during the period of mutual aid groups and elementary agricultural pro-ducers cooperatives in 19521958 increased steadily, and reached a high of 200million tons in 1958 (Figure 3). The countrys cultivated land also increased to ahigh of 112 million hectares in 1957 (Figure 3).A fast transformation from mutual aid groups and elementary agricultural pro-ducers cooperatives into advanced agricultural producers cooperatives andpeoples communes occurred during the countrys great leap forward campaignin 19581959. This transformation resulted in a sharp decrease in the nationalgrain output after 1959, and the recovery was very slow under the peoplescommune system.614 Hongye Zhang, Xiaofeng Li, and Xiaomei ShaoDuring the 20 years from 1957 to 1978, the annual income per peasant increasedfrom 87.6 RMB yuan to 133.6 RMB yuan. The amount of commercial grain con-tributed by each agricultural resident declined from 85.05kg to 62.6kg, cottondecreased from 2.65kg to 2.6kg, and oil from 1.95kg to 1.1kg. Shortages of foodsupplies spread all over the country, and coupons for grain, meat, oils, and clothin the urban areas appeared from the early 1960s. The coupons were used forabout 30 years until the early 1990s.Rural areas also suffered from food shortages from the early 1960s to 1978.During the countrys great leap forward campaign after peoples communes wereorganized, the leaders of communes did not truly report the decrease in grainoutput, instead they boasted of making big increases. They competed to sell moregrain to the country, and the grain left for the peasants was not enough. From 1960to 1963, the whole country suffered from a very severe food shortage. After thegrain productivity was fully recovered in the mid-1960s, the leaders of communeslearned the lessons from the famines and deliberately underreported their grainoutputs and cultivated areas. By doing so they could keep more for their members.Such games produced multiple and contradictory statistics, and nobody was ableto provide accurate and reliable data. During the 1970s, about one-third of therural population did not have a stable food supply (Du, Zhang, Huang, Chen, &Li, 2003). Even in east China, there were three provinces, which were Shandong,Hebei and Henan, relied on grain resold by the state to them.The decline of grain output during 19601963 mainly resulted from the equal-ized distribution of grain and cash among the members in the commune in19581959. In some places, canteens were established in production teams, andthe members and their families had free dinners together, and so families did notcook any more. People did not work hard because they would have food anyway.Impacts of Chinas Rural Land Policy 6150200004000060000800001000001200001400001949 1959 1969 1979 1989 1999 yeartotal arable land (1000 hectares)0100000200000300000400000500000600000total grain output (1000 tons)total arable land total grain outputFigure 3. Changes in Chinas total grain output and total arable land. The data are from CSSB (2000, 2001, 2003).The cultivated land in 1996 was a revised data by CSSB (2000), and the data for the cultivated land in 19972000were absentThe canteens were bankrupted very quickly at the end of the 1950s, and smallmodifications had to be made to the peoples commune system from the early1960s.Trying to distribute food and cash according to the amount of work eachmember did, a Gongfen system was introduced in the peoples communes. The pro-duction team was the unit for accounting. Each member of a production teamearned a certain amount of Gongfen each day according to the amount and inten-sity of his work. An accounting for distribution was made at the end of a year, andthe quota for each member was calculated based on the amount of Gongfens heearned during the year.From the early 1960s, members of the peoples communes were also allowed tohave small plots of private land for the needs of the family. The private land foreach family was very small, less than 0.02 hectares usually, but was so productivethat the per unit area yield on it could be several times that of the collectives land.The surplus from the private land went sometimes to the underground market inurban areas, and such deals were regarded as capitalist tails and were strictly pro-hibited by the government.Another type of land that peasants could privately keep was the land for resi-dency. The collectives allocated resident land and provided free use rights to peasants families. The peasants continued