How to make China even richer

Many years ago, when I tried to explain China's land system to my foreign clients, I commented that it was the only few badges the government hopes to keep for the proclaimed socialism in the country. Today, I found almost the same description and commentary in the following artical on the same topic.
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How to make China even richer
Mar 23rd 2006
From The Economist print edition

Let the peasants own their land

IN 1940, nine years before his Communist Party seized power, Mao Zedong set out his plans for a “new China”. The republic would, he said, “take certain necessary steps” to confiscate land from rural landlords. Under the principle of “land to the tiller”, it would then “turn the land over to the private ownership of the peasants.” If only things had turned out this way.

The “necessary steps” involved widespread slaughter. Hundreds of thousands, maybe millions, of landowning rural residents and their families were executed or beaten to death by fellow villagers. The peasants got their small parcels of land, but not for long. By the late 1950s, private land ownership had been eliminated and peasants had become property-less members of “People's Communes”. It was an upheaval that, along with bad weather and a frenzied attempt to catch up with American levels of industrial production, contributed to millions more deaths in a nationwide famine.

As our survey describes, China has yet to undo the damage. A few years after Mao's death in 1976, the People's Communes were dismantled. Under Deng Xiaoping, agricultural production soared as for the first time in 30 years peasants were allocated (but not given full ownership of) plots of land to farm independently. This marked the start of the economic transformation that today holds the world spellbound. But it is the prosperity of urban China that mesmerises foreign businesses. Since its boom in the early 1980s, the countryside has lagged ever further behind.

This time, a genuine great leap forward

Deng kept in place two pillars of the Maoist rural order: collective land ownership and an apartheid system that barred rural residents from moving to the cities. The latter has begun to erode, due to the need for cheap labour to sustain a manufacturing boom. But the former remains firmly in place.

Now is the time to revive Mao's vision of a new landowning order. This would ease rural strife, fuel growth and help develop the genuine market economy the leadership claims to want. Giving peasants marketable ownership rights, and developing a legal system to protect them, would bring huge economic benefits. If peasants could mortgage their land, they could raise money to boost its productivity. Ownership would give them an incentive to do so. And if peasants could sell their land, they could acquire sufficient capital to start life anew in urban areas. This would boost urban consumption and encourage the migration of unproductive rural labour into the cities. For China to sustain its impressive growth rate and reduce inequalities, getting the many tens of millions of underemployed peasants off the land and into wealth-creating jobs is essential. The exodus would help those left behind to expand their land holdings and use them more efficiently.

No government, least of all the control freaks who run China, would embark on such a momentous exercise lightly. Communist Party ideologues are all too aware that a failure to handle rural issues properly can be destabilising. They worry that allowing peasants to sell their land could restore a rural landowning class, and that peasants would sell up in huge numbers and descend upon ill-prepared cities, throwing up shanty towns and pushing up crime.

Some officials also see collective ownership of rural land as one of the few remaining badges of China's professed “socialism”, and fear the explosion of divisive political debate if this bit of constitutional dogma is changed. In China's case, however, it is the absence of reform that is proving destabilising, as peasants protest violently against land seizures by local governments keen to exploit the land themselves. Though materially better off than they were in 1949, many peasants say that local bureaucrats have in effect become the landlords, sometimes using mafia-type gangs to push them off their fields.

A few opponents of land reform in the countryside say they are acting in the rural population's own interests. They point to the lack of social-security provisions for peasants. Though peasants have limited control over the land they farm, in most cases it can at least help to feed them.

The weakness of this argument is that forced appropriations by local governments have already deprived as many as 40m peasants of some or all of their land since the early 1990s, with little or no compensation. Besides, the best way to secure the welfare of the peasants is not to keep them trapped on underworked land but to spend more directly on services for the poor. With strong revenue growth, a low budget deficit and a booming economy, China can afford this. Compensating peasants for appropriated land on the basis of market values, not just minimal agricultural ones, would help too. And introducing a value-based property tax would persuade local governments to worry less about losing the one-off revenues they now enjoy from the sale of land rights.

It would be disingenuous to deny that land reform will loosen party control in the long run. A decade ago almost all urban housing was owned by the state. In one of the most dramatically successful economic reforms of the past quarter century in China, most is now privately owned. This has fostered the growth of a middle class that wants guarantees that its new assets are safe from the party's whims. Property owners are electing their own landlord committees—independent of the party—to protect their rights. A new breed of lawyers, not party stooges as most once were, is emerging to defend those whose properties are threatened by the state. Property owners want a clean environment around their homes. Green activism, which hardly existed in China a decade ago, is spurring the development of a civil society.

Even so, China's Communist Party has shown that it will take big risks if economic development demands them. Hence the widespread closure and privatisation of state-owned enterprises in the past decade, with the loss of millions of jobs. The leadership knows that China's history has been one of recurring bloody upheavals by landless peasants; it is caught between wanting to retain control and wanting to avoid another upheaval. This is the moment to complete the unfinished business of rural reform.
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Wiki's explanation on "civil society"

Civil society or civil institutions refers to the totality of voluntary civic and social organizations or institutions which form the basis of a functioning society as opposed to the force backed structures of a state (regardless of that state's political system).

While there are myriad definitions of civil society, the London School of Economics Centre for Civil Society working definition is illustrative:

Civil society refers to the arena of uncoerced collective action around shared interests, purposes and values. In theory, its institutional forms are distinct from those of the state, family and market, though in practice, the boundaries between state, civil society, family and market are often complex, blurred and negotiated. Civil society commonly embraces a diversity of spaces, actors and institutional forms, varying in their degree of formality, autonomy and power. Civil societies are often populated by organisations such as registered charities, development non-governmental organisations, community groups, women's organisations, faith-based organisations, professional associations, trades unions, self-help groups, social movements, business associations, coalitions and advocacy groups.

Examples of civil society institutions:

non-governmental organizations (NGOs)
private voluntary organizations (PVOs)
peoples' organizations
community-based organizations
civic clubs
trade unions
gender, cultural, and religious groups
charities
social and sports clubs
cooperatives
environmental groups
professional associations
academia
businesses
policy institutions
consumers/consumer organizations
the media
citizens' militia
religious organizations

Whether all of these institutions are by definition part of civil society is up for debate. Neera Chandoke, a scientist from India, thinks not. She concludes that only institutions that are critical of the state are the real thing, while the rest are merely not governmental. The notion here is that not every institution is a 'countervailing power' to the state. In developing countries, civil society is popular with aid donors because it can make government behave in a better way. But mock civil society organisations can exist that serve only to gain access to development aid.

The term civil society is currently often used by critics and activists as a reference to sources of resistance to and the domain of social life which needs to be protected against globalization. However, within the United Nations context, the phrase "civil society" has been a source of some controversy, as its meaning also includes businesses as well as private voluntary organisations – see United Nations: Partners in Civil Society.

On the other hand others see globalization as a social phenomenon bringing classical liberal values which inevitably lead to a larger role for civil society at the expense to politically derived state institutions.