China’s land system

1. Background
   • China’s land system

Various systems of land ownership exist in different countries depending on their land policies. The ownership of land in all countries has to be confirmed by necessary authorities in the state. Land is one of the major factors of production together with capital and labor. This implies that without the land site production is halted. Ownership of land is therefore very important to the country and economy as a whole. The land in China is owned through two different systems depending on the setting of the land. The setting of the land can be described as either rural or urban. In urban areas, all the land is owned by the state while the land that is found in the rural areas is owned collectively. Before the adoption of The Law and Administration of the People’s Republic of China 2016 Version Article 2, the land in China could not be owned by an individual. However, with the adoption of the legislation, it is possible for whole people and collective ownership of land.

The ownership of all the land by the state implies that entities and individuals cannot own the land but they may own the property which is above the land. Due to the different systems in ownership of land, different regulations are set out for the different systems. In urban areas regulations are on the structures and buildings while in rural areas only the use of the land is regulated. The body empowered to control the usage of land in China is the State Council which carries out the role of determining the occupants of a piece of land, regulating trade on the land, and facilitating the transfer of land from one individual to another.

The socialist ownership system of land that has been adopted by China is different from the private ownership of land that is adopted in many countries. In the private ownership of the land, the production and means of production that is used on the land are privately controlled unlike in the socialist ownership systems such as that of China where the government is involved in every activity on the land. The power of the government in social ownership systems is very strong. The government maintains the authority to relocate residents, order for the demolition of buildings, and declaration of residents as squatters. In private ownership systems, such power is curbed as the governments are not involved directly in the ownership of the land. Decisions in the private systems of ownership are made and approved by the owner such as the decision to construct commercial and residential units in rural areas. Such decisions are highly monitored by the government in the socialist ownership system.

• China land system: urban and rural

As stated earlier the setting of the land is heavily dependent on the setting of the land. Policies in rural areas differ from the policies in urban areas. Land in rural areas is owned by the collectives. Generally, collective ownership of land can be described as a system where the benefits reaped from production on the land are shared between the working people. The land owned by the collectives is then tenanted to peasants who also double up as farmers and laborers. The rural-urban system was adopted in the 1990s and brought major changes as it increased the levels of outputs from the farms which in turn increased the rates of growth of the economy. The farmers could share the land from the collectives and reap benefits from farming, but they could not own the land. The land in rural areas houses the majority of the people of China and is more expansive compared to the land in urban areas. However, in recent times, the collective ownership of land has been criticized due to the instability of the right to use the land and the adequate insecurity to the peasants’ source of income which is mainly agriculture. According to the ministry of land and resources, by the close of 2015, there were 645.5 million hectares and 135 million hectares of land for agricultural use and farmlands respectively.

The land in urban areas is state-owned. State ownership is one of the public forms of land ownership. The people have to get permission from the state before using the land. A land administration law that was passed in 1987 stipulated that there were two ways in which urban land could be used. These ways include a paid transfer and the administrative location. The land that was controlled by the state was used for the construction of factories, highways, government financial institutions, rail networks, and shops. Other lands that were controlled by the government included areas that were rich in minerals, forests, water reservoirs, and grasslands.

• HRS land property characteristics

HRS is an abbreviation for the Household Responsibility System. HRS is also referred to as the contract responsibility system. The system of ownership under this system is where a collective leases its land to members for independence which is mainly agricultural activities. The HRS system was mainly adopted to facilitate the expansion of agriculture in the 1980s. The system was suggested by the peasants and the spread facilitated by the national government. The system encouraged unified management which combined with the peasants’ enthusiasm led to the success of the system. The system’s main objective as to transition the duties of production from the government to the households. The system replaced the collective production system. The collective productive system encouraged production managed by production units.

The main characteristics of the Contract responsibility system include:

• Each household must take care of the land put under their ownership for their personal benefits

1. Land ownership is collective.
2. All the profits minus the taxes go to the households responsible for the management of the land.
3. Individuals are responsible for any costs that are incurred or related to the land.

• In the initial stages of HSR, the transfer of land from one household to another was prohibited. This however changed with the introduction of the Rural Land Contracting Law (RLCL). The law allowed for the transfer of land. However, large scale resource allocation was banned.
• All the benefits reaped from properties that existed before the implementation of HRS would be shared between the state and the individual households.