to apply for new resident land when-ever there were grounds for it, and never returned the old ones to the collectives.Peasants families usually had large yards and houses, which were more thanenough, and this was believed to be one of the major causes for arable land loss inmuch research (Shao, Yang, & Zhang, 2001; Tian, 2003; Zhang & Zhang, 2002).The Impacts on Grain Production After 1978The national grain output rose above 300 million tons in 1978, fluctuated between332 and 387 million tons during 19791983, and increased to 407 million tons in1984 (Figure 3). During the 4 years of 1984 to 1988, grain output remained almostunchanged with slight declines. The implementation of the household responsi-bility system did not lead to a significant increase in national grain output, althoughthe per unit area output improved in most places. The reason was that peasantsin the relatively developed areas left or abandoned their land and started otherbusinesses. The number of peasant workers rose to about 1516 million in 1988from 2 million in 1984 (Chen, 2003).Along with the implementation of the responsibility system, the bans that prohibited peasants from growing cash crops were terminated. Peasants regainedtheir right to grow vegetables, or cash crops, to sell their products in markets, andeven to resell them for more profits. Free markets were formed in urban areaswhere peasants could sell fresh products. The guidelines in the peoples communeera, which put strong emphasis on grain production and compulsorily asking peasants to grow grain crops only, were discontinued. The peasant households whogot rich were even admired by industrial workers whose salaries were fixed andlimited.The declines of grain output during 19841988 even triggered disputes onwhether the responsibility system should be sustained or the previous policies616 Hongye Zhang, Xiaofeng Li, and Xiaomei Shaoshould be restored. During that period a series of actions were taken by the gov-ernment to increase the prices of agricultural products that were fixed for severaldecades. The adjustment of prices could have been one of the forces pushing upthe grain output in the early 1990s. The national grain output increased to 505million tons in 1996 and reached the high of 512 million tons in 1998, and thenfell to 462 million tons in 2000. The national grain output declined continuouslyto 457 million tons in 2002. The per capita grain was 413kg in 1998 on a nationalaverage and declined to 357kg in 2002. The reforms of rural land policy wereaccompanied by the changes in grain prices. From the early 1980s, there were twograin prices in urban areas: the subsidized grain price under the coupon systemand the negotiated price in the free markets. This dual-prices system lasted untilthe early 1990s, when the coupons and subsidized food supply were terminated.The grain price has fluctuated since then under the market-oriented mechanism,experiencing a hike in the mid-1990s (Cui, 1995; Ke & Tang, 1996; Yang, 1999),a 5-year continuous decline from 1995 to 2000, and a slight increase afterward (Du,Huang, & Chen, 2003).During 19911995, the amount of imported grain continuously declined andthe average annual amount was 1.64 million tons (Tang, 2002). During 19962000,the average national grain output was 496.31 million tons and the imported grainamount was 0.87 million tons. Table 1 shows the balance during 19962000between the total food supply, which is the grain output plus the imported amount,and the total grain requirements. During 19962000, the average total supply was497.2 million tons, and the total requirements changed in a narrow range with theminimum of 489.4 million tons in 1997 and the maximum of 499.4 million tons in1999. In 2000, it was the first time when the total grain supply was not enough.Impacts on the Society and Economy in Rural AreasChanges in Social Altitudes Toward Land During 19521978Land was regarded as the most valuable property for peasants until the late 1950s,when they could manage the land according to their wills and possess profits fromthe land. Lives on farming were stable, and most peasants did not want to changetheir careers. Even those who migrated to cities did not have a strong aversion togoing back to their native land. Changing dwelling places between urban and ruralareas was frequent and free.Impacts of Chinas Rural Land Policy 617Table 1. Balance between total grain supply and total grainrequirements during 19962000 (unit = 1,000 tons)Year