When should collective property rights be better defined? Evolution of institution land ownership in rural China

Abstract

Since 1949, China's countryside has undergone tremendous changes in terms of institution land ownership due to different political and economic reasons. The most significant institution is the emergence of rural collective and collective land tenure. For a long time, the collective ownership over rural land under the socialist ideology has been seriously criticized by scholars. Some argue that its ambiguous property rights constitute an obstacle against economic growth. However, the past experience indicates that such collective property rights are not always well defined because maintaining the clearness of definition will inevitably increase transaction cost. Thereby to what extent property rights should be explicitly set depends on how much benefit can be brought by the change. To better understand the status quo of collective-owned land, this study presents a historical picture of the evolution of land ownership in rural China, dividing the whole process into four stages - cooperativization, collectivization, decollectivization and shareholding reform. These four stages represent the rise, expansion, reduction and adjustment of collective land ownership in responding to diverse social context and economic development level. Currently shareholding reform over the collective land ownership appears to offer a good direction for the local government to solve the problems and conflicts as the non-agricultural sector is taking off. Nonetheless, such reform is still debatable and its prospect remains doubtful.