Land System Reform in China Since the 1980s

by Shouying Liu (Author)
©2021 Monographs X, 256 Pages


Land system reform in China has always been a hot topic and a controversial one. After the Third Plenary Session of the 18th CPC Central Committee (2013) issued its “Decision,” people throughout society generally responded well to the part relating to land system reform, but there were also a few dissenting voices. In the face of controversy, the central government determined the principles of land system reform: it set the program, tested it in local pilots, and only then did it apply the reform uniformly, first by enacting the laws, and so on. Under this background, this book goes through the fundamental logic of China’s land system reform since the 1980s and studies the problems this logic has encountered and whether it still works well. Hence, this book covers topics ranging from the historic origin of China’s land system, China’s rural land system and the relationship between China’s urbanization and land system reform. As a famous policy expert in China, the author also provides his own insights into how to find a solution to the land issue in China. This book is suitable for anyone who is interested in the facts and relevant research works of China’s land system reform, especially researchers in similar fields.

Table Of Contents

  • Cover
  • Title
  • Copyright
  • About the author
  • About the book
  • This eBook can be cited
  • Contents
  • Introduction: The Fundamental Logic of Land System Reform in China
  • 1. The Two Major Constraints on Choice and Change in China’s Land System
  • 2. Choice and Change in the Farmland System
  • 2.1 Efforts to Reform the Farmland System Have Never Stopped
  • 2.2 Outcomes of the Logic of the Reforms “Separating the Two Rights” (liang quan fen li 两权分离)
  • 3. Choice and Change in the Rural Homestead System
  • 4. Choice and Change in the Rural Land Conversion System
  • 5. Land Reform Must Be Done from the Roots
  • 1 The Historic Origins of China’s Land System
  • 1. Historical Evolution of China’s Land System
  • 1.1 Basic Context of the Historical Evolution
  • 1.2 Changes in the Land Administration System since the Founding of the New China
  • 2. The Main Features of China’s Modern Land Administration System
  • 2.1 A Land Rights System Based on the Socialist Public Ownership of Land, the Coexistence of Two Ownership Systems, and the Separation of Ownership and Use Rights
  • 2.2 Protecting Cultivated Land: The Primary Goal of China’s Land Administration System
  • 2.3 Establishing a Land Administration System with Land Use Regulations as the Core
  • 2.4 Implementing a Mainly Centralized and Uniform Land Administration System
  • 3. Important Enlightenment from History
  • 3.1 Land Issues Are Related to National Politics and Social Stability
  • 3.2 Dealing with the Distribution of Land Interests Is a Major Concern for Social Stability and Development
  • 3.3 The Land Administration System Plays an Important Supporting Role in Economic Development
  • 3.4 Too Many People, Too Little Land: The Perennial Constraint on China’s Land Administration System and Economic Development
  • 2 China’s Rural Land System: Features and Problems
  • 1. The Farmland Contracting Management Rights System: Features and Problems
  • 1.1 The Lessons and Legacy of Agricultural Collectivization
  • 1.2 Establishment of the Household Contracting System
  • 1.3 Formation of the Household Contract Responsibility System
  • 1.4 Features and Problems of the Current System for Land Contractual Management Rights
  • 2. The Homestead System: Features and Problems
  • 2.1 Formation of the Homestead System
  • 2.2 The Main Features of the Rural Homestead System
  • 2.3 Problems in the Operation of the Homestead System
  • 3. The Rural Collective Construction Land System: Features and Problems
  • 3.1 Formation of the Rural Collective Construction Land System
  • 3.2 The Growth Effects of Collective Construction Land
  • 3.3 Institutional Dilemmas in the Use of the Collective Construction Land System
  • 3 China’s Land Expropriation System: Features and Problems
  • 1. Introduction
  • 2. The Formation and Main Features of China’s Land Expropriation System
  • 2.1 The Formation and Evolution of China’s Land Expropriation System
  • 2.2 Characteristics of the Current Land Expropriation System, with Evaluations
  • 3. The Land Expropriation System and Economic Development
  • 3.1 Using Compulsory, Low-Cost Land Expropriation to Drive Economic Growth
  • 3.2 Using Low-Cost Land to Promote High-Speed Industrialization
  • 3.3 Rapid Urbanization Driven by Land Expropriation
  • 4. The Economic and Social Consequences of Land Expropriation
  • 4.1 Endangerment of National Food Security Due to Large-Scale Occupation and Use of High-Quality Cultivated Land
