Issues & Studie s© 43, no. 4 (December 2007): 117-148.
The Regional Variations of Farmland
Property Rights Transformation in
China: An Institutional Comparison
between Suzhou and Dongguan
DANIEL YOU- REN YANG AND HUNG- KAI WANG
This article explores the divergent patterns of farmland property
rights transformation in Suzhou and Dongguan, China, and investigates
the relevant factors influencing this divergence from an institutionalist
perspective. We point out that a local property rights regime based on the
collective ownership system coupled with developmental dynamics at
village level has made the transformation of farmland property rights in
Dongguan different from that in Suzhou. We also discover some emerging
local institutions that may have been factors in the variation of farmland
property rights transformation between these two regions. Furthermore,
we observe that such spatial-institutional variation influences the welfare
DANIEL YOU- REN YANG ( 楊友仁) is a post-doctorial researcher a t the Gra duate Institute of
Building and Planning, National Taiwan University, as well as a visiting fellow at the
School of Environment and De velopment, University of Manchester. His research interests include the geography of the ICT industry, land-use regulation in post-reform China,
and the geography of innovation. He has recently published papers in Environment and
Planning A and Urban Studies. Dr. Yang can be reached at <yyren@ms34.hinet.net>.
H UNG- KAI WANG ( 王鴻楷 ) has been a professor at the Graduate Institute of Building and
Planning, National Taiwan University in Taipei since 1979. His research inte rests include urban planning in developing countries, local development in post-reform China, and
the sustainable city. Writing in Chinese and English, he has published numerous pape rs on
subjects such as urban land-use patterns in Ta ipei and Shanghai, local land property rights
institutions in contemporary China, and sustainable tourism in Taiwan. Professor Wang can
be reached at <hungkaiw@ntu.edu.tw>.
© Institute
of International Relations, National Chengchi University, Taipei, Taiwan (ROC).
December 2007
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ISSUES & STUDIES
of local farmers to a significant degree. Finally, this study suggests that in
addition to the "economic paradigm," scholars might pay more attention
to political factors such as intra-Party promotion/evaluation systems, the
tensions between the evaluative indicators systems maintained by the tiao
(central/local sectoral command) and the kuai (territorial jurisdictions),
and the regulation as well as political governance of government-village
relations in order to further understand the dynamics and contradictions of
China's local development.
K EYWORDS : farmland; land property rights regime; institution; local government; development zone fever.
* * *
Since the beginning of the economic reform in 1979, China has
set up many economic development zones and opened up numerous cities for foreign investment. At the same time, in an effort
to provide incentives to promote regional economic development, local
governments in coastal areas have been granted a certain amount of administrative authority in land-use conversion. In these rapidly-industrializing
regions of China, we observe that a "collective ownership" system of
land property rights exists in the Dongguan (東莞) region of Guangdong
Province (廣東省), with respect to industrial land-use and development
mechanisms. This is different from the state-owned land property rights
system in the Suzhou (蘇州) region of Jiangsu Province (江蘇省). Although there is no macro-aggregate information on the variation of industrial land property rights in Dongguan and Suzhou in the official statistics
(including local statistical yearbooks and statistics issued by the Ministry
of Land and Resources [國土資源部]), our intensive fieldwork (see the
section on methodology below) leads us to believe that such variation is
significant and that it is still extant.
The characteristic of the "collective ownership" system is that the
village committee and villagers' groups dictate industrial land development. Whereas under the state-owned land property rights system in
Suzhou, the local government can often convert large quantities of collectively-owned agricultural land into state-owned property and then lease
it to industrial land users by issuing "state-owned land-use permits." Such
論
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Farmland Prope rty Rights Transformation in China
a variation between two different areas serves as the point of departure for
this research undertaking.1 Basically we echo Lin's argument that since
land is a production factor, alongside capital, labor, and technology, the
issue of land development should be "scaled up" in exploring local and
regional development, especially in the context of China.2 Therefore, we
argue that the further investigation of land development-related mechanisms in China may contribute to understanding not only the trajectories
of regional development, but also "regional variation"— the issue that
human geographers always explore with enthusiasm. Furthermore, such
a land-centered research perspective can complement the study of critical
development geography.3
The two regions in question are the Pearl River Delta (珠江三角洲,
Dongguan) in the 1980s and the Yangtze River Delta (長江三角洲,
Suzhou) in the 1990s, both of which were intent on attracting foreign investment.4 In the 1980s and early 1990s, a series of temporary measures
1Some exceptions
exist. For example, the Dongguan city governme nt recently expropriated
some rural land to build the Songshan Lake Scie nce Park ( 松山湖科技產業園區). Such
cases are few, however, and although there have been cases of rura l land being used for c onstruction in Suzhou, according to our fieldwork these have usually involved the re-use of
former township and village enterprise (TVE) site s. This is not a change in land use nor is
it a main source of industrial land supply. Thus, regarding the supply of industrial land, we
believe that it is appropriate to recognize Dongguan and Suz hou as two different models.
2George C. S. Lin, "Scaling up Regional Deve lopment in the Pearl River Delta: Loca l Capital
Ac cumulation, Land-Centered Politics, and Reproduction of Space" (Pape r presented at the
2007 Annual Meeting of the Associa tion of American Geographers, San Francisco).
3For an introduction to the field of critical development geography, see Vic toria A. Lawson,
Making Development Geography (New York: Hodder Arnold, 2007).
4For a more comprehensive understanding of the de velopment models in Donggua n and Suzhou, see George C. S. Lin, "Peri-urbanism in Globalizing China : A Study of New Urbanism
in Dongguan," Eurasian Geography and Economics 47, no. 1 (January-February 2006):
28-53; Liu Yia-ling, "Transformation from Without: Wujiang's Tra nsition from Import
Substitution to Export-Led Growth," Taiwanese Journal of Sociology, no. 30 (2003):
89-133; Yehua D. Wei, "Beyond the Sunan Model: Trajectory and Underlying Fac tors of
Development in Kunshan, China," Env ironment and Planning A 34, no. 10 (2002): 1725-47;
Jieh-min Wu, "State Policy and Guanxi Network Adaptation: A Case Study of Local
Bureaucratic Rent-Seeking in China," Issue s & Studies 37, no. 1 (January-Fe bruary 2001):
20-48; Jieh-min Wu, "Strange Bedfellows: Dynamics of Government-Business Relations
between Chinese Local Authorities and Taiwanese Investors," Journal of Conte mporary
China 6, no. 15 (July 1997): 319-46; Chun Yang, "Overseas Chinese Investments in Transition: The Case of Donggua n," Eurasian Geography and Economics 47, no. 5 (SeptemberOc tober 2006): 604-21; You-ren Yang and Chu-joe Hsia, "Local Clustering and Organiza-
December 2007
119
ISSUES & STUDIES
were adopted with regard to foreign direct investment (FDI), such as
"sanlai yibu" (三來一補, the processing of materials supplied from overseas to make goods that are then exported), to reduce uncertainty and
risks in the Pearl River Delta. Since the end of the twentieth century the
industrial zone in Suzhou has attracted tremendous amounts of large-scale
FDI, and become the example that many cities in the Yangtze River Delta
have attempted to imitate. Accompanying these two broadly different
modes of development are the divergent property rights systems with respect to industrial land in the two regions. Although the collective land
ownership system in Dongguan emerged earlier, it is still the "mainstream"
in the Pearl River Delta. Thus, it is appropriate to compare it with Suzhou's
system of state-owned/launched industrial zone development that has become the norm in the Yangtze River Delta.
