On Monday (11/07/16) Professor James Putzel had a letter published in the Financial Times in which he responds to an article from the 5 July entitled “Losing the plot“. Below is the full text

Sir, I welcomed Lucy Hornby’s Big Read article on the dilemma China faces over the future of property rights in agricultural land (“Losing the plot”, July 5). Indeed, managing the transformation of China’s rural economy and society is one of the biggest challenges the country faces in the decades to come.

In the 1980s the Chinese Communist party and state deftly managed the dismantling of ill-conceived communal farms through a “second redistributive land reform” (the first occurred with the 1949 revolution that ended the ancient landlord system, which kept the peasants mired in poverty). By devolving land-use rights to peasant households, the 1980s’ land reform unleashed a huge increase in agricultural productivity that fully exploited the rural infrastructure created during the communal period and opened the way for a stepwise increase in investment in agriculture. This initially was provided by the “sweat equity” of farming households followed by inventive co-operative and contractual arrangements allowing entrepreneurs to invest in new technology and production organisation. The state invested significantly in agricultural research, technology and extension services.

But, in a similar manner to the developmental states of north-east Asia, such as Japan, South Korea and even Taiwan, where land reforms were followed by great restrictions on agricultural land markets that persist to this day, the Chinese government wisely resisted full privatisation of land. This is because, like its north-east Asian predecessors, the proportion of the population still dependent on rural livelihoods and village forms of social security is and will remain far higher than was the case in less densely populated western Europe or North America at the same per capita gross domestic product.

The challenge facing China is to ensure democratic control over village co-operatives that exercise ownership over the land and to ensure that rural communities can continue to benefit from land rents to support the rural elderly and the diversification of the rural economy. At the same time, maintaining restrictions over land markets is crucial to keeping the best agricultural land under production and to prevent land ownership from becoming a new source of inequality and speculative activity, which sparked the Chinese revolution in the first place.

Prof James Putzel
London School of Economics, UK

The full text can be found on the Financial Times website