'Zone Fever', the Arable Land Debate, and Real

Journal of Contemporary China

ISSN: 1067-0564 (Print) 1469-9400 (Online) Journal homepage: http://www.tandfonline.com/loi/cjcc20

'Zone Fever', the Arable Land Debate, and Real Estate Speculation: China's evolving land use regime and its geographical contradictions Carolyn Cartier To cite this article: Carolyn Cartier (2001) 'Zone Fever', the Arable Land Debate, and Real Estate Speculation: China's evolving land use regime and its geographical contradictions, Journal of Contemporary China, 10:28, 445-469, DOI: 10.1080/10670560120067135 To link to this article: http://dx.doi.org/10.1080/10670560120067135

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Journal of Contemporary China (2001), 10(28), 445–469

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‘Zone Fever’, the Arable Land Debate, and Real Estate Speculation: China’s evolving land use regime and its geographical contradictions CAROLYN CARTIER* State promotion of export-oriented development in China through a system of special development zones contributed to both rapid economic growth and indiscriminate reproduction of special zones. Land use transformations have resulted in signi cant losses of arable land, and new state policies to conserve land and control land use through the revised Land Administration Law. Critical comparison of industrial development in the special zone phenomenon and the evolving land use disposition system demonstrates contradictory domestic political and economic policies of land development, land management, and land conservation. This analysis assesses land development trends in the south China coastal zone and adopts a geographical approach to examine the spatialities of the land use regime, across the administrative hierarchy, in the nature of the distinct rural and urban land use markets, and in land monitoring problems. Problems revealed in the land disposition system demonstrate how the state’s land use regime has promoted land development. New controls over land use coincided with the need to restrict service sector development in real estate and related industries at the onset of the regional economic downturn in 1997.

Introduction In May 1997 the State Council and the Central Committee of the Communist Party issued a joint notice promoting strict land use measures, including a 1-year moratorium on arable land conversions.1 Sources in China report that a high level brie ng on diminishing agricultural land, based on comparative remote sensing imagery, prompted state leaders to take this unprecedented step.2 After nearly two decades of economic development under reform, land use conversions had pro* Carolyn Cartier is Assistant Professor of Geography at the University of Southern California. The author would like to thank Kam Wing Chan, Graham Johnson, Richard Kraus, Anthony Yeh, and two anonymous reviewers for their comments on previous manuscripts. An earlier version of the paper was delivered at the ‘International Symposium on the People’s Republic of China at Fifty: Opportunities and Challenges’, Hong Kong Baptist University, Hong Kong, in June 1999. 1. Xinhua (Beijing), ‘Protection of cultivated land increasing’, translated in FBIS-China-97–096, (19 May 1997). 2. The research presented in this paper is based in part on information obtained from interviews with local of cials on land use issues in Fujian province in August 1995 and of cials from the Suzhou area in June 1998, and on unpublished internal documents. 1067-056 4 print; 1469-9400 online/01/280445-2 5 Ó DOI: 10.1080/1067056012006713 5

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CAROLYN CARTIER

ceeded rapidly and indiscriminately enough that the state imposed a 1-year freeze on conversions of arable land for industrial use. In April 1998 the ban on non-agricultura l use of farmland was extended for another year to 1999.3 The state renewed the ban in response to continued dif culties with unapproved land use conversions, and moved to strengthen existing land use regulations by reviewing revisions of the Land Administration Law during the Ninth National People’s Congress (NPC).4 Simultaneously , reorganization of the national government resulted in reshuf ing of state ministries, which included the creation of the Ministry of Land and Resources from the combined of ces of the former Ministry of Geology and Mineral Resources, the State Land Administration Bureau, the National Bureau of Oceanography, and the State Bureau of Surveying and Mapping. Thus, importantly, the former Land Administration Bureau was upgraded to ministerial status. The Ministry of Land and Resources will maintain a bureau of law enforcement, whose mission is to enforce the revised Land Administration Law. The revision of the land law was published in newspapers for public notice and response, which the state called ‘a leap forward in democratic legislation ’, because it marked the rst time a law was drafted to incorporate public opinion. The chairman of the NPC Standing Committee, Li Peng, found in the event an opportunit y to locate democratic practice. Chairman Li stated, ‘the pooling of wisdom from the masses of people in legislation embodies a form of bringing public participation into play in running the country’.5 The revised Land Administration Law, which went into effect on 1 January 1999, covers in eight chapters and 86 articles, land use plans, land use rights, farmland protection, land utilized for construction , and legal responsibilitie s for land use and land management.6 It revises the rst Land Administration Law, which took effect in 1987. The main goal of the revised law appears to be nothing less than the complete restructuring of the central focus of the land management regime: from facilitating land use transformations to controlling the purposes of land use. During the decade 1987–97, from the time of the rst sale of land use rights to the moratorium period, land use policy structures focused on gaining rights to land use and how to achieve land use transformations . The central feature of the original system was a hierarchical approval system by administrative level, in which administrativ e levels could approve land use transformations in a rank order system: the higher the administrativ e level, the larger the piece of land that level could approve for land use rights.7 The focus of the new law is on the nature and purpose of land use by categorizing land in three main groups: agricultural, construction-related , and unused . This scheme shifts the focus to current land use categories, and the maintenance of those categories by emphasizing the use of land 3. China Daily (Beijing), ‘China policy protects resources; freeze on land use continues’, (15 April 1998), p. 2. 4. China Daily, ‘NPC opens new session; farmland protection examined ’, (7 September 1998), p. 3. 5. Xinhua, ‘Public opinions incorporated into law’, translated in FBIS-China-98–241, (29 August 1998). The Ninth NPC also publicized drafts of other laws. See Xinhua, ‘Top legislature announce s mass discussion on law draft’, (30 April 1998), item no. 0430197 , (http://www.lexis-nexis.com/universe). 6. The Land Administration Law [Tudi guanli fa] is also translated as the Land Management Law. Xinhua, ‘PRC of cials debate amendments to draft of land-use law’, translated in FBIS-China-98–117, (27 April 1998). 7. See C. W. Kenneth Keng, ‘China’s land disposition system’, Journal of Contemporar y China 5(13), (1996), pp. 325–345.

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management plans. The revisions also signal an end to allowing independent decision-making power over land use conversions at lower levels of administratio n by restoring higher level checks on land use approval rights at the level of the provincial and central governments. The law has codi ed farmers’ land use contracts in 30-year terms and has generally doubled all types of compensation for land acquisition . It also seeks to enforce land utilization by a system of nes or by denying land use rights to non-users. The revised Land Administration Law can be seen as the culmination of a series of policy measures and laws promulgated over the past decade. From the late 1980s, when a market in land use rights rst appeared in select urban areas, the land management regime has encompassed the con icting needs of land development, land management, and arable land conservation. During this era, China’s coastal zone experienced the highest economic growth rates in the world, the country faced questions about a shortage of arable land, and the state introduced a complicated and variable socialist market economy in land rights. When the revised land law was published for public notice, Qu Geping, chairman of the Environmental and Resources Protection Committee of the NPC, characterized the effort to ‘draft the strictest land law in the world’.8 These comments paralleled earlier of cial statements. An editorial in the People’s Daily [Renmin Ribao] which appeared with the onset of the original moratorium period, raised a broad range of concerns, and stated ‘The current problem is, despite the grim situation about the protection of arable land, many people still lack a sense of crisis’. It recommended solutions for increasing arable land, including reclaiming ‘wasteland’9 and abandoned land, and intensifyin g land use.10 With the onset of the 14 May 1997 moratorium, the State Council called for a nationwide accounting of land use conversions. By the end of October 1997, all levels of government down to the township were required to have conducted an assessment of land use conversions under their jurisdictio n since 1991. Governments were exhorted to stop development zones unauthorized by the State Council or provincial government; re-evaluate rational use of large-scale land areas taken for commercial real estate projects, especially golf courses and luxury villas; investigate possible illegal land transfers and problems of land speculation; remove brick kilns from arable land; and stop haphazard use of land by village and township enterprises, especially for temples and ancestral halls.11 The report also sought to arrest provinces from selling land leases in military zones and large tracts of land for overseas investors. Entire islands, the state stressed , cannot be sold to

8. China Business Information Network, ‘China NPC to revise environmental laws: Qu Geping’, (28 May 1998), (http://www.lexis-nexis.com/universe). 9. Wasteland [huangdi ] refers to several categories of marginal land including swamp, sand, eroded land, or alkaline soil; ‘swamp’ is an indicator of the historic problems of wetlands ecosystem conservation in China. 10. Proposed land use intensi cation plans have involved settlement redistribution, such as the village and township restructuring plan for Jiangsu province in which more than 280, 000 natural villages would be merged into over 50,000 villages of larger sizes in order to realize a planned land savings of 3 Mmu, in Xinhua, ‘Renmin Ribao urges land protection’, translated in FBIS-China-97–097, (18 May 1998). 11. Xinhua, ‘Protection of cultivated land increasing’.