The empirical question of this article is: Why did these two rapidlyindustrializing regions of Dongguan and Suzhou, both with high demand
for industrial land, evolve divergent systems of industrial land property
rights? From an institutionalist perspective, this article will explore the
divergent patterns of land property rights transformation from farmland
to industrial use in Suzhou and Dongguan, China, and will investigate this
divergence from the perspective of the interaction between institutional
arrangements and tiao (條, central/local sectoral command)— kuai ( 塊,
territorial jurisdictions) conflicts. We will propose some independent
variables from the concrete modes of governing practices within the government mechanisms— including the financial, economic quota, and local
cadres' promotion/evaluation systems— and examine how these variables
are interrelated and contribute to the divergent evolutionary trajectories
tional Governance of Trans-border Production Networks: A Case Study of Taiwanese IT
Companies in the Greater Suzhou Area, China," Environment and Planning A 39, no. 7
(2007): 1346-63; You-ren Yang and Hung-kai Wang, "Dile mmas of Loca l Governance
under the Developme nt Zone Fever in China: A Case Study of the Suzhou Region," Urban
Studies 45, no. 9 (September 2008, forthcoming); Godfrey Yeung, "Foreign Direc t Investment and Investment Environment in Dongguan Municipality of Southern China," Journal
of Contemporary China 10, no. 26 (February 2001): 125-54; and Godfrey Yeung, Foreign
Inve stment and Socio-Economic Development in China: The Case of Dongguan (London:
Palgrave Macmillan, 2001).
120
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Farmland Prope rty Rights Transformation in China
of the industrial land property systems in Suzhou and Dongguan. In other
words, we will show how some regional patterns of political economy
(especially the contingently overlapping promotion systems) in China result in different "incentive structures"5 for local officials that dictate their
behavior in seeking economic growth. Finally, we will compare the
socioeconomic consequences of the different industrial land property
systems, especially the welfare of local farmers.
Analytical Framework
Issues surrounding the loss of agricultural land have attracted attention among academics. 6 Some scholars have noted that institutional
factors as well as local governments are important propellers behind this
phenomenon. 7 However, few of these studies have taken the dimension of
"regional differentiation" into account. The "institutional turn" in geography postulates a methodology based on studying institutions to comprehend divergent economic activities in different regions. It proposes
that institutions are the intermediaries in shaping the trajectories of economic development in different localities, thereby becoming important
5Douglass
C. North, Institutions, Institutional Change, and Economic Performance (New
York: Cambridge University Press, 1990).
6Lester R. Brown, Who Will Feed China: Wake up Call for a Small Planet (New York: Norton, 1995); Carolyn Cartier, "'Zone Fe ver,' the Arable Land Debate, and Real Estate Speculation: China's Evolving Land Use Regime and Its Geographical Contradictions," Journal
of Contemporary China 10, no. 28 (August 2001): 445-69; Mark W. Skinner, Richard
G. Kuhn, and Alun E. Joseph, "Agricultura l Land Protection in China: A Case Study of
Local Governance in Zhe jiang Province," Land Use Policy 18, no. 4 (October 2001): 32940; Minghong Tan, Xiubin Li, Hui Xie, and Cha nghe Lu, "Urban Land Expansion and
Arable Land Loss in China: A Case Study of Beijing-Tianjin-Hebei Region," ibid. 22, no.
3 (July 2005): 187-96; Wei Xu, "The Changing Dynamics of Land-Use Change in Rural
China: A Case Study of Yuhang, Zhejiang Province," Env ironment and Planning A 36, no.
9 (2004):1595-1615; Hong Yong and Xiubin Li, "Cultivated Land and Food Supply in
China," Land Use Policy 17, no. 2 (April 2000): 73-88; and Anthony Ga r-on Yeh and Xia
Li, "Economic Development and Agricultural Land Loss in the Pearl Rive r Delta, China,"
Habitat International 23, no. 3 (September 1999): 373-90.
7Cartier, "'Zone Fever'"; Xu, "The Changing Dynamics of Land-Use Change in Rural China";
and Yeh and Li, "Economic Development and Agricultural Land Loss."
December 2007
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ISSUES & STUDIES
elements of further institutional transformation.8 This perspective is appropriate for our purpose of investigating the institutional factors that influence local land property rights regimes.
Martin divides the concept of institution into institutional environments and institutional arrangements. 9 The former include systems of
informal conventions, customs, norms, and socialized routines as well as
formal rules and regulations, and function as frameworks for reconciling
socioeconomic behaviors. The latter refer to specific organizational formations, such as markets, firms, unions, and the state. Therefore, the institutional approach in geography focuses on the "institutional regime"
constituted by institutional environments and arrangements in particular
localities and the interactions between them. It examines the evolution of
different local institutional regimes and how they interact with local economic activities.
From such a perspective, we thus attempt to provide a preliminary
conceptualization of the "local land property rights regime." Our primary
concern is both the transfer of land-use rights (converting collectivelyowned land into state-owned land by eminent domain, leasing state-owned
8Ash
Amin, "An Institutionalist Perspective on Regional Economic Development," International Journal of Urban and Regional Research 23, no. 2 (1999): 365-78; Ash Amin, "Moving on: Institutionalism in Economic Geography," Environment and Planning A 33, no. 7
(2001): 1237-41; Ash Amin and Nigel Thrift, "Globalisa tion, Institutional Thickness, and
the Local Economy," in Managing Cities: The New Urban Context, ed. Patsy Hea ly et al.
