Traditional Forms of Land Tenure in Rural China and Models for Reform

TRADITIONAL FORMS OF LAND TENURE IN RURAL CHINA AND MODELS FOR REFORM

Andrew John Godwin ORCID ID https://orcid.org/0000-0003-4739-0432 Thesis submitted for the degree of Doctor of Philosophy (PhD) Submitted 5 July 2018 Melbourne Law School The University of Melbourne

This thesis is being submitted in total fulfilment of the degree and is not being completed under a jointly awarded degree.

Abstract

The plight of farmers in rural China is an issue of fundamental importance in China today, both in terms of improving their living conditions from the perspective of individual farming households and in terms of maintaining social stability and achieving economic prosperity from the perspective of the nation as a whole. Since 1979, when the Household Responsibility System was first trialled, China has made significant advances in terms of increasing agricultural production and lifting its rural population out of poverty.

As the liberalisation of the rural economy has gathered pace, however, problems have arisen in relation to rural land use and management. These include inefficiencies in the use of land as a result of small-scale farming; under-utilisation of land as a result of the migration of rural labour to the cities; abusive and coercive practices on the part of local governments and authorities; and irregular and unlawful land dealings.

The above problems have implicated law and the legal system and have revealed deficiencies in the legal framework and rules governing rural property rights. To a significant extent, these deficiencies are attributable to enforcement challenges and weaknesses in the courts and other institutions. However, the deficiencies have also been attributed to fundamental structural weaknesses in the design of the land tenure system in rural China. The nature and extent of the deficiencies have been thrown into sharp relief by a series of government policies over the past few years. These policies aim to give farmers stronger property rights and reduce or remove restrictions on the assignment of property rights to encourage the development of a market for the sale and purchase of rural property rights.

This thesis evaluates the relevance and suitability of traditional forms of land tenure to reform of rural land rights in China today. The criteria for the evaluation are the official policy objectives of the State, including giving farmers stronger property rights and increasing the scope of rights that famers may exercise. This thesis argues that the traditional forms of land tenure should be considered in the mix of reform options and considers conceptual models for this purpose.

Declaration

I declare that:

(i) This thesis comprises only my original work towards the Doctor of Philosophy (PhD); (ii) Due acknowledgement has been made in the text to all materials used; and (iii) The word count in this thesis is less than the maximum word limit in length, exclusive of tables, bibliographies and appendices.

Signed: Contents Chapter 1 - Introduction ...... 5 1. Introduction ...... 5 2. Literature review ...... 8 3. Focus, hypothesis and research questions ...... 17 4. The research methodologies and materials ...... 19 5. Outline of chapters ...... 22 Chapter 2 – The Legal Framework for Rural Land Tenure in Mainland China ...... 25 1. Introduction ...... 25 2. Concepts and terminology ...... 26 3. The evolution of rural land tenure since 1949 – an overview ...... 28 4. Collective land ownership ...... 29 5. Land contract management rights ...... 37 6. Residential foundation rights ...... 55 7. Conclusion ...... 56 Chapter 3 - Rural Land Tenure in Mainland China: Challenges, Policies and Calls for Reform ...... 59 1. Introduction ...... 59 2. Early criticisms of the current system ...... 60 3. Challenges ...... 61 4. Policies ...... 70 5. Calls for reform ...... 81 6. The implication of rules in the current challenges ...... 85 Chapter 4 – The Historical and Legal Context for the Traditional Forms of Tenure in China ...... 86 1. Introduction ...... 86 2. An outline of perpetual tenancy rights and dian rights ...... 87 3. An overview of the historical and legal context ...... 87 4. Family ownership and dealings with land ...... 95 5. Private constraints on the assignability of land ...... 102 6. Taxation as a basis for the legal recognition of private rights in respect of land ...... 103 7. Observations on the factors underpinning the traditional forms of tenure in China ...... 105 Chapter 5 – Perpetual Tenancy Rights ...... 107 1. Introduction ...... 107 2. Historical overview of perpetual tenancy rights ...... 109 3. The debate concerning the recognition and adoption of perpetual tenancy rights ...... 128 Chapter 6 – Dian Rights ...... 141 1. Introduction ...... 141

