What Extent Is Chinese Rural Land Law Being Developed?

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What extent is Chinese Rural land law being developed to follow the “legal aspect of the ongoing legal reform” (Zhu, 2011) ?

 

Introduction

The purpose of this essay is to debate the legal aspects of rural land ownership rights. Nowadays, China agriculture land rights is subject to negative review on international media about its collective ownership (Hornby, 2016) and its apparently “legal gymnastics” (Economist, 2018). Therefore, In what extent is Chinese Rural land law being developed to follow the “legal aspect of the ongoing legal reform” (Zhu, 2011) ?

To debate this idea, this essay designs two arguments. The first one debates the rural law evolution in order to pursue its agricultural modernization and development. Therefore, in what extent is being developed the rural law to cooperate with its goal? This is followed by the second argument, regarding policy initiatives, how policy is being driven to change law status in modern China? To conclude this essay, there will be some considerations to further research about the subject.

Section one

This section aims to answer in which extent Chinese rural land law is being upgraded to face the challenging rural development. Some scholars suggest that is an ongoing market economy pressure on the agriculture sector. Thus, to answer this subject is necessary to understand the rule of law evolution in ownership, so that is possible to answer if the law is weak or in line with Chinese gradualist reform process. At the end of this section, it will be possible to understand in which extent the law is modern or not, considering the Chinese characteristic.

The evidence consists the number of legislative work towards securing land-right ownership. Wilmsen (2016) states the Constitution of China, Law Property Law and Land Administration Law as the main rights concerning land-right acquisition for agricultural purpose. On the other hand, the authors Hussain and Wei (2012) conclude that besides the Laws already mentioned above, there are five Laws and Regulations highlighting the land use rights.

However, the evidence for the argument above is given by Härtel (2018). He concludes that are more than twenty laws concerning agriculture rights in China. All of them estipulate food supply, rural development and agricultural production. His study argues that Chinese farmers are engaging in non-agricultural industries in cities. Therefore, contracted lands are being transferred to agricultural cooperatives, enterprises, family farms and other systems. The most important for this study are “Interim Regulations on the Allocation and transfer of Land Use Rights (1990)” and “Land Contract Rural Areas (2002)”.

Private ownership is a new concept at the Chinese society (Zhang, 2008). Zhang concludes this affirmation after a detailed study of the law historic background in China. According to him, a system or institution of private property never developed, and the right of property never became a fundamental right of individuals (Zhang, 2008). Although, legally speaking, private property rights were not officially recognized in China until 2004 when the 1982 Constitution was amended. Therefore, the concept of private ownership was hardly developed in the country`s history and for this, it is a Chinese characteristic to experiment new developments in order to progress in the field of ownership. In other words, the evolution regarding private ownership is a modern approach and for this, it needs extensive experiment before being into practice.

One evidence for the above argument is followed here. Rural Land Right transfers and its Household contract system did not develop at the same time as the Urban Land Transfer Rights. The urban rights have been introduced by the second Constitution amendment (1988) and its official regulation in 1990 by the Standing Committee at the “Interim Regulations on the Allocation and Transfer of Land Use Rights to the State-owned Land in Urban Areas”. While the rural land transfer rights were only legally introduced in 2002 by the promulgation of “Law on Land Contract in Rural Areas”.  Article 3, 10 and 32 of this legislation provides as follows:

“Article 3: The State applies the contractual management system in respect of land in rural areas.

Article 10: The State protects the circulation of the right to land contractual management, which is affected according to law, on a voluntary basis and with compensation

Article 32: The right to land contractual management obtained through household contract may, according to law, be circulated by subcontracting, leasing, exchanging, transferring or other means.” (“Law of the People’s Republic of China on Land Contract in Rural Areas,” 2002).

The previous evidence is also suggested by some scholars. For instance, Clarke (2014) affirms the cornerstone of the “Socialism with Chinese characteristics” is indeed the system of Land Use Rights (“LURs”). The scholar also suggests that the time pace of the legal development was not the same for Urban and Rural areas. Although the system initiated in rural areas in 1988, however, it was in urban areas where the government generates income by trading it. Hussain and Wei (2012) affirm that the separation of land use rights from public ownership is now a well-established feature of Chinese land law. The transfer of LURs to collectively-owned land is more restricted than that to state-owned land. This difference relies to the State policy of maintaining agricultural land protected against capitalism forces and self-sufficiency in food supply, which may only be traded amongst those with agricultural household registration (户口簿).