(London: John Wiley & Sons, 1995), 91-108; Andrew Cumbers, Danny Ma cKinnon, and
Robert McMaster, "Institutions, Power, and Space: Assessing the Limits to Institutionalism
in Economic Geography," European Urban and Regional Studies 10, no. 4 (October 2003):
325-42; Roger Hayter, "Economic Geography as Dissenting Institutionalism: The Embeddedness, Evolution, and Differentiation of Regions," Geografiska Annaler, Series B 86,
no. 2 (2004): 95-115; Bob Jessop, "Institutional Re(turns) and the Strategic-Relational Approach," Environment and Planning A 33, no. 7 (2001): 1213-35; Gordon MacLeod, "In
What Sense a Region? Place Hybridity, Symbolic Shape, a nd Institutional Formation in
(Post-)modern Scotland," Political Geography 17, no. 7 (September 1998): 833-63; Ron
Martin, "Institutional Approaches in Economic Ge ography," in A Companion to Economic
Geography, ed. Eric Sheppa rd and Trevor J. Barnes (Oxford: Blackwell, 2000), 77-94; Ron
Martin and Peter Sunley, "Path Depende nce and Regional Economic Evolution," Journal
of Economic Geography 6, no. 4 (August 2006): 395-437; and Dani Rodrik, Arvind Subramania n, and Francesco Trebbi, "Institutions Rule: The Primacy of Institutions over Geography and Integration in Economic Development," Journal of Economic Growth 9, no. 2
(June 2004): 131-65.
9Martin, "Institutional Approaches in Economic Geography."
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Farmland Prope rty Rights Transformation in China
land to private enterprises, transferring collectively-owned land to private
enterprises, etc.) and the conversion of land use (such as turning farmland
into land for development) in China. Thus we define a "local land property
rights regime" as a set of dynamic systems that comprises varied formal
institutional environments as well as arrangements, and informal rules
concerning land property rights transfer and land-use conversion in a
particular geographic region.
Furthermore, from the perspective of "path dependence," special attention should be paid to the structural influences of post-socialist reform
on institutional transformation, especially with regard to the fiscal system,
decentralization, and the "quota system" between different levels of government. For example, Weingast, Qian, and Montinola emphasize that
the fiscal system reform and devolution have had great consequences for
China's economic development. 10 They propose the concept of "marketpreserving federalism" as an important political foundation of China's
economic reform, and assert that devolution and competition among localities have ensured the success of this reform. Jean Oi also recognizes that
reforms in China's fiscal system have established strong advantageous factors that entice local officials to strive for local economic development. 11
She introduces the notion of "local state corporatism," and argues that
the governments at higher levels assign economic "quotas" to be fulfilled
by lower-level governments, and establish connections between rewards
for local officials and the economic development they help to advance.
However, Whiting maintains that the motivation/supervision system of
the local governments is very complicated in practice, including as it does
performance evaluation, a promotion system, and an objective responsibil-
10Barry
R. Weingast, Yingyi Qian, and Gabriella Montinola, "Federalism, Chinese Style: The
Political Basis for Economic Success in China," World Politics 48, no. 1 (October 1995):
50-81.
11Jean C. Oi, "Fiscal Reform and the Economic Foundations of Local State Corporatism in
China," World Politics 45, no. 1 (October 1992): 99-126; and Jean C. Oi, "The Role of the
Local State in China's Transitional Ec onomy," The China Quarterly, no. 144 (December
1995): 1132-49.
December 2007
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ISSUES & STUDIES
ity system.12 Thus, in addition to the economic incentives created by the
new fiscal system, the political factors of the promotion mechanisms of
Party organizations should be taken into account, too. This kind of socialist
legacy introduces variables that we have to explore while investigating
local land property rights regimes, especially regarding the role of local
governments.
In the following sections, we elaborate on this framework while
systematically analyzing the formation and transformation of the land
property rights regimes in Suzhou and Dongguan. Our analysis will focus
on four more inclusive dimensions of local land property regimes. First,
we analyze the formal regulations governing China's land-use management system and the way they interact with the Ministry of Construction
(建設 部) as well as related local regulative mechanisms. Second, we
scrutinize the allocation arrangements for land-related income between
different levels of governments and analyze some specific modes of land
development derived from such arrangements. Furthermore, we will investigate how some political-economic factors work in driving the local cadres
in these two regions to react to the central government's regulations on land
conversion in different ways. In the third part, we compare the local financial structures in Suzhou and Dongguan that might influence the different
practices of farmland property rights transformation. Fourth, we try to
understand the different ways in which quotas are assigned between different levels of government and how this influences the local land property
rights regime. Finally, we further examine the distribution issues derived
from farmland acquisition in Suzhou and Dongguan that are relevant for
local farmers.
The empirical data for this paper were gathered by face-to-face interviews with local officials in Suzhou, Kunshan (昆山), Wujiang (吳江),
and Dongguan (see maps 1 and 2), as well as participatory observation of
some land development projects, accompanied by secondary data consist-
12Susan
H. Whiting, Power and Wealth in Rural China: The Political Economy of Institutional Change (New York: Cambridge University Press, 2001).
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De cembe r 2007
Farmland Prope rty Rights Transformation in China
Map 1
The Location of the Studied Cases in Suzhou
Wuhan
Suzhou
Shanghai
Changsha
Zhangjiagang
Taipei
Yang
Hsinchu
tze
Guangzhou
Hong Kong
Changshou
Wuxi
River
Zhoushi Taicang
Kunshan
Suzhou
SND
SIP
Taihu
Lujia
Zhangpu
Jinxi
Shanghai
Pudong
Wujang
Luxu
Wanping
Huzhou
Qidu
Shengzhe
Jiaxing
East China Sea
ing of related regulations and reports in China. Fieldwork began in May
2003 and ended in April 2004. The interviews were carried out with people
from different agencies of the local government (including planning, land
management, finance, taxation, foreign trade, and customs departments),
as well as village committees, leaders of villagers' groups, and land developers, in a total of ninety-two meetings.13
13These
samples were carefully and systema tically selec ted, since the first author of this article is a planning c onsultant for the local governments concerned as well as a consultant
for Taiwanese trade associations. The interviews were conducted through planning and
policy consulting in a way that wa s meant to build a sense of partnership with the interviewees.