2. The concept of a dian ...... 142 3. Historical overview of the dian ...... 147 4. Why were dian sales so prevalent in pre-modern China? ...... 156 5. The debate: arguments for and against recognising dian rights ...... 160 Chapter 7 – Reform Models ...... 168 1. What deficiencies of the current system have led to calls for reform?...... 169 2. Do traditional property rights have the potential to achieve the official policy objectives? . 172 3. If traditional property rights were adopted, what conceptual models could be considered? 175 4. Household ownership and rights of pre-emption ...... 180 5. Key findings and areas for further research ...... 181 Appendices ...... 184 Bibliography ...... 208

Chapter 1 - Introduction

1. Introduction

The plight of farmers in rural China is an issue of fundamental importance in China, both in terms of improving their living conditions from the perspective of individual households and in terms of maintaining social stability and achieving economic prosperity from the perspective of the nation as a whole. The plight of farmers is particularly important in view of the need to achieve food security and agricultural efficiency and the need to reduce the economic and cultural disparity between the urban areas and the rural areas. The challenges faced by rural China and the policies that have been adopted to meet these challenges have occupied a central position in China’s modern development over the past six decades. Indeed, it was land reform in a rural context that was one of the rallying cries of the revolution of 1949.

Since 1979, when the Household Responsibility System was first trialled,1 China has made significant advances in terms of increasing agricultural production and lifting its rural population out of poverty. As the liberalisation of the rural economy has gathered pace, however, problems have arisen in relation to rural land use and management. These problems can be divided into four categories. First, there have been inefficiencies in the use of land as a result of small-scale farming and the fragmentation of land. Secondly, there has been under-utilisation of land as a result of the migration of rural labour to the cities, which increases the amount of idle land and contributes to the reluctance of farmers to invest in land in order to improve its long-term yield. Thirdly, local governments and authorities have engaged in abusive and coercive practices, including the expropriation of arable land for construction and development purposes and the adjustment and transfer of land in a way that prejudices the interests of farmers. Fourthly, farmers themselves have become involved in irregular and unlawful land dealings, including the development and sale of rural residential property on the informal ‘small property rights’ market.2

The above problems have implicated law and the legal system and have revealed deficiencies in the legal framework and rules governing rural property rights. To a large extent, these deficiencies are attributable to enforcement challenges and weaknesses in the courts and other institutions (such as the system of land registration) in recognising and protecting rural land rights.3 Consequently, any efforts to reform the system will be incomplete if they do not take account of the need to strengthen enforcement institutions and processes. However, the deficiencies are also attributable to fundamental structural weaknesses in the design of the land tenure system in rural China. The nature and extent of the deficiencies have been thrown into sharp relief by a series of government policies over the past decade. These policies aim to give farmers stronger property rights and reduce or remove restrictions on the assignment of property rights in order to encourage the development of a market for the sale and purchase of rural property rights.4

1 The Household Responsibility System and its impact on the evolution of rural property rights in China are discussed in Chapter 2. 2 See Chapter 3, Part 3(a)(iii), for a discussion of ‘small property rights’. 3 See Zhao 2011, 141. 4 See Chapter 3, Part 4, for an analysis of policies.