  • 4.2 Reduced Governmental Credibility Due to Overstepping Its Role
  • 4.3 Debt Risk for Local Governments and Financial Risk for the Central Bank
  • 4.4 Unfair Distribution of Land Value-Added Income
  • 4.5 Increased Social Risk
  • 4 China’s Land Sales Income and Expenditure and Land Finance
  • 1. Characteristics and Causes of Land Sales Income Growth
  • 1.1 Characteristics of Land Sales Income Growth
  • 1.2 Reasons for the Increase in Land Sales Income
  • 2. Costs, Benefits, and Expenditures of Land Sales
  • 2.1 Costs of Land Sales
  • 2.2 Land Sales Revenue
  • 2.3 Structure of Outlays from Land Sales Revenue
  • 3. The Main Problems in the Management of Land Sales Income and Expenditure
  • 3.1 Uneven Distribution of Land Sales Revenue Between Urban and Rural Areas
  • 3.2 Problems in Land Sales Income and Expenditure
  • 4. Policy Recommendations on Improving the Land Sales Income System
  • 4.1 Continuously Increase the Proportion of Land Sales Income Used for Funding Compensation for Land-Expropriated Farmers and Maintaining Their Long-Term Standard of Living
  • 4.2 Optimize the Expenditure Structure and Guarantee a Proportion of Land Sales Income for People’s Livelihoods and Rural Areas
  • 4.3 Raise the Standards of Paid Use Fees for Newly Added Construction Land, and Apply These Funds to Establish a National Cultivated Land Protection Fund
  • 4.4 Strengthen the Management of Land Sales Income Collection to Ensure That All Receivables Are Collected
  • 4.5 Formulate and Improve the Management Measures for the Use of Relevant Special Funds
  • 4.6 Strengthen Supervision and Inspection and Implement Policy Strictly
  • 5 Urbanization and Land System Reform
  • 1. Dual-Track Urbanization and Its Main Problems
  • 1.1 Government-Led Urbanization
  • 1.2 Farmers’ Autonomous, Self-Initiated Urbanization
  • 2. The Third Track: From Local Trials
  • 2.1 Beijing’s Experiment on Integrating Key Villages in 50 Urban-Rural Fringes in the City
  • 2.2 Nanhai, Guangdong: Industrialization and Urbanization on Collective Land
  • 2.3 Reformed Methods of Land Requisition and Demolition in Lingshui and Sanya, Hainan
  • 3. Policy Recommendations
  • 3.1 Reform of Property-Based Market Allocation Methods
  • 3.2 Fundamental Reform of Land Finance
  • 3.3 Improving the Property Tax System by Putting It in Line with Modern Society
  • 3.4 Establishing a Fair and Shared Distribution System for Value-Added Income
  • 3.5 Establishing a Unified Registration System That Serves Modern Social Management
  • 6 Bidding Farewell to “Development Driven by Land”
  • 1. The Land Sales Model: Frustrated in the East, Spreading in the West and Center
  • 1.1 The Predicament of the Land Sales Model in the Eastern Coastal Region
  • 1.2 The Land Sales Model Is Replicating and Spreading in the Central and Western Regions
  • 2. Why the Land Sales Model Is Unsustainable
  • 2.1 As the Volatility of Land Sales Income Increases, So Does Instability
  • 2.2 As Compensatory Expenditures Rise, So Does the Cost of Urbanization
  • 2.3 As Local Governments’ Land Revenue Decreases, Their Social Spending Faces a Challenge
  • 2.4 Shrinking Land Sales Income Means Less Funding for Urban Construction
  • 2.5 As Land Mortgage Loans and Illegal Mortgage Financing Increase, So Does Risk to Local Governments
  • 3. Response Policies
  • 3.1 Optimizing Land Structure, with Reform of the Land System as the Core
  • 3.2 Simultaneous Reform of the Land Expropriation System and Release of Collective Construction Land into the Market
  • 3.3 Promoting Land Asset Management and Financial System Reform, to Provide Sustainable Funding for Urbanization
  • 7 Thoughts on China’s Land System Reform and How to Promote It
  • 1. The Characteristics and Problems of China’s Land System
  • 1.1 The Land Rights System in Which Ownership and Use Rights Are Separated on the Basis of Socialist Public Ownership
  • 1.2 Land Administration That Aims to Protect Arable Land and Is Centered on Use Regulation
  • 1.3 A Government-Guided Land Resource Allocation Method That Mainly Follows Market Mechanisms
  • 1.4 A Land Administration System Based on Centralized and Unified Management
  • 2. China’s Current Land System and the Transformation of Development Methods
  • 3. The General Idea and Main Content of Reform
  • 4. Breakthroughs and Priorities in Land System Reform
  • 4.1 Reform Breakthroughs
  • 4.2 Reform Priorities
  • 8 Land System Reform and Its Implementation as Decided in the Third Plenary of the 18th CPC Central Committee
  • 1. The Relationship Between Land System Reform and Overall Reform
  • 2. Establishing a Unified Market for Urban and Rural Construction Land
  • 3. Giving Farmers More Property Rights
  • 4. Building a New Agricultural Management System
  • 5. Strategies for Reforming the Land System