December 2007
125
ISSUES & STUDIES
Map 2
The Location of the Studies Cases in Dongguan
Shijie
Guangzhou
Huizhou
Foshan Dongguan
Shilong
Shenzhen
Jiangmen
Zhuhai HongKong
Dongguan City
Huizhou
Changping
Songshanhu
Houjie
Guangzhou
Huangjiang
Humen
Chang'an
Qingxi
Tangxia
Shenzhen
Zhu
Zhongshan
Jiang
Freeway
Highway
Railway
The Institutional Environment of Land Property Rights
Transformation in China
Since the beginning of economic reform in 1979, local governments
in China have been granted certain administrative powers in land-use conversion in order to attract foreign investment. However, the vast majority
of local governments have appropriated large amounts of farmland in the
name of industrialization and caused a wide variety of problems, including
the omnipresent "development zone fever" and a serious waste of prime
agricultural land. Thus, the central government decided to establish a
unified land management system in urban areas, passing the Land Management Act (土地管理法) in 1986. Furthermore, the state created a new
central-level Land Management Bureau to take charge of national landrelated affairs, and established local branches of this bureau at each level
of local government. However, the problem of the loss of cultivated land
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Farmland Prope rty Rights Transformation in China
continued to be severe after 1986. 14
The central government's concern about land resource management
was expressed in a new Land Management Act in 1998. The 1998 Act
requires governments at each level to adopt a land-use master plan that
should take into account the all-important five-year plan, geological features, environmental resources, conservation considerations, land provision ability, and the land requirements of construction projects. The
land-use schemes of lower-level governments should follow the schemes
of higher-level governments. 15 A land-use scheme devised by any local
government must not allow for a total amount of construction land that is
more, nor an amount of agricultural land that is less, than the respective
control indicators set in the scheme of the level of government above it.16
The central government also introduced compensation for farmers displaced from their land (the "agriculture land-use balance" or zhanbu
pingheng 佔補平衡), designed to preserve the total amount of agricultural
land (especially land of high quality) by controlling the up-to-then disorderly process of land-use conversion.1 7
Changes in the regulations related to land-use approval show that
there has been a tendency to re-centralize land management authority.
However, such attempts have faced constraints from other institutions to
different degrees. This is our next focus of concern.
Under the two systems of land ownership, there are two ways of
changing farmland from agricultural use. The first is through acquisition
by eminent domain on the part of the government, which transfers ownership of the land to the state (and then to the final land-user). The second
way is to transfer the land-use right from the collective ownership body,
which is usually the village, to the end land-users, such as investors in
the manufacturing sector. In the Suzhou area, the first approach is most
common. Such transfers of land property rights involve several regulatory
14Cartie r,
"'Zone Fever'."
17, Land Management Ac t.
16Article 18, Land Management Ac t.
17Article 31, Land Management Ac t.
15Article
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ISSUES & STUDIES
mechanisms, including the "agriculture land-use balance" policy and the
"construction land quota" (建設用地指標, jianshe yongdi zhibiao) system.
When appropriating collectively-owned farmland (say, for the purpose of establishing an economic development zone), local governments
must follow a specified approval process, and must satisfy the principle
of the compensation-for-displacement balance, which is mainly achieved
at the provincial level. Local governments below the provincial level
should also maintain the balance at their own level. The way it works is
thus: when a piece of prime farmland is converted to a non-agricultural
use, a piece of non-agricultural land of equal productivity must be switched
into the farmland category. However, this results in the "trans-jurisdiction
quota exchange" phenomenon. That is, some rapidly-developing areas
have to "buy" a quota from areas that are developing more slowly. For
example, when there is a shortage of 10,000 acres of farmland in Suzhou,
the city government may pay the Jiangsu provincial government to convert
or reclaim an amount of land of equivalent agricultural productivity
somewhere in, say, northern Jiangsu where development is going at a
much slower pace. According to our interviews, farmland compensation
is set at about 6,000 yuan per hectare.
Higher-level governments allocate a quota of construction land to
lower-level governments each year. For example, Jiangsu Province sets
an annual total construction land allowance, and distributes quotas to each
city, county, and township. The actual land use must correspond with the
relevant urban planning and land-use master plan. Such planning and control systems are basically the legacy of a bygone age of the planned economy. However, planning can seldom keep up with the mounting requirements of rapid economic development. This is especially true in areas
such as Suzhou where policies are designed to attract foreign investment.
We note that agencies involved in economic development at all levels of
local government often break the rules stipulated by their land management
counterparts, trying to acquire as high a quota of construction land as
possible. We also observe that many industrial parks in townships in the
Suzhou region do not exactly follow the urban planning and land-use
master plan as required. What is obvious is that local governments at all
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Farmland Prope rty Rights Transformation in China
levels (but especially the townships) consider the quota allocations from
upper-level governments as restrictions, rather than instructions to be
followed. Their desire to attract foreign investors is so strong that many
of the local officials we interviewed indicated that all investment projects
could certainly get the land they needed, even when the current quota had
been used up.
Furthermore, the history of the land property rights regime in Dongguan serves as an example of the institutionalization of the conversion of
farmland to construction use. The new Land Management Act adopted in
1998 can be seen as a watershed in institutional development. There are
two ways of changing the use of farmland through formal national institutions. One is to create new construction land by allowing farmland to be
converted to construction use according to allocated construction quotas.
The other is by using "inventory land"— i.e., unused land which was assigned for construction purposes before the implementation of the 1998
Land Management Act. According to the Act, collective construction land
includes land occupied by township and village enterprises (TVEs) and
public facilities at the village level, as well as land used for villagers' housing. The stipulations of the previous Act (enacted in 1986) were loose
regarding the conversion of collectively-owned land from agricultural use
to construction use. Collective organizations could ask for a change of
land use in the name of establishing TVEs. Many such TVEs are "sanlai
yibu" enterprises. As many "sanlai yibu" enterprises with capital from
Hong Kong, Macau, or Taiwan are attracted to the Pearl River Delta, collective organizations frequently seek this type of land-use change.
Before 1998, the approval process for converting farmland to construction use was indeed flexible. Moreover, there was no limitation on
the amount of land involved. Our surveys also indicate that construction
land quotas did not exist before 1998. In Dongguan city, construction land
obtained by collective organizations before 1998 was still permitted to be
used for development. Although this is not permitted under the new 1998
Land Management Act, approval can be granted as long as certain conditions are complied with, such as paying some local fees. A lot of collective
construction land has maintained its current status through these measures.
December 2007
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ISSUES & STUDIES
A large quantity of it is still waiting to be developed, while some of it is
already occupied by factories built to attract foreign investors.
The 1998 Land Management Act also has some implications for the
agriculture land-use balance policy and the system of construction land quotas. Up to 2010, Dongguan city has to maintain 600,000 mu (畝, 1 mu =
666.7m2) of farmland, of which 520,000 mu must fall into the more critical
"essential farmland" category. When an imbalance arises, additional farmland has to be acquired, usually in a jurisdiction where there is an ample
supply of non-construction land. The "balance fee" (i.e., the cost involved
in providing that new agricultural land) is about 5,000 yuan per mu. The
local governments that receive the balance fees are those in Guangdong
Province where urbanization and industrialization are not progressing as
rapidly. The amount of essential farmland cannot be changed without
permission from the State Council (國務院). Thus the regulations of the
new law tend to increase the costs and limit the locations of development.