• Migration

Migration can be defined as the movement of human beings from one area to another to settle either temporarily or permanently in the new area. Migration has two scoped namely; external and internal migration. Migration can also be subdivided according to the characteristics of the areas which a person is moving to and from i.e. rural to urban, urban to urban, rural to rural, and urban to rural. Migration is caused by many factors and can be done by individuals, families, or communities. Migration can either be temporary or permanent depending on the preferences of individuals. In permanent migration, people stay in areas they migrate to for the rest of their lives while in temporary migration, people tend to move back to the places they came from after the completion of their purpose of migrating.

As stated earlier, various factors trigger and favor the migration of people from one area to another. The factors can be classified into social, economic, and political factors. Social factors that have influenced migration education, marriage, and job seeking. The age of a migrant is also a factor in social migration. Young people and people who have no dependent are more likely to migrate. People with a large number of resources such as wealthy people have less likelihood of moving.

Economic factors that have influence migration include better living standards in the new areas, better transport systems. The living standards in some areas are below the poverty line which forces the people to migrate in such new paces with better living standards. Political factors also play a huge role in migration. Political factors directly influence the style of living. A toxic political environment is likely to induce stability and chaos. This forces people to move to places where the political environment is more stable.

In China, migration has unique characteristics because of the laws governing the lands. Migration in China is mainly internal and is one of the most extensive in the work. In 2015, about 36% of the workforce in China was made up of immigrants. Good times in china results in reduced levels of immigration while bad times lead to high levels of migration. There is also a system in China described as “Hukou” which restricts the movement of the people. Immigrants in cities are also exempted from any social services that are provided by the government. Immigrants are also offered lower salaries. Approximately 236 million people live in places where they do not have a local ‘Hukou’.

• The profits of migration.

Migration is a double-edged sword with both advantages and disadvantages. Migration encourages the sharing of skills. People who move to new areas are likely to develop new skills which would help the regions they come from on returning. In places where migration occurs, the pressure on resources reduces since the number of people depending on the resources reduces. In places where the migrants live, cultural diversity takes place. Cultural diversity is a result of interaction between people of different cultures. Diversity in the immigrants is not only on the cultural front but also on the skills front. Migration brings together people having different scales which when combined are likely to produce a very efficient workforce/ Migration is also profitable as it allows industries to have cheap labor. As stated earlier, migrants are often paid lower salaries than the locals. The migrants are also likely to take up the jobs that have been shunned in society as low-class jobs.

2. • Property right

Activities surrounding the usage of land are variant from one region to another. There is a need to control how the land is used especially in socialist societies such as those in China. Property rights can be described as the power of an individual or institution in the determination of how resources are to be used in an area. The allocation, definition, and protection of property rights are very complex issues in society. The attribution of high economic growth in China has been largely attributed to the property rights that have been enforced in China. However, some critics suggest that the economic growth would have been faster had the government adopted private property rights (Woo, 1994)

• The mechanism of land property right impacting migration.

The system of land ownership in any place is likely to affect the migration levels.in places where restrictions exist to movement, migration is less likely. Other than restrictions to migration, the land systems used in areas limit the movement of people. According to research, the systems in china are some of the major factors which influence migration in China. The land in China cannot be owned by an individual. The contractual agreement for use of the land highly encourages the movement of people in China. People without land may choose to move to areas where the collectives contract the land at favorable terms. The system also promotes instability in the source of income for the peasants. The collectives or the government have the right to exist people from the land where they have settled and restrict the use of the land.

3. Empirical analysis
   • Data

The China Health and Retirement Longitudinal Study (CHARLS) targets the collection of data from a sample selected in such a way that it represents the characteristics of the total Chinese population. The citizens in the sample are above 45 years of age. The collection of the data begins in 2011 and the residents are monitored for two consecutive years. The data is collected from about 10,000 households with 17500 individuals taking part. The data collection was done in over 450 villages in 150 counties.

• Identification strategy

The equation below describes the relationship between immigration and various factors affecting it.

The equation above is a general equation for the multiple regression model. The multiple regression model describes the interaction of different independent factors represented by.  Represents the weights of the independent variable in the estimation of the dependent variable. The interaction of these variables often results in the estimate of the independent variable, which is the migration for this study and is represented by  in the equation. The estimation of Y according to the model is not accurate due to many factors that are not accounted for in the equation. The errors in the model for estimation of the migration levels are represented.

The different factors which are weighted in this research to determine the migration levels include the expropriate marking of land, the income of the individual, the gender of the individual, the political party which an individual supports, Han nationality, the number of member in the household that are involved in self-employment, the living status of the parents, the age of the individual, the education levels, and the health of the individual. For analysis, the data has to be cleaned. Cleaning the data involves calculating the logarithm of the salaries.