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foreign investors.12 During the 1991–96 period, there were 3.8 million reported cases of violations against the land law, and between 1986 and 1995 as much as 5 Mha (75 Mmu) of arable land was converted for infrastructural and industrial development. 13


Method and scope This paper adopts a geographical approach to examine the political economy of the land use regime, from three main perspectives: relations of scale; rural–urban relations; and located conditions of land use transformations. The concept of geographical scale is especially useful for China where the administrative hierarchy, from the local level of villages and townships, to the national level in Beijing, remains an important, dynamic, and uneven force of state organization and policy implementation . A scale perspective recognizes the administrative hierarchy as a system of spatial scales that the state has historically created, and which the state adjusts and changes in order to achieve particular political economic goals.14 Re-scaling by the state is a common response to economic transformation generated by transnational capital, as in China under reform, as the state has ‘scaled down’ economic decision-making to local levels. Scale also often serves as a framework for policy articulation and implementation, such as in China’s land use regime, as discussed below. A geographical perspective on rural–urban relations recognizes both the distinctions and connections between processes constituting rural and urban areas.15 Differences between rural and urban areas can be dramatic in China, and rural–urban relations have intensi ed in the reform era. Rural and urban lands are classi ed differently in China, and are subject to different processes of administratio n and disposition , as well as different markets. Under the new land use regime, municipalities have been expanding urban boundaries into surrounding suburbs and agricultural areas—in effect reclassifying rural lands as urban—which has created a range of land management problems and land resource access problems, especially for farmers. Moreover, basing the analysis in located conditions emphasizes local differences in the land use regime. The importance of geographical location is not simply 12. The transnational conglomerate Lippo Group, headquartered in Indonesia, obtained Meizhou Island off the coast of Fujian province for a ‘gigantic investment scheme’ centered on a ‘world class tourism resort’. See Xinhua, ‘Lippo investment project proceed s smoothly’, translated in FBIS-China-95–121, (23 June 1995). 13. Xinhua, ‘Chinese leader stresses land control’, (22 January 1998), item no. 0122286, (http://www.lexisnexis.com/universe). Tang Min cited state statistics reporting 30 Mmu (2 Mha) of land lost to construction over the decade, but promoted 75 Mmu (5 Mha) as a realistic gure. See Tang Min, ‘Land management strategy for 1997 examined ’, translated in FBIS-China-97–070, (24 February 1997). 14. For perspectives on geographica l scale see John Agnew, ‘Representing space: space, scale, and culture in social science’, in James Duncan and David Ley, eds, Place/Culture/Representation (London: Routledge, 1993), pp. 251–271; and Erik Swyngedouw , ‘Excluding the other: the production of scale and scaled politics’, in Roger Lee and Jane Wills, eds, Geographies of Economies (London: Arnold, 1997), pp. 167–176. 15. Analyses of rural–urban relations are common in China area studies. The theoretical literature from geograph y and developmen t studies brings to studies of rural–urban relations a greater focus on human–environmen t relations, environmenta l degradation, and sustainable development . See for example Jonathan Rigg, ‘Rural–urban interactions’, in Southeast Asia: The Human Landscape of Modernization and Development (London and New York: Routledge, 1997), pp. 239–274.

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where some event has taken place but rather a particular geographical area as de ned by the social and economic processes that have given rise to local conditions. 16 Assessment of local conditions is especially important where policy or law cannot be depended upon to create predictable general conditions. While this paper discusses land use management policy, it is well known that of cials have not dependably apportioned land according to the land use law. At the same time, because of the sensitivit y of the subject, it is impossible to generate accurate and systematic data on the details of land use apportionment and transformations , especially at the local level. Instead, the analysis uses located examples from the southern coastal region as the basis for discussion of the land use regime and its contradictions. The analysis proposes three main arguments. The rst argument is that the land law, especially in its rst iteration, from 1987 to 1998, was characterized by internal contradiction s that are especially geographical. Rather than preventing transformations of arable land, the internal contradiction s effectively allowed, if not promoted , land development. These contradiction s are organized in three categories: administrativ e hierarchy contradictions ; land monitoring contradictions ; and rural–urban contradictions . The revised land law, put into force in 1999, attempts to overcome many of the problems of the original land law, by ‘scaling up’ land use transformation approvals in the administrative hierarchy, strengthenin g land use management in rural areas, and increased land use planning. Will the 1999 land law be effective in overcoming these contradictions? While it is too soon to assess the effects of the new land law, in 1999 the state reported that most of the more than 160,000 recorded violations of the land law were associated with projects in relatively developed areas.17 The second argument holds that ‘real estate fever’ heated up in the special economic zones (SEZs). As promoted by Deng Xiaoping, SEZs became both real and ideological models for rapid development in other cities and provinces. This argument is based on accepting the premise that real estate fever had its origins in land use transactions pioneered in the SEZs, and that state promotion of the SEZ concept served to sanction similar economic practices in other places. The connection between the problems of ‘zone fever’ and real estate development has been established by Dali Yang, who concluded that ‘zone fever … became both the cause and symptom of China’s macroeconomic dif culties in 1993’.18 The third argument threads through the analysis the propositio n that while the revisions of the land law were ostensibly directed at conserving arable land, they may be better understood in the larger transnational context of the Asian regional economy. The revisions of the land law coincided with the Asian nancial crisis, 1997–99, during which economic problems resulted in regional currency devalua16. For a discussion of the signi cance of location and in relation to the concepts of place and region see John Agnew, Place and Politics: The Geographical Mediation of State and Society (Boston: Allen and Unwin, 1987). 17. Press reports indicated continuing problems with the land law, and that there were 168, 309 violations of the law in 1999. These gures are relatively small by comparison to the data for 1991–96. See Hai Min, ‘Land law poorly enforced’, China Daily, (18 May 2000), (http://www.lexis-nexis.com/universe). 18. See Yanzhong Huang and Dali L. Yang, ‘The political dynamics of regulatory change: speculation and regulation in the real estate sector’, Journal of Contemporar y China 5(12), (1996), p. 181; Dali L. Yang, Beyond Beijing: Liberalization and the Regions in China (London and New York: Routledge, 1997), p. 57.

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tions, stalled economic growth, decreased foreign direct investment, and curtailing or abandonment of many development projects. The Chinese leadership sought to maintain a distinctive international position by not devaluing its currency, the yuan. At the onset of the crisis, in order to shore-up domestic nancial stability, the state began to attempt to tighten up domestic credit, and monitored especially local trust and investment corporations.19 These non-bank nancial institutions , both local and the larger scale provincial government trust and investment corporations, which had sought international capital markets, became closely associated with real estate development in the 1990s.20 In several countries across the Asian region, including China, by the 1990s real estate development had become the highest growth economic sector.21 In this context, the new land law works to curb real estate speculation. The state’s rhetoric about the land law, though, is directed at farmers and arable land conservation practices, which maintains a politically sensitive position and apparent con dence about the foreign investment environment. Rapid development and the arable land problem The moratorium on land use conversions and the revisions of the Land Administration Law appear to have responded to China’s ‘arable land problem’. Through the middle of the 1990s, of cial reports and media analyses, both domestic and international, identi ed China’s decreasing cultivated land per capita as a serious resource management problem. The publication of Who Will Feed China?, by Lester Brown, especially galvanized popular concern in the US.22 Brown argued that China’s rapid industrializatio n and consequent conversion of arable land would generate demand for so much imported grain that China’s future food consumption would lead to sharp rises in international grain prices, and destabilize the world food economy. Among a range of serious problems with the analysis, this neo-Malthusian ‘crisis’ perspective turned out to be based on faulty though ‘of cial’ data. The problems of measuring China’s arable land are well known among China specialists. Analysis of gures on arable land published in the China Statistica l Yearbook has raised questions about the accuracy of government statistics and surveys.23 Statistics from the early reform period measured China’s arable land total at 95–96 Mha, but more recent estimates put the total in the range of 130–140 Mha.24 Based 19. Ian Johnson, ‘Beijing plans massive closure of trust rms’, Asian Wall Street Journal (Hong Kong), (7 January 1998), pp. 1, 4. 20. See Anjali Kumar et al., China’s Non-Bank Financial Institutions: Trust and Investment Companies (Washington, DC: The World Bank, 1997). 21. See Robert Wade, ‘The Asian debt-and-developmen t crisis of 1997–?: causes and consequences ’, World Development 26(8), (1998), p. 1541. 22. Lester R. Brown, Who Will Feed China?: Wake-up Call for a Small Planet (London and New York: W.W. Norton, 1995). 23. See Vaclav Smil, China’s Environmental Crisis: An Inquiry into the Limits of National Development (Armonk, NY: M.E. Sharpe, 1993), pp. 52–58; ‘Who will feed China?’, The China Quarterly 143, (1995), pp. 801–813; ‘China shoulders the cost of environmenta l change’, Environment 39, (1997), pp. 6–9; 33–37; and ‘China’s agricultural land’, The China Quarterly 58, (1999), pp. 414–429. Gerhard K. Heilig, ‘Anthropogeni c factors in land-use change in China’, Population and Development Review 23, (1997) presents a summary of the statistical problems. 24. See Robert F. Ash and Richard Louis Edmonds, ‘China’s land resources, environment , and agricultural production’, The China Quarterly 156, (1998), pp. 836–879.

