New Implications of Land Commodification in China’s Local Development

Title: 1206 | New Implications of Land Commodification in China’s Local Development
Area: China and Inner Asia
Stream: Political Sciences
Presentation Type: Panel Presentation
Timna Michlmayr, University of Vienna, Austria (organizer, presenter, chair)
Francesco Zaratin, University of Vienna, Austria (presenter)
Zeng Yu, Peking University, China (presenter)
Li Jie, University of Vienna, Austria (presenter)
Jiwei Qian, National University of Singapore, Singapore (discussant)


Land's public ownership is one of CCP's socialist ideological strongholds in an otherwise vigorous embrace of the market. Nevertheless, China has developed a system whereby although this principle is maintained, land can be marketed and mortgaged. State and non-state actors have largely taken advantage from land as an economic and financial asset, which have thus become a key driver of economic growth and a major generator of incomes.
What implications do land's financial utilization and commodification bring along? This panel attempts to answer this question focusing on the realms of rural development, urban governance and local political-economic management. It explores the practices, functions and by-products of land financialization during the past decade.
Francesco Zaratin's paper takes up the recent use of land transfer-based rural development by a "rural reconstruction" company and shows its strained position between government policies and peasants' empowerment. Timna Michlmayr's paper reveals that the importance of 'land finance' in the management of subnational government debts has grown as a response to rising debt risks. Zeng and his colleagues find that homeowners have enjoyed greater autonomy in community affairs as a result of the local state's response to social conflicts generated by land-based urbanization.
Applying mixed methods ranging from qualitative documentary analysis to quantitative deep learning techniques, the contributions converge in highlighting the determinant role local actors in urban and rural settings play both as subjects and objects in China's 'land finance'.

Panel Abstracts:
Subnational Debt Management in China: a 'Land Finance' Perspective
This paper examines the role of land-based financing in the management of China’s local government debts. In the period after the global financial crisis of 2008, local governments have increasingly borrowed money from banks and used public land sales as a major debt repayment source. The land-based borrowing strategy has become one of China’s greatest financial risks, since it has made local debt repayment heavily dependent on development of the real estate market. While existing studies mainly point to the local implementation of land-backed borrowing in China, this paper analyzes the role of ‘land finance’ in China’s top-down debt management. Drawing upon text and statistical analyses of policy documents issued during the past decade, bond rating reports and more than 1000 local government bonds issued after 2015, this study reveals that ‘land finance’ has played a growing role in the management of debts since the debt reform in 2015. This paper argues for a growing necessity of land-related financing practices in China’s political-economic management as an unintended consequence of the fiscal stimulus package of 2008. It indicates that institutional reforms of China’s fiscal system are necessary in order to bring the virtuous cycle of land, debt and infrastructure investments to a halt.

Empowering Peasants through Land Transfers? The Case of 'Internal Finance' Cooperatives
The marketisation of land-based on land transfers has become a widespread instrument to develop the Chinese countryside. So far, we know that this method responds to top-down imperatives to maximise productivity, rationalise space and “modernise” rural areas. We also know that large investors renting land tend to benefit from this system more than small peasant households leasing it out. What happens when a rural development consultancy company rooted in the peasant-protection discourse of New Rural Reconstruction gets into this process? This paper examines Li Changping’s Rural Reconstruction Institute (RRI) and its rural development method of 内置金融 - “internal finance”, which mixes intra-village land marketisation and micro-finance. In it, land is transferred exclusively among villagers and is administered by the village collective in collaboration with a local financial cooperative issuing micro-loans.RRI claims that this method allows villagers to self-organise and lead the development of their village. But how can this grassroots function be reconciled with top-down land planning? It is argued here that the limitations of this method lie in its compromise nature. The case of Haotang - a “model village" and showcase of RRI’s activity - will be analysed drawing from primary sources and field research.

Urbanization, State, and Civil Society: Theory and Evidence from China
Contrary to the conventional wisdom that civil society can only thrive in liberal democracies, we argue that authoritarian leaders may tolerate and foster genuine self-governing civic associations to reduce intergroup conflict resulting from economic development. By examining China's reform that aims to facilitate homeowners' associations, we identify the causal mechanism of emerging civil society in a one-party regime. Using state-of-the-art deep learning techniques and instrumental variable estimation in event history analysis, we find that state-led land development increases homeowners' complaints on properties years later and that local governments receiving more homeowners' complaints are more likely to adopt policies promoting homeowners' associations. Our findings suggest that civic organization is not just a means of protecting against the state, but also a tool for competing with other groups in distributional conflicts.

This panel is on Tuesday - Session 05 - Room 6

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