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[East Asia Forum] Asia’s political problems and land

June 3rd, 2013

Author: Peter Drysdale, Editor, East Asia ForumResource

Wherever there is successful industrial and economic transformation in Asia, the tussle over possession of land is at the centre of the politics of development.

There are two main reasons for this. Economic growth in land and resource-deficient economies depends crucially on the shift away from agriculture and other activities that use land intensively, towards manufacturing and urban services that use labour, capital, technology and human skills intensively.

A group of Chinese residents hold a banner outside the Beijing municipal bureau of land and resources as they protest against a land auction in Beijing on 6 July 2011.  The banner says: no compensation, not allowed to auction land. (Photo: AAP)

Industrial activity inexorably encroaches on agricultural land and village space in the course of successful economic growth. While in principle markets can facilitate the orderly transfer of land from its use in agricultural activities to its use in industrial and other activities, there are usually many institutional and cultural reasons why land markets are not well developed or adequate to yielding the supplies of land that are needed to fuel industrial development. Land might be subject to tenure and ownership restrictions that prevent its owners or commercial tenants from effective access to realising its value in the market. In formerly communist states, the rights to trading in land were at least initially constrained by the ownership of land by the state. Economic growth is also associated with the growth of demand for public goods — roads, railways, housing, airports — all of which require the dispossession of tenants of their land. These transfers of property rights in states with well-developed legal structures and well-established and transparent processes for effecting them are difficult enough. They are a core political problem where such institutions are undeveloped and restraints on the power of governments, or officials in positions of power, are ill-defined and open to test.

In China, the overwhelming majority of political ‘incidents’, as John Garnaut recently reported, are ultimately connected with the appropriation of land. Police data show that the number of disturbances has doubled to more than 180,000 a year in the past half-decade. More than half of these incidents are said to have been generated by conflict over farmers and households defending their land. A more dangerous development is that local authorities appear to have outsourced violence to criminal gangs in managing what is nothing less than extortion at the root of these disturbances.

In 2010, David Kelly pointed out that, in China, ‘the relationship between developers and residents is at the core of these political problems. To balance the interests between developers and residents, residents’ voices need to be placed on an equal footing with those of the developers so that genuine negotiation over the value of land under acquisition can take place. But as collective negotiation by residents is blocked there is no such voice; local government then has to deal with the social and economic cost of quelling protests by disaffected residents. So the work of maintaining stability becomes an instrument for the interests of unscrupulous officials, companies and contractors, a tool for developers in carrying out predatory evictions and relocations’.

Kelly says that a team of sociologists at Tsinghua University suggest that ‘[in 2010] the (Chinese) budget for internal security reached 514 billion yuan.’ Public safety expenditure increased by 16 per cent [in 2009], augmented by a further 8.9 per cent [that year]‘. Amazingly, this increase in ‘compensation’ put expenditure on internal security in the same league as national defence spending.

This is a huge issue in the politics of economic transformation. And it is not confined to China.

In this week’s lead essay, David Brown tells one sad story of the acquisition of a prawn farm for an airport development. Brown explains that the Vietnamese Constitution provides for state management of land on behalf of the people. And the system has worked well enough up to a point. ‘A family of farmers can generally expect that its lease will be renewed as a matter of routine. But problems arise when someone wants the land for another purpose. If a developer is eager to build a housing estate, a factory or a golf course, local administrators will take on the job of persuading villagers to accept trivial compensation in exchange for their plots’, Brown observes.

‘Throughout Vietnam’, Brown says, ‘farmers are pushing back. The courts are clogged with lawsuits and the nation’s newspapers are full of stories about anti-eviction demonstrations’.

‘Coincidentally, land laws and the Constitution are being revised’. But will a substantial reform be possible?

Obviously not everyone would profit. Local officials would no longer pocket hefty ‘rents’ from developers for setting low prices for prime farmland and evicting farmers who hold out for fair compensation. And it seems they may have won.

Half of Vietnam’s population is still on the land, and relative to people in the towns and cities, peasants remain impoverished and exploited. ‘It’s no longer cruel landlords or greedy imperialists who are exploiting the peasants — it’s the party that pledged their liberation’; a party whose agents are embroiled in corruption in divvying up the rents from land development.

Without land and constitutional reform, Vietnam and China both face an enormous political challenge around the politics of development and land acquisition that threatens to corrode the authority not only of the party, but also the state.

Peter Drysdale is Editor of the East Asia Forum.

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