Principales formes de remembrement et d'expansion des terres agricoles en Chine

Les petites exploitations fragmentées sont désormais le dernier obstacle au développement rural durable dans l'Asie des moussons. Les économies rizicoles de la région n'y ont pas trouvé de remède, à l'exception de la Chine continentale, qui expérimente - essentiellement depuis le milieu des années 80 - quelques moyens efficaces de surmonter cet obstacle.

Formas principales de concentración de tierras y expansión en China

La fragmentación de las pequeñas explotaciones agrícolas constituye el último obstáculo al desarrollo rural sostenible del Asia monzónica. Esta cuestión no ha sido resuelta por ninguna de las economías arroceras de la región, con la excepción de la China continental, que ha encontrado algunos medios eficaces para superarla, especialmente desde mediados del decenio de 1980.

Principal forms of land consolidation and expansion in China

J.M. Zhou
Jian-Ming Zhou has a Ph.D. in Economics from the European University Institute, Fiesole, Tuscany, Italy.

Fragmented small farms have become the last obstacle to sustainable rural development in monsoon Asia¹. This problem remains unresolved in all of the region's rice-based economies, except for mainland China which, especially since the mid-1980s, has found some effective ways of overcoming it.

For many centuries, fragmented small farms have been characteristic of the rice-based economies in monsoon Asia,1 where they were held by both tenants and owner-peasants under the feudal system. In Japan, pioneering land reform after the Second World War, from 1946 until 1950, redistributed the feudal landlords' lands in equal lots to peasants for individual ownership. Although fragmented small farms were maintained, they were efficient in a low-wage economy where labour was cheaper than large machinery, since they were conducive to the development and diffusion of land-saving and scale-neutral technology, dispersion of natural risks, and provision of employment to peasants who did not have non-grain agriculture and off-farm job opportunities. By 1960, non-grain agriculture and off-farm activities had developed, and agricultural labour shortages started to arise. In a high-wage economy, where large machinery is cheaper than labour, fragmented small farms hamper the achievement of economies of scale, and are wasteful of land, labour, capital, management and technology resources. However, small farms have been maintained by part-time farmers and absentees who earn higher off-farm income and have no incentive to sell or lease their land. This has prevented the remaining full-time farmers, whose small plots are not viable, from expanding their farms. Rice self-sufficiency has been artificially maintained by huge government subsidies. The Japanese model was repeated in Taiwan Province of China and the Republic of Korea in the 1970s and 1980s, respectively. Other rice-based economies under private landownership in monsoon Asia are generally now in the early stages of the Japanese model. Thus, fragmented small farms have become the last obstacle to sustainable rural development² in monsoon Asia (Oshima, 1987: 65).

Similarly, in the land reform of 1949-1953, China also allocated the land of feudal landlords equally to the peasants for individual ownership of fragmented small farms. Later, the government led peasants to organize, first temporary and permanent mutual aid teams, and then elementary agricultural producers' cooperatives based on private landownership which, even after the initial development of non-grain agriculture and off-farm activities, still could not overcome the problem of fragmented small farms successfully. Thus, in mid-1956, land was collectivized into advanced agricultural producers' cooperatives which, in 1958, were replaced by large-scale people's communes covering several townships or even a county. In 1962, the three-level commune-brigade-team system emerged, where the team was the basic level of landownership and operation. Although landholdings were larger, the incentives to team members, and thus productivity, were low, among other problems.

During the 1978-1983 reform, collectively owned land was distributed equitably to households for individual operation, mainly according to family size combined with the quality, quantity and distance from the village of the land. This was the so-called Equal Land System which, once again, created fragmented small farms. The exact figures vary slightly from study to study. In 1986, the per household area of cultivated land was 0.65 ha, scattered over an average of nine parcels as revealed by one investigation (Wu, 1989: 22; see also Table 1).

Table 1
Overcoming land fragmentation in China, 1986-19921

¹ Samples from 7 983 villages in more than 200 counties, spread over 29 provinces, municipalities and autonomous regions (not including Tibet Autonomous Region, in western Xinan, southwestern China, or Taiwan Province of China, an island in Huadong, southeast China).
Source: CEST, 1993: 48.

In 1988, the per caput area of cultivated land among peasant households was 0.17 ha, of which 0.121 ha (88.4 percent) was held under contract and 0.012 ha (8.7 percent) was the family plot (CSY, 1989: 156), calculated on the basis of an average peasant household containing nearly four people (0.65/0.17 = 3.8). This new system brought huge production incentives to peasants, as had happened in Japan in the 1950s.

Another phenomenon that was similar to the Japanese case had appeared by the mid-1980s, i.e. part-time farmers and absentees earning higher off-farm incomes were holding land that was being used inefficiently while the remaining full-time farmers could not enlarge their farms to achieve agricultural mechanization and benefit from economies of scale. However, since the mid-1980s, China has developed ways of overcoming this obstacle, and a second round of institutional changes for large-scale farming with a mixed collective-individual economy are making it possible to practise agricultural mechanization with large machinery. Other rice-based economies that operate under public landownership in monsoon Asia are now generally at the earlier stages of the Chinese model, and the Chinese experience is relevant both to these and to those that operate under private landownership, as well as to economies outside the region.³

This article concentrates on China's second round of land tenure institutional changes with the aim of showing how efficient, large-scale farming can be achieved in a mixed collective-individual economy (which is different from the low-productive large-scale farming system combining public ownership and operation of land under a centrally planned economy that had failed).

From as early as the beginning of the 1980s, in those areas where fragmented small farms had emerged as an obstacle, experiments to find appropriate economies of scale in land operation or large-scale farming had already been made successfully. "Appropriate" in this context means raising the scale gradually as the surplus peasants transferred to non-grain agriculture and off-farm activities, rather than squeezing peasants off land they are still relying on. This new land tenure system has four principal forms.

DUAL LAND SYSTEM: FORMAL FORM

In this system, there are two main classifications of land: self-sufficiency land and responsibility land.

Self-sufficiency land is shared and contracted out on a per caput basis to households who use it mainly for planting grain for self-consumption. Contractors are required to pay one of the following: a contractual fee to the village and agricultural tax to the state; only a contractual fee (Wang and Ma, 1990: 33); only an agricultural tax (CEST, 1991: 33); or no fee at all (Wang and Ma, 1990: 33).