On the other hand, the “Land Contract in Rural Areas Law” is a modern legislation? Some scholars believe it is. The legislation welcomes the “free will” to engage into transfers negotiations. Following this debate, the article 20 of the legislation states thirty years for the length of the rights for the use of the rural land (arable). Also, the tenure of the contract should be used for agricultural production. On other words, no changes in the nature of the land should be made. The highlight of this legislation is the “free will” concept. This subject is followed by who is actually authorising to commercialise the right. Regarding this subject, although this legislation is advanced is free will of both parties, it still fails on who consists the ownership, which the article 26 provides this rule as follows.

“If during the term of contract, the whole family of the contractor moves into a city divided into districts and his rural residence registration is changed to non-rural residence registration, he shall turn his contracted arable land or grassland back to the party giving out the contract.(“Law of the People’s Republic of China on Land Contract in Rural Areas,” 2002)”

Another important advance of the legislation regards the “free will” of both parties to engage their negotiation to the transfer of rights. The article 36 is clear about this subject and, also the following article mandates that both parties should agree in a written contract, which should be sent to the party for record. Therefore, the transaction is made aware by the Central Government, which could imply in a possible collection of data, inclusive with information regarding the price for the right circulated and the method of payment.

Next, it is necessary to study the Chapter VI consisting “Settlement of Disputes and Legal Responsibility”. There are 10 articles describing the rules of this subject. The most important topic regards both parties could directly bring a suit in the People`s Court, without any analyse from lower level legal arbitration, such as Township. The legislation describes eight acts that is considered civil responsibilities, the majority of the examples reflects the protection of the peasant. Moreover, the rest of the chapter is in accordance with the Chinese Contract Law. There is also claim that if the contractor fails to honour the contract clauses, they must compensate.

Moreover, Härtel (2018) suggests that there are 21.5 percent of farmers contracted land by the end of 2012, and by 2016 the figure increase to one third of transferred land in China. That figures show a clear example of an important revolution in the way agriculture is being developed. On the other hand, Hairong and Yiyuan (2015) collected further data regarding land right transfer. According to them, in 2013 26 percent of farmland rights has been commercialized and it has been primarily land transfers from household to household, while cooperatives and enterprises follows only by 30 percent of such operation (Hairong and Yiyuan, 2015).

From the data above is possible to affirm that the land-right transfers are a growing movement. However, there is little research about the legal forms of enterprise allowed to purchase the rights. On the one hand, there is legal specific description regarding agricultural cooperative role that are authorised to negotiate land rights. On the other hand, however, the Chinese law on rural land lacks the definition about commercial enterprise allowed to engage into rural land rights transfers. Some scholars identify a trend of Chinese agribusiness firms called “dragon head” business enterprises, but no clear definition on its concept, neither in the legal aspects. This ongoing relationship as showed above is happening a large scale, as 30% of rural transfer’s rights has been going to cooperatives and enterprises. Therefore, this essay suggests further research on this subject, which is not the goal of this study.

Following this argument, it is important to identify the contrary argument that China is progressing in the rural-right law. For this purpose, this essay will study academic research and well stablished international organizations like the World Trade Organisation (WTO) and the World Bank.

Tang (2009) affirms that China is lagging behind the legislative work regarding agricultural areas, especially “agricultural use of foreign capital flow of the service sector the lack of corresponding laws and regulations guide” (Tang, 2009). Nevertheless, its importance on the academic law in China, the authors does not offer detail argument regarding his affirmation into land rural rights. Also, his academic work aims in the legal consequences for the Foreign Direct Investment into Chinese agriculture. Although, it is not the purpose of this essay to discuss this subject, it is important to study his affirmation. This essay has showed previously that the Chinese legislation is improving on the subject of land-rights, with some improvements regarding right transfer, but the land ownership is still collectively-owned for rural areas and State-owned in urban areas, according to the Chinese Constitution article 10.

