Country Driving [176]
If a city hopes to stay solvent, it must continually expand. In order to build infrastructure, the local government takes out huge loans from state-owned banks. Wang Lijiong, the director of Lishui’s development zone, told me that back in 2003 the city had borrowed over sixty million dollars in order to start blowing up the mountains and building roads. “If you want to get wool, you have to raise the sheep,” he explained. But there were many parts of China where officials had gambled on investors who never arrived. When this happened, the development zone remained half-built, and the loans failed, and the whole bubble collapsed.
By 2006, the central government had realized the risks of this system, and they were trying to slow growth. They raised interest rates, and they required cities to undergo a more stringent application process for major expansions. But authority had become so decentralized that rules were hard to enforce. Wang Lina said that the Ministry of Land Resources simply didn’t have enough staff to do the necessary on-site investigations. Sometimes they even relied on satellite images to try to figure out which cities were embarking on major construction projects. Budgets were a disaster, because governments could effectively decide what to report and what to hide. Wang had recently researched a town in Henan Province where the government reported a year’s fiscal revenue of only two hundred million yuan, or roughly a quarter of a million dollars. But they had spent five times that amount on infrastructure projects. Wang couldn’t tell where the money came from—she assumed the city had profited from real estate transactions, but there were many ways to avoid reporting such deals. The cadres, like everybody else, were involved in the guanxi game; major deals were accompanied by bribes and gifts, and nobody left a paper trail. And only a fool bothered to think about long-term goals. “Every five years you change the local government officials,” Wang said. “So they know they have a limited opportunity. Do they worry about the next generation of leaders? They have to get it while they can.”
Wang, like many scholars, believed that eventually the Chinese government will have to privatize land. With stable income from property taxes, they could end the current system of real estate speculation, but there isn’t much incentive to make a change now. And the people who suffer the most are those with the least power: the farmers. Their loss of land helps subsidize China’s urbanization, and they have no legal recourse—it’s hard enough to overthrow a single village Party Secretary, not to mention the whole system. In any case, most peasants are so intent on migrating, or coping with the transition to private enterprise, that the last thing they worry about is changing the constitution.
In a country where everybody is on the move, the land itself is fluid, at least in the legal sense. All around a city like Lishui, farms are being converted to suburbs, and every construction site means more revenue for the government. East of downtown, one major development was happening in a place formerly known as Xiahe. Xiahe was a village on the banks of the Hao River; in the old days peasants raised rice, tangerines, and vegetables. But a few years ago the Lishui government had acquired a 16.5-acre section of the village. For the rights to this land, the city paid slightly less than one million dollars, most of which was used to compensate local farmers who had to move out. I met a Xiahe resident named Zhang Qiaoping, who had supported a family of four on a plot of land