Effectively, however, the use of self-sufficiency land is always almost free of charge (as a basic social welfare) because the contractual fee and agricultural tax (when imposed) are low. In general, the higher the degree of development of a village's non-grain agriculture and off-farm activities, the lower the charge for using the self-sufficiency land.

Large-scale farming is not excluded from self-sufficiency land. For example, in 1987, 24 households in the Yanhe Villagers' Group (previously a production team) in Hujiadu village in the Sunan region of Jiangsu province⁴ contracted their joint total of 4.83 ha of personal self-sufficiency land to four expert farmers who set up a farm. All of the grain was sold to the village, which retained seeds for the following year's production, sold self-sufficiency amounts to all the member households (including the four experts') at prices that were lower than the State procuring quota prices, and sold the remainder to the State (at negotiable prices). The extra revenue generated went to the experts. This system meant that, although the 24 households had to buy grain, they saved time and energy and could earn higher incomes from other jobs (Hu, Yu et al., 1988: 63). By 1995, other villages in Xishan city of the Sunan region were amalgamating their self-sufficiency land for large-scale farming in the same way (Lu, Gao and Li, 1995).

Responsibility land is also contracted out in parcels, under condition that contractors fulfil State output quotas, pay agricultural tax to the State and pay all collective fees. Contractors can dispose of surplus products on the market. In general, the higher the degree of development of a village's non-grain agriculture and off-farm activities, the more competitive the distribution of responsibility land. There are four basic categories of responsibility land.

Category 1. When non-grain agriculture and off-farm employment have only just started to be developed⁵ and peasants rely almost completely on grain production for their livelihoods, responsibility land is contracted among households on a per caput basis.

Under the Equal Land System, increases of population were encouraged and led to the redistributions of land parcels that were increasingly small and fragmented.

Under the Dual Land System, the contracted land of each household is divided into self-sufficiency and responsibility land. An increase in the number of members in a household leads to a reduction in that household's responsibility land and an increase in its self-sufficiency land (children born in excess of the family planning limit are not taken into account). A decrease in household size leads to the increment of its responsibility land and a deduction from its self-sufficiency land. Thus, as the family size changes, the area and location of the household's land remain the same, only the proportion assigned to each of the two kinds of land changes. This is called the Dual Land on Account System. Households are thereby encouraged to produce fewer children in order to gain more responsibility land within their total of contracted land so that they can produce more to sell to the State or on the market. In this system, therefore, economies of scale are not reduced by loss and fragmentation of land area, and may even be raised (Wang and Ma, 1990: 34).

Category 2. In areas where non-grain agriculture and off-farm employment are slightly developed, responsibility land is contracted in equal parcels according to the section of the labour force a household's members work in. In this category, some labourers are already working in non-grain agriculture and off-farm activities, but their jobs are not secure and they are not yet willing to transfer their responsibility land. Such areas are richer than those in category 1, and non-labourers (the old, children, etc.) are entitled to self-sufficiency land but not to responsibility land, so that use of the latter is more efficient. As responsibility land is distributed among fewer people, each labourer can obtain a greater area and economies of scale are increased (Wang and Ma, 1990: 34)

Some villages set aside reserves of land for overall rural development and to accommodate future increases in population. When a household without labourers acquires additional members, its self-sufficiency land may become inadequate in area and it can be given a part of the reserve land to support its increased size (Zhang, Liu and Zhang, 1989: 34-6). The Dual Land on Account System (category 1) continues to be applied to the households of labourers.

Category 3. In areas where non-grain agriculture and off-farm employment are more developed, responsibility land is shared out and contracted to the households of agricultural labourers working in grain production. In this system, labourers who have left grain agriculture but are still resident in the village are no longer entitled to responsibility land, although they still have a right to self-sufficiency land. (Those with permanent city residence are not entitled to either self-sufficiency or responsibility land.) This means that only the remaining grain-producing labour force can contract more land, so the economies of scale are increased further (Wang and Ma, 1990: 34).

In this system, when the ratio of self-sufficiency land to responsibility land needs to be adjusted among agricultural labour force households, the category 1 system can be applied. If the self-sufficiency land of a newly enlarged non-grain agriculture or off-farm labourer's household becomes insufficient, part of the reserve land can be assigned.

Category 4. In areas where non-grain agriculture and off-farm employment are highly developed, responsibility land is contracted to the grain producing agricultural labour force through a competitive system of bidding. In this system, because many peasants want to concentrate on non-grain agriculture and off-farm activities to earn higher incomes (thereby losing their rights to responsibility land), villages can contract excess responsibility land to expert farmers. Those who bid the highest output win the contract. The land is divided according to its suitability for a specific product (rice, cotton, etc.). Expert farmers, who can come from outside the village, are given land according to their relevant expertise and ability. Economies of scale are raised considerably.

As villages became rich, they can feed increased population with food at quota prices, rather than with self-sufficiency land.

Category 4 is regarded as the optimal standard Dual Land System, because self-sufficiency land is distributed equally as a back-up to basic social welfare, while responsibility land is contracted through competitive bidding (Wang and Ma, 1990: 33-4). It combines both competition and cohesion.

For example, in 1982, the Changyuan Brigade of Linxiang county in Hunan province⁶ arranged for 27 households that were competent and active in non-grain agriculture and off-farm activities to till self-sufficiency land only, and for 138 households that were good at farming to produce grain on responsibility land (RO, 1984: 14).

Rural industry in the Sunan region began a long time before the economic reform, but has developed much more quickly since. In this region, the Household Contract System was implemented in 1983, while the Dual Land System was in category 1 (i.e. equal distribution of land in terms of quality, quantity and distance, leading to fragmented land parcels). The average area of land contracted to each household was 0.13 to 0.2 ha, divided into seven or eight parcels, forming separate individual farming units (RT, 1991: 23). In 1987, an able-bodied labourer was capable of operating a 0.26-ha farm earning 600 yuan⁷ a year, which was much lower than the overall annual per caput income of 853 yuan and the rural industry average of 1 000 yuan (Fei, 1990: 5). Large numbers of peasants converted to non-grain agriculture and off-farm activities but were not yet willing to transfer all of their contracted land. Since 1983, category 1 of the Dual Land System has been replaced by other categories.