In response to these deficiencies, scholars and others have identified a need to reform the legal framework governing rural land rights and have engaged in a debate over the specific reforms that should be introduced for this purpose. This thesis contributes to this debate. The debate has been shaped by the dual purposes that rural land is said to serve – traditionally and in China today – and the inherent tension between these dual purposes. The dual purposes have been recognised in the literature5 and in official policies.6 First, land serves a productive purpose, under which the focus is on maximising the yield, income and return from agricultural land in an economic sense and on the policies, fiscal and otherwise, that the State should implement in order to support this purpose. The importance of this purpose has become greater in recent years as the State has sought to maintain a high level of self-sufficiency and food security and, accordingly, has formulated a series of policies and measures that are designed to increase the efficiency of rural production through encouraging large-scale farming, the collectivisation or corporatisation of farms, mechanisation and the use of technology. In order to maintain self-sufficiency and achieve food security, the State has imposed a ‘red line’ minimum of 1.8 billion mu (120 million hectares) of arable land.7

Secondly, land serves a social purpose, under which rural land is treated as a social security net to guarantee the sustenance and livelihood of individual farming households and the well-being of the rural community more broadly. The reliance on land as a social security net by rural farming households has been widely acknowledged by development scholars and others. It has been referred to as a factor that has affected rural-urban migration and also caused a high level of tenure insecurity on the part of the members of farming households as a result of concerns that their land- use rights will be taken back if they spend too much time away from the land.8 The social purpose has been supported by the practice under which rights in relation to land are allocated primarily to, and decisions in relation to land management and dealings with land are mediated primarily through, families or households instead of individuals.9

From a general perspective, the debate about land reform has revolved around two objectives. Although these objectives are not formally articulated as objectives by the policies of the State and their boundaries are not fixed or immutable over time, this thesis uses them as conceptual tools to analyse the debates concerning land reform, to evaluate the relevance of traditional forms of land tenure and to construct potential reform models. The first objective is to strengthen the rights of farmers and to reduce the improper or unnecessary interference of the State and the Collective in land relations and dealings – this is referred to in this thesis as the ‘empowerment objective’. The second, related objective is to adapt land tenure arrangements so that they facilitate the use and management of land for the dual purposes as referred to above (namely, to serve a productive purpose and a social purpose) – this is referred to in this thesis as the ‘dual-purpose objective’.

From a legal perspective, the debate has revolved around the question of how to give farmers greater security of tenure and how to increase the scope of their rights so that they have greater

5 See Part 2(a) below. 6 See Chapter 3, Part 4. 7 The red line of 1.8 billion mu was first adopted in the CPC Central Committee ‘Decision on Certain Major Issues Concerning Promoting the Development of Rural Reforms’, issued on 12 October 2008. 8 See Chapter 3, Part 3(b). 9 As Ma et al 2016, 386, have noted, migration decisions are also mediated through the household and not individuals.

6 autonomy and flexibility to deal with their rights. Underlying this debate is a fundamental question as to how rural land should best be managed and, specifically, how decisions concerning the management of rural land should be allocated between the Collective as land-owner and the household. In other words, how should an appropriate balance be struck between, on the one hand, the needs of farmers to deal with their rights as they deem fit and, on the other hand, the needs of the State or the Collective to ensure that land is managed in a way that benefits the legitimate interests of the broader community and the State and does not facilitate or lead to improper and abusive practices? A related question that arises out of this fundamental question is whether farmers should have autonomy to assign or dispose of those rights on the market and to determine the ways in which they would like to extract and apply the economic benefit or interest that they enjoy in land.

At the heart of the debate is the question of how best to design and operate rural land rights and the reforms that are necessary in order to achieve the two objectives referred to above; namely, the ‘empowerment objective’ and the ‘dual-purpose objective’. The reforms proposed have been diverse and far-reaching. Some have called for collective ownership of rural land to be replaced by state ownership.10 Others have even called for the privatisation of land ownership.11

Many scholars have turned their attention to the possibility of adopting or adapting traditional (i.e. pre-1949) property rights to resolve the current uncertainties and challenges. In particular, scholars have debated the suitability of two traditional forms of tenure: (1) perpetual tenancy rights [永佃权]; and (2) dian rights [典权], each of which is introduced in Chapter 4 and examined in detail in Chapters 5 and 6 respectively. After the revolution of 1949, perpetual tenancy rights were extinguished as a result of the land reform programme, involving the redistribution of rural land to famers and the vesting of rural land ownership in cooperatives and communes at the end of the 1950s. On the other hand, dian rights in respect of buildings survived in certain parts of China and have been recognised by the courts on the basis of customary practices. However, these rights are not recognised as proprietary rights by the Property Rights Law (the ‘PRL’), despite a long and robust debate concerning their inclusion. The PRL was promulgated in 2007 and introduced the first comprehensive framework for the recognition and protection of property rights.