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on alternative sources of semi-classi ed data, from sample surveys and remote sensing, China’s arable land is not the of cial Yearbook gure of 95–96 Mha but more in the range of 130–140 Mha. On this basis, China’s arable land is 45% larger than the national total historically repeated by of cial statistica l materials. Within the last few years, Chinese scientists have also recorded and published these larger gures in the 130–140 Mha range.25 State policy changes in China’s land taxation system, and the fact that the mu unit was not historically standardized , have contributed to the problems in statistical analysis. On this basis, some researchers take the position that China’s ‘arable land problem’ has been exaggerated .26 Most recently, Vaclav Smil has argued that China’s total cultivated land may be as high as 160 Mha.27 While now it is generally recognized that of cial statistics on arable land and arable land losses differ and have been under reported during the reform era, all major sources con rm extensive transformations of arable land, especially in the coastal zone.28 Research by Anthony Gar-On Yeh and Xia Li, utilizing remote sensing data on Dongguan county in Guangzhou, concluded that the loss of agricultural land has been under reported by as much as 61.3%.29 Whether or not China has an ‘arable land problem’, the amount of arable land lost to construction has been signi cant. What can be agreed on is that extensive areas of vegetable land in the suburbs and urban periphery have succumbed to industria l development, and that the excesses of land use conversions during the 1980s and rst half of the 1990s have been politically and economically chaotic. From the misdeeds of high ranking former of cials in the of ce of the Mayor of Beijing, to judgments by scholarly boards that Guangdong province has excess airport capacity as a result of ve different cities rushing to build major airports (where the maximum distance between them is less than 250 km),30 it has become widely known that land and infrastructure development have not evolved along theoretical lines of market rationality under reform. These issues register acutely where historically low arable land per capita and widespread development have coincided in the coastal zone. In the coastal region, Fujian province has particularly experienced the pressures of both extensive land development and the need for serious land conservation. With its special economic zone at Xiamen, and strong ties to Taiwan investors across the 25. See Sun Han, Zhongguo Nongye Ziran Ziyuan Yu Chu Yu Fazhan [Agriculture, Natural Resources and Regional Development in China] (Nanjing: Jiangsu Kexue Jishu Chubanshe , 1994); Wu Chuanqun and Guo Huancheng, Zhongguo Tudi Liyong [Land Use in China] (Beijing: Kexue Chubanshe , 1994). 26. Smil, ‘China shoulders the cost of environmental change’; and ‘China’s agricultural land’. 27. Smil, ‘China’s agricultural land’. 28. Chen Baiming, ‘Comment on “Who Will Feed China”’, Chinese Geographical Science 7, (1997) based on Land Administration Bureau data, reports 4.81 Mha (72.15 Mmu) of arable land lost between 1987 and 1994, but that the net loss was only 1.77 Mha (26.55 Mmu) owing to expansion of cultivated land in other areas. Heilig, ‘Anthropogeni c factors in land-use change in China’, pp. 142–143, estimates a loss gure of approximately 2.6 Mha (39 Mmu) for the period 1985–94. Despite potential reassurances generated by these lower gures, the same data set that Heilig adopts reports 26 Mha (390 Mmu) of land transformed by urbanization, transportation infrastructure, and mining sites between 1949 and 1990. 29. Anthony Gar-On Yeh and Xia Li, ‘An integrated remote sensing and GIS approach in the monitoring and evaluation of rapid urban growth for sustainable developmen t in the Pearl River Delta, China’, International Planning Studies 2(2), (1997), pp. 193–210. 30. Jiang Jingen, ‘State urged to improve construction planning’, China Daily, (24 July 1998), p. 2. See also Shen Bin, ‘Port projects run out of control’, China Daily, (18 May 1998), Business Weekly section, p. 1.

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Strait, Fujian, like Guangdong, was one of the rst two provinces opened under reform and received considerable foreign direct investment. During the rst half of the 1990s per capita cultivated land in Fujian province had dropped from 0.041 to 0.038 ha, making it the province with the overall lowest per capita arable land ratio nationwide.31 In 1998 the director of the Fujian Land Administration Bureau, Lin Fanglei, revealed the results of the mandated 1997 provincial surveys, which showed that in the previous 7 years more than half of the 700,000 ha of land subject to industrial development had been arable land.32 The bureau reported handling 40,000 cases of illegal land use, but it rescinded land use rights for just 200 ha. The province responded by mandating that 80% of basic farmland would remain under ‘top protection’. Even before the moratorium period, in 1995 the Fujian Governor Chen Mingyi reportedly had begun tying performance evaluations of lower level of cials to farmland protection and reduced the amount of land they could approve for development.33 Fujian’s largest land use transformation is a 48 km 2 seaport industrial zone associated with Liem Sioe Liong, head of the Salim Group and Indonesia’s leading industrialist . Local perspectives about the land use transaction allege that of cials allowed him 800 ha of prime farmland for ‘virtually nothing’,34 which is a largescale example of the common problem that land use rights have too frequently been given over by negotiation at below market rates for high pro le projects.35 Elsewhere in Fujian, the city of Shishi, one of the country’s top 100 county-leve l cities, had its 9.6 ha Zhenshi industrial development zone solely invested by a Hong Kong company.36 Fujian successfully attracted many large-scale urban and industrial development projects especially during the period 1993–96. Yet even after the April 1997 moratorium announcement, policies encouraging coastal zone land development continued in Fujian. In May 1997, Fujian provincial policies promoted foreign-invested real estate projects, and announced new preferential measures for overseas-funded infrastructure and industrial projects. These measures included 5-year exemptions from land use fees, and ‘more preferential land-use prices … granted to those who develop wasteland, barren hillsides, and beaches’— thereby apparently eliding the arable land problem.37 The same policy statement offered refunds on value-added tax for high technology projects, and backdated the privileges to apply to foreign funded enterprises approved after 1 April 1996. In May 1996 the leading Taiwan industrial conglomerate Formosa Plastics signed a letter of agreement to build a US$3 billion power plant on the Zhangzhou coast. 31. Fujian imports one-third of its grain supplies from other provinces. See Xinhua, ‘Fujian steps up land protection efforts’, (20 February 1995), item no. 0220030 and Xinhua, ‘Fujian’s arable land shrinking’, (10 September 1996), item no. 0910073 , (http://www.lexis-nexis.com /universe). 32. Xinhua, ‘Fujian province to revise land-use plan’, (18 May 1998), translated in FBIS-China-98–089. 33. Xinhua, ‘Fujian steps up land protection efforts’. 34. See Rajiv Chandra, ‘Prosperous sons return in search of more pro t’, Inter Press Service, (8 April 1994). The industrial park is located near Liem’s ancestral home, Niuzhai village in Putian county. 35. See for example David Y. W. Ho, ‘Editor’s notes’, on the administration of Urban Real Property Law in The Encyclopedi a of Chinese Law, vol. 2, June 1993–December 1994 (Hong Kong: Asia Law and Practice, 1995), pp. 222–225. 36. Xinhua, ‘Rising city in Fujian stresses ef ciency in land use’, (5 June 1993), item no. 0605118 , (http://www.lexis-nexis.com/universe). 37. Xinhua, ‘Preferential policies for overseas investors in southeast China’, (23 May 1997), item no. 0523150 , (http://www.lexis-nexis.com/universe).

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Then in August 1996 Taiwan implemented a ban on large-scale capital investment projects in the mainland , which effectively scuttled the deal.38


Policy shifts and arable land loss China’s statistical data on arable land have been problematic and questions about the extent of the arable land problem have dominated debate, but the general trends in statistic s on losses of cultivated land are worth retrieving. Data on decreases in arable land from two cities and two provinces demonstrate similar trends in land use change (see Table 1). The two cities selected, Shenzhen and Shanghai, represent different stages in the evolution of opening policies under reform, and evolution of the land use regime. Shenzhen, as the major SEZ in Guangdong province, was the center of reform activity in the 1980s. Shanghai emerged as the center of intensive development in the 1990s, after the opening of the Pudong New Zone. The two provinces selected, Fujian and Jiangsu, have both been subject to rapid industrializatio n under reform and also have a particular mandate to conserve arable land because of their historic low per capita arable land conditions . Jiangsu has had a particularly rich reform experience in the rural sector, in the successful growth of township and village enterprises, especially in the Su’nan subregion of the province. Accounting for localized differences, these areas all appear to have witnessed similar trends in losses of cultivated land (see Figure 1). Up to 1983, cultivated land did not decrease substantially , likely in association with increased returns from agriculture realized under the early years of the household responsibilit y system. After the high point of grain production in 1984, and concomitant with the announcement of the open coastal city and open coastal region policies in the middle of the 1980s, losses begin to mount. Losses dropped off after 1985–86 and then hit a low point in 1990, after the Tiananmen Incident. Losses began to mount again across the board in 1991, when increased capital owed from Hong Kong into China, and after 1992, and when Deng Xiaoping promoted intensifyin g the pace of reform during his ‘Southern Tour’.39 A precipitous rate of arable land transformation characterizes Jiangsu and Shanghai from 1991–92 to 1993–94, which is also associated with the opening of the Pudong New Zone and the establishment of several foreign invested industrial parks in the Su’nan area of Jiangsu. 40 (It is beyond the scope of this paper to assess the dramatic pattern of cultivated land loss for Jiangsu, which deserves its own analysis.) Decreases in arable land begin to subsid e by 1993, rst in Shenzhen and Fujian, followed by the Yangzi River Delta areas. As discussed above, 1993 is the year identi ed by Dali Yang as the point when real estate development emerged at the basis of China’s 38. Formosa Plastics remained in negotiations over the project and company chairman Y. C. Wang has been received at the highest levels in Beijing. 39. Property prices doubled in Hong Kong between 1991 and 1994, which coincided with enhanced development interest in coastal China. See, for example, Henny Sender, ‘And now for China: Hong Kong’s speculators move north of the border’, Far Eastern Economic Review, (3 December 1992), pp. 59–60. 40. On the role of Singapore in funding developmen t zones in Su’nan see Carolyn Cartier, ‘Singaporean investment in China: installing the Singapore model in Su’nan’, Chinese Environment and Development 6(1 & 2), (1995), pp. 117–144.