For example, in Wuxi county, in the autumn of 1983, an expert household contracted 1.504 ha of land in Dongge township; in the spring of 1984, 35.267 ha, or 77.8 percent of the total responsibility land in Rongnan village, Yuqi township, was contracted to 70 labourers from 60 households, raising the average land area per labourer from 0.077 ha to 0.504 ha, and that per household from 0.105 ha to 0.586 ha. In 1986, 25.73 ha, or 77.8 percent of the total cultivated land in Yuanhe village, Qinnan township in Changshu city, was contracted to 19 agricultural labourers, with contracted land area per labourer of 1.353 ha; in Wuxi and Wu counties, 115 households contracted between 1 and 1.33 ha of land each, and 75 households contracted more than 1.33 ha each (RT, 1991: 23).

In 1986, in Wuxi county, the number of farming units contracting more than 0.33 ha was 4 080, accounting for 1 920 ha, or 11.09 percent of the total responsibility land of the county. In 1989, the number of larger farming units had dropped to 3 820, but the total area held by them had increased to 2 306.67 ha, or 13.8 percent; within this group, 6.5 percent, or 248 farming units, contracted more than 1 ha each, accounting for a total of 617.3 ha or 26.6 percent of the total responsibility land of the group. In 1989, in Suzhou city, 970 farming units each contracted more than 1 ha, covering a total of 2 886.67 ha, or 3.6 percent of all the city's responsibility land (RT, 1991: 23).

In 1989, Changshu city transformed its category 1 Dual Land System into a mixture of categories 2, 3 and 4. Self-sufficiency land was assigned at 0.03 ha per caput; the average area of responsibility land was 0.125 ha per labourer, people who held off-farm jobs were not assigned responsibility land, and 50 to 100 percent of the land left over could be distributed to those who had not yet secured off-farm jobs, the remainder (less than 50 percent) being allocated to expert farmers via bidding (non-villagers were admitted to this, although priority went to villagers). By the end of the year, 736.43 ha, or 1.06 percent of the total farmland, had been contracted to 536 expert farmers forming 190 large-scale farms (i.e. farms with more than 1 ha of land per labourer). This implied an area of 1.38 ha per labourer, which is 11 times the average, and the country's largest per household holding of 3.33 ha (Jiang et al., 1992a: 74-6, 80).

During 1990-1994, both the area under the Dual Land System and its percentage share of the total household contracted land in China rose, and the system was also adopted in the western part of the country, where non-grain agriculture and off-farm production were less developed, as shown in Table 2.

Table 2
Area under the Dual Land System in China, 1990-1994

Sources: CEST, 1991: 34; 1996: 39.

Table 3 shows how the area of self-sufficiency land decreased while that of responsibility land increased, leading to a lower ratio of self-sufficiency land to responsibility land and implying that land was more efficiently used. Table 4 indicates that, in terms of the methods of contracting responsibility land under the Dual Land System, the percentages of land distributed on a per caput basis and through bidding increased, but that of land distributed on a per labourer basis decreased, suggesting not only that there was population pressure on land, but also that market competition had grown.

Table 3
Areas of self-sufficiency land and responsibility land under the Dual Land System in China, 1990-1994

Sources: CEST, 1991: 33; 1996: 39.

Table 4
Methods of contracting responsibility land under the Dual Land System in China, 1990-1994

Sources: CEST, 1991: 34; 1996: 39.

It was necessary to educate villagers, since their majority agreement was needed for implementation of the Dual Land System (Jiang et al., 1992b: 68).

For example, three villages in Wu county (Wuxian), Sunan region, began to establish large-scale farming in 1987 and 1988. Village leaders started by talking to the villagers about the importance of large-scale farming. In each of the three villages, some villagers openly opposed the scheme. In village 1, only one or two households did so because they would lose responsibility land, but the leaders obliged them to give it up. In village 2, many people were against large-scale farming but were persuaded to accept it. In village 3, opposition was even stronger and, initially, only 15 percent of the farmers gave up their responsibility land. In this case, a gradual approach was adopted. The leaders took back all the arable land and divided it into two consolidated portions, one for self-sufficiency land and one for responsibility land. Consolidated parcels of self-sufficiency land were allocated to households on a per caput basis by drawing lots. In villages 1 and 2, responsibility land was distributed to large-scale farmers immediately in 1987 or 1988, while in village 3 it was distributed gradually over the following years as farmers gave up their responsibility land voluntarily or under collective persuasion (Prosterman, Hanstad and Li, 1996: 15-6). This was category 4 of the Dual Land System.

LEASING SYSTEM

The village may also lease plots of land to expert farmers via bidding for the highest monetary rent, rather than bidding for the highest contracting output as used in the Dual Land System. However, under such a system the types and amounts of output (e.g. grain) produced by each lessee are still stipulated and the village is responsible for providing services, so there is still a kind of village-household dual-level operation of land. This is different from a straightforward leasing for monetary rent system, under which lessees produce whatever they want and the lessor does not have the duty to provide services. A village usually leases its reserve land, although other land may also be included. When this happens, the land being leased is a kind of responsibility land, hence this is a special form of the Dual Land System.

For example, Bai village in Baicun township, Dingxiang county, Shanxi province⁸ had 204.87 ha of farmland. In the mid-1980s, it reserved 7.47 ha of saline-alkali land for leasing to sorghum producers. The contracts were for one year and renewable. The total rent was 8 000 yuan - 71.43 yuan per mu (1 072 yuan per hectare) - in 1987, rising to 11 000 yuan - 98.21 yuan per mu (1 473 yuan per hectare) - in 1988 through bidding among six farmers representing 20 households (Wu et al., 1988: 36-8).

In contrast, Yujiazhuang village, Shoulu township, in the same county had exhausted its reserve land. It then divided all its land into five classes according to productivity, and leased 19.33 ha of the highest class to expert households with the labour to produce grain, the rent being 1 200 to 1 500 yuan per hectare (Wu et al., 1988: 37)

SINGLE LAND SYSTEM

In areas where non-grain agriculture and off-farm production are very highly developed, many peasants have secure jobs in these sectors and are willing to transfer both their self-sufficiency and responsibility land to expert farmers. They thereby leave (grain) agriculture, although most of them still live in rural areas, often in their original villages. Such voluntary action is strongly encouraged by villages, which sell grain to non-grain agriculture and off-farm workers for self-consumption at quota prices, and sometimes also allow them to keep family plots for producing vegetables to accommodate the peasant tradition of not buying them on the market. These measures are both an incentive to the handing over of land and a basic social welfare provision. In this system, expert farmers can operate much larger areas of land than they can under the Dual Land System, in which they have to fulfil targets for the State and collective and can only dispose of the residual for their own consumption and for sale on the market. There is no distinction between self-sufficiency land and responsibility land in the Single Land System. Dual land becomes single land (Wang and Ma, 1990: 36). Single land can also be contracted for output or leased for monetary rent, via bidding, to expert farmers.