Total grain supply Total grain requirements Balance1996 514,693 491,974 24,3101997 492,228 489,421 2,1611998 509,947 497,087 10,7171999 507,756 499,365 3,6172000 463,077 492,512 29,435Source: Tang, 2002.Afterward, a so-called dichotomous urbanrural economy was introduced byapplying the Hukou system, which enlarged the disparities between urban and ruralareas. Even in the serious famine during 19601963 after the fast transformationinto the peoples commune system, the government guaranteed a minimum foodsupply in urban areas under the coupon system, though the quota of grain for eachurban resident was reduced. Shortfalls in grain output happened everywhere dueto poor management and natural disasters, and the food supply for agriculturalresidents was short and unreliable. The lives of agricultural residents were evenworse compared to nonagricultural residents. Nonagricultural residents also hadthe advantages of accessing social welfare, such as medical insurance, pensions, andhigh-quality education, and food at subsidized prices. As the income of industrialworkers in urban areas grew much faster than that of peasants, the differencebetween agricultural residents and nonagricultural residents became pronouncedin both income and food supply. Agricultural resident identity and agriculturalworks on land were subsequently less valued in the society, and became signs ofthe poor. Almost at the same time, the government discontinued some industrialprojects in urban areas because of the difficulties in the economy, and the laid offworkers were mostly sent back to where they came from. Another campaign totransfer urban surplus labor to rural areas was in 19681978, in which more than10 million educated urban young people were compulsorily sent to the country-side and mountain areas. This not only prevented agricultural residents frommoving to cities but also gradually formed a concept that rural areas were placesto settle the unemployed from towns.The chance for peasants to leave the collectively owned land was very rare. Theonly chance was when the land was converted to state-owned urban land throughland acquisition, and the peasants would be granted nonagricultural resident iden-tities. The compensations from the state could even be provided to the collectives.The owners of rural land were always willing to give up their land. The nationalcultivated area in the statistical book started to decline from 1958, and the decreasewas either hidden by the leaders of the peoples communes or used for exchang-ing nonagricultural resident licenses. It is impossible to clarify what happened tothe diminished cultivated land during that period. The inefficiency in the admin-istration of agricultural production and cultivated land was reflected in the multi-ple and contradictory statistical data during that period. Figures about Chinascultivated land had a very large range from 94.97 to 160 million hectares (CSSB,2000; Heilig, 1997; Smil, 1999), and the 1996 land survey revealed a total culti-vated land of 130 million hectares, nearly 40% more than what was reported (Lin& Ho, 2003).Transfer of Agricultural Labors and Rural IndustrializationThe agricultural population is over 900 million and the amount of agriculturallabor is about 350 million in China. The small-scale household management limitedthe increase of peasants income. Grain production in China is characterized byhigh cost and low efficiency compared to the other parts of the world (Du et al.,2002). The relaxation of restrictions that bound peasants to land resulted in notonly the transfer of peasant workers to urban areas but also the industrialization618 Hongye Zhang, Xiaofeng Li, and Xiaomei Shaoin rural areas. It was recognized that China has experienced a rural industrializa-tion process in the post-1978 reform period, causing a further decline of cultivatedland (Figure 3), especially in the coastal provinces where the fertile soils are located(Bradbury, Kirkby, & Shen, 1996; Skinner, Kuhn, & Joseph, 2001). According toDu et al. (2002), about 30% of the diminished cultivated land was occupied by col-lective-owned industries and 20% was used for peasants dwellings. Rural indus-tries play very important roles in the increase of the rural economy and peasantsincome, and make up more than 50% of Chinas rural economy (Qu & Li, 1994),especially in the coastal regions (Lin, 1997; Smyth, 1998).The number of peasants who left the soil and went either to nonagriculturalsectors in rural areas