THE DRAWBACKS AND REFORM OF CHINA’S CURRENT RURAL LAND SYSTEM: AN ANALYSIS BASED ON CONTRACT, PROPERTY RIGHTS AND RESOURCE ALLOCATION

Abstract

This article analyzes the drawbacks of China’s current rural land system (the House- hold Contract System based on the collective ownership) mainly from the perspectives of con- tract, property rights and resource allocation. This article defines the Household Contract System as a lease where the collective (landowner) leases land to its members to farm inde- pendently. The drawbacks of China’s current rural land system mainly include instability of the peasants’ land use right and insecurity of their land income right weakening peasants’ enthusiasm for investment in land, and a lot of restrictions on the transfer of peasants’ land leases obstructing the flows and optimized allocation of labor, land and capital. According to analysis, the drawbacks of China’s current rural land system result mainly from the col- lective ownership and the government-run nature of the collective. This article then makes and elaborates the proposition of the privatization of rural land to peasants. It also analyzes the government’s land rights in private ownership of land and refutes the popular arguments against the privatization of rural land.