In the example from Wu county (Wuxian), Sunan region, already cited, where a Dual Land System was established in 1987 or 1988, some farmers then voluntarily gave up their self-sufficiency land for allocation to large-scale farmers in all the three villages. In one village, about 20 percent of households did so. Two villages offered 6 750 kg of paddy rice, at about 50 percent of the market price, per year for each hectare of the self-sufficiency land given up by households (Prosterman, Hanstad and Li, 1996: 16)

By 1988, in the Sunan region, some other villages, and even a few townships, had gathered all their land together to be contracted through bidding to a number of expert farmers (Fei, 1990: 6).

The Dual Land System was first adopted in Qianzhou village, Xishan city, in the Sunan region, at the end of the 1980s. Although off-farm employment developed quickly here, its benefits were reduced because rural firms had to close for half a month in each of the two busiest farming periods, thus seriously affecting their business. In a 1991 referendum, the villagers unanimously agreed to give up their self-sufficiency land. Thus, all the land of the village was amalgamated to form a collective farm, which contracted land to seven member households on condition that they sell 8 625 kg of rice and 3 750 kg of wheat, per hectare, at quota prices each year to the village, in return for being able to dispose of the residual. The village then sold quotas of grain to the State, as well as 147 kg of rice and 28 kg of wheat to each of the other villagers, at prices that were even lower than the State-subsidized prices to city residents. Mixiangqiao and Lidong villages in Dongxiang township, Tan village in Chaqiao township and Taoshu village in Xuelang township also adopted the Single Land System. As a result, rural firms could now shorten considerably, or even cease altogether, their periods of closure. Unified seed supply, plant protection and agricultural mechanization were achieved and high-yielding varieties and advanced technologies introduced, with Qianzhou village becoming the township's demonstration village. The net income of farming households (whose labourers were usually husband and wife) in Mixiangqiao village reached 22 000 to 25 000 yuan, 100 percent higher than that of households in off-farm activities (Lu, Li and Zou, 1996).

In areas where local off-farm activities were very highly developed, the Single Land System could be adopted as soon as the Equal Land System had been abolished.

For example, in 1984, Matou village, in the suburbs of Zhongshan city, Guangdong province,⁹ had 60 households, 170 labourers, 8.8 ha of land for grain, 2.53 ha for vegetables, 0.56 ha for fishery and 2.67 ha for fruit trees. The local industry and services were very highly developed and could absorb all the surplus labour force, but peasants were still unwilling to transfer their farmland. The village then converted from the Equal Land System directly to the Single Land System by assigning all the land to expert farmer Zhi-Hua Huang's ousehold. The agreement of other households was achieved by offering to sell them grain at quota prices and allowing them to keep some family plots for producing vegetables for self-consumption. Zhi-Hua Huang was to pass 9 000 kg of grain per hectare to the village so that it could fulfil its obligations to the State and sell grain to other villagers for self-consumption. He could dispose of the surplus as he chose (Lu and Li, 1987: 33).

Shunyi county in the Beijing municipality¹⁰ adopted the Equal Land System at the end of 1983, offering three-year contracts (some villages implemented the preliminary Dual Land System in 1985 [Zhong and Cai, 1997: 54]) under which each household operated 0.2-0.3 ha of fragmented land. Although more than 70 percent of the rural labour force shifted to non-grain agriculture and off-farm production, personal transfer of land was rare. The county used the profits of township and village enterprises (TVEs) under collective ownership as direct subsidies on the costs of grain production for all peasant households - at the rate of 50 yuan per mu (750 yuan per hectare) per annum - but recipients simply used the money for consumption, and only slight increases of output were achieved. In the autumn of 1986, taking the opportunity offered by the renewal of contracts, the county implemented the Single Land System. First, between August 1986 and August 1987, it experimented in developed areas, then it extended the system until it had been introduced in most of the other areas of the county by the autumn of 1989. New contracts were not given to those who had gained stable jobs and income from non-grain agriculture and off-farm production, to those who had engaged in housework for a long time, or to those who were not able to till land. Those who were not successful grain producers but had not yet found other stable employment were recruited into other activities, either in TVEs or in diversified crop and non-crop agriculture (vegetables, fruit, fish, oxen, chickens, pigs, etc.), that had been created for them by the special investment of townships and villages. Part-time farmers who were neither active in grain production nor willing to give up their land were required to meet conditions if they wanted to carry out large-scale farming, and those who failed to do so gave up their land voluntarily. More than enough grain was guaranteed for sale at prices lower than the market levels to the families of labourers who were no longer engaged in grain production for self-consumption. Direct subsidies were abolished. Land for grain production was successfully transferred to expert farmers who earned higher income, not through direct subsidies but through their own economic performance (Pei et al., 1992: 87-89, 92).

In general, the Dual Land System is a transitory stage between the Equal Land System and the Single Land System, as rural industrialization proceeds and absorbs more and more of the surplus labour force. Surpassing this stage may not be viable. For example, in 1984, Zijing village, in Jiangling county, Hubei province,¹¹ established three companies, one each for agriculture, industry and livestock and fish farming, which each employed about one-third of the total labour force. The village implemented the Single Land System, subsidizing those who left their land with grain at market prices and those who contracted larger areas of land with the annual profits of village enterprises, which worked out at a total of 41 000 yuan. Of the more than 400 labourers, 77 percent left the land altogether, and the area of farmland per labourer increased from 0.25 to 1.1 ha. In order to gain access to additional direct subsidies, some households contracted 4 to 6.67 ha of land, or 2 ha per labourer, in excess of their operating ability. In 1986, however, two major enterprises were closed because of unprofitability, and others had to rationalize their operations. Thus, while on one hand half of the workers became surplus and had to return to agriculture, on the other hand, the cessation of subsidies from enterprises meant that farmers were unable to maintain large-scale farming. In 1987, the village converted to the Dual Land System, which proved suitable (Li, 1988: 57-8; Peng, Zhang and Yang, 1988: 17-8).