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Table 1. Decreases in cultivated land under reform , selected coastal areas, 1000 ha Year

Shenzhen

Shanghai

Fujian

Jiangsu

1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995

2.8 2.02 1.38 0.61 1.9 4.1 0.7 1.29 1.01 0.81 0.16 3.56 4.78 4.3 1.46 0.19

4.37 1.71 1.33 1.07 1.72 4.18 6.18 6.54 2.17 3.67 3.12 0.82 2.24 3.12 15.85 8.14 3.89

2.66 3.67 2 4.53 1.8 3.07 18.4 10.93 6.34 4.73 0.67 2 2.06 5.94 9.33 8.8 6.41

10.39 9.02

1996 1997

0 0.87

2.71 0

7.79 7.67

12.87

5.8 1.16 8.96 17.06 13.24 10.98 10.97 6.52 4.46 7.89 28.2 26.11 31.66 15.69

Historical context SEZ policy formulated

Coastal cities opened Coastal regions opened

Tiananmen Incident Hong Kong property market high Deng Xiaoping’s Southern Tour Urban Real Estate Law in effect May moratorium on arable land conversion

Sources: Shenzhen Tongji Nianjian (Statistical Yearbook of Shenzhen) (Beijing: Zhongguo tongji chubanshe, 1998), p. 181; Shanghai Tongji Nianjian (Statistical Yearbook of Shanghai) (Beijing: Zhongguo tongji chubanshe, 1997; 1998), p. 169; p. 163; Fujian Tongji Nianjian (Statistical Yearbook of Fujian) (Beijing: Zhongguo tongji chubanshe, 1996; 1998), p. 164; p. 134; Jiangsu Tongji Nianjian (Statistical Yearbook of Jiangsu) (Beijing: Zhongguo tongji chubanshe, 1998), p. 157. Notes: Data calculated from year end total cultivated land. For 1996 Shenzhen reported increased in cultivated land of 0.72 over the previous year. Shanghai reported an increase in cultivated land of 10.8 in 1997. The 1998 Jiangsu yearbook did not report data for 1997.

macroeconomic problems. In 1994, the Basic Farmland Protection Regulations took effect, followed in1995 by the Urban Real Estate Law, both discussed below, which may have helped to dampen speculation. In general, these trends in the data suggest that arable land loss in the SEZs and open development regions has been positively correlated with historic policy junctures in state promotion of land development and management of land resources generally. In these ways and more, the arable land problem is the land development problem. The proliferation of special development zones ‘Development zone fever’ [kaifa qu re] and ‘real estate fever’ [fangdichan re] have particularly characterized the second decade of reform, especially between 1992 and 1996. Emphasis on land development in special zones can be traced to the essential geographical bases of reform planning. In 1979, when the Central Committee of the Communist Party formally proposed establishin g ‘experimental’ special economic zones on the south China coast, the state carved out large tracts

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Figure 1.

of coastal zone land for industrial land.41 The designation of four SEZs in Guangdong and Fujian, followed by the simultaneous declaration of SEZ and provincial status for Hainan island in 1988, the extension of SEZ privileges to the Pudong New District in Shanghai in 1990, and the China–Singapore Suzhou Industrial Park in 1994, established a reform era land use pattern of large-scale special zones for industrial development. The state allowed SEZs numerous advantages to promote rapid development, and then patterned other development zone categories after the success of the SEZ concept. Through the 1980s state planners continued to promote a specialized zone system for the 14 open coastal cities and other major cities around the country in a growing system of economic and technological development zones, high technology development zones or science parks, bonded zones or free trade zones, border region economic cooperative zones, and state tourist vacation zones.42 In 1989, the State Council designated two additiona l special zones in the Xiamen SEZ, Haicang and Xinglin, especially for Taiwan investors, followed by Jimei in 1992. In 1995, there were 422 zones 41. Selected Works of Deng Xiaoping (1975–1982), translated by The Bureau for the Compilation and Translation of Works of Marx, Engels, Lenin, and Stalin under the Central Committee of the Communist Party of China (Beijing: Foreign Languages Press, 1984), p. 416, note 113. Deng Xiaoping, in the context of party dissension over the nature of reforms, introduced the geographica l componen t of China’s new economic reforms as an ‘experiment’. 42. The many types and functions of industrial developmen t zones below the national level are not well de ned in the literature. For a comparative summary of development zones see S. P. Gupta, ed., China’s Economic Reforms: The Role of Special Economic Zones and Economic and Technological Development Zones (New Delhi: Allied Publishers, 1996), sponsored by a Ford Foundation collaborative project between the Indian Council for Research on International Economic Relations, the Developmen t Research Center in Beijing, and the Institute of Southeast Asian Studies in Singapore. See also Laurence C. Reardon, ‘The rise and decline of China’s export processing zones’, Journal of Contemporar y China 5(13), (1996), pp. 281–303, for historical precedents of the development zone concept during the Maoist era.

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approved by the central government.43 The strong emphasis on the role of SEZs as a focus of industrial development and as centers of reform leadership arguably provided the model for establishin g industrial and residential development zones around the country. The new experimental economic practices taking place within the SEZs were sanctioned at the highest levels, and special zones also became symbols of nationalist reform ideology.44 Deng Xiaoping nurtured the SEZ experiment in highly publicized site visits. In 1984, Deng conducted his rst tour of the SEZs and promoted the enhanced use of foreign capital. At a critical juncture in the second decade of the reform era, in 1992 after the high in ation years during and after the Tiananmen crisis, Deng Xiaoping purposefully conducted another ‘Southern Tour’ during which he exhorted China’s coastal areas, especially Guangdong, Jiangsu, and Shanghai, to extend and deepen reform and grow faster than the national average. 45 From measured growth to model strategy, zone fever and real estate fever gripped China and intensi ed after 1992. One of the unplanned results of the SEZ model was the widespread copying of the special zone concept.46 Beyond ‘of cial’ zones, no published systematic data on the number of special zones exists, but national estimates of the extent of special zone development indicate that the ‘experiment’ transformed into an unplanned and uncontrollabl e development regime. Once again, available data differ and cannot be corroborated with precision. Nevertheless, existing gures are startling. A Fujian source cited 1993 Land Administration Bureau statistics to report that among 2800 development zones nationwide, only 27% were national or provincial level zones.47 Based on these Land Administration Bureau gures, three quarters of industrial development zones were projects undertaken below the provincial level. Anthony Yeh and Fulong Wu have cited published and unpublished estimates of ETDZs that enumerate 1874 zones in 1990, and that ‘the total area of ETDZs established [by] 1992 reached 15,000 km 2, which exceeded the total built-up areas in the existing cities’.48 He Qinglian’s treatment of China’s political economy, based on National Construction Bureau statistics, repeated the 15,000 km 2 gure for total land area given over to development zones, but more than doubled the count of development zones generally to over 6000 by 1993.49 Dali Yang has cited a China Daily article 43. Guo Kesha and Li Haijian, ‘Zhongguo duiwai kaifang diqu chayi yanjiu [‘A study of regional variations in China’s opening to the outside’], Zhongguo Gongye Jingji [China’s Industrial Economy] 8, (1995), pp. 61–68. 44. See George T. Crane, “‘Special things in special ways”: national identity and China’s special economic zones’, in Jonathan Unger, ed., Chinese Nationalism (Armonk, NY: M.E. Sharpe, 1996), pp. 148–168. 45. Yang, Beyond Beijing, pp. 54–55. 46. Ibid., pp. 53–59. 47. Baohu Gengdi Wenti Zhuanti Diaoyan Zu [Special Investigative Group on the Problems of Conserving Arable Land], ‘Lanzhan gengdi chengyin pouxi ji gengd i baohu tujing’ [‘Causes and analysis of indiscriminate occupation of arable land and means of arable land protection’], Fujian Tudi Yanjiu [Fujian Land Research] 2, (1997), p. 20. 48. Anthony Gar-on Yeh and Fulong Wu, ‘The new land developmen t process and urban developmen t in Chinese cities’, International Journal of Urban and Regional Research 20(2), (1996), p. 345. This data does not specify precise types of zones or their administrative levels of approval. The Zhongguo Jingji Tequ Kaifa Qu Nianjian [Yearbook of China’s Special Economic and Development Zones] (Beijing: Gaige Chubanshe , 1996) listed 34 nationally designated ETDZs, and so gures reported by Yeh and Wu include local and provincial level zones. 49. He Qinglian, Zhongguo De Xianjing [China’s Pitfall]: Primary Capital Accumulation in China (Chinese title, English subtitle) (Hong Kong and Flushing, NY: Mirror Books, 1997), p. 75. He calls the zones kaifa qu (development zones) and so suggests all possible developmen t zones rather than the category ETDZs.