• Market mechanism of land property rights change and migration.
  • Basic regression

The income of an individual is likely to influence their decisions to migrate. People with higher sources of income are more likely to migrate. These previous findings are supported by the data as demonstrated by the positive coefficient of the income. The positive coefficient implies that income has a positive effect on migration. Positive effects imply that as income increases, the probability of migrating also increases.

• Robustness checks

The income of an individual is likely to highly influence the decision to migrate. To produce a better model, more variables that are likely to influence migration are added to the regression. Migration (1) selects the expropriation status of the land, Migration (2) adds the Hankou nationality, Migration (3) adds the marital status to the model, Migration (4) includes the number of self-employed family members and Migration (5) adds the living status of the parents to the model. The addition of the variables to the model follows a sequence.

• Endogenous checks.

Endogenous checks check for internal factors that are likely to influence the migration of the people. The model includes internal variables that are likely to cause migration. These variables are mentioned in section 3.1.1 such as the Hankou nationality, the living status of parents, and the marital status of an individual. The endogenous checks also return negative results as some variables are not available such as education and health status.

• Government mechanism of land property right changes on migration.
  • Basic regression.

One of the key variables which affect migration includes the expropriated marking of the land. The land can either be owned by the government or the collectives. However, this is not the only factor that affects the probability of an individual migrating. Other factors that have shown high significance in affecting the migration of people include income, gender, political affiliation, the nature of an individual’s ‘Hankou’, the number of family members in self-employment, the living status of the parents, the age, education levels and the general health of an individual. From table 1 below, the marking of land as expropriated has a coefficient with a value of -0.192. This implies that the expropriation of land discourages the migration of the people.

• Robustness checks

The accuracy of a model developed through the use of regression with different variables exhibits different properties. The robustness of a model described how much change in one variable is likely to influence the accuracy of the model.

The market is mainly controlled by the forces of demand and supply. From the relationship in figure 1, the expropriation status of the land has an inverse relationship to migration. This is in agreement with the findings in section 3.1.1. The increase in land expropriation by the government increases the rates of migration of the people. The expropriation of land acts as a form of tax to migration. Migrating individuals must consider the probability of the land expropriation resulting from the reduction of the size of the household.

4. Analysis
   • Market channel.

The market channel for migration is guided by factors such as employment. According to the results from the analysis, these factors play a huge role in influencing the decision of an individual to migrate. A positive relationship exists between gender, age, and the probability of migrating. The nature of the positive relationship is supported by the critical values of the individual variables. The positive nature implies that an increase in immigration levels increases all the above factors and vice versa.

• Expropriation (government channel).

The government has a huge role to play in controlling the levels of migration in a country. The role played by the government is mainly political and is influenced by policies such as the Hankou status, the expropriation status of the land, and the political affiliation of an individual. The relationship between the expropriation of land and immigration is negative implying that positive change in one leads to a negative change in the other. The relationship between migration and political affiliation is positive. This implies that a positive change in one of the variables affects the other negatively.

5. Conclusion
   • What we have done in this paper.

This paper analyzes the factors that are the major contributors to migration in China. To do this, past literature on migration are analyzed to form the basis of the paper. The main factors which are identified include the expropriation policies in the country which is one of the major causes of migration. The relationship between income, gender, political affiliations, Hankou status, and the number of self-employed family members are weighed. From the analysis, a conclusion can be reached.

From the analysis carried out in the paper, the expropriation policies negatively affect immigration. This implies that the adoption of HSR has been effective in the curbing of migration. From the analysis, the people earning higher incomes are less likely to migrate while those earning more income are less likely to migrate. Political affiliations also play a huge role in determining the levels of migration. Other factors that positively affect migration include political affiliations, Hankou status, and the number of family members in self-employment.

• Policy implication.

The adoption of HSR appears to be hugely successful in curbing the rate of migration. This policy which is responsible for land expropriation has reduced the movement of people from one area to another. However, the policy only appears to work in restricting the migration of peasant who frequently faces uncertainties in their incomes and sources of income.

However, the policies by the government are still outdone by the demographic features. Although there is a need to control migration, it is still beneficial. This implies that controlled migration may be goods for China. The restrictions on migration appear to work against the peasants. The government of China should strive to adopt private land ownership systems which are likely to increase their growth levels.