In 1996 the Single Land System was still not widespread in China.

CORPORATE HOLDING SYSTEM

In the typical form of the Corporate Holding System, households transfer the land that has been contracted to them under the Equal Land System to the village in exchange for land shares. The village, as a collective corporation, contracts plots of land through bidding to expert farmers who have to fulfil tasks for the State and collective and can dispose of the surplus products as they see fit. The village then distributes a part of the revenue to land shareholders as dividends. The village also sells grain at quota prices, and makes family plots available to ordinary households so that they can produce vegetables for self-consumption. Households can then concentrate on non-grain agriculture and off-farm activities. Land shareholders cannot withdraw land physically from the village but can transfer (including bequeath) their shares in a financial form. A change in size of the land shareholder's family does not affect its number of shares, which discourages rather than encourages births (Chen, 1996: 23-4).

This system is similar to the functioning of a modern capital shareholding corporation whose shareholders can earn dividends and sell shares in the market but cannot claim reimbursement for them by the corporation.

For example, Shatou village in Jun-an township, Shunde county, Guangdong province, initially contracted farmland of 30.67 ha equally among more than 600 households, each of which held about 0.051 ha, yielding only 30 to 45 tonnes of sugar cane per hectare. At the beginning of 1986, in response to popular demand, the village took back the land, invested 210 000 yuan and assigned special farmers to plant litchi. In the same year, revenue from intercropping¹² reached 210 000 yuan, more than twice the previous year's income from sugar cane. In the litchi harvesting year, the land was contracted to expert farmers via bidding, and a part of the revenue was distributed to the original households according to their previously contracted areas (Lu and Li, 1987: 34).

Although this example used fruit production, the same approach could be applied to grain. For instance, by 1995, 70 percent of the peasants living in Nanhai city, Guangdong province, had given up their contracted land (about 45 percent of the total contracted land) to the villages to be contracted to expert farmers in exchange for revenue (dividends) (People's Daily, 1995). Expert farmers who contracted larger areas of land could earn incomes that were higher than those of off-farm workers (Yang, 1995: 16).

Inverse leasing or contracting (fan zu dao bao) is an untypical form of the Corporate Holding System in which the original contractors under the Equal Land System lease/contract their land to the village, which pays rent or gives grain to the contractors and then leases/contracts land plots to expert farmers for large-scale farming (Chen, 1996: 24). It can be regarded as a form of the Corporate Holding System, because the rent - or grain for self-consumption - given by the village to the original contractors comes from the gross revenue of the new, large-scale farmer lessees/contractors, as do the dividends in the system's typical form. This system has been implemented in Leqing city and other areas of Zhejiang province,¹³ Linquan county in Fuyang prefecture and Dawang township, Nanqiao district, Chuzhou city in Anhui province¹⁴ (Wu and Hu, 1995: 43; Huang et al., 1996: 60; Qin and Wang, 1995: 43; Fan and Zhou, 1994: 16).

The Corporate Holding System is a special kind of Single Land System and its implementation requires highly developed rural industrialization to absorb surplus labour. Thus, relatively fewer regions have adopted it.

Table 1 (p. 90) shows how, during 1986-1990, the fragmentation of small farms worsened all over China apart from in the central part of the country. However, as a result of implementing the forms of large-scale farming described in the preceding sections, the situation improved in 1990-1992 as the number of parcels per household was reduced and the area per parcel increased. Table 5 indicates how the percentage share of the smallest farms (less than 0.333 ha) contracted to individual households increased during 1986-1990, but decreased in 1990-1992.

Table 5
Land contracted per individual household in China, 1986-1992 (percentages)¹

¹ Samples from 7 983 villages in more than 200 counties, spread over 29 provinces, municipalities and autonomous regions (not including Tibet Autonomous Region or Taiwan Province of China).
Source: CEST, 1993: 47.

SELECTION OF EXPERT FARMERS

As already mentioned, the selection of expert farmers as large-scale farmers is carried out through bidding. After some 4 000 years of development, farming in monsoon Asia now involves sophisticated intensive farming techniques, even where farmers have not received formal schooling, important though such schooling is. Villagers usually recognize who are expert farmers and who are not. The process of bidding to fulfil contracts also helps to identify expertise. More competent farmers can contract more land. Priority is given to villagers, but non-villagers can also be selected.¹⁵

The conditions attached to contracts stipulate not only the output and varieties of grain and other products to be fulfilled for the State and the village, but also requirements for the maintenance and improvement of land quality.

For example, in 1983, noticing the decline of agriculture caused by the development of off-farm activities, Zhangjiabian township in Zhongshan city, Guangdong province, decided to investigate. They found that 90 percent of the peasants were willing to keep only small amounts of land. Thus, the township called for bids for contracts on 3 733.33 ha of grain and sugar cane land. The amount of land allocated depended on the ability and willingness of each bidder, but a shortage of local agricultural labour meant that 1 066.67 ha was not assigned. The township then opened the bidding to outsiders, and 223 expert farmers from outside the township contracted land. The largest area contracted by one household was 29.87 ha, and the smallest 2 ha (GT, 1988: 18).

In order to avoid the refragmentation of farms, Nanwen village, Dayong township, in the same region and over the same period stipulated that the smallest area of land contracted was to be 10 mu (0.67 ha), but that several households could make a joint bid (GT, 1988: 18).

Since 1985, the conditions to be met by expert farmers who want to contract responsibility land under the Dual Land System in Luyang township, Kunshan county, Suzhou city, are that they be able-bodied; have attained a certain educational level, including scientific and technological knowledge and practical experience; and be enthusiastic, competent and hardworking farmers with good management skills. In 1986, candidates were short-listed by group and village, then selected by the township. In 1985, 29 households were granted contracts and, in 1986, 40 were selected. Of these 40, 70 percent were headed by people under 40 years of age (12 percent more than in 1985); 32.5 percent had been educated to junior-middle school level or above (1.5 percent more than in 1985); and 52 percent were former production team directors, accountants, agricultural technicians or mechanics, who are usually more competent than ordinary peasants (1 percent more) (Shi and Zhang, 1987: 24). In 1993, in the rural areas of the six counties and cities within the jurisdiction of Suzhou city, the frequentation rate of senior-middle schooling was 15.36 percent, and only 42.41 percent of the labour force was educated to junior-middle school level or above, so the government stipulated that new contractors must receive special training and obtain a "Green Certificate" (eligibility to be farmers). Training and lectures on technologies and policies for large-scale farmers have since been provided regularly by relevant government organs, grain administrations, machinery and electricity suppliers, credit, supply and marketing cooperatives, etc. Associations of large-scale farmers also periodically organize live demonstrations and exchange of experience (Sun, 1996: 24).