Since the introduction of the new law, new construction land cannot
be obtained without the assignment of quotas from the land management
bureaus. In rapidly-developing areas such as Dongguan, there is a certain
degree of imbalance in the supply and demand of construction land. For
example, in 2002, there began to be signs of a shortage of construction
land in Dongguan. After some negotiation, the Guangdong provincial
government allowed its quotas for 2010 to be appropriated by 2005. The
Dongguan city government then allocated the quotas among townships
within its jurisdiction according to demand and their speed of development.
However, there are no specific rules concerning the allocation and the
city government has not reserved any quota allowance to cover any possible unforeseen additional demand from the townships. As a result, there
is under-the-table dealing in quotas among the townships.
The Development Mechanisms for Industrial Land
County and township governments in the Suzhou region tend to
discourage the long-established practice among villages of promoting in130
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Farmland Prope rty Rights Transformation in China
vestment by transferring collective construction land for development. In
this region, these local governments usually establish large development
zones by converting farmland into state-owned land through compulsory
acquisition, and this is what distinguishes the mode of development in the
Suzhou region from that in the Dongguan region. We also found cases
where villages tried to attract investment with collectively-owned construction land, but the upper-level governments discouraged such undertakings by cancelling the villages' construction land quotas.
Local governments in the Suzhou region did not invest a great deal in
industrial land development, and not much in the way of extra-budgetary
funds were involved in this either. For example, in Kunshan city, the total
extra-budgetary fund (excluding the land transfer fee) was 0.4 billion yuan
in 2002, and it was distributed among a large number of agencies. With
such a financial structure, income from the land transfer fee and bank loans
becomes an important means of funding construction and development
for the local governments.
The land transfer fee is not enough to cover the costs of infrastructure
and the relocation of farmers in a development zone. The income from land
transfer fees (including industrial, commercial, and residential categories)
received by Kunshan in 2002 was about 2 billion yuan, more than the 1.6
billion yuan of budgetary revenues retained by Kunshan city. This seems
like a large amount of income, but it has to be shared with the Suzhou city
and township governments. According to our investigations, the fees paid
to the upper-level government exceeded 700-800 million yuan in 2002,
and more than 80 percent of the rest was returned to the townships. Therefore, the city of Kunshan had only 100-200 million yuan from land transfer
fees available to it in 2002.
Furthermore, we also understand that township governments often
reduce the actual land transfer cost in order to attract investment. Although
Jiangsu Province established a minimum land price of 200 yuan per square
meter (or about 133,000 yuan per mu), the minimum price tends to drop
at lower levels of government. For example, Kunshan city adopted a
minimum of 105,000 yuan per mu (including the related charges paid to
each of the upper-level governments) in 2002. After the basic price was
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ISSUES & STUDIES
established, Kunshan city required that, when transferring land, township
governments had to pay 105,000 yuan per mu to the land management
bureau, which would then return a specified proportion of the revenue to
the townships after deducting the payments to upper-lever governments.
However, a strategy of low-price transfer was commonly adopted in areas
where there was keen competition for investment.
According to the regulations of the fiscal agency in the central government, income from land transfer fees can only be used for two purposes.
The first is for land compensation and relocation expenses, and the second
is for the development of the land involved. We found that the land transfer
fees were insufficient to pay for the provision of infrastructure, making it
necessary for some local governments to arrange budgetary financing or
loans from financial institutions. For this reason, land-secured bank loans
have become an essential means of funding local development. Before
lending to a development zone, the banks need to consider the development
prospects of the area, and it is basically a business undertaking. Therefore,
the land-use type designated by the planning system is a crucial factor.
Utilizing the usually high transfer fees for commercial and residential
districts to compensate for the generally low industrial land transfer fees
has gradually become common practice in land development in many
townships. For example, we observe that Huguan township (滸關鎮) in
Suzhou New District adopted this development model. The township
authorities started a development zone of 10 square kilometers, and invested 2 billion yuan over two years (2003-04). Funding was kept in
balance in three ways. The first was through sales of commercial and
residential properties, the second was through the rental of standard plants,
and the third was through the collection of revenue from local enterprises.
This mode of development could be described as borrowing on the one
hand, and selling property on the other. The 10 square kilometers of land
enclosed by the government could be said to be the key to the future success of the development zone.
Collective ownership is one of the distinctive features of Dongguan.
The collective entities can be the village committee or the villagers' groups
(sub-units under villages). The distinction between the two used to be
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vague and was not clarified until the start of the process of converting
farmland to construction land. Clarification occurs through the application
for and issuance of a land permit, also known as a "collectively-owned land
permit." Both village committees and groups can apply for permit rights
but whichever gets the permit has to sign a contract accepting responsibility for the welfare of the villagers involved.
Village committees have two ways of handling their collectivelyowned land. They can lease it out directly to manufacturers or developers
(including private companies) and let the lessees develop the land, or they
can build standard factory buildings and then lease them to manufacturers.
Either way, the committee needs to apply for the permit before carrying out
the development. Once the necessary land is amassed, the committee can
start the development process. In the earlier days, when village committees
lacked financial resources, they usually leased the land to the final users.
The user was then liable for the permit fee and the "land payment" made
to the committee. In addition, the land-user had to pay a monthly rent to
the committee. Schemes such as this still exist in some under-developed
areas of Dongguan. The income from land payments and rent thus becomes the village's means for financing future land developments.
Once village committees had accumulated sufficient capital, direct
investment in building factories for lease became a more common means
of land development. Some of the capital came from the committees'
stock-sharing cooperatives (SSCs), while some came from bank loans.
For example, the committee in Shigu (石鼓) village invested 50 million
yuan in building 100,000 square meters of standard factory space. The
price was 500 yuan per square meter, and the monthly rent was 9 yuan.
With the influx of foreign investment since the 1980s (especially from
Hong Kong and Taiwan), the huge demand for factories has created considerable profit margins for these village committees. Such economic incentives encourage the committees to invest directly in the development
and leasing of factory spaces. Villagers' groups with resources also participate actively in the process of land development by adopting similar
strategies, with the precondition that they maintain a good relationship with
the village committee.
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Village committees have to obtain the agreement of villagers' groups
before carrying out collectivized land development schemes. However,
unlike the government land expropriations often seen in the Suzhou region,
land in Dongguan is obtained through negotiation, or more directly,
through concrete land/welfare interests exchange agreements. All the
villagers' groups have representatives on the committee who express their
group's opinions about the handling of their land. Apart from negotiations,
a villagers' group must obtain permission from the committee before
leasing out the group's land for development. However, if villagers' groups
have sufficient capital and decide to build factories on their own and lease
them out for development, the committee would not object. This enables
groups with resources to use the collectively-owned land they control in
ways they see fit.
