1 LAW, LAND RIGHTS, AND REVENUE Prof. Susan Whiting Political Science University of Washington
2 Law, Land Rights, and Revenue 1. Generation and extraction of revenue from land 2. Role of law and legal institutions • Documents • Case studies • Survey data 3. Theoretical reflections • Political economy of institutions 4. Conclusions: Authoritarian embrace of law
3 Land: major source of fiscal revenue • Total revenue from land conveyance • Mainly converting land from agriculture to real estate, industrial uses • 2010 nearly 3 trillion rmb (> US $400 billion) • 2001 nearly 130 billion rmb (> US $15 billion) • Liu Shouying, Deputy Director, Department of Rural Economy State Council Development Research Center
4 Land: major source of fiscal revenue • Especially important revenue source for local governments (cities and counties) • Outside the formal budget (“extra-budgetary funds”) • Rival the size of the formal budget • Kung and Chen 2013
5 What is the role of the legal system in this process of revenue extraction? • Legal system facilitates revenue extraction from rural sector via • Constitution and laws • Role of courts • Dispute resolution process
6 Role of the legal system • Legal system channels conflict away from the local government • Transforms conflict over state land takings into disputes among villagers themselves • Makes rural land rights less secure • Contrary to existing lit. • Limits legal recourse • Contrary to existing lit.
7 Constitution and nature of land rights • 1954 Constitution • “The state protects the right of peasants to own land.” • 1956 socialist transformation • “All privately owned land… is to be turned over as collective property.” • Today’s Constitution • Distinguishes urban and rural land • Rural land is collectively owned by villages rights enshrined by Constitution are not private
8 Land law and nature of land rights • Rural households are prohibited from using arable land for non-agricultural purposes (RLCL Article 8). • Only the state may convert rural land to more profitable urban uses (LML Article 2) • Land conversions take place at below-market value (LML Article 47) • Compensation for agricultural use value only • Paid to members of collectives
9 Land law and nature of land rights reflect urban bias • Legacy of “socialist transformation” in China • “Collective ownership of rural land… serves—in the market economy—as the legal basis on which local government monopolists extract ‘power rents’ from land conversion” (Yu Jianrong) • State officials extract rents from rural sector through non- market mechanisms (Robert Bates)
10 Legal system channels conflict • Households can challenge the distribution of compensation within the collective but not the amount of compensation itself (SPC Interpretation 2005) • Most land takings compensation cases are civil cases, reflecting disputes within the village • Administrative cases challenging the legality of taking itself • Difficult to file • Seldom accepted by court
11 State actions cause collective conflict Case study of land taking for 3 factories • The goal for each household was to receive as much compensation as possible. • “Every time a meeting was held, there were two groups in conflict, making it difficult to resolve.” (Village leader)
12 State actions cause collective conflict Case study of land taking for 3 factories • Source of conflict 1: • How should compensation be distributed within the village? • Pay only affected households; no redistribution of remaining arable land, or • Pay all village members; redistribute remaining arable land • Adopted this approach • Made land rights less secure
13 State actions cause collective conflict Case study of land taking for 3 factories • Source of conflict 2: • Who counts as a member of the village? • Who has household registration in the village? • Who has lived in the village the longest? • Who has paid their taxes? • Married sons but not married-out daughters? • Adopted most restrictive criteria • Challenged by villager in court (unsuccessfully)
14 State actions cause collective conflict Case study of land taking for 3 factories • What is NOT challenged: • Legality of taking itself • Government share of total land conveyance fees paid by factories
15 Locus of conflict over land takings compensation (illustrative) Locus of conflict
16 Household-level survey of land disputes • Survey of 1897 households in 36 villages in 3 provinces • With RCCC and Changdong Zhang • Quantitative analysis • With Xiao Ma
17 Household-level survey of land disputes • 11% (208) reported land disputes (n=1897) • 41% land-takings compensation (civil) • 24% allocation of agricultural land • 35% boundaries and related issues with neighbors • Dispute resolution • 70% (145) took action • 30% (63) “lumped” it • “other party too powerful”
18 Land-taking disputes more likely where land is most valuable (close to county seat)
19 Land-taking disputes more likely where land is most valuable (close to county seat) Change in Probabilities of Having State Land − Taking Disputes Change in probabilities with 90% confidence inter vals − 0.1 − 0.05 0 0.05 0.1 County Seat (as to not in county seat) Income (1 sd above mean) Reliance on Agriculture (min to max) Landsize (1 sd above mean) Complete Middle School (as to primary school) Family Connection(as to no connection) Social Connection (as to no connection) Party Membership − 0.1 − 0.05 0 0.05 0.1 Number of Households=1897
20 Land-takings disputes make additional disputes over allocation of remaining agricultural land in village more likely When reallocations follow takings, household rights are less secure
21 Land-takings disputes make additional disputes over allocation of remaining agricultural land in village more likely Change in Probabilities of Having Collective Land Distribution Disputes Household Level Village Level − 0.1 − 0.05 0 0.05 0.1 0.15 0.2 − 0.1 − 0.05 0 0.05 0.1 0.15 0.2 County Seat (as to not in county seat) When reallocations Had State Dispute (household or village level) follow Income (1 sd above mean) takings, Reliance on Agriculture (min to max) household rights are Landsize (1 sd above mean) less secure Complete Middle School (as to primary school) Family Connection(as to no connection) Social Connection (as to no connection) Party Membership − 0.1 − 0.05 0 0.05 0.1 0.15 0.2 − 0.1 − 0.05 0 0.05 0.1 0.15 0.2 Number of Households=1897 Number of Households=1897
22 Land-takings disputes make boundary disputes among neighbors more likely Disputes are channeled away from state
23 Land-takings disputes make boundary disputes among neighbors more likely Change in Probabilities of Having Neighborhood Land Disputes Household Level Village Level − 0.05 0 0.05 0.1 − 0.05 0 0.05 0.1 County Seat (as to not in county seat) Had State Dispute (household or village level) Disputes are Had Collective Dispute (household or village level) channeled Income (1 sd above mean) away from state Reliance on Agriculture (min to max) Landsize (1 sd above mean) Complete Middle School (as to primary school) Family Connection(as to no connection) Social Connection (as to no connection) Party Membership − 0.05 0 0.05 0.1 − 0.05 0 0.05 0.1 Number of Households=1897 Number of Households=1897
24 Theoretical reflections • Political economy of institutions • What underpins a state’s ability to generate (and extract) revenue? • North • Legal system that enforces private property rights is prerequisite for economic growth • Acemoglu & Robinson • Inclusive economic institutions drive sustained economic growth • Secure, private property • Unbiased system of law • Besley • Institutions that assign factors to most productive uses are key to prosperity • Acemoglu & Robinson • Extractive economic institutions—opposite properties
25 Theoretical reflections • China’s place in this literature • “part of broader pattern of prosperity (Acemoglu and Robinson)” • England, US, Taiwan, Korea, China • Tendency to read institutions from growth? • “law offers protection from land grabs (World Bank blog)” • “increasing security of individuals’ land-use rights (Deininger and Jin)”
26 Theoretical reflections • China’s place in this literature • China—extractive economic institutions (Acemoglu and Robinson) • Growth can occur “when elites directly allocate resources to high productivity activities that they themselves control”
27 Theoretical reflections • China’s place in this literature • What is the role for law? • English enclosures (Acemoglu and Robinson) • Claim: Inclusive law precedes rather than follows economic growth • Contrast Thompson, Thirsk • Chinese land takings • My claim: Inclusive law may follow rather than precede economic growth • English enclosures lack property of inclusive law
Recommend
More recommend