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that reported the total number of zones designated by local authorities down to the township level at about 8700.50 Even if the lower 6000 gure for development zones is correct, national level zones, based on the 1995 tally of 422, accounted for only 7% of all zones. What is even less systematically understood is the degree to which rural counties and towns have followed suit and adopted their own special zone systems. Large numbers of low level zones have proliferated , even as they are often implemented without higher level administrative approval. A 1993 report on the growth of local level zones in Fujian recorded 389 development zones at the township and village level, a gure 3.5 times higher than the count for 1992.51 In the Su’nan area of Jiangsu, 275 out of a total 389, or 70%, of local settlements at the village and township level had their own ‘small zones’ [xiaoqu], by mid-1993.52 Among them more than 1800 enterprises had utilized foreign investment. Research on the evolving zone phenomenon at the local level in Jiangsu cited the success of the Kunshan Economic and Technological Development Zone, a national-level zone in a formerly rural area of Suzhou prefecture, as the leading model that villages and townships followed.53 In the eyes of the state, many local special development zones have often been unapproved land use transfers, or nominally approved at the local level and contrary to policy directives at the provincial or national levels.54 As a nationally legitimated strategy, SEZ ‘exceptionalism ’ became normative practice, as places all over China at every level of administrativ e jurisdictio n implemented the special zone concept.55 In 1993, the state struck back and eliminated up to 1000 development. 56 Some localities have attempted to avoid development zones monitoring completely by not using the labels xiaoqu or kaifa qu in the names of their development zones, or by changing the names of existing development zones.57 The SEZs were the obvious staging grounds for the rst attempts at land marketization. The rst transaction of a land use right occurred in Shenzhen in 1987. 58 But Shenzhen’s land market evolved haphazardly. The municipality lacked 50. Yang, Beyond Beijing, p. 56. 51. Zhao Jianhong, Fujian Sheng Xiangzhen Qiye Guanli Bu (Fujian Province Township and Village Enterprise Management Bureau), ‘Xiangzhen gongye xiaoqu he qiye jituan jianshe’ [‘Construction of township and village small industrial zones and enterprise groups’], Zhongguo Nongye Nianjian, 1993 [Agricultural Yearbook of China, 1993] (Beijing: Nongye Chubanshe , 1994), p. 54. 52. Zhu Tonghua and Sun Bin, Su’nan Moshi Fazhan Yanjiu [A Study on Development of the Su’nan Model] (Nanjing: Nanjing Daxue Chubanshe , 1994), p. 266. 53. Ibid., p. 270. 54. In 1994 Jiangxi province of cials reportedly closed down 17 development zones that had not been of cially approved , based on new provincial regulations that forbid the establishment of development zones at and below the county level. See Xinhua, ‘Jiangxi closes 17 development zones’, (24 August 1994), item no. 0824112, (http://www.lexis-nexis.com/universe). 55. Reports by international consultant s have also recorded the idea of the ‘experimental’ approach in the establishment of new institutional arrangements in China under reform, and the role of existing and historical Chinese models as markers of state acceptability of particular local arrangements . See, for example, John Bruce, ‘Commentary’, in Transition of China’s Rural Land System (Madison, WI: Land Tenure Center, 1995), p. 23, and S. P. Gupta, ‘Chinese Special Economic Zones: an introductory summary’, in S. P. Gupta, ed., China’s Economic Reforms, pp. i–xvi. 56. Yang, Beyond Beijing, p. 58. 57. Baohu Gengdi Wenti Zhuanti Diaoyan Zu, ‘Lanzhan gengd i chengyin pouxi ji gengd i baohu tujing’, p. 20. 58. See Jieming Zhu, ‘Changing land policy and its impact on local growth: the experience of the Shenzhen special economic zone, China, in the 1980s’, Urban Studies 31(10), (1994), pp. 1611–1623.

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the resources to prepare land and provid e the infrastructur e for industrial development, and became reliant on developers to engage in basic land grading, roadway construction , and more. In this way, developers gained control over the processes of land development, and pro ted substantiall y from land speculation in an environment of rapidly increasing rents.59 Following on the Shenzhen and larger southern China experience, land development became widely understood as a highly pro table venture in China at all scales. Xiamen began to engage in land lease sales in 1988, and sold the rst two leases in the 480–830 yuan per m2 range; by 1992 the average m2 cost had increased up to 10 times at 8000 yuan.60 But more often, land use rights were transferred informally by negotiation, and a true market never evolved .61 Land use rights auctions and tenders appeared again, especially in 1992–93, but the of cial procedures soon yielded, with some exceptions, to informal means of land disposition , so that the negotiated price method effectively became the norm.62 The negotiated price method typically results in land lease costs that are lower than would be expected at market rates. In addition, formal means of land apportionment more reliably sends land lease revenue to the state, whereas informal land leasing tends to pro t local of cials. Large-scale development projects in the south China coastal zone have resulted in widespread land use transformations and have contributed to the speed of rapid industrializatio n under reform. But the concentration of land use transformations in the coastal areas raises a set of questions about intensive development in already densely populated regions, impacts on the natural environment, problems of uneven development in China’s larger space economy, and the real nancial risks of widespread over extension in the real estate sector. The state has promoted a series of regulations and laws attempting to manage land use conversions, yet comparison of the institutiona l contexts and geographical realities of land use transformation demonstrates contradictory conditions in the evolving land use regime. The state and land use planning and regulation The complications of the land use regime re ect the dilemmas of an evolving land market in a socialist state where marketization means not freehold ownership but buying and selling of transferable land use rights and leaseholds. Under these circumstances, how does the state facilitate, regulate, and attempt to control land 59. Ibid., pp. 1618–1623. 60. Xinhua, ‘Land developmen t interests in Xiamen’, (10 June 1993), item no. 0610050 , (http://www.lexisnexis.com/universe). 61. The example of the large land lease in Putian county, Fujian, in association with the Salim group, is likely an example of informal land leasing. See Huang and Yang, ‘The political dynamics of regulatory change: speculation and regulation in the real estate sector’, pp. 171–185, and also K. K. Wong and X. B. Zhao, ‘The in uence of bureaucratic behavior on land apportionmen t in China: the informal process’, Environment and Planning C: Government and Policy 17, (1999), pp. 113–126. According to Wong and Zhao, p. 121, Shanghai’s land of cial market has been well organized. 62. See Wing-shing Tang, ‘An inquiry into urban land system reforms in Shenzhen’, in Yue-man Yeung, ed., Urban Development in Asia: Retrospect and Prospect (Hong Kong: Hong Kong Institute of Asian–Paci c Studies, The Chinese University of Hong Kong, 1998), pp. 307–340; and Jean Jinghan Chen and David Wills, The Impact of China’s Economic Reforms upon Land, Property and Construction (Aldershot, England and Brook eld, Vermont: Ashgate, 1999), pp. 16–25.

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use transformations ? What are the problems of implementing land use plans in regions of rapid development? How has the land use regime facilitated development? China has been attempting to create a system of land use management and arable land conservation through administrativ e plans, regulations, and legal measures, but the contradiction s between policy and practice suggest how the policies of the rst land law may have impeded arable land conservation and actually facilitated industrial zone development and extensive urbanization. In 1986 the state established the Land Administration Bureau to oversee land development, and responded to the policy problems of increased pressure for land development with the Land Administration Law. The land law was passed in 1986 by the Sixth NPC, and revised in 1988, but otherwise was not redrawn in step with changes in the rapidly changing land market. The Land Administration Law required all administrativ e levels to prepare land use management plans, conduct land surveys, collect relevant statistics, coordinate construction projects, and protect arable land.63 The state also established a quota system, which set limits on the amount of land available for conversion.64 This systematic effort established thousand s of Land Administration Bureau branch of ces down to the township level. 65 The Land Administration Bureau was charged with monitoring land use plan implementation at each level, and issuing nes if plan infringement occurred. The land law also held that land used illegally for construction must be returned to its former condition. This provision allowed local of cials to order demolition of new peasant housing built on farmland, and con scate the violators’ construction tools, equipment, and building materials, which created considerable tension over land use decisions at the local level. Generally though, the Land Administration Law was not a detailed document and left unde ned many areas in the land use dispositio n system. Its implementation was highly variable. The evolution of the land use regime has otherwise taken place in a series of ancillary and local measures. Provinces, the four centrally governed municipalities , and SEZs, for example, have been able to devise their own land use regulations, which are only superseded when the state issues a new national measure. The state has also sometimes given special permission for particular provinces to decide their own policies, as in the case of the measure on land registration fees, issued in 1990, which explicitly allowed Guangdong, Hainan, and Fujian to determine their own fee standards. Between 1988 and 1993, the state issued over 20 different types of land regulation measures, from circulars, opinions, and tentative procedures, to new and substantial regulations.66 The provisions for leasehold approval authority, for example, promulgated in 1989, rst set forth the system of granting the various levels of government authority to approve land use rights. While it xed sizes of land use transformations at the county and national levels, it allowed provincial 63. ‘Law of the People’s Republic of China on land management ’, China’s Laws for Foreign Business, Business Regulation, vol. 3, Resources and Environmental Protection (Hong Kong: CCH Asia-Paci c), 14–715(4)-(57). 64. See Keng, ‘China’s land disposition system’. 65. See George P. Brown, ‘Arable land loss in rural China: policy implementation in Jiangsu province’, Asian Survey 35(10), (1995), pp. 922–940. 66. ‘Land and real property’, Encyclopedia of Chinese Law, vol. 1, (December 1986–June 1993), (Hong Kong: Asia Law and Practice, 1993), pp. 148–150.