A Comparison of Local Financial Structures
in Suzhou and Dongguan
In this section, we investigate, from a financial perspective, the mechanisms that influence the different ways local governments in Suzhou and
Dongguan handle farmland property rights transformation.
Although Suzhou and Dongguan are both locations that attract a
great deal of foreign investment, the property rights arrangements of investors are very different. In the Suzhou region, most of the foreign companies
are sole-owners, and the tax these companies pay is mainly value-added
tax (VAT), which is shared between the central and local governments.
From our interviews with staff members in fiscal departments, in the city
of Kunshan, the tax paid by foreign investors amounts to 60 percent of
total tax income. The total tax revenue in 2002 was about 4.1 billion
yuan, but only 1.6 billion yuan was retained in Kunshan, less than 40
percent of which was contributed by foreign companies. In other words,
foreign investment in Kunshan has made a great contribution to national
tax revenues, but has had less of an impact on the financial status of
Kunshan itself. The reason for this is closely related to China's local
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revenue-sharing system.
According to the tax revenue-sharing system as defined by the central
government, in the period 1993-2001, 75 percent of VAT income was allocated to the central government, 12.5 percent to the province, 4 percent to
Suzhou city, and 8.5 percent to Kunshan city (including the townships).
After 2001 the share of Kunshan and its townships increased to 12.5 percent, the shares of the central and provincial governments remained intact,
and the city of Suzhou was almost totally squeezed out of the picture.
Suzhou city received 0.6 percent of a reduced total tax intake of the countylevel cities under its jurisdiction. As to the way tax revenue is shared between Kunshan city and its townships, we find that the basic principle is
a 40/60 split, with 40 percent of tax revenue going to the city and 60 percent
to the townships.
At township level, the current revenue-sharing system often results
in financial deficits and a shortage of construction funds for townships
that depend on land development to draw investment. For example, the
total financial revenue of Lujia township (陸家鎮) is 0.38 billion yuan,
but the amount kept in the township is only 74 million yuan. We find that
the budgets in the investigated areas only cover "meals finance" or basic
personnel expenses.
The property rights of foreign investment in Dongguan are very different from those in the Suzhou area. A great number of manufacturers
in Dongguan operate as "contracted materials processors." Contracted
materials processing factories do not have to pay VAT imposed by the
central government; they only pay so-called "processing fees." The most
common formula is to levy a fixed percentage of the processing budget
stipulated in the contract. The current rate is about 100/80; i.e., the local
contracted processor receives 80 yuan for every 100 Hong Kong dollars
that the foreign company transmits to him/her. Calculated at an exchange
rate of 1.06 yuan to the Hong Kong dollar, the processing cost would be
26 yuan, which is treated as "off-budget revenue" and does not have to
be shared with the central and provincial governments. It is allocated
among the relevant municipal- and township-level governments (each receives roughly 4 yuan), plus the handling charges levied by some banks.
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ISSUES & STUDIES
The remaining 17 yuan is paid to units under the village committee. If
the village committee is the "landlord," it receives all of the remaining 17
yuan. If the villagers' group or a private company is the landlord, the
committee and the landlord share the 17 yuan.
Basically, sole-owner companies only pay VAT. As there is no
county-level authority between Dongguan city and the townships, revenues
from VAT are shared by these two levels of governments, with each receiving 12.5 percent of the total, which is about double the 5-6 percent
levied by townships in Suzhou. This is of course financially more beneficial to the townships.
After comparing the financial structures in Suzhou and Dongguan,
we observe that under different patterns of foreign investment and institutional arrangements for revenue-sharing, the financial situation of townships in Suzhou is much worse than that of their Dongguan counterparts.
Furthermore, the local governments in Suzhou have to invest considerable
amounts to develop the infrastructure of their industrial zones. However,
the strategy of cut-price land-use rights is commonly adopted by county
and township governments in Suzhou in their fierce competition for investment. Under the current tax-sharing system, land transfer operations do
not contribute to the financial capacity of local governments in Suzhou.
Additionally, the economic development-related agencies in Suzhou, due
to pressure from the quota of registered capital, usually try to lure investors
by lowering the land price, without understanding that the land transfer
fees are insufficient to pay for the land acquisition and infrastructure construction. Thus we find that in Suzhou, local government tends to use
the large-scale acquisition of farmland plus bank loans to finance the infrastructure necessary to achieve economic development. From an economic
perspective, this seems to be a contradictory phenomenon. Therefore, we
would like to explore further some of the factors that induce the "development zone fever" in Suzhou.
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A Comparison of Economic Indicators and the CCP Cadres'
Promotion/Evaluation Systems in Suzhou and Dongguan
China's economic indicator system is a legacy of a bygone era of the
planned economy. In those days, there were strict quotas for almost every
governmental function at each administrative echelon, and some elements
of this governing mechanism have been retained up to the present. In contrast to the system of supervision through the ballot that operates in Western
democracies, the efficiency of local governments in China is managed
through a system of "zhibiao" (指標, indicators or quotas) which cover
various administrative functions. Although some areas pay special attention to development-related indices, such as GDP growth and quantities
of incoming foreign capital, the indices vary in different regions, and the
central government does not have a strict, overarching index control system. Also, totals may not be thoroughly distributed among lower-level
governments by the upper levels. The lower-echelon governments still
have a certain leeway, and define their own annual objectives after satisfying the demands of the upper level.
The responsibility for quota assignment belongs to the planning
commission, which in the planned-economy era would define a five-year
development plan and conduct certain annual reviews and adjustments.
In those days, the economic quotas that were assigned were "solid." However, the indices defined by the planning commission in recent years have
tended to become "estimates." Generally, they are only predictions, and
their fulfillment is not the sole reference for a Party member's promotion/
evaluation.
According to our investigation, Jiangsu Province has stopped assigning quotas to lower-level governments, so the highest level of government that assigns quotas is the city, like Suzhou. Although the pressure
from the quotas given out by the city government seems much lighter, the
pressure from the lower-level governments has increased. We observe
a contradictory phenomenon that city-level governments have noticed:
"solid" quotas do not accord with the market economy, and it is too difficult
to predict investment growth that depends on international capital moveDecember 2007
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ments. However, it is possible that the areas below city level set targets
higher than the predictions set by the upper level, and some even link the
promotion and evaluation of lower-level government leaders to the rate of
quota fulfillment.