By contrast, both of these traditional rights survived in Taiwan until 2010, when perpetual tenancy rights were abolished and replaced with agricultural rights (农育权). Dian rights continue to be recognised. The experience in Taiwan is relevant to the issues examined in this thesis for three reasons. First, many of the traditional practices in pre-modern mainland China continued in Taiwan after the 1949 revolution and have been examined in scholarly literature.12 The experience in Taiwan after 1949 therefore informs an understanding of the traditional forms of tenure that are the subject of this thesis. Secondly, the civil law reforms that were introduced in mainland China during the Republican Period (1911 – 1949) and embodied in the Civil Code of the Republic of China, which was enacted in 1929, were carried through to Taiwan after the Nationalist government led by Chiang Kai- shek established its base in Taiwan in 1949. These reforms included the codification of perpetual tenancy rights and dian rights. The experience of the Civil Code in Taiwan therefore represents the

10 See Chapter 5, Part 3(1)(iii)(a). 11 See Chapter 3, Part 5. 12 See, for example, Myron Cohen’s research on village practice in Taiwan: Cohen 1976.

7 continuation of the civil law reforms in mainland China prior to the 1949 revolution, and provides an important comparator for reform in mainland China today. Thirdly, it is necessary to examine the fate of these traditional property rights in Taiwan. As discussed in Chapters 5 and 6, the use of dian rights has declined in Taiwan, despite recent reforms. In addition, perpetual tenancy rights have been abolished and replaced with agricultural rights. An understanding of the factors behind the decline or abolition of these traditional rights is of critical importance to an understanding of the potential relevance and suitability of these rights within the context of property law reform in mainland China. Their fate in Taiwan would suggest that they no longer have any significant relevance in a modern context. However, this thesis argues that the fundamental differences between land ownership in mainland China and Taiwan do not negate their consideration in the context of reform in mainland China today.

The debate surrounding the relevance of these traditional property rights to reform in mainland China has been controversial and polarised. Many scholars argue that they are obsolete and should be replaced by modern concepts. Further, scholars criticise them for facilitating land consolidation and the exploitation of farmers. On the other side, many scholars argue that they would meet the current challenges for the reason that they would provide stronger rights for farmers than the current system (i.e. they are better able to achieve the ‘empowerment objective’) and also that they would facilitate the dual purposes of land (i.e. they are better able to achieve the ‘dual-purpose objective’).

The reasons for this argument are essentially attributable to two factors. First, the traditional property rights allowed for greater security of tenure against interference by the landowner, who operated essentially as a passive owner. The move towards passive ownership of land by the Collective in mainland China is a key element of the conceptual models suggested by this thesis and is premised on a re-allocation of the rights and powers between the Collective as land owner and farmers as land users.

Secondly, the traditional property rights enabled the split between the ownership, use and management of land in a more effective manner than under the current system. In particular, the rights enabled rural families to grant extensive rights to others whilst maintaining a connection – what might be referred to as a form of ‘residual ownership’ – with the land. In the case of dian rights, for example, the ability of farmers to sell their land on terms that they reserved the right to redeem or ‘buy back’ the land at some point in the future facilitated decisions about land dealings and how the dual purposes of land might best be served. This thesis critically considers the arguments for and against these propositions and concludes that the traditional property rights should be considered in the mix of reform options that might satisfy the official policy objectives of the State.