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The Fundamental Logic of Land System Reform in China

Land system reform in China has always been a hot topic and, at the same time, a controversial one, upon which consensus is difficult to reach. After the Third Plenary Session of the 18th Central Committee of the Communist Party of China (CPC) (2013) issued its “Decision,”1 people throughout society generally responded well to that part relating to land system reform, but there were also a few dissenting voices, which is normal. In the face of controversy, the central government determined the principles of land system reform: it set the program, tested it in local pilots, and only then did it apply the reform uniformly, first by enacting the laws, and so on. In my opinion, in cases where social consensus has not yet been fully achieved, the approach whereby policies and systems are formed through pilot programs and the legitimacy of reform is guaranteed through legal amendments is correct in this area.

From a research perspective, there are many contending voices on this issue. Having such great divergences of opinion is a good thing, since it can stimulate us even more to ponder the matter more rationally and comprehensively and subject it to more objective analysis.

One problem I have been thinking about recently is the necessity of carefully clarifying the strategies and pathways of land reform since the Third Plenary Session of the Eleventh Central Committee in order to find a solution to the ←1 | 2→land issue, that is, we need to reflect on the questions—What is the logic of the reforms to China’s land system? What problems has this logic encountered, and does it still work well?

One of my views is that during the past few years, as the reforms have been implemented, there has always been a search for compromises, and by now they may have touched on fundamental issues. If we do not work hard on the root of land issues or find breakthroughs on the deeper problems, then it may be difficult for land system reform to make great progress.

1. The Two Major Constraints on Choice and Change in China’s Land System

China’s land system reform has been subject to two major constraints: a system constraint and a goal constraint; these two constraints determine the choice and change in the entire land system.

The first is the system constraint. China’s land system is a basic system of the state; the collective ownership of rural land and state ownership of urban land are currently the main forms of public ownership. From the reform decision-making perspective, when reforming the system, questions such as how to change it, to which extent should it be changed, and how would alternative system arrangements affect the public ownership system are of greatest concern.

The system constraint is chiefly manifested in three areas.

First, the legitimacy of governance. Because the ruling basis for the CPC is the elimination of private ownership, its insistence on public ownership determines the legitimacy of governance. The CPC took agricultural land from the hands of landlords and distributed it to the peasants—this was the magic weapon that the CPC used to obtain political power. Public ownership of land is also a foundation of its legitimacy in governance. Second, socialism with Chinese characteristics. The “characteristics” are embodied in the leadership of the CPC and in its adherence to public ownership. The system of public landownership is the most “characteristic” systemic arrangement among the Chinese “characteristics.” Third, the basic economic system. The “basic” is embodied in public ownership playing a dominant role and different economic sectors developing side by side, and the land system is the most basic system within the basic economic system. The existence of these system constraints basically determines which of the land system reforms are optional and which are not.

←2 | 3→

The second major constraint is the goal constraint. During the Second Plenary Session of the Seventh Central Committee (1949), Chairman Mao Zedong proposed changing China from an agricultural country to an industrial one. The CPC since 1949 has been working hard toward this goal. The core of this change consists of realizing economic modernization.

Regardless of whether China was in the planned economy period or in the reform period, and regardless of how controversial the issues were or how many difficulties and setbacks were being faced, economic modernization has always been a fundamental consensus and the goal of the ruling party. The Third Plenary Session of the 18th CPC Central Committee put forward what some people call the “fifth modernization”—the modernization of the country’s system and capacity for governance, which in fact is the modernization of the system.

Under the old Soviet model, if one wanted to realize the transformation from an agricultural country into an industrial one, one could only choice industrialization led by state based on depriving peasants. This development model determined the basic pattern of interests wherein agriculture served industry, and the countryside served the city. Since the land system arrangement was the main tool that served this goal, change in the land system could not conflict with the orientation of this goal.

Therefore, choice and change in China’s land system have always been subject to two constraints: the fact that the land system is the most important form of public ownership, and the fact that the distribution of land interests must serve the goal of changing from an agricultural country to an industrial one. These two constraints have also determined the basic threefold logic of China’s land system reform:

First, the ownership system is locked. The system of public ownership in the land system is locked, and the forms of other systems are excluded. The main manifestations of public ownership are the state ownership of urban land and the collective ownership of rural land. These cannot be modified. What reform can do is to explore the forms in which public landownership is realized.