Contracts ranged from one to ten years in duration and were renewable (Prosterman, Hanstad and Li, 1996: 25). Although in 1984 the State stipulated that the length was to be extended to 15 years and, in 1993, to 30 years, local officials normally prefer a shorter period for responsibility land in category 4 of the Dual Land System and the Single Land System, so that they can use the renewal as an incentive to the contractors. The contract can be either stopped or not renewed, and the contractor may even be penalized, unless natural causes are involved, for failing to satisfy the terms of the contract by missing the farming season, allowing fields to become desolate, damaging the land and reducing its quality, or mixing inferior varieties with superior ones (Shen, 1987: 32).

Attention has to be paid to the possibility that short-term contracts may affect the incentive of the contractors to make long-term improvements to the land. However, there are offsetting factors in this:

• When a contract is renewable, the contractor might be encouraged to establish a good reputation in order to win the next contract. This differs from the situation under the Equal Land System, in which the short period of contract discourages long-term investment, because parcels are always redistributed to other people as a result of population changes, rather than being kept or renewed.
• In order to win the next contract, the present contractor and competitors must bid higher output, or rent, by proposing improved measures conducive to land fertility, and the winner of the contract must implement them. The basic requirement for contractors is that land fertility should not be reduced. This can be controlled even on short-term contracts and provides the basis for the long-term use of the land. For large, long-term infrastructure construction, the village can rely on TVEs, which have financial strength, and on the collective mobilization and organization of peasants, rather than on individual contractors whose financial and physical abilities are weak. The village could also invest the revenue (or rent) paid by the winner of the contract in long-term improvements to the land. Even large-scale farms in monsoon Asia are very small in comparison with those in Europe and the United States. Farmers do not invest beyond the geographic boundaries of their own parcels of land, so long-term construction of infrastructure for the whole village is dependent on collective action.
• Long-term contracts cause problems when the farmers who won them subsequently prove unable to operate the land units under their control, which cannot easily be taken over by others until the contracts expire.
• Short-term contracts won via bidding are also helpful in controlling corruption on the part of village officials who might have an interest in giving long-term contracts to relatives or friends even when their performance does not justify it.
• The optimal duration for a contract has still to be discovered through active local experiments. If short-term contracts prove harmful, local officials and peasants will have an interest in adopting longer-term ones.

For instance, in 1987, in Bai village, Baicun township, Dingxiang county, Shanxi province, one of the lessees of a one-year contract on 7.47 ha of saline-alkali land operated 3.73 ha to which he applied 750 kg of chemical fertilizer and 15 cart-fulls of superior chicken manure per hectare, and achieved a sorghum yield of 5 625 kg per hectare, or 2.5 times the 1982 level. In 1988, four households won the contract and immediately renovated the land. They built a ditch of 112 m for irrigation, and applied 1 500 kg of chemical fertilizer and 750 kg of farm manure per hectare, raising the yield to 7 500 kg per hectare (Wu et al., 1988: 38).

In Yang township, Shunyi county, Beijing, the Dual Land System was initiated in 1985. The following year, the township's Tianjiayin village changed to the Single Land System by introducing a one-year lease system via bidding. The success of this venture encouraged first the township, in the early 1990s, then the county, in 1995, to introduce the system to other suitable villages. By 1996, 21 of the township's 27 villages had adopted the Single Land System on 1 733.3 ha, representing 65 percent of the township's total grain land (2 666.7 ha) (Zhong and Cai, 1997: 54-6).

Bids were called every year on 18 August. Grain land was divided into compact units of 7 mu (0.467 ha), 15 mu (1 ha) or 30 mu (2 ha), depending on the village. On the basis of the quality of the land and its distance from the village, a basic contract fee (or rent) of between 100 and 200 yuan per mu (1 500 to 3 000 yuan per hectare) was announced for each unit three days earlier. One or several households could bid together and paid a deposit of 300 to 500 yuan, which was not reimbursed to the winning bidder until the land had been tilled. The units were contracted to the bidders who offered the highest contract fees. Some 60 to 70 percent of households were able to obtain land, the rest sought other jobs or were offered posts in village firms (Zhong and Cai, 1997: 55)

Within two days of winning the contract, the contractor had to pay the contract fee (an average of 3 975 yuan per hectare), a deposit for selling output in quotas (450 yuan per hectare) and the production costs of collective services and inputs such as seeds, fertilizer, pesticide, machinery, ploughing, irrigating, harvesting and land clearing (1 350 yuan per hectare). Contractors gained access to the economic results after the contract had been fulfilled. Because they had already committed some 5 775 yuan per hectare, contractors were motivated to maximize production potential and this encouraged them to learn and apply more science and technology, carry out intensive farming and increase investments. As a result, there was a surplus. For example, in 1996, the average grain yield was 11 250 kg (double cropping), the gross income 16 500 yuan and the net income 7 500 to 9 000 yuan per hectare. After more than ten years of operating the system, the quality of the land has not been negatively affected by short-term or predatory behaviour on the part of contractors, rather land has been more efficiently used. For example, in 1987, Tianjiayin village still had 26.67 ha of wasteland, which has since been converted to farmland via bidding for one-year contracts. Agriculture was further strengthened by the village collectives feeding back the contract fees. By 1996, the township collectives owned 406 motor-pumped wells, 168 sets of spraying irrigation facilities and 23 808 kw of agricultural machinery power (8.85 kw per hectare of grain land) with a total investment of over 45 million yuan, raised mainly from contract fees. The fees charged for collective water, electricity and machinery services were lower. For example, the cost of irrigating 1 mu of land was 20 yuan (300 yuan per hectare), but the collective charged only 10 yuan (150 yuan per hectare), the remainder being subsidized by contract fees. Hence this was a clear case of "from the peasants, to the peasants" (Zhong and Cai, 1997: 55-6).

MAJOR PROBLEMS

The major problems discussed here concern the process of promoting appropriate large-scale farming, rather than the general aspects of agricultural and rural development in China.