The WTO (2016) affirmed that “China’s land management system has remained unchanged. Nevertheless, measures have been implemented to provide more flexibility to transfer farmers’ contract rights. In 2015, a pilot programme was introduced to allow farmers to use both their right to contract land and their dwelling as collateral to obtain financing” (World Trade Organization, 2016). This statement shows a clear affirmation about Chinese legislation improvements about procedures and enforcement. Following this subject, the World Bank in its late China assessments described Chinese rule of law as follow provided:

“Reforms to professionalize the judiciary, increase judiciary independence, improve fairness in the implementation and enforcement of rules, and enhance access to justice. The proposed rule-of-law reforms make it clear that China would maintain a socialist rule of law with unique “Chinese characteristics.” In particular, this means that the government will lead the reforms and remain in overall control of the judiciary.”(The World Bank, 2018)

Finally, this section has analysed the evolution of rural land legislation, specifically the Constitution and the latest laws and regulation regarding ownership and it transfers rights. Therefore, it is clear that the trade of rural land is prohibited. Thus, the Chinese law authorises to transfer rural land rights between rural residents, cooperatives and enterprises. However, the legislation lacks the interpretation about rural cooperatives and enterprises. The gradualist approach to reform agricultural rights is even clearer, it took more than 20 years after the urban lease land.

Section two

Following the previous debate, this section argues on how the policy orientation has been a source to change the legal aspects on rural-land rights. For this purpose, it will assess the impacts on the rule of law from the “No. 1 Policy Document”, which it has been devoted  to agriculture, farmers and rural areas in 15th year in a row (Bo, 2018). Therefore, the argument is that the policy drives new legislation in China but has failed to update its legislation in recent years.

The peasant-driven shift from collective farming to a family-based system in Anhui (1978) was the first input to change policy orientation, but what about the rule of law? Ye (2015) describes the policy gradual process, and he concludes that it first was endorsed by the Central Committee of the Communist Party of China (CCCPC) in 1979. Later it was subject for the 1983 “No. 1 Policy Document” as “‘a great creation of the Chinese peasants’ and stipulated that it would be the basis of China’s agricultural system” (Ye, 2015).

Therefore, there is lack evidence to affirm that this shift was responsible for a major change in the Chinese law. However, as said at the previous section, the 1982 Constitution could have been influenced by this debate, and it has inaugurated the idea of ownership in the Chinese society, as written at the Article 10. Moreover, according to

Härtel (2018), the Constitution definition of agriculture contains rules concerning the basic agricultural operating system, the basic rural economic system, the ownership of the land and basic requirements of ecological environmental protection. Hence, the effort of the Anhui province has improved the Chinese rule of law regarding the shift of rural land ownership.

Another evidence of the evolution of rural law has come at the 1988 Constitution amendment at the article 10, which has inaugurated the transfer land rights. However, as seen at the previous section, only the urban areas had progressed in the land transfer rights. Regarding the subject of this essay, there were no evidence regarding the evolution of rural rights. Even thought, the Constitution has made clear that rural land was subject to transfer rights, the regulation law was not enacted until 2002. During this period, the rural law was subject only regarding the time length of right to explore the land.

In 1993, period of the first round of the early rural land contracts to expire, the Central Government edited the “1993 No. 1 Policy Document – Policy Measures on Agriculture and Rural Economic Development” in order to offer guidelines for the second round of land contracts was to be prolonged to 30 years. That characteristic will be a consequence at the “The Law of the People’s Republic of China on Land Contract in Rural Areas” in 2002 the contract length of 30 years.

For the 1997 policy document, the challenge to be importance for the following year relied on the issue of agricultural modernization by ‘promoting agricultural commoditization, specialization and modernization.’ In the Chinese context, agricultural modernization usually requires the scaling up of farmland plots, and so this can be seen as an encouragement for land transfer (Ye, 2015). However, once again the law subject to this study was not developed, but the Chinese gradualist approach is being developed to put into action the revolutionary 2002 regulation regarding rural land transfers.

As observed in previous paragraphs of this section, Dean and Damm-Luhr (2010) affirm that rural land is considered a threat to the Central Government stability, so it is necessary to observe policy documents from the Chinese Communist Party (CCP), which can be seen at the Anhui model. The authors also comment the relationship between policy documents and evolution of the land-law:

“These policy documents addressed the problems with length of use rights and frequent readjustments. In the years that followed, the Chinese government essentially codified the measures in these policy documents into formal laws, which similarly concentrate on providing farmers with reliable use rights to their land.”(Dean and Damm-Luhr, 2010).

