Wednesday, September 13, 2006

Land Expropriation Reform Makes "Land Enclosure" Worse

Author/Qin Hui

The land problem has become intensified after local tax reform. The central government has paid a lot of effort in constraining land "enclosure". In the year of 2004, it initiated the reform in land expropriation, the so-called "new land policy", "land revolution" and "The deadline of August 31", and it has enormously constrained the collusion between government and business sector and protected the national interest. The reform has changed the interest distribution between developer and government. The system of negotiated leasehold is replaced by open auction. Now it is less possible for developers to offer bribe to local officials to get land at low price. This policy reduces the loss of land revenue to national financial income.

However, this policy not only fails to alleviate but also further worsens the problem of land enclosure.

The previous leasehold system definitely causes corruption in land expropriation. Bribery and the people in power lured the local officials to sell land at low price. It did harm to national interest and peasant. Only developers and the officials involved made a lot of money. But these illegal practices only increased personal wealth rather than govenment financial resources. So it not only led to anti-corruption campaign but also the internal constraint within governments, particularly the incentive to monitor by the officials who did not benefit from corruption. There was incentive for the businessmen and officials to pursue personal interest. But the "incentive for government fiscal revenue" is comparatively less.

"Reform in land expropriation" is different. Now after low prices in expropriation and leasehold was replaced by low price in expropriation and high price in "auction", the revenue from expropriation of peasant's land does not decrease. More land revenue goes to government rather than the pockets of officials and developers. Land revenue becomes more important to government financial income.

Although corrupted officials might have less personal incentive to push forward land enclosure, governments become much more active in it. It is difficult to condemn these practices as "corruption" because the land revenue goes to government rather than individuals. Because the financial interest is shared within local government, the monitoring and constraining by "disinterested colleagues" will be reduced. The land enclosure perpetuated by government's land revenue rather than officials' personal interest, by governments rather than individual official, and legal rather than illegal, will move faster. This is not unimaginable. One and half year after new land policy, the conflict between people and government caused by land expropriation has increased. The conflicts like the incident of Ding Zhou, which was rarely seen previously, happened persistently.

Since the fiscal and tax reform in the 1990s, with the exception of some coastal areas, most local governments, particularly those of county-level or below, are increasingly "thirsty and hungry" for finanical resources. The reform in tax and fee allievates peasants' economic burden but put more grassroot-level governments into financial difficulties. But the appropriate measures of grassroot-level government reform do not bring substantial change. Now the land expropriation reform further causes great seduction of "land reveneue" for government. With these factors together, where is the land enclosure heading to? The answer is expected.

2006-08-28 New Express

Qin Hui teaches in the Faculty of Human and Social Sciences, Tsinghua University, Beijing. He is an expert in agricultural problems of China and Russia.

The original article
Photo: *LJ*

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