The Fourth Annual N.T. Wang Distinguished Lecture by Prof. Qiren Zhou

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Read about and see pictures from the Fourth Annual N.T. Wang Distinguished Lecture by Qiren Zhou, Professor of Economics, the National School of Development, Peking University.  The February 5, 2014 event, moderated by Shang-Jin Wei, the N.T. Wang Professor of Chinese Business and Economy and Director of the Jerome A. Chazen Institute of International Business,  was co-sponsored by the Jerome A. Chazen Institute of International Business at Columbia Business School.

Audio for the lecture on iTunes U can be found: here.

On Wednesday, February 5, 2014, Qiren Zhou, Professor of Economics at the National School of Development, Peking University, delivered the lecture “Urbanization and Land Ownership Reform in China” at the Fourth Annual N.T. Wang Distinguished Lecture sponsored by the Weatherhead East Asian Institute and the Jerome A. Chazen Institute of International Business at Columbia Business School.

Following a warm introduction by Shang-Jin Wei, N.T. Wang Professor of Chinese Business and Economy and Director of the Jerome A. Chazen Institute of International Business, Professor Zhou opened his lecture by listing a few statistics on the urban and rural population distribution in China, noting that 65 percent of China’s population registered as rural residents. Among the most surprising figures were the numbers of rural residents who kept their rural household registration, but worked and lived in urban areas for more than half the year. According to Zhou, such residents made up 17 percent of China’s population, or 230 million people. After factoring in these unregistered migrations, he approximated 30 percent of the population actually lived and worked in the countryside, sharing 10 percent of China’s GDP. One of the largest differences between urban and rural populations is property relative to income, or capital gains from property. In this category, rural populations only make about 30 percent of the capital gains of urban populations, along with only a fraction of urban wages. The rural-urban gap in income provides incentive for rural residents to move to urban areas.

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These migrations have led to a number of problems, Zhou noted, as “millions of rural people move to the city to search for higher incomes.” Among the main issues needing to be addressed, Zhou listed improving agricultural efficiency, reconstructing rural society, enlarging cities, and becoming more inclusive of migrant populations. In his opinion, the solutions to these problems are rooted in land reform.

Zhou discussed the series of land system reforms since 1978, when rural households were first allowed “to take out long-term leases on collective land for private farming.” After 1984, land transfers among rural residents were allowed, and since 1987, urban land owned by the state was open to lease for commercial purposes. Zhou argued that, despite these steps, “the reform is still incomplete” because rural residents have no right to sell their land to urban residents. Additionally, he stated, the local government “still has legal power to requisition rural land for urban development.” This segregated system has led to “a massive misallocation of land resources” and “widespread conflict.” The government requisitions land from 1.1 million households every year, the reason why 60 percent of all protests are related to land. These land requisitions are a major source of income for local governments, whose debt in 2010 amounted to 10.7 trillion RMB or “about 27 percent of China’s 2010 GDP.”

 

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Zhou spoke in-depth about the inefficiencies of land use in rural areas, especially regarding residents who move to cities but keep their land in the countryside as a safety net. In order to deal with these inefficiencies, he asserted, China needs to reallocate resources through a unified land market. Zhou stated, “the best path to a unified land market, I think, is based on the very important economic phenomenon I call de facto property rights.” He cited a long history of de facto transfers in the years before and after reform, ending most recently with the several central government land reform experiments set up since 2003. He argued that a unified land market could be accomplished in three steps: “delineation of rural land rights,” legalizing “rights to transfer,” and building “a public market for rural land.”

In the first step, Zhou advocated for mapping exact land coordinates, such as what was carried out in the “Chengdu experiment” from 2008 to 2010. In Chengdu, they “re-measured, registered, and reissued official property deeds” for all rural land. Residents were given long-term contracts, rather than ones which expired after several years.

 

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In the second step, Zhou spoke about changing the land transfer system from “de facto to de jure.” While there were already widespread illegal transfers, he highlighted the 2008 earthquake as the first time transfers between urban and rural individuals were given official legal recognition. Transfer rights were also extended to companies. These transfers provided villages the money they needed to rebuild. He asserted legalizing these transfers would give more villages the capital they need to relocate and transform rural areas into a “new countryside.” In this way, “high value land” close to the city center becomes urbanized and “low value land’ away from the city is turned into farmland.

In his third step, Zhou advocated for “a public market for rural land” in order for villagers to “discover the real prices” of their property. The current quota-based system, he asserted, is not reflective of the real land value. He stated there needs to be a unification of urban and rural land markets to address this problem.

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In his concluding remarks, Zhou called for “deeper reform of the central party” in accordance with the Third Plenum document, which called for the market to “play a decisive role in resource allocation.” He believed, if executed, it is possible to see an urban-rural land market in China by 2020. Just like the enclosure movement in England, “a unified land market will help China improve the efficiency of land allocation and income distribution” and will lead to improved urbanization.

Here are more pictures from the event:

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