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Urbanization and Land Reforms

Author: Source: Date:2016-08-12

On the XXXXX of XXXXXXX, Mr. Dang Guoying, XXXXX, visited Shenzhen Innovation and Development Institute (SZIDI) and shared his insights on Urbanization and Land Reforms at the institute’s Public Lecture Series.

Dang began his speech with an overview of the land policy in China. With regards to the available resources available, he pointed that land resources would not influence the urbanization process of China. Comparing to the Netherlands – a country known for its sustainable development model or urbanization –,wherethe GDP per mu is around 1.6 million Yuan in urban areas, that of China is significantly lower and therefore urban areas in China today can support future economic growth.What concerns the land use in China is its inefficiency. Both agricultural and urban land uses have not reached their capacity in theory, yet it is hard to make any adjustment. “We can’t just demolish all the skyscrapers, nor can you turn industrial areas to residential areas on a large scale,” He said.

He further elaborated on the problems of the agricultural sector.The high cost of agricultural products, which aims to support the peasants, undermines the competitiveness of Chinese agricultural products and weights on the Chinese government.The cost of agricultural products also adds to the living costs of everyday Chinese and reduces their consumption level.Ro reduce agricultural costs, Dang believed China must reform its collective ownership system to clearly define private and public ownerships.Pointing to the “Law on Contracting of Rural Land”, he stated that private property rights incentivizes the land owners to adhere the market principles without the fear of losing their investments.

Regarding the urban areas, he believed that the living condition in China is highly problematic.While Chinese cities have followed the high-density development model of Hong Kong and Singapore, studies have shown that living in compact cities would affect physical and mental health and create other social issues, and this development model is attributed to inefficiency inland use – which reduces the available amount of land –due to the lack of market forces.In light of this, he advocated for the changes of belief among the leadership. “Properties in contemporary societies can be valued with money and bonds, which is decided by its marginal production under economic concepts. This apply to lands as well.” He believed that market force is the key to land ownership reform.

Comparing the agricultural land use in the United States and that of China, he pointed out that the value of agricultural land should not come from the land itself, but the human capital of the farmers.The economic growth in the past centuries stemmed fromthe surge in human capital due to education. Governments, therefore, should loosen the ownership regulations and clear the way for the development under high human capital.

He then looked back to the Chinese history to search for solutions, notably the principle of ownerships. The practice of private ownerships can be traced back to Qin Dynasty two thousand years ago.While Marxism discourages private ownerships, it should be evaluated with regards to the situation in contemporary China. He believed that the core principle of Marxism is to build an equal society and the means employed is not as important.“Our lands are said to be collectively owned, yet a mass amount of land has been fenced. How can you say this is a socialist collective ownership system?” With references to the western world, he believed that the purposes and the privacy level of the lands should strictly be regulated to facilitate efficient land uses.

As he had reviewed the agricultural and urban land uses, he turned to the proposal of reforms.He began with the structural change in living conditions. He proposed that China should set up agricultural protection areas that are reserved for agricultural development, promoting efficient and effective uses of agricultural land. On urban land uses, he believed that China should expand the residential areas and reduce the population density in the area. While it would increase the commune hours and the number of vehicles on the road, the change in living conditions would result in consumption and expand domestic demand, which is the foundation of the economic growth in the coming decades; as well as reducing demand of properties in downtown, cooling down the overheated real estate market in major cities.Using the example of 70-years ownerships restriction on properties, he pointed out that the solutions of high properties prices lie in the hands of the government.

On rural land uses, he also proposed reforms regarding the living conditions. He envisioned a scatter of houses on farms and countryside, rather than concentrated living spaces that looks like a city.This change – together with the agricultural protection areas proposals – should be implemented under a broad strategy that considers population patterns, such as existing city layouts, population mobility, balanced development in urban and rural areas, counter-urbanization, and education level.He believed that a comprehensive strategy would facilitate the modernization process of agriculture and overall social stability.

As a final remark, he said that cities should accept elderlies and poor, who can be well supported by the social security net there; in contrast, professional farmers should stay in the rural areas to benefit from the infrastructure built for them. With all the strategies proposed in his speech, he believed that the real estate marketand other relevant industries would observe significant changes, as they start to build houses than buildings.