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level People’s Congresses to decide a system of land use approval sizes for administrative levels within provinces.67 Under this system, cities could approve larger land areas and approve higher levels of foreign investment than counties, and these regulations led county governments to press hard for higher level city status. This policy opportunit y has been known as ‘abolishing counties and establishin g cities’ [chexian gaishi], and the central government approved these reclassi cations at higher rates after 1992. In 1993 and 1994, 53 counties were re-designated cities each year, which is over twice the average rate of previous years.68 The reclassi cation of counties to higher level city status was of cially banned with the moratorium on arable land use conversions. Policies de ning land use rights are organized according to urban and rural land classi cations.69 Regulations for the urban regime, which have constituted the institutiona l basis of industrial development, have been more carefully de ned. In 1990, two measures established a framework for real estate development in open cities and regions: the Provisional Regulations on Grant and Transfer of the Right to Use State Land in Urban Areas, and the Provisional Administrative Measures for Commercial Land Development and Management by Foreign Investors. These urban–industrial land use regulations called for rational land development to promote growth, but did not includ e an arable land management component. In the rural sector, the 1993 Regulations on the Administration of Planning and Construction for Villages and Towns had largely replaced the much less detailed relevant provisions in the Land Administration Law. These regulations focused attention on rational location of construction in rural areas but did not regulate farmland conservation, and did not prevent state requisitions of village and township land for industrial development. The Land Administration Law also authorized formulation of the Basic Farmland Protection Regulations, which took effect in 1994. Together, the Basic Farmland Protection Regulations and the 1993 Law on Agriculture set the institutiona l basis for the protection and management of rst and second class basic farmland, and established a system of protection for arable land insid e designated agricultural protection zones.70 Thus even regulations on arable land conservation have adopted a special zone system. Provinces in turn were charged with writing their own basic farmland protection regulations, which established minimum areas of basic farmland to be conserved and locations of protection areas. Still, the state maintained the right to convert basic farmland protection areas where national infrastructure projects, including development zones, were deemed to require the site.71 67. ‘Leasehold approval authority provisions’, Encyclopedia of Chinese Law, vol. 1, p. 148. Transformations larger than 1000 mu of cultivated land or more than 2000 mu of other land had to be approved by the State Council; the county could approve land use transformations less than 3 mu of rice and vegetable land or shponds, and less than 10 mu of other land. 68. L. Zhang and Simon X. B. Zhao, ‘Re-examining China’s “urban” concept and the level of urbanization’, The China Quarterly 154, (1998), pp. 338–339. 69. See Chen and Wills, The Impact of China’s Economic Reforms upon Land, Property and Construction; Li Ling Hin, Privatization of Urban Land in Shanghai (Hong Kong: Hong Kong University Press, 1996). 70. ‘Basic farmland protection regulations’, (27 August 1994), translated in FBIS-China-94–170. 71. Transformations under 500 mu had to be cleared with provincial authorities and projects occupying over 500 mu were cleared with the State Council.

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The rst national law governing urban property development, the Urban Real Estate Law, took effect in 1995. The Urban Real Estate Law maintained many of the principles issued in previous regulations, including the land law, but attempted to redirect types of investment and enhance regulation of land market transactions. Its distinctive effect was to shift land development emphasis to the residential housing sector. The law promoted average- and low-cost housing construction by offering housing developers tax exemptions, preferential loan terms, and land use rights at low prices. It also encouraged international investment by eliminating distinctions in treatment between domestic and international investors, which encouraged Hong Kong investment in the housing market by treating Hong Kong investors on a par with domestic investors in advance of 1997.72 In order to attempt to limit speculation, the law included measures that allowed of cials to impose on the developer a ne of 20% of the contracted investment if the land lay idle for more than a year, and to con scate land use rights entirely from developers who did not initiate construction within 2 years.73 In early 1995 a Ministry of Construction of cial assessed the initial effects of the law as ‘successful’, because speculation had been curbed, developers had shifted investment from up-scale villas or of ce buildings to standard housing, and the overall growth rate in real estate investment had declined from its early 1990s frenetic pace.74 The following sections raise concerns about speci c internal contradiction s in the land use policy regime. This analysis focuses on the particularly geographical nature of the problems that have emerged, in three categories: administrativ e hierarchy contradictions ; land monitoring contradictions ; and rural–urban contradictions. The administrativ e hierarchy contradiction s The revised Land Administration Law and the stipulation s of the 1997–98 moratorium on land conversions reiterated that jurisdiction s down to the township level must prepare integrated land use plans highlightin g both planned construction and the conservation of arable land. However, the most obvious obstacle to effective land use planning has been the predictable lack of enforcement. This is the central problem that may be at least partially solved by the 1998 revisions of the land law, which has mandated a new land law enforcement of ce. Lack of coordination among state of ces, another well known characteristic of Chinese government organization, may be addressed in part by the restructuring of state ministries, and

72. Xinhua, ‘Real estate law to boost housing construction’, (7 July 1994), item no. 0707137 , (http://www.lexisnexis.com/universe); and Mark T. Kremzner, ‘Managing and regulating land use rights in China: the new Urban Real Estate Law’, East Asian Executive Reports 16, (1994), p. 9. The real estate law also imposed order on some of the problems of the quota system, in which local government s allowed land in the housing quota to be used for industrial development . See Keng, ‘China’s land disposition system’, p. 333. 73. A Hong Kong perspective assessed that the real estate law would result in a wide-spread sell off of land use rights in the Zhujiang delta because the property market in the region was already ‘ ooded’ and prices had dropped. See Richard Warren, ‘Axe looms over small developers’, South China Morning Post (Hong Kong), (23 October 1994). 74. Xinhua, ‘Real estate business on right path in China’, (21 March 1995), item no. 0321114, (http://www.lexisnexis.com/universe).

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in this case the creation of the Ministry of Land and Resources, yet in addition to the usual enforcement and coordination problems, the hierarchical structure of the plan approval process has created its own internal contradictions . The hierarchical structure of the plan approval process has de ned that plans must be approved by higher levels of government, but land use plan preparation has not reliably taken place in an orderly fashion by administrativ e level.75 At the provincial level of scale, not all provinces have drafted regulations to enforce land use plans, which, in turn, compromises expectations for lower level jurisdiction s to prepare local land use plans. In other cases some counties completed plans before prefectures, which then delayed approval of lower level plans for enforcement until the higher administrative level plans were complete. Where higher administrative levels did not support land use plans, some lower administrativ e levels did not prepare plans. In such ways, the hierarchical scale of planning approval has inhibited plan implementation , and especially at lower levels where the most effective monitoring should take place. The 1998 land law revisions continue to require provincial governments to report land use plans to their respective People’s Congresses, after which lower level plans can be approved and theoretically enforced. The system of land use approvals by administrativ e level in the rst land law led local level of cials to devise ways of approving pieces of land for industrial development. Localities preferred to be upgraded to city-level status and approve their own projects in order to avoid petitioning higher authorities for large land use conversions. A more piecemeal solution was known as ‘breaking the whole into parts’[hua zheng wei ling], an illicit but common strategy to gain land use rights for a series of adjacent parcels. In order to pursue relatively large-scale development projects at the local level, developers applied to the Land Administration Bureau for several different pieces of land up to the maximum size approved at that level of administrative scale, which would later be reunited into a larger land parcel. Since the majority of entrants in the land market have been government agencies and state-related enterprises, these arrangements between land administrators and land developers often represented common interests.76 At the lowest levels of the administrativ e hierarchy in the rural sector, farmers have generally not taken part in preparation of land use plans, and so cannot be expected to act on the basis of documents with which they have no experience. Nevertheless they are regularly the focus of blame for illegal rural construction .77 Farmers have been required to apply to village leaders for house construction applications , which are in turn reviewed by the township land management of ce. But a single township-level land management of ce often cannot effectively 75. Interview data, Xiamen, August 1995. 76. Keng, ‘China’s land disposition system’, p. 331. 77. Even before the urban land market took off in Shenzhen, land use conversion s in the rural sector had been proceeding rapidly, especially after the record harvest of 1984 when farmers widely invested in new rural housing for the rst time in decades. But where farmers constructed housing became an issue of acute concern. In the Xiamen hinterland, for example, some farmers built houses on class one basic farmland, which local of cials attributed to perceived auspiciousnes s of the number one, associated with peasant belief in fengshui and numerancy ; Gu Yan, Xiamen Shi Tudi Guanli Bu Fagui Chu (Xiamen Municipal Land Administration Bureau Regulations Department), ‘Tudi ziyuan de heli peizhi’ [‘Reasonable disposition of land resources’], Xiamen Ribao, (22 May 1995).

