Tuesday, May 1, 2012

Collective Property Rights Reform

The Farmers Daily published an essay calling for faster and broader reform of the collective ownership of rural assets. The author is a researcher at the Beijing Municipal Rural Economy Research Center. The essay is similar to Premier Wen Jiabao's promise at last December's rural work meeting that rural peoples' property rights will be protected.

Since the 1950s China has been divided up into urban and rural territory. The article explains that rural assets include farmland, forests, land occupied by houses, land for construction use, village-owned enterprises, and public facilities. These assets are owned by village collective organizations. The essay describes the ambiguous ownership as joint ownership in which shares are not assigned to individuals. The essay cites the "household responsibility system" established in the early 1980s as a significant first-round reform of the collective system. Individual members of collectives were given rights to operate land and derive benefits from it. The Farmers' Daily article asserts that a new round of rural property reform is urgently needed that will clarify ownership, allow villagers to dispose of their collective property and utilize other derivative rights of property like mortgaging, inheriting and reassigning ownership.

The "first round" of reform worked well during the first two-or-three decades. However, now China is in a period of rapid urbanization in which people and land are being incorporated into growing cities. The fixed boundary between rural and urban land and people is no longer fixed. People are moving around the country and village people are moving into cities. What happens to their share in collective property when people leave the village? Cities are expropriating rural land, deriving large value from it, but giving the village collective members little or no compensation. Although it's not spelled out like this, the Farmers' Daily essay seems to be referring to these problems when it refers to "fast urbanization" and "urban-rural integration" over and over. The essay says farmers collective property rights are incomplete, constraining their ability to participate in the urbanization and integration process.

The essay acknowledges that there are many local explorations of reforms of rural property rights, mainly in developed regions like Guangdong, Zhejiang, Beijing, and Shanghai. In many of these areas village collective members are given shares in collective assets which clarifies what each member owns, entitles them to dividends and allows inheritance and transfer of shares.

As an example, a document from a town in Beijing's Fangshan County on reform of collective property sets forth guidelines for establishing shares in companies or businesses based on collective assets, paying out profits as dividends, and setting up supervisory boards to ensure everything is done legally.

The essay calls for a broader reform of rural property ownership that covers all types of property and is nationwide in scope.  Many of the reform areas only include certain types of assets like village enterprises or housing land but exclude others. In some places the rights can be inherited but not reassigned. In others reassignment is only allowed to other members of the collective. The Farmers Daily essay cites Tianhe District of Guangzhou's stipulation of full ownership rights to individual shares as a significant breakthrough.

The Farmers Daily essay asserts that reform of the rural property rights system has lagged behind. The reforms in some areas have provided a demonstration effect, but in most places reform has been slow. In place of chaotic regional reform experiments the author calls for a top-down national design of a standardized program. The author calls for each level of government to put reform of collective property on its policy agenda and setting up a national network of property exchanges to serve as a platform for farmers moving to the city to voluntarily exchange their collective property rights.

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