A Beijing Normal University professor conducted a study of income distribution in China which reveals how the urbanization process is ripping-off Chinese peasants due to their lack of property rights.
About half of China's GDP "growth" comes from building things, usually on farmland. If farmers had secure ownership rights to their land, they would be benefiting greatly from the rising value of their land. In reality, most benefits from rising land values accrue to developers and government officials who act as brokers in these real estate deals.
In most cases, collectively-owned village land on the fringe of urban areas is leased to a developer who pays rent to a government organization. The villagers, theoretically the collective owners, generally get a fraction of the rent paid by the developer.
The report found that 40 million peasants have "lost" their land, which seems to mean that it has been rented out for urban uses.
The report profiles Bailian village of Hunan's Hengdong County, where 19.3 mu of farmers' land was purchased, and the developer earned 8.5 million yuan from the land. The government collected 6.2 million yuan [from the developer?], but farmers only got 470,000 yuan in compensation.
According to the report, the number of rural migrants rose from 98 million in 2005 to 153 million in 2010. There were over 250 million peasants employed either locally or as migrants last year.
When peasants move to cities, they typically find they are frozen out of urban property ownership and excluded from urban social services.
In the past, migrants typically worked in cities until they saved enough money to go back to their village to build a house, get married, or start a business. However, the report confirms that this pattern is breaking down. The "new generation" of migrants have little interest in returning home and often have no property to return to. Only 8.8% of rural migrants intend to go back to their villages, including 7.7% of "new generation" migrants and only 13% of "old generation" migrants.
The report also found that many young migrants have no property to return to. Of 16-25 year-old migrants, 41% have no contracted farmland and 36% have no land for building a house in their home village. Of migrants 25-30 years old, 35% have no contracted land and 33% have no housing land.
Most migrants intend to live in the city long-term, yet they still lack access to urban social services. The report says 80% of migrants intend to stay in the city long-term but have not been able to become legal residents of the city.