China's land reform aims to revolutionize 750 million lives

Zhang Xiaosui is the very model of a modern Chinese peasant.

Farming a field 10 times larger than any of his neighbors' in this scruffy village in central China, he is on the front lines of a new government drive to transform Chinese agriculture, and with it the lives of 750 million country dwellers.

If the land reform announced last week works as officials hope it will, many peasants will emulate Mr. Zhang's effort to turn family plots into a modern farm, and help bang one of the last nails into the coffin of Mao Zedong's collectivist dream.

"I wanted to farm more land before, but I didn't have the opportunity," Zhang says, sitting in his comfortably appointed front room. "Now I can, because the government is starting to support my idea."

In what the official news agency Xinhua called a "landmark policy document," the ruling Communist Party's Central Committee agreed last weekend to allow small farmers to sell their right to till the land. The plan is designed to consolidate landholdings, encourage uneconomic farmers to seek other employment, and boost rural incomes.

The decision did not privatize agricultural land, which remains collective property. But "it marks a huge improvement in tenure security for farmers and contains many, many good points," says Li Ping, a lawyer with the Seattle-based Rural Development Institute, which advocates wider land rights for peasants. "This new policy is really, really good."

President Hu Jintao has made improvements in rural living standards a key goal of his administration. The new reform comes a symbolic 30 years after the radical changes that Deng Xiaoping introduced, breaking up Soviet-style collective farms so that peasants could do as they liked with the plots they were allocated.

That is widely credited with kick-starting the economic reforms that have driven China's extraordinary economic growth over the past three decades. Peasant farmers, however, have not enjoyed the fruits of that growth anything like as much as their cousins in the cities: The urban-rural income gap is now more than 3 to 1.

Under the current system, village committees divide village land equally between residents who hold 30-year leases free of charge, and who can grow what they like and sell their harvests wherever they want.

This boosted productivity and incomes when it was first introduced, but 30 years later the system is beset by inefficiencies and waste. At the same time, 120 million peasants who have headed to the cities in search of work as migrant laborers no longer use their land to its full potential.

In recent years, many of those migrants have begun informally leasing their land-use rights to relatives and neighbors, a trend that the authorities tolerated. "We sincerely respect the creativity of peasants" says Zheng Jiandong, head of the economics department of the local Agricultural Administration that has been supervising land reform experiments in this district in Henan Province for the past 18 months.

"But disagreements can easily arise" from informal deals, he adds, "and that has a bad impact on social stability, so the government has stepped in."

Building on experiments around the country, like the one Mr. Zheng is supervising, the new decision sets a policy framework to "establish and improve a market for the transfer of land-use rights ... and allow farmers to transfer their rights by subcontracting, leasing, swapping, or using them to form a joint-stock company."

"This decision indicates that the government really wants to encourage the commercialization of scale agriculture," says Sally Sargeson, an expert in Chinese rural affairs at Australian National University in Canberra.

Zhang hopes to profit from the government's intentions after taking advantage of an experimental reform here. Last month he saw a notice at the village hall announcing the auction of rights to farm a 6-1/2-acre plot of village land on which 20 special short-term leases were about to expire.

A week later, he says, he won the public auction (the first of its kind in China) and paid two years' rent money as a down payment for an eight-year lease on the field. Within days, he planted it with wheat.

"I will earn more money farming if I can buy more land," Zhang says. "But I'm only interested in large plots. Farming on a big scale will be more efficient."

Many of his neighbors want to sell their land-use rights, says Zhang, because the profits from their family plots are so small. "They can save their energy to do other things," he adds, "like set up a small business or go into transport. Or they can go and work in the city and not have to worry about coming back to plant and harvest."

In the nearby village of Xiwan all 2,097 households leased their land-use rights to a company set up by the village committee and four local farmers. They were willing to do so, says Tian Baozhu, deputy village director, because "profits from traditional crops are so low and the economy here is well developed. There are jobs to be had, people don't live by agriculture here anymore."

"Xiwan is a special case," however, acknowledges Zheng, not least because an average family farmed only a tenth of an acre. "The situation there is ideal for land transfers." Elsewhere in his district, he says, where families have more land to farm and other jobs are scarce, "fewer people are transferring less land."

That makes it unclear how widely applicable the new system will be in other parts of China. "There are vast areas where lots of peasants are farming semisubsistence, and there is no demand for tiny plots of not very fertile land from agribusiness or anyone else," points out Dr. Sargeson.

Even where authorities judge the conditions to be ripe, they have taken only tentative steps. In the Qinyang district, for example, where Zheng works, farmers may transfer their land-use rights only to people from their own or neighboring villages, which rules out the creation of large agribusiness enterprises. So far 7.6 percent of the area's arable land has been transferred, Zheng says.

Nor is Zheng keen to see transfers of thousands of acres. "If tens of thousands of people have no farming jobs anymore and they move to the city and don't find a job there, what could they do?" he worries.

Such fears appear to be behind the government's reluctance to privatize agricultural land, or even to allow farmers to mortgage their land-use rights to raise money, in case they default and end up penniless.

"For most Chinese peasants their plots of land and their houses are their lifeline, the last straws of their existence and livelihood," said Chen Xiwen, deputy head of the Communist party's "Leading Group on Rural Work" last week.

"The Chinese social security system is not very complete," he added. "The government does not allow peasants to use land-use contracts as collateral to avoid them losing their land, job, and house, which could affect social stability."

"Chinese land reform has to be done step by step. You can't make a leap forward that creates instability," agrees Li, the land reform lawyer. "But the new guiding principle will set up a platform for further reform in the future."