or to cities and towns increased very fast. Table 2 presentsthe number of agricultural laborers who transferred to nonagricultural sectors inrural areas or to cities and towns during 19792000 (Du et al., 2002), and Table 3shows the number of peasant workers in urban areas from different provinces(Chen, 2003). Land is no longer the sole source of income for peasants house-holds, and the proportions of pure household income from the secondary and ter-tiary industries are continuously enlarged (Table 4). The number of peasantsemployed part-time in nonagricultural sectors is increasing. Even with the increas-ing amount of earnings from nonagricultural jobs, the total income of an agricul-tural resident is much lower compared to a nonagricultural resident. The percapita income for urban residents increased from 343 RMB yuan in 1978 to 4,839RMB yuan in 1996 with an annual increase rate of 6.3%, and then to 6,280 RMByuan in 2000 with an annual increase rate of 6.2%. The per capita income for ruralresidents was 148 RMB yuan in 1980, 1926 RMB yuan in 1996, and 2253 RMByuan in 2000, and the average increase rate during 19962000 was 3.7%.Discussion and ConclusionsThe contemporary rural land policies adopted in China actually placed agriculturein a secondary position in the urbanrural dichotomous economy. The backwardrural economy was directly or indirectly induced by the slow development of indus-tries in urban areas. China is among the few world countries that have a large agri-cultural population, and the industries in urban areas could not provide enoughopportunities to satisfy the fast-growing demands for nonagricultural employ-ments. In 2002, Chinas gross domestic product (GDP) was 10,239.8 billion RMByuan, of which 14.4% was from the primary industries, 51.1% from the secondaryindustries, and 28.6% from the tertiary industries. The total number of employedImpacts of Chinas Rural Land Policy 619Table 2. The amount of agricultural labors transferred to nonagricultural sectors in rural areas or tocities and towns (Unit = 1,000)Accumulated amount transferred to Accumulated amount transferred toYear nonagricultural sectors in rural areas cities or towns19791983 28,27032,350 2,00019841988 32,35095,450 2,00010,00019891998 95,450120,410 15,00065,00019992000 120,410128,470 65,00078,000Source: Du et al., 2002.in 2002 was 737.4 million, 50% of which was in the primary industries, 21.4% insecondary industries, and 28.6% in tertiary industries. It was irrational for the leastproductive primary industries to employ the largest number of laborers.The level of urbanization in China is much lower than that in the developedcountries, even below most of the developing countries. In 2002, the urban pop-ulation accounted for 39% of the total in China, compared to 70 to 90% in devel-oped countries and 40% on average in developing countries. The land useefficiency is also low in urban areas, as indicated by Ding (2003), who comparedBeijing and Tokyo, which have similar geographical size. Tokyo houses more than26 million people, almost threefold that of Beijing. Yet, the urban area in China isstill growing. The current rural policy strengthened the dominant position ofurban industries, and granted a priority to urban land use development. Anotherunique characteristic of Chinas rural land policy is the fast rural industrializationcompared to the slow urbanization. The number of peasants employed in the nona-gricultural sectors in rural areas increases much faster than those transferred tourban areas (Table 2), causing the processes of rural industrialization and ruralurbanization and undermining loss and degradation of cultivated land, even in the620 Hongye Zhang, Xiaofeng Li, and Xiaomei ShaoTable 3. The number of peasant workers in urban areas and the percentage of transferred labors inthe total labor amount in each region in 2001Percentage of transferred The number of peasantlabors in the total labor Total labor workers in urban areasRegion amount (%) amount (thousand) (thousand)Beijing 20.81 1,658 350Tianjin 5.63 1,681 90Hebei 16.2 27,071 4,390Shanxi 14.94 9,886 1,480Inner Mongolia 6.88 6,315 430Liaoning 15.66 9,660 1,510Jilin 15.99 6,410 1,020Heilongjiang 17.33 9,132 1,580Shanghai 15.17 2,556 390Jiangsu 20.25 26,880 5,440Zhejiang 21.28 21,084 4,490Anhui 22.16 27,978 6,200Fujian 22.41 12,441 2,790Jiangxi 31.75 15,472 4,910Shandong 14.03 36,396 5,110Henan 18.45 47,124 8,690Hubei 26.96 17,817 4,800Hunan 22.12 28,561 6,320Guangdong 10.88 27,851 