Second, the basic mainline of land system reform makes an issue about the separation between ownership and use rights. While the first level of the land system’s structure is ownership, the second level is formation of rights. Since the first level is locked, breakthroughs in reform can only be sought on the second level, that is, by separating the two rights, expanding use rights, putting into full play the incentivizing and stabilizing functions of property rights, and mobilizing land users’ enthusiasm in order to improve land use efficiency.

←3 | 4→

Third, land becomes a tool for development. Economically speaking, land is a derivative demand, when it should be an inductive one. That is, land plays whatever role economic demand wants it to play—but, as we have passed from a planned economy to the period of reform and on to the present, we somehow got things backwards. Throughout our development, land has really played the role of an engine—it became a tool with which to pursue development. For transforming China from an agricultural country to an industrial one, and for achieving the goal of economic modernization, it has been land that fulfills the engine for growth: only if it runs at the very front can it pull the great wheel for economic growth forward.

Three types of land actually played a very important role in Land system reform: one is the farmers’ contracted land; the second is rural residential land or homesteads, where the farmers build their houses, and the third is converted farmland, that is, land converted from agricultural use to other uses. In land system reform, since these three types of land are basically locked in the ownership system, the whole process of reform has started from the logic of “separation of two rights” (liangquan fenli 两权分离).2 However, the rights function has been weakened on each levels.

How shall we comprehend this? For farmland, that is, contracted land, the current logic is to maintain collective ownership rights and strengthen farmers’ use rights. That is to say, property rights are strengthened after “separation of two rights” (liangquan fenli 两权分离), and then the system of ownership is changed so that ownership becomes a legal and nominal ownership. Although the “two rights have been separated,” the latter is stronger. This is the logic of reform for farmland.

For rural residential land, things are different. Although there is a separation of collective ownership rights and use rights for rural residential land, as the system has evolved for this type of land, the outcome is that the former has been strengthened, while the latter has become vague. When the homestead system was being built, collective ownership rights became stronger and stronger, while the protections of farmers’ use rights, within the institutional framework, were lacking, so that the property function of homesteads for farmers has almost disappeared.

The situation for converted farmland is even worse. Basically, the conversion of farmland consists of stripping farmers of their collective ownership rights and their use rights. When conversion sets into motion the structures of urban state ownership and rural collective ownership, the outcome of the “separation of the two rights” has in actuality become a division between the two systems of ←4 | 5→ownership. This division leads to the cancellation of both the collective ownership rights and the use rights.

2. Choice and Change in the Farmland System

2.1 Efforts to Reform the Farmland System Have Never Stopped

Institutional choices and changes with regard to farmland have attracted the utmost concern. Before the agricultural land reform of the 1980s took place, the results of such institutional choices after 1949 may be summarized in four sentences:

One: Private ownership of farmland by landlords was abolished. This “land reform” (tu gai 土改)basically consisted of abolishing private ownership by landlords and replacing it with ownership by peasants, but the private ownership system still remained.

Two: The farmers’ ownership system was replaced with a cooperative ownership system, that is, elementary communes. During the era of elementary communes (chu ji she初级社, 1949–1956), communes were still privately owned, but the commune system replaced the farmer ownership system.

Three: The cooperative system was replaced with the collective ownership system. During the Advanced Cooperatives and People’s Commune era, the collective ownership system replaced the cooperative system.

Four: The system of “production (including land) were owned on three levels, i.e., the commune, the production brigade and the production team” (san ji suo you, dui wei ji chu 三级所有,队为基础), and the production team was taken as the basic accounting unit). The three levels meant that one level of ownership belonged to the production team, but in fact there were several other levels of ownership that continued to play a role; however, the production team was still the foundation.

Research on the defects of the collective ownership of farmland had already yielded a conclusion. Since administrative power replaced the function of property rights, the incentives for producers were low, and rewards were incommensurate with the amount of effort they put in, leading to poor production performance. Consequently, reform of collective ownership system took place—initiated at the grassroots level and then implemented with the support and interaction with reformers at the local and central government levels—whereby farm output quotas were established for each household. These reforms were implemented throughout the country, and then institutionalized through law.


X, 256
ISBN (Hardcover)
Publication date
2021 (October)
New York, Bern, Berlin, Bruxelles, Oxford, Wien, 2021. X, 256 pp., 33 b/w ill., 28 tables.

Biographical notes

Shouying Liu (Author)

Shouying Liu graduated from Fudan University and is now a professor of the School of Economics at Renmin University of China. He was recognized in Elsevier's list of the Most Cited Chinese Researchers in the field of social sciences and won the 7th Peikang Chang Excellent Achievement Award of Development Economics in 2018.


Title: Land System Reform in China Since the 1980s
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268 pages