China’s Land System Reform; What Comes after the Third Plenum? John W. Bruce 16 th Annual World Bank Conference on Land and Poverty March 23 – 27, 2015, Washington DC

1. The Dual Tenure System Urban Land; State-owned, use rights transferable (a financial asset) Rural Land: Collectively-owned, use rights transfer limited (a social security resource) The Consequences: Cheap land = massive municipal revenue = dramatic expansion urban infrastructure Distortion in urban growth patterns Loss of agricultural land Disadvantage to rural population, resentment and conflict

2. The Land System Reform The need for reform - why now? Key reform elements: Registration of both collective and household landholdings Increased marketability of rural land rights, by category of rural land Reforms of procedures and compensation for land takings

3. What Remains the Same? Public ownership of land, whether state or collective The duality between urban and rural land ownership The long-standing trend toward strengthened property rights in rural land The “quota”- based system of rural land use planning The market can shift rights in land within use categories, not between them

4. The Larger Reform Context The rule of law reforms – and piloting The urbanization (townization) program The scaling up on agricultural production through land consolidation Associated changes in organization of production

5. An Example: the Henan Xinxiang New Urbanized Community Development Project A townization case: voluntary consolidation of rural villages, intact socially, near non-farm job opportunities Demolition of village built-up areas and restoration to agricultural use Compensation to villagers is basis for purchase new residences, together with… Revenue generated by auction of additional quota based on restoration of village land to agriculture Village farmland remains held and managed by village, holdings with households if they wish New town-level organization holds collective ownership of new town construction

6. The Reform Process Policy Documents and piloting Instructions Issued Piloting status: Collective land registration virtually complete Household rights registration piloted (5-year target for completion) Instructions issued for piloting reforms for all categories of rural land Thirty-three sites announced for land system reform piloting No instructions so far on reform of rural land taking process and compensation Piloting and the rule of law (“waiver of law”) Pilots must be in line with the Third Plenum direction, “adhering to the principle of initiating pilots first, while ensuring that the nature of state land ownership remains unchanged, the red line of arable land is not broken, and farmers’ interests are not impaired…”

7. What to Expect (1) Registration of household use rights will go more slowly than projected Registration likely to miss an opportunity to improve the land rights of Chinese women In many communities farmland consolidation move ahead of registration A good deal of farmland is going onto the market before registration

8. What to Expect (2) Roll-out of the reform for collective construction land poses special challenges and is being approached especially cautiously Failure to provide public education to rural people on the risks and challenges of greater marketability of rural land Based on the experience with implementation of earlier reforms, the Central Government will have difficulty getting compliance by local officials with policies that restrain them in pursuing their interests, both bureaucratic interests and private interests. Expect attempts by local officials to manipulate reform implementation to their personal or organizational advantage, or simply to drag their feet to delay implementation.

9. What to Expect (3) Organizational accountability issues seem likely to emerge as critical, in old and new institutions Private actors are moving rapidly to take advantage of increasing transferability of rural land rights and their efforts will tend to outpace government’s development of an adequate regulatory framework through pilots Urbanization as piloted in Xinxiang will exist alongside existing patterns of municipal land requisitioning Piloting enjoys financing advantages, and there are important replicability issues that can threaten benefits for rural people.

10. Conclusions Central government will persevere in the roll-out of the land system reform, systematically and quite cautiously, and may be outpaced by events on the ground. There will not be a single market in rural land use rights but several segregated markets for different use classes of rural land. Land use regulation to protect farmland in the interest of national food security functions as a critical limit on the role of markets in rural land. Pilots are valuable but it will be important to pay attention to what is happening outside pilot areas and to be aware of factors affecting replicability of pilot activities. The reforms promise to benefit rural people by conferring new value on their land rights, but how far will those benefits be hijacked by private and local government actors?