In his address to the December 2011 rural work meeting, Premier Wen Jiabao emphasized the importance of protecting rural peoples' property rights. He emphasized that rural people have rights to the income from their land whether they are living in their home village or have migrated to cities. He did NOT say farmers have ownership of their land, just that some unnamed authority should ensure that farmers are entitled to a share of the income stream flowing from their land.
Wen said institutional disparities between rural and urban economies are one of the biggest issues to be addressed in China's economic development. He identified the gap in income between rural and urban residents as a major concern. The two institutions that keep that gap in place are the land-ownership system and the household registration system. In his address, Wen called for more tinkering without any fundamental change of the system.
Wen seems to favor reform of the household registration system, pointing out that rural people entering cities must become "real" urban residents. But he adds that changing household registration "is not that simple."
In his address, Wen said that China cannot rely on "sacrificing" farmers' land rights to lower the cost of industrialization and urbanization. This apparently refers to the practice of expropriating farmers' land to build factories and apartment complexes.
In principle, Wen affirms that rural people are entitled to receive income generated from their allocation of village farmland, the land occupied by their house, and income from the village collective. They are entitled to these property rights regardless of whether they live in the village or have moved to a city.
Wen said that rural people must get a much larger share of the increased value of their land. This means that a larger share of the proceeds from sales of rural land to developers must be paid to villagers.
To implement this, Wen said a land compensation system must be set up. Wen promised (demanded?) that regulations for implementing such a system will be issued next year (The speech was given in 2011, so regulations will be issued in 2012).
Wen's address seems to have nixed the strategy of knocking down villagers' houses (to create more farmland) and moving them into highrise buildings. Wen said that rural development must not change the basic appearance of the countryside (fields and scenery) and must maintain the ecological environment. Wen said that urban residential communities cannot be reproduced in the countryside by moving people into highrises. This appears to be a rebuke of some of the practices that have been used all over the country recently but are associated with experiments in Chongqing and Chengdu that some commentators have criticized as pretexts for rural land grabs.
No details were given, but based on the dimsums blog's observation of recent experiments, here's what seems to be implied. Wen's comments seem to point to a tangled system of land rights and associated payments that would move with village residents wherever they go. Each family in a village will have rights to a certain amount of farmland, house land, and collective assets (such as factories, land occupied by schools, office buildings, roads, training centers etc.) The villagers will not be able to sell these rights since farmland cannot be sold and by extension ownership of the rights to it can't be sold either. Land rights will be converted into a share in a village cooperative or some other financial asset that entitles the holder to a stream of income from the asset. So, for example, if village farmland is consolidated and rented to an agribusiness the lease income would be paid to the cooperative, divided up and paid out to each villager as a dividend. If the village's school is knocked down and replaced with a hotel the income would be similarly divided divided up and paid out to villagers according to their shares in the collective. Shareholders will be entitled to the payments regardless of where they are actually living.
Basically, it implies turning collectively-owned land into a massive, convoluted system of financial derivatives for a billion peasants. But is it realistic to create derivatives that have an income stream but cannot be sold? A new era of collective capitalism!
Wen also emphasized breaking down the disparities between rural and urban education. The speech also called for increasing village political autonomy and was careful to mention that rural per capita income was estimated to have reached 6900 yuan (they managed to come up with this estimate before the year was over, yet the statistics bureau has not yet managed to publish the yearbook reporting rural household statistics for 2010).
This announcement seems to be following China's "whack-a-mole" approach to policy-making in which policies are announced in response to whatever crisis has just popped up. Wen's speech comes just after last month's protest in Wukan, a village in Guangdong Province (Wall Street Journal's coverage of the protest here) which drew attention to bubbling rural unrest. Illegal land grabs by local officials were at the heart of the Wukan protest. The timing of this speech on rural land rights suggests that this is a response to that protest.
The measures Wen calls for are not a new direction. The party has been experimenting with land rights and land compensation mechanism over the past three years. Premier Wen may be genuinely interested in guaranteeing the property rights of rural people, but the announcement seems calculated to head off further rural unrest.