Problems have arisen both from the failure to promote large-scale farming when land was inefficiently used by part-time farmers and absentees and from its premature promotion. While, in the early 1980s, the former was the main cause of problems (Gao and Liu, 1984: 21), in the 1990s, the latter took over.

As early as 1984 (Oi, 1989: 192), Chinese journals were already criticizing bad practices on the part of some cadres which were creating large specialized households, for example, to produce 5 000 kg of grain, by arbitrarily reducing the already meager holdings of the other peasants in the village before local off-farm activities had been properly developed.

In many areas where rural firms could not yet absorb all the surplus peasants, several villages, under the pretext of "introducing the market mechanism" and without the majority agreement of villagers, enforced category 4 of the Dual Land System by reducing self-sufficiency land, expanding responsibility land and allocating the latter through bidding, so that they could charge more in village fees. Those peasants who could neither win responsibility land nor find jobs in other areas had to subsist on the tiny plots of self-sufficiency land remaining to them, and this caused strong resentment (CEST, 1993: 46; 1996: 39).

An extreme example of this was in Hougu village, Shendan township, Dengta county, Liaoyang city, Liaoning province,¹⁶ which had 2 100 inhabitants and 335.3 ha of farmland. In 1983, each household contracted land and benefited considerably as a result. In 1993, however, despite the central government's directive to renew the existing contracts, the village, without seeking the peasants' agreement, took back all the land and implemented a mixture of the Dual Land System and the Single Land System. Only 28 peasants obtained self-sufficiency land, while a few farmers, selected by the village leader, contracted all the responsibility land. The contract fee for self-sufficiency and dry land was as high as 120 to 130 yuan per mu (1 800 to 1 950 yuan per hectare), while that for the profitable wetland was only 40 yuan per mu (600 yuan per hectare). Most peasants had no land to till, and had to subrent from the large-scale farmers charging high rents, rent land in other villages, or resort to casual labouring, resulting in a steady, year-by-year decline in their living standard (Liaoning Daily, 1996). In this case, corruption might have been involved.

Such bad practices attracted the attention of the media. The government has repeatedly stressed that large-scale farming should be promoted only when it is appropriate to do so, i.e. in accordance with the degree to which peasants have found jobs in other sectors, established new regulations and laws and launched campaigns to combat corruption. For example, on 7 July 1997, Vice Premier Rong-Ji Zhu (Zhu, 1997) publicly called on provincial leaders to stop incorrect practices in some rural areas where responsibility land was being withdrawn from peasants and redistributed via bidding for the purpose of charging high contract fees, regardless of whether surplus peasants could find other jobs or not, thus increasing the financial burden on peasants.

EVOLUTIONARY TREND IN THE LAND TENURE SYSTEM

The evolutionary trend of the Chinese land tenure system towards overcoming fragmented small farms as the last obstacle to sustainable rural development may progress from the Equal Land System, through the Dual Land System (including the Leasing System), to the Single Land System (including the Leasing System and the Corporate Holding System). The necessary condition is the development of rural industrialization to absorb the resultant surplus in the peasant workforce. The Dual Land System is particularly significant. Self-sufficiency land, which is contracted equally to all households on a per caput basis, serves as a form of basic social welfare or last resort for peasants and removes their major concern about losing their jobs in off-farm activities. It is, therefore, a beneficial system. The back-up social welfare provided by the Dual Land System does not require peasants to buy grain for self-consumption, while that provided by the Single Land System does, albeit at prices below market levels. The Dual Land System can also increase the economies of scale on land, even in areas where rural non-grain agriculture and off-farm activities are less developed, because responsibility land, i.e. land that is in access to self-sufficiency needs, is contracted to everyone, to every section of the labour force, to every section of the agricultural labour force or to expert farmers, according to the stage of development of non-grain agriculture and off-farm activities. This makes it particularly suitable to the situation in China, where it is likely to last for a long time.

At the beginning of the 1980s, the State had already raised the issue of promoting appropriate large-scale farming wherever the conditions were right (Yang, 1995: 17). In 1982 and 1983, the State under Deng Xiao-Ping supported the emerging large household contractors (CCCPC, 1992a: 169; Deng, 1992: 184). In 1984, the State called for the concentration of land towards expert farmers (CCCPC, 1992b: 224). Experience across the country has shown that the ideal conditions for appropriate large-scale farming by expert farmers (i.e. category 4 of the Dual Land System, the Leasing System, the Single Land System and the Corporate Holding System) occur when 70 percent of the rural labour force has shifted to non-grain agriculture and off-farm activities, which are generating 80 percent of the local revenue and 90 percent of the income of peasant households. Under these conditions, villages are economically strong, competently led and offer an overall service system to farmers. However, not many rural areas can meet these conditions. As soon as some households are no longer interested in grain production, the village can force the transfer of land to full-time farmers, rather than relying on voluntary transfer (Yang, 1995: 17). This can be done even before the Dual Land System has been adopted throughout the whole village. As the local conditions gradually approach the ideal ones, economies of scale in land operations are increased.

As Table 2 (p. 94) shows, in 1994, less than 50 percent of the total land contracted to households was being administered under the Dual Land System. In other words, more than half was still under the Equal Land System (especially in western China). This is primarily because both the urban and the rural populations of China were increasing during the 1949 to 1996 period, while the farmland area was decreasing and the pace of rural industrialization, especially in the central and western areas, was not rapid enough to absorb the surplus peasants. The Dual Land System generally works best in areas with per caput farmland of at least 0.08 ha; where it is less than 0.067 ha per head, areas of responsibility land (when separated from self-sufficiency land) become too small to be profitable (CEST, 1996: 39). Even in the eastern part of the country, the development of large-scale farming has been constrained because, although rural industrialization has been more rapid in this area, it also has the densest population. For example, at the beginning of the 1980s, some densely populated villages in Wuxi county in the Sunan region already lacked responsibility land to be contracted to labourers (Prosterman, Hanstad and Li, 1996: 20). The criterion for judging when large-scale farming is appropriate varies across the country, but many regions determine it as about 1 ha per labourer. In 1994, the area under appropriate large-scale farming was
6 056 300 ha, accounting for only 6.5 percent of the total farmland area (CEST, 1996: 40).