Is there any connection between the fulfillment rate of assigned
quotas and the promotion/evaluation of the local leadership? It is the
personnel and organization department that primarily manages the Party
cadres' evaluation and promotion, and the quota fulfillment rate is just
one of many references it uses. In theory, quota fulfillment has no connection with cadre evaluation, but it seems otherwise in practice. We further
notice the practice of "stressing quotas" (壓指標, ya zhibiao, emphasizing
or commanding the achievement of further economic indices), which is
most noticeable below the county level. The quotas become very "solid"
once they have been distributed through the echelons, especially when they
reach the townships, and are more commonly linked to the evaluation of
Party members at those levels. In Suzhou, we found that township officials
seldom had the chance to be promoted to county level, and county-level
cadres were usually dispatched from the relevant department in the Suzhou
city government. Their term of office is usually not very long. Therefore,
when they serve as county officials, their achievements (especially in economic development) usually become the main point of reference for future
promotion. Thus, these county officials are the driving forces behind the
practice of "stressing quotas."
The mechanism of "stressing quotas" at the county level provides an
important driver for attracting investment through large-scale farmland
conversion in the Suzhou region. In other words, even when the land administration department establishes land-use regulations, the Party cadres'
evaluation system at county level drives the local government leadership to
breach these regulations. Thus we argue that the economic quota system
and the Party cadres' promotion/evaluation system have become the predominant driving forces behind land property rights transformation in the
Suzhou region.
The main reason why Suzhou's intra-governmental quota system
results in localities rapidly renting out land to attract foreign investors is
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that economic and financial achievements are linked to officials' promotion
assessments. We still need to examine two issues: (1) Do higher-level governments in Dongguan issue quotas to lower-level governments, and are
these "solid" quotas? (2) Is the fulfillment of these quotas linked to officials' promotion assessments?
Our field research shows that Dongguan had at one time assigned
economy-related quotas to township governments but "softened" them
(i.e., made them toothless) after the 1990s. Recently, Dongguan has
scrapped economic and financial quotas for township governments altogether and replaced them with predictive quotas, which are only for reference purposes, allowing township governments to set their own annual
development goals. At the level of Dongguan city, this trend of "softening
the quotas" is similar to the trend in Suzhou. However, as discussed above,
Suzhou's quotas "harden" as we descend the administrative hierarchy,
while this hardening is absent in Dongguan, probably for three reasons.
One is that the level of government above Dongguan, the Guangdong
provincial government, no longer issues economy-related quotas to Dongguan and all the figures are now set by Dongguan itself based on its own
conditions. In addition, there are no county-level cities below Dongguan,
so unlike Suzhou, there are no prefecture-level department heads "going
rural" to work as heads of county-level cities. These leaders are some of
the most important drivers of "stressing the quotas" in Suzhou. Such a difference in administrative structure makes the phenomenon of "stressing
quotas" less frequent in Dongguan. Thirdly, our field research shows that
township governments in Dongguan do not allocate economy-related quotas to village committees, as the latter are fundamentally not government
organizations. Thus, in the same way, the economic motivation of village
committee leaders is less driven by "stressing quotas."
If "stressing quotas" is not a frequent phenomenon in Dongguan, the
question then is whether the promotion of officials in Dongguan is linked
to economy-related quota performance. We discover that there are some
assessments related to the economic performance of lower-level governments, but these assessments were not linked to the promotion of lowerlevel leaders. In other words, economic and finance-related quotas are
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ISSUES & STUDIES
not linked to officials' promotion assessments in Dongguan, and these
quotas themselves are being downplayed. Thus, compared with Suzhou,
we believe Dongguan's tax-sharing system and the land-use fee appropriation arrangement are already enough to encourage local leaders to attract
business through land development, and the distribution of local revenues
facilitates the re-production of local social-political relations.
The Distribution of the Land Rent
Although the central government established compensation standards
for farmland nationalization, our fieldwork indicates that local institutions
vary in this regard. For example, Kunshan city does not pay compensation
in one lump sum, but has adopted a "3-6-9 system" under which payments
of 300, 600, and 900 yuan per mu/year are made to the affected peasants
according to the land category: responsibility field (責任田 , zerentian),
family land (自 留地, ziliudi), and staple field (口糧 田, kouliangtian),
respectively. This significantly reduces the financial burden on the local
government.
How does the 3-6-9 system affect farmers in a village where the
upper-level government has taken away all the land? One such village is
located in Huaqiao township (花橋鎮), Kunshan, with a total area of 2,800
mu and a population of about 1,800. Our calculations show that if the
government appropriates all the agricultural land in the village, each farmer
would only receive a compensation payment of 817 yuan per year, an
amount lower than the average income from cultivation. In other words,
this 3-6-9 mechanism is disadvantageous to the village and farmers to a
considerable degree.
Furthermore, we observe that county and township governments in
Suzhou tend to prevent villages from attracting investment by transferring
collective development land. The impact of the economic-related quota
system reaches right to the lowest level of local government— the township
government. What really happens is that, on the one hand, county and
township governments in the Suzhou region adopt a negative attitude to140
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Farmland Prope rty Rights Transformation in China
ward attempts by village organizations to establish development zones
on collectively-owned land, while on the other hand, they tend to establish
big development zones by compulsorily purchasing farmland, and this is
what distinguishes the mode of development in the Suzhou region from
that in the Pearl River Delta. We find many cases where villages have tried
to attract investment with collectively-owned development land, but the
upper-level governments have discouraged such attempts by cancelling the
villages' development land quotas. It is precisely due to power inequalities
that the local government is simply able to override the wishes of the
village committees in Suzhou.
How to make up for such differences in benefit for villagers has become an important issue in the Suzhou region. Kunshan city has proposed
an experimental system involving an "enrich-the-people cooperative"
(EPC; 富民合作社, fumin hezuoshe) at village level, in which the villagers
are shareholders. Three to five percent of the expropriated land is reserved
for the EPC to build standard factories for rent or housing for workers. For
example, the development zone of Zhangpu township (張浦鎮) in Kunshan
set aside 2,000 mu for EPCs to build standard factories, allowing them to
collect the rental payments. The development rights of collectively-owned
development land in nearby villages were then transferred to the development zone. So we can see that in order to develop the village economy,
local governments are trying to make good use of the opportunities provided by the policies of upper-level governments that are designed to attract investment.
The EPCs piloted in Kunshan are very different from the village-level
stock-sharing cooperatives (SSCs) of the past. The SSCs managed the
public assets accumulated in the village, and villagers were allocated
shares automatically by virtue of their household registration in the village,
and these share rights could not be sold or reassigned. Villagers can join
or withdraw from an EPC freely, and the shares are transferable; in other
words, it operates according to a free cooperative spirit.
