Country Driving [95]
After Deng Xiaoping came to power in 1978, he and other reformers wanted to grant some type of landownership to individuals. But this issue was extremely sensitive: privatizing land in Communist China, especially in the countryside, would be tantamount to admitting that the revolution had failed. Instead, officials developed something called the “Household Responsibility System.” Farmers contracted land from the village commune, agreeing to pay a certain amount annually in either cash or harvest quotas, and they were allowed to keep any surplus. It was a variation on the pre-Communist tenant system, except that now the nation essentially served as the landlord.
The policy was adopted nationwide, and it became the next best thing to private ownership. Individual motivation returned to the fields, and from 1979 to 1984, the average net income for rural people increased by 11 percent. City dwellers actually lagged during this period, at least in relative terms—the average urban income increased by only 8.7 percent. But the nation still had a dual economy—rules were different for urban and rural regions. In the mid-1980s, government policies began to favor urban development, because leaders wanted to build the export economy. They improved city infrastructure, and they built special economic zones in places like Shenzhen. Most important, in the 1990s they reformed laws about the use of urban land. In Chinese cities, all land still technically belonged to the government, but private individuals were given the right to buy and sell dwellings. They couldn’t own the land, but they could own the building or apartment atop the land; they were free to sell it, or lease it, or apply for a mortgage. This change had an immediate effect—it helped spur the growth of the new middle class. Nowadays in Chinese cities, a person’s most valuable possession is typically his apartment.
None of these reforms apply to rural residents. In the countryside, an individual can’t buy or sell his farmland, and he can’t mortgage it. He can’t use his house as collateral on a loan. The best he can do is a long-term lease on his land, which is still owned by the village collective. And a farmer has no bargaining power if a developer comes to town—an individual can’t oppose a land sale or negotiate for a higher price. The law gives cities and townships the right to acquire any suburban land that’s in the “public interest,” a term that’s never been defined, and the result is that urban places expand at will. When cities buy farmland, they pay set rates that are kept artificially low. Such transactions are handled by the village governments, which are supposed to reimburse any farmer who loses his land, but corruption often siphons off funds. Beginning in the 1990s, as urban areas grew rapidly, such land grabs became more common—by one estimate, during the period from 1990 to 2002, sixty-six million farmers lost their land. And the rural system turned into a particularly unfair combination of the old and the new, the communist and the capitalist. Profits are individual, but risk is communal: local cadres benefit from land sales while villagers are stuck with the ramifications. A half century after the revolution, rural land reform has accomplished exactly the opposite of its original intentions.
Over time, the government has taken some steps to improve the rural situation. They’ve sponsored road-building campaigns, and they stopped demanding harvest quotas and agricultural taxes. But the land law remains a fundamental problem, along with the sheer number of people. In 2005, according to a government survey, the