Nevertheless, where new land tenure systems have been implemented, quick progress has been achieved. For example, by the end of 1986, 706 (30 percent) of the 2 347 villages in the peripheral plain of Beijing had adopted large-scale farming; under further government intervention an additional 45 percent, or 1 051 villages, followed in just two months of 1987, reaching an average of 75 percent of the total, rising to as much as 94 percent in Shunyi county (Meng, 1988: 13). By 1996, in the Yangtze River delta, large-scale farming units had become the backbone of agricultural production. In Zhejiang province, two-thirds of the grain for State quotas was sold by large-scale farmers (Shi, Zhu and Zhang, 1996).¹⁷

As population growth is expected to reach its peak sometime in the twenty-first century and then decline, and as development in central and western China has been accelerating since the 1990s, the prospect of overcoming the obstacle of fragmentation seems bright.

In 1993, in order to prevent the frequent redistributions of contracted land resulting from changes in family size and the use of farmland for housing construction, the State stipulated that at the start of the second round of contracts (1994-2024), farmland could be redistributed, but people born over the family planning limit were not eligible for land; housing construction was to be regulated and standardized. The land of a household was not to be reduced when the size of the family decreased (and this encouraged some family members to abandon agriculture and leave more land to the others) or increased in the case of its expansion (and this discouraged new births and obliged new arrivals to seek non-grain agriculture and off-farm employment). A proper land transfer mechanism was also to be established in order to achieve appropriate large-scale farming (Zhang and Hou, 1995: 23-4; Zhang, 1996: 17).

The Land Management Law was amended on 29 August 1998 and enforced on 1 January 1999. It prescribed, for the first time in law, that land contracts are valid for 30 years (and renewable); that the contractor is obliged to protect and use the land appropriately according to the contract; that individual land parcels can be adjusted among contractors within the contractual period, with the agreement of two-thirds of the villagers or their representatives and approval from the township government and agricultural administration of the county government; and that law suits are allowed but, before they are settled in court, the existing land use situation cannot be changed (PPRC, 1998). These rules not only guarantee the stability of land use, but also show flexibility in preventing inefficient landholding. They give local officials power to adjust land, while promoting democracy and peasant participation so as to avoid arbitrariness and corruption on the part of officials. This law reflects that a decade of experimentation has helped China to reach a relatively mature stage in overcoming the last obstacle to sustainable development, although further experiments will still need to be carried out.

¹ There are 19 rice-based economies in monsoon Asia: China (mainland), Japan, the Democratic People's Republic of Korea, the Republic of Korea and Taiwan Province of China, in East Asia; Cambodia, Indonesia, the Lao People's Democratic Republic, Malaysia, Myanmar, the Philippines, Thailand and Viet Nam, in Southeast Asia; and Bangladesh, Bhutan, India, Nepal, Pakistan and Sri Lanka, in South Asia. Landownership is private in Japan, Taiwan Province of China, the Republic of Korea, Malaysia, Thailand, Indonesia, the Philippines, Bangladesh, India, Pakistan, Sri Lanka, Nepal and Bhutan; and public in mainland China, Myanmar, Cambodia, the Lao People's Democratic Republic, Viet Nam and the Democratic People's Republic of Korea.

² In 1991, a Conference on Agriculture and the Environment, sponsored by FAO and the Netherlands, defined the essential and interdependent goals of sustainable agricultural and rural development as: "Food security, to be obtained by ensuring an appropriate and sustainable balance between self-sufficiency and self-reliance; employment and income-generation in rural areas, particularly to eradicate poverty; and natural resource conservation and environmental protection." (FAO, 1995: 1).

³ The Japanese and Chinese models are described by Zhou, 1996; 1997a; 1997b.

⁴ Jiangsu is a coastal province in southeast China (Huadong).

⁵ The different levels of development of non-grain agriculture and off-farm activities are based on the proportion of the labour force inside and outside grain agriculture. Although there are no systemic data for measuring this, case studies, the literature and observation have been used in this article to come up with categories that can be used in comparisons with the Japanese model, under which land is still largely held by part-time farmers and absentees. In the Chinese model, as more and more peasants leave grain agriculture, an increasing amount of land becomes available for transfer to the remaining full-time farmers for more efficient use.

⁶ Hunan province is in south-central China (Zhongnan).

⁷ US$1 = approximately 8.3 yuan, July 2000.

⁸ Shanxi province is in north-central China (Huabei).

⁹ Guangdong is a coastal province near Hong Kong and Macao, in south-central China (Zhongnan).

¹⁰ Beijing is the capital of China, situated in the northeast of the country (Huabei).

¹¹Hubei province is in south-central China (Zhongnan).

¹² Intercropping involves the planting of two or more crops at regular intervals in the same field, so as to make use of positive externalities between them and use land more efficiently. For example, one or two drills of green gram can be planted between two drills of maize.

¹³Zhejiang is a coastal province in southeast China (Huadong).

¹⁴ Anhui province is in southeast China (Huadong).

¹⁵Nolan (1988: 127) cites many press reports about rich areas with agricultural labour shortages attracting workers from distant poor parts to take over land contracts, especially in suburban areas of big cities in eastern China. Oi (1989: 191-192) cites the example of an agricultural research station in Jiangsu province that contracted land to a peasant from Hebei province to produce a total of 13 750 kg of grain, at a minimum of 225 kg per mu (0.067 ha). The station provided the peasant with access to fertilizer, insecticide and other agricultural inputs; technical support; and investment. He produced 50 000 kg and yielded a net profit of more than 50 000 yuan in just one year. This profitable arrangement prompted him to sell his newly built house in his home village, build one at the station and concentrate on grain production.

¹⁶Liaoning is a coastal province in the most northeastern part of China (Dongbei).

¹⁷Nolan (1988: 95, 147, 184) notes that the government encouraged the gradual concentration of farmland to expert farmers as early as the first half of the 1980s. In areas where off-farm employment has absorbed surplus peasants, a high degree of concentration in land operation emerged, fragmentation was overcome and mechanization reached. An example is cited by Oi (1999: 622) from as early as the 1980s when Daqiuzhuang village, Tianjin township, in coastal northeast China (Huabei) designated only a few households to farm but they were able to produce sufficient grain to feed the entire community and allowed the village to meet its grain sales quotas to the State. However, in districts where off-farm activities are less developed, the concentration of holdings has hardly developed and fragmentation has survived (Nolan, 1988: 147).

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