Basically, the EPC system may be seen as a remedy designed to
ameliorate the effects of the large-scale acquisition of farmland by eminent
domain in Suzhou. The local governments hope that farmers who have
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lost their land will use their compensation payments to join the EPCs and
secure their livelihoods through the rental of standard factory buildings
and worker housing. However, according to our investigations, successful
EPCs are few in number, and the villages that set up EPCs tend to be economically better off. For example, although Zhangpu township had set
aside land for an EPC to build standard factory buildings, no EPC was
established in any of the villages in the township. The key to the success
of such a strategy lies in the villagers' trust in the collective organizations
that would manage the collective property. Villagers in some areas had
no confidence in the propositions put forward by the collective leadership,
owing to past experience of irregularities in TVEs.
Compared to the Suzhou system, local farmers enjoy a better standard
of welfare under the system of collectively-owned land property rights.
For example, it is common practice in Dongguan for villagers' groups to
accumulate sufficient capital to build standard factory buildings for lease.
Unlike the old SSCs, the shares of which could not be traded, some villagers' groups can run SSCs for specific development projects, with the free
exchange and trading of shares permitted. Whenever there is a new investment project and the need for more factory spaces is anticipated, the
villagers' group will set up a new shareholding cooperative to raise the required funds. Take one group in Humen township (虎門鎮), for example.
The group consisted of about two thousand villagers, collectively holding
about 40,000 square meters of development land— the land-use quotas being carry-overs from past applications. The villagers estimated that they
would need nearly 20 million yuan to fully develop the land, so they established a shareholding cooperative. As the expected return on investment
was over 10 percent, the villagers were willing to buy shares.
In Dongguan, the user of the collectively-owned land has to pay the
"land fee," which is mainly used to pay for the welfare of the villagers
and the basic infrastructure involved. Dongguan city and township governments do not get any part of the payment, nor do they regulate its magnitude and use, which is entirely up to the land-user and the "landlord" (i.e.,
the village committee or villagers' group). The "land fee" is one of the most
important sources of revenues for the village. In addition to paying the
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permit fee to the land management bureau and the "land fee," the land-user
also has to pay land rent to the "landlord" if the former builds his/her own
facilities. Our surveys show that wealthy village committees in Dongguan
could receive nearly 10 million yuan per year from the above-mentioned
sources of revenue. Some villagers' groups could even receive up to 30
million yuan annually.
How are these rents allocated within the collective organizations?
The collective bodies pay a certain amount of their income to all the people
whose households are officially registered as residing in the village. The
reason for this is that every collective body has its own shareholding cooperative. These cooperatives are charged with the management and allocation of all collectively-owned assets. The per capita amount paid to
villagers by the cooperative varies according to the financial resources of
each organization. Some wealthier villages pay up to 600 or 700 yuan per
person per month, but immigrant workers who are not considered official
residents of the village cannot enjoy these benefits.
Through the above discussions, we indicate that farmers in Dongguan
have fared much better than their counterparts in Suzhou. In other words,
we argue that the collectively-owned land property rights regime protects
local farmers' interests to a significantly higher degree.
Conclusion
Geographers have argued that "aspatial" theories, such as the neoclassic thesis of perfect competition, have their limits.18 From an institutional geography perspective, we try to highlight the place-dependent
political economic process that sustains the divergent local land property
rights regimes in Suzhou and Dongguan. Although these two industrializing regions are regulated by the same Land Management Act, their systems
18David
Harve y, "On the History and Present Condition of Geography: An Historical Materialist Manifesto," in Human Geography: An Essential Anthology, ed. John Agnew, David
N. Livingstone, a nd Alisdair Rogers (Oxford: Blackwell, 1996), 95-107.
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ISSUES & STUDIES
of land property rights transformation (from farmland to industrial land) are
very different.
Two "exogenous" factors can be shown to influence the placedependent interplay of political-economic variables such as the financial
system, the economic quota system, and the local cadres' promotion/evaluation system, and to contribute to these divergent patterns. The first is the
administrative hierarchy. Dongguan has a two-tier administrative setting
of prefecture/townships, while Suzhou has a three-tier setting of prefecture/
counties, county-level cities, and townships. This factor influences the
local financial structure and the incentive structure for county (county-level
city) leaders that are embedded in the promotion/evaluation systems for
Party cadres. The second factor is the pattern of foreign investment, i.e.,
the "property rights pattern" of FDI. A great number of manufacturers
in Dongguan operate as "contracted materials processors," while soleownership operations prevail in Suzhou. This factor also influences the
local financial structure and the incentive structure of village committees.
Based on this comparative study, we argue that it is the place-dependent
interplay of these relevant variables (financial system, economic quota system, and local cadres' promotion/evaluation system) embedded in China's
broader institutional environment that results in the "exchange structure,"
which further shapes the place-specific "incentive structure" of the local
officials. 19 For example, the phenomenon of "stressing quotas" in Suzhou
illustrates such place-specific governmental practice.
In addition, the emergence of local institutions could be regarded as a
supporting factor for the difference in farmland property rights transformation between these two regions. These institutions include shareholding
cooperatives, the 3-6-9 payment system, and others. As this study shows,
these local institutions play a considerable role in supporting the local land
property rights regime. With China's political-economic systems in a state
of transition, we suggest that such locally developed institutions deserve
19For
discussion of the exchange structure, incentive structure , and institutional transformation, see note 5 above.
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more academic attention, especially the way in which they influence divergences in local development patterns.
Which model is more successful? The answer to this question requires much more investigation from different perspectives. However, it is
quite obvious that in the process of industrialization, the collectivelyowned land property system in Dongguan is much more desirable than
nationalization in terms of the welfare of farmers. Furthermore, we argue
that there exists a "dilemma of governance" that reinforces the "development zone fever" in Suzhou, especially the interplay among economic
quota assignment, the promotion/evaluation system for Party cadres, and
the revenue-sharing system. We suggest that land property regimes that
rely on attracting foreign investment by low land prices, made possible by
land-ownership conversion, are not really beneficial to short-term (or even
medium-term) local fiscal operations, and there are consequential "governance deficits," such as the need to resettle peasants whose land has been
expropriated and the abuse/waste of land resources.
Finally, on a theoretical level, we propose a "political turn" in the
study of China's local development. Apart from the economic paradigm
that focuses on fiscal reforms and decentralization, scholars might pay
more attention to political-institutional factors, such as intra-Party promotion systems, tensions between the two evaluative indicator systems
maintained by the tiao and kuai, and the regulation as well as the political
governance of government-village relations. As this study shows, these
factors contribute to variations in regional development patterns in China.
A more integrated perspective that incorporates the issue of "political governance" could be valuable to a further understanding of the dynamics and
contradictions of China's local development.
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