State Fragmentation and Rights Contestation: Rural Land Development Rights in China

• Date: 01 July 2013
• Author: Hui Wang,Ran Tao,Fubing Su
• Published date: 01 July 2013
• DOI: http://doi.org/10.1111/j.1749-124X.2013.12027.x

36 China & World Economy / 136–55, Vol. 21, No. 4, 2013

©2013 The Authors

China & World Economy ©2013 Institute of World Economics and Politics, Chinese Academy of Social Sciences

State Fragmentation and Rights Contestation:

Rural Land Development Rights in China

Fubing Su, Ran Tao, Hui Wang*

Abstract

The functionalist reasoning of institutional changes builds on individual rationality and

explains institutional changes from the demand side. While insightful, a comprehensive

understanding also needs to take into account the supply side. The state, as the ultimate

supplier of institutional changes, plays the pivotal role of agency; therefore, its willingness

and ability decide how such regime change occurs and what particular form the new regime

takes. Since the mid-1990s, the Chinese economy has embarked on a path of rapid

industrialization and urbanization. The contestation over rural land development rights in

China offers an excellent case to illuminate the importance of state agency in institutional

changes. Drawing on case studies in China’s three major urbanizing regions, this article

analyzes how villages brought their own land directly to the land market and reaped

handsome profits. We argue that the three successful cases, Nanhai in Guangdong, Kunshan

in Jiangsu and Zhenggezhuang in Beijing, all represent a product of active agency on the

supply side. The Chinese state’s fragmented authority provides a favorable institutional

environment for such changes.

Key words: institutional change, land development rights, state agency

JEL codes: H71, K11, P26, R52

I. Introduction

The rise of the developed world can be attributed partly to the establishment of a well-

*Fubing Su, Associate Professor, Department of Political Science, Vassar College, New York, USA. Email:

fusu@vassar.edu; Ran Tao, Professor, School of Economics, Renmin University of China, Beijing, China.

Email: rantao1972@ruc.edu.cn; Hui Wang (corresponding author), Associate Professor, School of Public

Administration, Zhejiang University, Zhejiang, China. Email: wanghuidn@zju.edu.cn. The authors

acknowledge the assistance of the China National Science Foundation (project 710731138), The Ford

Foundation, the British SPF Funds, the Fundamental Research Funds for the Central Universities and the

Research Funds of Renmin University of China and Vassar College for related fieldwork on China’s land

reform and urbanization over the past 5 years.

37

Rural Land Development Rights in China

©2013 The Authors

China & World Economy ©2013 Institute of World Economics and Politics, Chinese Academy of Social Sciences

defined property rights regime. By defining and enforcing rights for property owners, the

state created a conducive environment for entrepreneurship, technological innovation and

economic growth (North and Thomas, 1976). According to North and Thomas (1976),

explaining development really boils down to an understanding of the evolution of the

property rights regime in a society. In their view, institutions such as property rights

regimes develop in response to changing private needs or profit potential. “It is the

possibility of profits that cannot be captured within the existing arrangemental structure

that leads to the formation of new (or the mutation of old) institutional arrangements”

(Davis and North, 1971, p. 59). Libecap (1978) finds that potential gains played a decisive

role in the emergence and refinement of mineral rights in western USA in the 19th century.

This functionalist reasoning builds on individual rationality and explains institutional

changes from the demand side. While insightful, a comprehensive understanding also

needs to take into account the supply side. Social scientists have long been debating the

power of structure and agency in theorization (Lichbach and Zuckerman, 1997). Structural

changes such as industrialization and capitalist expansion might provide a necessary

condition for certain phenomena, like social movements. Agency, in the form of cultures,

memories, revolutionary ideas and capable leaders, brings that potentiality to fruition.

Changing structures in the economy might render a new form of property rights regime

superior for the society, but that is only necessary for its adoption. The state, as the

ultimate supplier of this institutional change, plays the pivotal role of agency; therefore, its

willingness and ability decide how such regime change occurs and what particular form the

new regime takes. History has witnessed many states unwilling or unable to embrace better

property arrangements.

The contestation over rural land development rights in China offers an excellent case

to illuminate this logic. Since the mid-1990s, China’s economy has embarked on a path of

rapid industrialization and urbanization. Factories, apartment buildings, shopping centers,

highways and subways all needed land to develop. However, land supply was severely

restricted by the division between urban and rural land markets. Land requisition by urban

governments was the main legitimate channel to transfer land from rural to urban uses (Lin

and Ho, 2005). Despite the tremendous gains, rural communities were prohibited from

dealing with land users directly. Demand pull was clearly not enough to break down the

rigid, inefficient and unjust land rights regime.

The continuity of the formal land regime, however, has been increasingly challenged

by de facto control over land rights by village communities. This is particularly true in

China’s major urbanizing areas, where farmers have fought for land development rights.

This research focuses on three examples in the Pearl River Delta, the Yangtze River Delta

and the Beijing–Tianjin area to better understand how villages brought their own land