3,030Guangxi 17.2 21,454 3,690Hainan 5.81 2,240 130Chongqing 24.45 13,526 3,310Sichuan 23.46 37,890 8,890Guizhou 17.21 18,026 3,100Yunnan 13.38 19,489 2,610Xizang 1,008 Shaanxi 13.13 13,432 1,760Gansu 11.86 9,345 1,110Qinghai 10.28 1,720 180Ningxia 12.94 1,979 260Xinjiang 2.84 3,541 100The whole country 18.42 478,615 88,160Source: Chen, 2003.hinter rural areas. Overpopulated rural areas are one of the main limitations tothe development of the rural economy and grain production. There already haveappeared discussions on modifying the resident registration system (Hukou) andchanging the dichotomous urbanrural economy into the unitary economy (Chen,2003).Although the strict residence registration system helped China to avoid prob-lems prevailing in prime cities in other developing countries, the previous long-term policy of compulsorily asking peasants to grow more grain and to stay in theirnative land resulted in outstanding social injustice, a vulnerable grain productionsystem, and poverty in rural areas. The fast transfer of agricultural laborers tononagricultural sectors and rural residents to urban areas will certainly imposegreat impacts on grain production. Even for those households that stick to grainproduction, the earnings from part-time or casual nonagricultural jobs are increas-ing. The small-scale household management induces unprofitable grain produc-tions, and it is always hard to ask the producers to increase their input to aproduction that is not profitable. Grain production and cultivated land protectionin China are conducted most times under political mandates rather than economicguidance. This can also be, more or less, reflected in the performance of the gov-ernmental administrative system.There are two ways to economically spur growth in grain production: enlarge-ment of farm scale and compensation for producing grains. The first way needs amore flexible land policy and the second requires the government to pay more formore grains. The permission of land use right transfer allows the concentration ofland to the specialized grain-producing households, which offers opportunities forpeasants to increase their income by producing more grains. It will be difficult forpeasants to manage their land when they concurrently hold several part-time orcasual jobs. The way to increase peasants income by encouraging them to do moreImpacts of Chinas Rural Land Policy 621Table 4. The changes in average per capita income of peasant households in ChinaYear PHI FI PFI SI PSI TI PTI1985 367.7 298.3 81.1 29.5 8 40 10.91990 657.4 510.9 77.7 70.7 10.8 75.8 11.51991 675.5 516.9 76.5 78.8 11.7 79.8 11.81992 746 543.7 72.9 104.4 14 97.8 13.11993 873 589.6 67.5 149.5 17.1 134 15.31994 1,176.7 783.4 66.6 236.9 20.1 156.5 13.31995 1,479.5 996.5 67.4 287.2 19.4 195.7 13.21996 1,813.2 1,192.6 65.8 372.4 20.5 248.3 13.71997 1987.3 1,267.7 63.8 437.8 22 281.8 14.21998 2,039.6 1,237.5 60.7 498.9 24.5 303.2 14.91999 2,078.6 1,180 56.8 564.3 27.1 334.3 16.12000 2,129.6 1,125.3 52.8 488.9 23 515.4 24.22001 2,231.6 1,165.2 52.2 532.6 23.9 533.8 23.92002 2,326.8 1,167.8 50.2 586.9 25.2 572.1 24.6Sources: ECCAY, 1999, 2003.PHI = Average per capita income of a peasant household (RMB yuan) from various productions;FI = Average per capita income of a peasant household from the primary industry (RMB yuan);PFI = Percentage of the average per capita income of a peasant household from the primary industry in PHI;SI = Average per capita income of a peasant household from the secondary industry (RMB yuan);PSI = Percentage of the average per capita income of a peasant household from the secondary industry in PHI;TI = Average income of a peasant household from the tertiary industry (RMB yuan);PTI = Percentage of the average income of a peasant household from the tertiary industry in PHI.part-time or casual off-farm work will have negative effects on grain production. Afairly high purchasing price for grain is needed for a stable grain output. Peasantsmay earn more by doing a small amount of farm work, and the efficiency of agri-cultural labor will be low, but there is no other choice. The government payingmore to peasants directly or indirectly for them staying on the land and stickingto grain production could be an alternation of political mandates. The maximumamount of land that can be managed by a peasant in a traditional way is 15 hectares,according to the authors investigation, and the amount of cultivated land for apeasant with more mechanical assistance