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monitor housing construction for all villages under their jurisdiction . In addition, while rural land is owned by the village collective, as stipulated under the Land Administration Law, the law had not systematically speci ed at which level of collective (administrative village or natural village/village group) the land is owned. In these ways, land tenure at the lowest administrative levels remained ill de ned. Under the Ninth NPC the state also prepared a new draft of the Law on Village Committees, which provides the opportunit y to coordinate provisions with the land law. The role of the state in regulating land use conversions according to levels of administrativ e scale has also necessarily involved multiple of ces at different administrativ e levels in planning and pro ting from real estate development, especially the largest scale projects. State land use requisitions include large-scale joint venture real estate projects, for industry, commercial use, and housing. The existence of many government departments, agencies, and state-af liated companies at each administrativ e level, and competing economic development interests among them, has made it unclear which of ce at which level should actually act as the bona de land owner.78 Under these circumstances, the higher level checks on large-scale projects do not reliably serve a land conservation function but rather give notice to new pro t-sharing opportunities . In addition, the original revenue sharing arrangements on land lease sales, in which local governments were required to remit a portion of revenue to the central government, created a land development climate in which the central government appeared to directly promote land use transformations . Since 1994, with the implementation of the new tax system, local governments have been able to keep all of the revenue, which further stimulated land lease sales.79 The land monitoring contradiction s Changes in the evolving land management system have given rise to historical trends to over and under report arable land, which exacerbates land management problems. Before the Land Administration Law took effect in 1987, there was a tendency to under report arable land simply because it was taxed,80 but the Land Administration Law also introduced fees and penalties associated with agricultural land conversions, which have promoted the opposite tendency. Now the expectation is that arable land gures tend to be exaggerated .81 In some areas, rural land registration is at the root of the problem. Land may not be properly registered because the Land Administration Bureau claims that village collective boundaries are not clearly de ned.82 As a result, certi cates of ownership may not be issued 78. Keng, ‘China’s land disposition system’, pp. 328, 331. 79. See Kam Wing Chan, ‘Urbanization and urban infrastructure services in the PRC’, in Christine P.W. Wong, ed., Financing Local Government in the People’s Republic of China (Hong Kong: Oxford University Press, 1997), p. 109. 80. Brown, ‘Arable land loss in rural China’, p. 927. 81. Ibid. 82. Interview data, Xiamen, August 1995. Large-scale lineage feuds over village boundaries have been documented in rural Guangdon g in the 1980s and 1990s. See I. Yuan, ‘Center and periphery: cultural identity and localism of the southern Chinese peasantry’, Issues and Studies 32(6), (1996), pp. 1–36.

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to the collective, and the potential for an evolving land management system breaks down ultimately at the lowest level of management—the land itself and the title which should de ne it. In addition to the problems of accurately measuring arable land, the survey approach of the Land Administration Bureau has limited analysis of land loss. State statistical data have utilized ve causal categories of arable land loss: expansion of forests; expansion of pastures; national infrastructur e projects; township and village infrastructure construction ; and rural private construction. Absent from the of cial categories of arable land loss has been transformation owed to foreign or joint venture development projects, which have constituted some of the largest rural land use transformations including special development zones. Brown rst pointed out that the difference between the ve stated categories of arable land loss and the total arable land loss left unaccounted for the potentially largest category: joint venture development projects.83 This gap in the data is another indicator of the lack of reporting on causes of arable land loss, especially in areas of high economic growth. By the middle of the 1990s, the state began to publish data on arable land converted for construction of industrial sites, including development zones.84 The 1998 revisions of the land law tackle these monitoring problems in part by reducing land categorization to only three types: agriculture-related ; construction related; and unused . In this way construction-related land use emerges from obscurity to become a primary monitoring category. The category of unused land may raise new environmental monitoring problems, though, as the typical types of ‘unused ’ lands or ‘wasteland’ includ e beaches and wetlands. The Environmental Protection Bureau has been responsible for approving environmenta l impact analyses for development projects, but has not been responsible for assessing environmenta l impacts on agricultural land. In addition to the integrated land use plans required by the 1997–98 moratorium, administrative jurisdictions have also prepared sectoral plans—which have not been regularly articulated with integrated land use plans. For example, urban construction development plans of municipalities , planned by the Construction Bureau, and authorized by the Urban Planning Law, have tended to be in con ict with or have had priority over the agricultural priorities of land use plans and the basic farmland protection areas. In this context, con icts of interest between government of cials charged with land conservation and approvals of land use conversions for construction create contradictory roles for the state.85 While such mergers put of cials from different departments in closer dialogue, the potential also exists to prioritize construction over land conservation. Urban area development plans project future city size and many forecast enlargement of the municipal boundary and extensive urbanization. In Fuzhou, the capital of Fujian province, the urban area development 83. Brown, ‘Arable land loss in rural China’, p. 929. 84. I am indebted to George Lin for noting this data; se Samuel P.S. Ho and George C.S. Lin, ‘China’s evolving land system’, Centre for Chinese Research Discussion Paper (Vancouver : University of British Columbia Institute for Asian Research, 2001). 85. Brown’s research on the implementation of land use management in Jiangsu demonstrated how some new land managemen t of cials at the township level were merged into of ces of the township Construction Bureau; see Brown, ‘Arable land loss in rural China’, p. 923.

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plan projects expansion from the current 69 km2 to 120 km2.86 In Guangdong, Zhuhai’s urban master plan projected especially ambitious urban expansion from 100 to 700 km2; other cities and towns in the Zhujiang delta have attempted to follow Zhuhai’s model.87 Even in May 1997 the Xiamen SEZ tripled in size by absorbing Tong’an county, the province’s largest county, which allowed it to extend urban land use transformation rights to an extensive area in the former urban hinterland . The Urban Real Estate Law has effectively supported this urban capture of surrounding rural areas. Assessments of the real estate law have pointed out that the law did not clearly de ne urban land, and that its purview extended to state-owned land outsid e urban plan boundaries, anywhere within the municipal administrativ e region.88 The rural–urban contradiction s Rural land in China is owned by the village collective, and urban land is owned by the state. 89 Land use rights may be obtained for both collective-owned and state-owned land, but national regulations for land use transfer rights have only been formulated for urban land. Only urban land use rights can be priced and transferred for urban and industrial development. Rural land marked for industrial development must rst be transferred to state ownership; then the state sells the development rights. Thus, rural and urban land have experienced different tenure systems and different land market environments. Rural to urban land use conversions entail transformation fees, which, according to regulations, are supposed to be used for basic farmland expansion elsewhere according to the policy that basic farmland must not decrease in overall extent. As anywhere, rural land costs are lower than urban land use costs, but rural values have been especially low in China where the comparative lack of an active market for rural land has depressed the value of rural land use rights compared to land use rights in urban areas. Because the state can requisition rural land for development, some farmers have perceived that their land is owned by the state, or that their rights to land use, as administered through the village collective, are meaningless in the face of aggressive expansion by municipalities . Since compensation standard s were set after the rst version of the land law, they have been revised upward but have not kept pace with in ation and real estate values. Thus the state has been able to requisition rural land at a set compensation price which is lower than the already low so-called market price. Compensation and associated resettlement fees have not gone to the farmers themselves, but to the village collective, which is supposed to provide alternative opportunitie s for farmers. 86. Interview data, Xiamen, August 1995. 87. Wong and Zhao, ‘The in uence of bureaucratic behavior on land apportionmen t in China: the informal process’. 88. Kremzner, ‘Managing and regulating land use rights in China’. 89. Urban land use allocation is also complicated by differences in administratively allocated land, such as land assigned to work units and related institutions, and other urban land that may be leased for speculative development . The former typically has not been allocated through market activities, whereas the latter has been subject to the three methods of market allocation: auction; tenders; and negotiated agreement. Work units do not have the right to lease or sell land use rights and have offered land informally for speculative development . See Wong and Zhao, ‘The in uence of bureaucratic behavior on land apportionment in China: the informal process’.