Contrary to this essay argument, the authors believe that the major problem for the land-law in China nowadays relies on the lack of implementation and enforcement. Their argument is positively contributed according a survey of 1,600 households in seventeen provinces conducted in 2005 by the Rural Development Institute (RDI). It has showed less than 50% of farm households has received a written land-use contract. This suggests that farmers are not confident to secure their land would not be readjusted or expropriated.

Following the next argument of this essay, which affirms that policy documents have failed to draft new legislation regarding rural-land rights. According to Dean and Damm-Luhr (2010) argument: although the policy orientation, it is still difficult to understand the ‘overall role that policy plays in Chinese governance.’ They go further in their argument: law and policy are often blurred. They offer the example of the CCP Central Committee policy to provide farmers with thirty-year contractual rights, which since then has been into practice at local level, but the policy provision become law only after five years, the Land Administration Law. Therefore, considering this information, the second argument of this part is that the lack of new amendments of the current law in the rural-land right is due to the high number of policy orientation replacing the rule of law.

Conclusion

This essay has provided arguments and evidence to support the affirmation that rural law is being transformed. Also, it provided negative argument in order to formulate a debate. In a broader reference, there is enough evidence to support the argument that the rural-land legislation is on ongoing reform. However, the Chinese government controls this change with tight regulations and laws in order to protect its arable land against market forces. For this reason, some international scholars believe is due to the socialist ideology with Chinese characteristics. As Clarke (2004) affirms the Land-Use rights is the backbone of the Chinese Socialism ideology. For other, like Luhr (2010) arguments that the main reason is the blurred rule of law and, on the other side, the policy orientation from the Chinese Central Communist Party.

However, there is one argument clear among most scholars and they agree with them: the Chinese agriculture model is an ongoing reform. The system has shifted from collectivisation to a family-based arrangement. The research has shown that what persists from the Maoist period is the Collective ownership of the rural land. Thus, a clear example of the ongoing reform system happened in 2002: farmers have the free will to negotiate their “Household Production Contract” and could engage in negotiate contract land or manage agricultural production. On the other side, survey-data suggests less than 50% of farm households has a written land-use contract. Then, how to engage into land-use transfers? The answer for this question is still a problem for most of the rural households and clearly shows the lack of legislative enforcement.

What can be conclude from this study is the Chinese reform is based on a gradualist approach. Back in history, it first had a significant influence from the peasants, specifically from Anhui. That had influenced the policy document No. 1, and consequently, the law development. This same example could happen of the “dragon head” enterprises with rural collective enterprise, but further research needs to be practice, as there is lack literature in this subject.

Moreover, looking back to the Financial Times and The Economist affirmations, there is no evidence suggesting that the rural land is being facing “legal gymnastics” regarding the transfer land-rights. Actually, according to some scholars the law is advanced. The prescription of “free will” in the piece of law is an example of the legislative development. This essay shows the contrary. In fact, the rule of law in the rural area is being respected and is widely discussed to encourage further reform, but the central point is the blurred enforcement of the law. Data has shown that exist farmers without a written contract about its right to produce in the land, and therefore it is impossible to negotiate land rights. To summarize, the law is advanced in some parts, but its enforcement is lagging behind for further improvement.

In my point of view, there should be a significant debate regarding the role of Chinese rural cooperatives and the so-called “Dragon-head” enterprises. There is evidence that it needs to be further research regarding their role and application of Company Law for this typology of business in the agribusiness.

To conclude, this essay suggests that is taken further research to verify aspects of the lack of enforcement and the policy orientation overshadowing the rule of law. However, is this the “Market-orientation” with Chinese characteristics? That the answers that should further research to give a better explanation regarding land-rural rights.

Reference

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Economist, T., 2018. Why China needs bigger farms – Dreaming big [WWW Document]. The Economist. URL https://www.economist.com/news/china/21734394-despite-huge-improvements-maos-dire-day-farming-china-still-woefully-inefficient-why (accessed 2.20.18).

Hairong, Y., Yiyuan, C., 2015. Agrarian Capitalization without Capitalism? Capitalist Dynamics from Above and Below in China: Capitalist Dynamics from Above and Below in China. J. Agrar. Change 15, 366–391. https://doi.org/10.1111/joac.12121

Härtel, I., 2018. Handbook of Agri-Food Law in China, Germany, European Union : Food Security, Food Safety, Sustainable Use of Resources in Agriculture. Springer, Cham, Switzerland.

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