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China's Great Migration
How the Poor Built a Prosperous Nation
By Bradley M. Gardner The Independent Institute
Copyright © 2017 the Independent Institute
All rights reserved.
ISBN: 978-1-59813-222-9
CHAPTER 1
Leaving the Countryside
WHEN JIA LINGMIN tries to explain land rights in China, she likes to start with the story about the time that she was kidnapped.
In November 2009, residents of Qiliyan village, in the southern suburbs of Zhengzhou, a city in central China, found out that their homes were slated for redevelopment — or, in other words, destruction. It came as something of a surprise. No meetings were held and no one came to announce the government's plans. Residents woke up to find notices posted around the village giving them thirty days to vacate their homes. If they vacated within thirty days, they would receive RMB 20,000 (USD 3,250), which would go toward decorations and utilities at a new apartment that had already been set up for them. If they did not vacate within thirty days, then they would forgo compensation, and be forcibly made to vacate.
While the notice came as a surprise, the villagers knew what was happening. Much of Zhengzhou had been redeveloped over the previous few years, and the national news was filled with stories about people being cheated out of their land by corrupt officials. Each relocation was supposed to come with long negotiations over expected compensation. Some of these negotiations brought significant returns to the villagers, helping them buy better properties in urban areas and invest in businesses that could profit from regional development, while others had their homes stolen from them for a paltry sum and a ramshackle apartment. Violent standoffs between property developers and villagers were almost daily features in Chinese media, and by leading with an ultimatum, the government made it clear that they didn't expect to reach a compromise.
Ms. Jia, a schoolteacher from the village, was determined to resist to the best of her ability. She approached her fight as a legal problem. According to government law, before any land was sold, a public assembly was required, where villagers could vote on whether they wanted to sell and what compensation to request. The developers had to show judicial documents as well as plans for their new development. None of this had been done in Qiliyan, and Ms. Jia was determined to make sure that the law was followed before any of the villagers signed over their rights.
She delayed the project for eight months. Then on June 22, 2010 at 4 p.m., she was assaulted in the street, grabbed and thrown into the back of a van. She was driven to the mountains outside of town and thrown into a ditch. By the time she found her way back, her home had been destroyed, her pets killed, and her fields torn up.
Several others who had organized the resistance in the village were also kidnapped, and at least one was hospitalized because of his injuries. He identified the car's license plate, which the police traced to a local government office, but none of the victims were able to identify any of the perpetrators. Workers at the government office denied any knowledge of the event, and the police claimed there was nothing they could do. Eventually, most of the village signed over their land.
Ms. Jia did not. Instead, she built a shack on the ruins of her old house. Each time someone managed to tear down her shack, she would rebuild it. She refused to abandon her land until her fourth shack was destroyed in August 2012. Then, she finally took heed of the danger and abandoned her home. The crooks had won — at least for a while.
She tells this story both to explain the corruption that permeates many local governments and police stations in China's interior, and, in a strange way, to praise the laws that China has put in place to protect her. She was not arrested during the whole ordeal, nor was she ordered by a court to vacate her land. Her husband, who works as an engineer at a state-owned enterprise (SOE), kept his job. As long as Ms. Jia refused to sign over her land, there was nothing, legally, that the authorities could do to make her vacate her property. Her stubbornness forced them to act off the record and illegally in order to get what they wanted. "The law isn't the issue in land disputes," Ms. Jia says, "The villagers don't know their rights, and police don't enforce their rights. But those rights exist."
* * *
China's history with land rights in the decades following World War II is key to understanding the country's economic transformation and its story of migration.
At a politburo meeting in March 1979, Chen Yun, who was, along with Deng Xiaoping, one of the major architects of China's economic reforms, laid out what he saw as the problems facing China's development: "We have 900 million people, over 80 percent of whom are farmers. We are very poor. There are still people begging for food. We all want to modernize, but the question is what can we achieve? We need balanced development. In considering basic construction, we must first consider agriculture."
Histories of China's first economic reforms tend to focus on China's turn from Marx, Lenin, and Mao and gradual embrace of Smith, Ricardo, Keynes, and Hayek. While this transformation would certainly happen during the thirty years following Chen Yun's speech, China's reform period started with leaders wrestling with the ideas of Thomas Malthus. In 1978, the average Chinese person ate only 66 percent of the number of calories taken in by the average person in a developed country, and 53 percent of the level of protein. Despite substantial gains in agricultural output since World War II, China's largest problem continued to be how to feed its growing population. The government would soon introduce the one-child policy in an attempt to restrict population growth by force.