was 0.29 hectares in 1995 (Du et al., 2002). Peasants have too much leisure time, but limited opportunities for off-farmemployment.The household responsibility allows peasants to earn the maximum on the landthat is equally allocated to them, but it becomes an obstacle to the development oflarge-scale commercial grain production and mechanization of agriculture. Peas-ants suffer from the low profitability in grain production and face the risks in themarket at the same time. It was argued by Ke (1995) that the average income ofpeasants would be reduced in the years when the national grain output increased,because the grain price would decline. From the mid-1980s when the amount ofgrains available was more than enough in China, peasants started to have difficul-ties selling their grains. The vulnerability of Chinas grain production did not actu-ally result from the limited productivity of the cultivated land, and it was, instead,very closely related to the policies implemented and the administrative system.Attention to grain production is paid only when shortages appear, and the societydoes not take any responsibility when there are surplus grains. It is very hard forthe producers to increase their profits, and the economic returns are sometimesquite opposite to what is expected when they increase their inputs.It can also be found from the discussions in this article that grain output andpeasants income will increase when they have ownership of the land or more rightsto arrange their production and to choose their jobs. Although there were excep-tions during 19851988 when a slight decrease of grain output was caused whenpeasants in the coastal areas left their land, the problem was solved after the per-mission for land use right transfer was granted. The separation of the use rightfrom the ownership of the land has induced outstanding conflicts among the inter-ests of central government, local governments, collectives, and peasant households.The Chinese government fights continuously to prohibit its officers and residentsfrom changing cultivated land for other uses, while most of the governments in theother parts of the world try very hard to acquire land for public uses from theprivate owners. When collective-owned cultivated land is converted to the state-owned urban land, what the peasants lose is not the households wealth, but theunprofitable jobs, and they will be easily satisfied when other jobs are offered tothem. The real value of cultivated land is obscured under the current land policyand administration. As the users of the cultivated land do not have the ownershipof it, the compensation for occupying cultivated land is very low, while cultivatedland has to be politically protected in most cases. Once the land is converted intourban land, the price will rise spontaneously and dramatically. The local economywill benefit because more profitable industries are introduced to the original farm-land. Even the state and local governments can benefit by selling the use right of622 Hongye Zhang, Xiaofeng Li, and Xiaomei Shaothe urban land. The house responsibility system prevents cultivated land frombeing used for other purposes by the peasants, because the use of the land is con-fined to agriculture in the peasants use right contract. The loss of cultivated landis induced mostly by the administrative system, and therefore there is a need fora more strict land administration.Note1 Supports for this research were provided by the Natural Science Foundation of China (projectnumber 49971004), and the Institute of Geographic Sciences and Natural Resources Research,Chinese Academy of Sciences (project number CXIOG-A00-03-01), and the Ministry of Science andTechnology of China (project number 2005BA517A03).About the AuthorsHongye Zhang, has a PhD from Sydney University and is a Professor in the Department ofLand Cover Change and Land Resources, Institute of Geographic Sciences and NaturalResources Research, Chinese Academy of Sciences.Xiaofeng Li, is a PhD student in the Institute of Geographic Sciences and Natural ResourcesResearch, Chinese Academy of Sciences, major in land use and land resources.Xiaomei Shao, has a PhD from the Institute of Geographic Sciences and Natural ResourcesResearch, Chinese Academy of Sciences and is Associate Professor in the Key Laboratory ofLand Use, Ministry of Land and Resources, China Land Surveying and Planning Institute.ReferencesAsh, R. 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