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Farmers have been aware of these distinction s in land values, the consequent attractiveness of rural land for development, and unreliable opportunitie s to claim adequate compensation. As a result, farmers, in areas at risk of development, have often viewed their responsibilit y land contracts as obligation s without security of tenure. Further complicating the tenure problem is that contract length has varied. Even though the state directed in 1995 that contracts be extended 30 years beyond the original 15-year term, contract duration has often been left up to village committees. In some low per capita arable land areas, land use rights for agricultural land have been short term, for only 1 or 2 years. Contracts have been canceled outright when the state has requisitioned responsibilit y land holdings for industrial land use, and when land holding size must be readjusted based on change in family size. This latter condition has also promoted rural area son preference as married daughters continue to relocate to the husband ’s village. If contracts do not ultimately secure tenure, farmers are disinclined to make long-term investments to maintain and improve soil quality. The 1993 national Law on Agriculture attempted to strengthen contract rights, but did not guarantee long-term contracts. Under this combination of circumstances, farmers near large cities have been of cially encouraged to take the short-term view on arable land management. Will the 1998 revision of the land law, in codifying a nationally uniform system of 30-year land use contracts for farmers, offer a signi cant change for the rural sector?90 It is beyond the scope of this paper to answer this question, and future research will have to assess the regional differences in land tenure practices and contract variations. Cities have a revenue earning motivation in reclassifying rural land for industrial use. Land use transformations from rural to industria l use result in re-categorization of the land to urban status, which incurs a higher tax rate—payable to the municipal government. Suburban rural lands are also the logical place for large-scale industrial zone development to occur. The state, domestic companies, and developers with foreign capital have all looked to low-cost agricultural land on the urban fringe as prime sites for new industrial development zones. Suzhou city has demonstrated the outstandin g example of this logic, in the 70 km2 China–Singapore Suzhou Industrial Park, on the eastern ank of the city, and in the Suzhou New Zone, on the western edge of the city.91 Conclusions Certainly the contradiction s in the evolving land use management system are well known in China, but the usual focus of criticism is the set of contradictor y structures that characterize the urban land use rights market.92 In the larger scale view of the arable land debate, the fact that farmers are not suf ciently protected is one of the roots of the land management dilemmas. In the urban and industrial land use rights market, the administrativ e hierarchy contradictions complicate the 90. Still, 50-year contracts have come into use in many places. 91. Interview data, Suzhou of cials, August 1998. 92. The pricing of land use rights, while not part of the geographica l concerns of this paper, has been one of the most serious issues plaguing the evolving land use market. See Keng, ‘China’s land disposition system’.

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concept of land management because more than one level of government may have an interest in exercising authority over land use approvals. The monitoring contradiction s have put land under the simultaneous control of different bureaus with mutually inconsisten t goals, and the uneven evolution of the legal and regulatory regime has made land use rights easier to obtain in some places than in others. Geographical analysis of the land use policy regime reveals institutiona l gaps between policy and practice, where both private and state agents of development have located opportunitie s to make real estate development the most pro table sector of industrial expansion during the second decade of reform. Still, understanding these dualities does not adequately encompass the set of contradiction s between land development and land conservation. The widespread construction of development zones on rural lands of the urban periphery has raised the stakes of the land use planning regime in China where arable land, population , and processes of industrializatio n all concentrate and overlap in the deltaic plains and low-lying topography of the coastal zone. The SEZ concept promoted land development without directly addressing impacts on cultivable land and the natural resource base. The farmland conservation system has not been integrated into overall land use planning. This ultimate contradiction is not necessarily attributable to the Chinese development context, since it is a common feature of land use marketization. 93 In consideration of the longue duree´ of world economic history in which most countries industrialized before institutionalizin g resource conservation and environmenta l quality measures, China has taken considerable steps to plan industrializatio n concomitant with environmental conservation measures. The revised Land Administration Law promises to generally double compensation for land acquisition , and to change the focus of land use management from administrative levels of land use transformation to management of existing land use. In these ways the new law foregrounds agricultural priorities. The institutionalizatio n of the special zone system in China, from experiment to general strategy, has been a gradual process that successfully promoted large-scale land development for both industrial and residential purposes. In the early 1990s, China’s concern about land management centered on the arable land debate. By the late 1990s, the rhetoric of the arable land debate remained while the larger problems of land management emerged in excessive and irrational land development. China’s conditions mirror land development processes across the Asian region in the 1990s, an era that has become distinguished by over extension in the real estate sector and underwritten by domestic and transnational nancial service industries. 94 China’s own real estate fever is now cooling down after a heated spate of mega-project planning, and the state has worked to dampen the feverish pitch. After the onset of the nancial downturn in the region, state economists called for the closure and consolidation of a large number of local trust and investment companies, which have been particularly associated with funding real estate 93. See William Adams’ comparative work on policy evolution in development economics and sustainable developmen t planning: W. M. Adams, ‘Green development theory?: environmentalis m and sustainable development ’, in Jonathan Crush, ed., Power of Development (London and New York: Routledge, 1995), pp. 87–99. 94. Wade, ‘The Asian debt-and-developmen t crisis of 1997–?: causes and consequences ’.

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development. The state also ordered all commercial banks to de-link from these trust and investment companies.95 Evidence for how closely the excesses of real estate development have come to destabilizin g the regional economy is found in the bleak picture of nancial institution s in the late 1990s. In June 1998, the Hainan Development Bank, the main banker to the provincial government, was forced to close after the state ordered it to assume the liabilities of credit cooperatives on the island , a type of local non-bank nancial institution . The Financial Times of London reported that the causes of the nancial disaster in Hainan could be traced to ‘1995 as a spectacular property bubble burst’.96 A range of reports emerging in 1998 af rmed that ‘Shanghai is in the middle of the largest property collapse in the world and perhaps the most peculiar such de ation in history: side by side with double-digit growth are (according to some estimates) 70 percent vacancy rates, real estate prices that have slid 50 percent since 1995, and ironically, a housing shortage’.97 After 1992, real estate speculation in Shanghai and other urban areas drove new housing prices to levels between 10 and 30 times household income.98 In October 1998 the state announced it would close the investment arm of the Guangdong provincial government, the Guangdong Internationa l Trust and Investment Corporation (GITIC). This is the largest failure of a mainland company under reform, and the state simultaneously demanded that 20 ministerial-leve l units sever ties with trust and investment rms.99 The GITIC closure sent shock waves through the domestic economy and the international nancial community: it effectively signaled an end to the era of the idea of a ‘miracle’ economy in south China. A senior of cial reportedly characterized the scope of GITIC’s problems as ‘no less serious than the nancial storm breaking out in Thailand in October 1997 in terms of its size and implications . … it could endanger the country’s whole nancial system’.100 At rst the state announced that it would guarantee GITIC’s international debts, but it later instead gave preference to individual investors. In January 1999, the People’s Bank of China declared GITIC bankrupt, and under bankruptcy law foreign and domestic losses are treated equally. The central bank also declared bankrupt major GITIC subsidiaries , including Guangdong International Leasing Corporation, which in better days was characterized as south China’s largest real estate development rm. Outside of GITICs securities business, its most signi cant assets are in Guangdong real estate. Within a year of GITIC’s closure, the provincial-leve l international trust and investment rms, 239 across the country, were supposed to be restructured and consolidated , but this has yet to widely take place, likely because of the complexity of interlocking relationship s 95. Johnson, ‘Beijing plans massive closure of trust rms’. 96. James Kynge, ‘Hainan bank closure sound s warning bell’, Financial Times (London), (23 July 1998), Asia–Paci c section, p. 6. 97. See Joshua Cooper Ramo, ‘The Shanghai bubble’, Foreign Policy 111, (1998), pp. 64–75. 98. The World Bank pegs the cost of an affordable residence at three to six times household income. See Liu Binyan and Perry Link’s review of He Qinglian’s Zhongguo De Xianjing [China’s Pitfall], ‘A great leap backward ’, The New York Review of Books (5 October 1998). 99. Ming Pao (Hong Kong), ‘Ministerial units delinked with trust and investment rms’, (19 October 1998), translated in FBIS-China-98–292. 100. Wang Xiangwei, ‘Wang Qishan clout grows on GDE deal’, South China Morning Post, (5 October 1999), Business Post section, p. 12.

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between the non-bank nancial institutions , local governments, and state-owned enterprises. 101 All parties are concerned that should GITICs assets be auctioned to pay debts, the impact would further depress real estate prices. In the middle of 1999, the state announced that the People’s Bank of China closed the Shanghai-based Pudong United Trust and Investment Corporation in the third quarter of 1998, in an apparent attempt to shield Shanghai from the economic pall brought over Guangdong by the closure of GITIC.102 This institutio n was heavily invested in property in the Pudong New Zone, and ranked second in total assets after the Shanghai International Trust and Investment Corporation. More recently, in April 2000, the Shanghai Agriculture, Industrial, and Commercial Group (SAIC), an investment company of the Shanghai government, was reportedly on the brink of failure.103 SAIC was established in 1990 by the Shanghai Farm Administration Bureau, and has maintained interests in more than 100 subsidiar y companies from supermarkets to securities rms. One of SAIC’s reported problems has been engaging in property development without obtaining land use rights: SAIC is believed to have developed property, presumably in part on agricultural land, without registering land use transformations . These reports would do well to compel research on linkages between service sector industrie s in China, between real estate development industries and the evolving nancial services industries. Based on this preliminary analysis, the newly revised Land Administration Law may help conserve arable land, and an equally if not more signi cant resource— national nancial security.

101. See Matthew Miller, ‘Debt-chaos legacy of Gitic collapse’, South China Morning Post, (17 December 1999), Business Post section, p. 14. 102. James Harding, ‘China shuts nance company’, The Financial Times (London), (8 July 1999), Companies and Finance section, p. 27. 103. See Matthew Miller, ‘Shanghai group’s woes echo Gitic’, South China Morning Post, (21 April 2000), Business Post section, p. 1; and ‘SAIC scandal con rms continuing sorry state of commerce’, South China Morning Post, (28 April 2000), Business Post section, p. 1.

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