Managing agricultural productivity, and, by extension, agricultural land rights was not only important for the Chinese economy, but an issue of government legitimacy. Rural poverty and starvation had led to the collapse of countless other governments in China's long history, including the Republican government that the Communists had replaced. The Communists had already reformed rural land rights twice in the thirty years since they had taken over: the first time in order to redistribute the spoils of war and gain support among the population, and the second time as part of an ideologically driven plan to end rural poverty with communal land management. Both reforms rank among the worst human tragedies of the twentieth century.
The Problem of Land Tenancy
Farming is not only a labor-intensive activity; it's also a capital-intensive activity. Farmers must invest in fertilizer, seeds, machinery, irrigation, and other land improvements in order to increase yields and profits. Without strong land rights, farmers resist making these investments for fear of expropriation, and yields stagnate.
In a preindustrial society though, maintaining land rights over the long term can be extremely difficult. Land is a fixed resource, but the population that owns and works the land can be a growing resource. Unless those workers can be employed in other industries, new farmers enter the market with only partial property rights — a tenancy contract that gives them the right to invest in and cultivate the land, but which allows a secondary landholder to take rents and arbitrarily expel the tenant. This creates an adverse dynamic where farmers who wish to invest in land face the risk of losing their investment to either higher rents or expropriation.
This problem had been understood in China since at least the tenth century, and was the subject of a number of laws, particularly during the Ming and Qing dynasties (1368–1912). These governments introduced two separate categories of land rights — topsoil rights, implying the right to make use of and develop the land, and subsoil rights, implying the right to collect rents and the responsibility for tax payments. Over successive imperial administrations, topsoil, or land-use, rights were strengthened so landlords could not easily push tenants off their land, and rents were either fixed as a percentage of total output or as a set amount, allowing the tenant to benefit from any increase in production.
The dual-ownership system was problematic, but it worked. The law was advantageous to land-use rights holders, who did not have to worry about changes in the tax rate and were at a legal advantage when negotiating rent. Though agricultural output figures from the period are unreliable, China saw its first period of sustained population growth under the Ming and Qing governments, implying significant improvements in food production. The country's population grew from 143 million in 1741 to 432 million by 1851.
The system had a few significant loopholes that, when combined with rapid population growth, would undermine its success. In areas with a high population of landless peasants, individuals with land-use rights could further subcontract to secondary tenants, pushing investment and labor costs forward while the original landowner covered taxes. Secondary tenants could legally sublease as well, allowing the number of rent seekers to multiply as far as the productivity of the land would allow. These overlapping contracts, combined with weak enforcement of existing rights, could lead to the same problems that China's land tenancy laws were meant to avoid. At the end of the Qing dynasty, land disputes continued to be the largest reported cause of civil violence in the country, with rural dwellers continuing to complain about poor protection from rent-seeking landlords.
The Communists introduced a program for dealing with these disputes even before declaring victory in the revolution. The first reform was gruesomely simple. Landlords — people with subsoil rights — would lose their land; most were beaten and shunned, many were murdered. While this reform has often been framed as a large-scale redistribution of private property, the reality is somewhat more complex. While people with subsoil rights were persecuted and often murdered, there was relatively little land redistribution among people with topsoil rights, because Mao worried such an attack would undermine support for the new government among wealthy peasants and disrupt the overall rural economy. This can be seen in income distribution statistics, which barely changed during the initial reform: in 1952, the top 10 percent of rural households still controlled 21.6 percent of total income, dropping only slightly from 24.4 percent in the 1930s.
Despite the brutality, this reform proved to be surprisingly successful at increasing agricultural output. In the years that followed, agricultural output in China grew by approximately 3 to 4 percent a year, or roughly twice the rate of output growth during the Republican period. The Communists claimed a win, and, despite the implications for the common conception of land rights, America would soon push Japan, South Korea, and Taiwan to implement similar reforms nonviolently — as much to fend off any Communist impulses as to increase agricultural output.
The strength of this reform is relatively straightforward. The role of a landlord had shrunk significantly by the time Mao took power, from someone who had the right to manage the land he owned to simply a well-paid tax collector, with most other rights going to people with land-use rights. For many of the richest landholders, the reform seemingly strengthened their own claim to the land by replacing a secondary claimant with the government. By removing the middleman between topsoil rights holders and the government, the reform gave farmers a larger share of their profit and more money to invest.
