Eric's Beijing Diary

I was talking to a university student about a piece in the China Daily that focuses on the difficulty of growing up in the countryside of China. Interestingly, he had the same reaction I had to the article, but for slightly different reasons.

Public policy in China is largely designed by city dwellers who assume that dissatisfaction in the rural areas is all due to the inconvenience of country life. So public policy tends to be focused on urbanization as a solution to the unrest. This is why I always wince when I read articles like this. In my opinion, urbanization is the worst possible approach to the problem.

The university student responded negatively to the article because his father was a country doctor, so he grew up in a very small town, where he lived with a lot of open space and room to roam. He told me he would not have wanted to grow up in a crowded city neighborhood.

There are certainly problems in the rural areas. And there is plenty of unrest. Some of this was alleviated with the recent reforms in agricultural policy. But there is one huge problem that remains, and for which urbanization is most definitely not the answer. It is the rampant expropriation of property. It is hard to determine the extent of this problem, but available information suggests the problem is huge. Jonathan Fenby puts the number of land grabs for the year 2006 at 131,000. That's a ghastly number.

In America, if real estate development comes to a rural community (such as one of the major automakers deciding to build a new factory in a small Midwestern town), there will certainly be some objection from townspeople who fear the changes that will come to their community. But generally, the common people will be the beneficiaries, because the market value of their real property will go way, way up. In China, what often happens is that corrupt officials hear about the development before anyone else, grab the land from the common people, and make the profit themselves. This understandably creates deep resentment. The government's solution to this seems to be to move rural people to the cities, where they will have a more convenient life as cliff dwellers in a crowded city apartment building. It's a mistake. Far better to ensure that rural people benefit from increases in the value of their land.

The way to build a strong China economically is to decentralize development, not centralize it. But to do this requires addressing the problem of corruption, and protecting the property rights of the citizenry, so that development brings increased wealth to the local people. Expropriation of property is the number one injustice in China. It dwarfs all others by a very wide margin. Any civil government is going to take a certain amount of private property for the purpose of putting in highways and such. But when that happens, the government needs to compensate people in a way that clearly benefits them. And confiscation of property for business purposes should be out of the question. Let those business bid for the land from the local people, and let the market price of the land develop naturally. Then rural communities would start to welcome development, rural people would benefit, and the new urban areas that grew out of this development would draw many unemployed people from the cities.