The reform, in other words, briefly strengthened land rights among people who already had legal rights to the land, with mild redistribution on the margins. But it did so with little regard for the long-term consequences. Besides the millions killed, millions more dispossessed moved to the cities as refugees. The reform made no plan concerning what to do once China's rural population once again outstripped land availability. This was, in part, intentional. The first land reform rewarded political allies and helped build enforcement infrastructure in the countryside, but it was never the reform that the Chinese government was aiming for.
The Return to Serfdom
Chinese cities grew rapidly in the late 1940s as refugees flocked to urban areas where they would find greater protection from the ravages of war and the land reform that followed in its wake. These refugees posed an immediate threat to the Communists' industrial plan, which called for consolidating what remained of China's existing industrial capacity after the war under state control. One of the promises of communism was that the government would take responsibility for providing full employment, but with limited financial means and a growing number of migrant workers, the government didn't have the resources to replace jobs lost in the nationalization of the private sector. Instead of admitting that there was nothing wrong with private employment or self-employment, the government demonized the migrants as "nonproductive" workers and suggested that there were far too many migrants for industry to ever be capable of employing them. An editorial published in August 1949 in Dagongbao, one of China's largest newspapers at the time, asserted that Shanghai could at most support 3 million of the 6 million people that were living in the city at the time. A later editorial called for "nonproductive" workers to be sent to the countryside to repopulate areas devastated by the war and grow their own food.
In the early 1950s, a number of cities implemented mostly voluntary resettlement programs. Individuals who agreed to return to the countryside were offered subsidies, often amounting to several months' living expenses, as well as free housing and occasionally free land. However, this did not stop the process of urbanization. China's urban population grew by 34.6 million between 1949 and 1956, pushed up by 19.8 million rural migrants. Shanghai, which sent more than 1 million people to rural areas between 1949 and 1957, received 1,820,000 migrants over the same period. The population of Beijing increased by 70 percent.
China's land reform would very quickly turn against those who had remained in the countryside and benefited from the initial removal of landlords. In 1953, the Chinese government began the process of collectivization. The same year, the government established the state as the only legitimate purchasing and distribution agent for grain, meaning those who didn't initially lose their land were barred from profiting more than the government would allow. By the end of 1956, 97 percent of the rural population had given up their land. As prospects declined for farmers, many headed for the cities, increasing the pressure on the government to create jobs and support the urban unemployed.
The central government would respond with a number of new policies aimed at monitoring and controlling population movements. In 1951, China introduced a household registration, or hukou, card: a basic identity card that listed a person's place of residency, with any changes having to be registered with the local police. At first, the card was relatively harmless, but within a few years, the hukou was being used to restrict migration and reduce urban employment opportunities for rural workers. In March of 1954, the Ministry of the Interior and the Ministry of Labor released a "Joint Directive to Control the Blind Influx of Peasants into the Cities," which prohibited companies from hiring rural workers without the permission of the labor department of the nearest prefectural-level city, and gave the police power, as well as funds, to send unemployed migrants back to their villages. The attitude of the government was expressed in the term "blind migrant" (mangliu), which punned on a vulgar Chinese term meaning "hooligan" (liumang).
Despite these new restrictions, the fundamentals of the labor market proved to be significantly stronger than the law. When demand for labor in the cities was high, factories widely ignored the hiring regulations, using direct contacts to hire workers. In 1955, the government would tighten migration rules yet again. Migrants had to receive permission from officials in their place of residence prior to relocating, and those designated as "class enemies" required approval from the district-or country-level government. The government had also established a number of indirect controls on migration, which would prove to be more effective than direct restrictions. By 1955, the state had established a monopoly on urban housing, and required travel documents for those registered in hotels. The government had also taken control of the country's agricultural markets, and was mostly feeding its urban population through ration cards, which rural dwellers — who were expected to be self-sufficient — did not receive. The system was still fairly flexible, allowing some grain to be purchased, but it was an additional burden for travelers and created a further legal distinction between rural and urban dwellers.
(Continues...)
Excerpted from China's Great Migration by Bradley M. Gardner. Copyright © 2017 the Independent Institute. Excerpted by permission of The Independent Institute.
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