2. Literature review

The following review outlines the literature that has been examined in relation to three areas that are relevant to the research questions in this thesis: (a) the current challenges facing rural land rights; (b) the debate over the relevance of traditional property rights to reform; and (c) the traditional rights in their historical context. It then locates the thesis in relation to the literature.

(a) The current challenges facing rural land rights

The current challenges facing rural land rights have been explored in the literature in Chinese by legal scholars, political scientists and economists and also in the literature in English by economists and development scholars. These challenges include irregular dealings, as reflected in the phenomenon that is known as ‘small property rights’, which is the phenomenon where farmers purport to sell their houses to unqualified third parties, particularly buyers from the urban areas, in breach of the laws and regulations.13 The challenges are also reflected in abusive practices such as the unilateral seizure of land as part of unlawful real estate development and rent-seeking by local authorities.14 As noted by Ho, ‘[t]he evictions of farmers due to urban sprawl have rekindled fierce debates in China on tenure security, once more [fuelling] the arguments of proponents for the formalization of property rights and titling of land ownership.’15 As evictions and disputes concerning land have increased in recent years, this debate has intensified in the Chinese literature and has led to calls to reform the current system in order to strengthen the security of rights enjoyed by farmers and also to give them greater autonomy in terms of the scope of rights that they may exercise.16

The literature in English has engaged extensively with the issues and challenges from a sociological and political perspective, particularly in the context of land disputes. This literature identifies and explores the impact of land insecurity, irregular practices and abuse of rights and is useful for several reasons. First, this literature highlights the extent of illegal takings of land in China and the impact of illegal takings on farmers and on social cohesion and stability. Scholars such as Pils have explored the impact of ‘dignity takings’, under which farmers are denied their dignity, which is ‘understood as respect for their intrinsic moral worth and moral authority’, and the extrajudicial protests and resistance that have occurred as a result.17

Secondly, this literature highlights the failure or inability of the legal system and law enforcement to deal with the problems and the gap between law and practice. In their edited book on land disputes in East Asia, Fu and Gillespie write that ‘the proliferation of land disputes is puzzling, because it is occurring at the same time as governments in China and Vietnam are clarifying property rights and improving formal dispute resolution institutions, such as the courts.’18 Noting that ‘[l]and claims and property rights often conflict’, Fu and Gillespie identify the ‘fuzzy property rights’ that are created by the way in which ‘law-based property rights and planning processes are interwoven with political and personalistic relationships’.19

13 See Chapter 3, Part 3(a)(iii) below. 14 See, for example, the literature as discussed in Chapter 3, Part 3(b). 15 Ho 2014, 24. 16 See Chapter 3, Part 5 below. 17 Pils 2016a. Pils’s study provides examples of dignity takings in China and the deleterious impact that this has had on residents in rural and urban areas of China. For additional examples of dignity takings and the impact of this on social stability generally, see Biddulph 2015, Chapter 3, 113 ff. See also Fu and Gillespie 2014. 18 Fu and Gillespie 2014, 3. 19 Fu and Gillespie 2014, 26.

Thirdly, this literature examines the impact of protests and violent resistance on society more broadly. For example, Sargeson has examined the relationship between violence and development in the context of land expropriation in China20 and also the gendering of property rights.21

The literature in English has also engaged extensively with the issues and challenges from an economics and development perspective and has suggested various reforms. For example, Zhu et al identify tenure insecurity caused by land-takings by governments and ague that ‘China should consider going beyond a tenure system of thirty-year rights by either providing farmers with full private ownership rights to land, or nationalizing agricultural land and giving farmers perpetual use rights’.22 For those who call for reforms such as this, the primary driver appears to be the need to give farmers security of tenure and to achieve a market-based system for the use and management of rural land.

Other scholars have challenged the view that the solution lies in measures that are designed to strengthen tenure security, such as privatisation or the conversion of collective ownership into state ownership and the granting of perpetual tenancy rights. Zhao, for example, argues that the focus should be placed less on liberal, pro-market measures and tenure security and more on ‘pro-poor land tenure’ and ‘locally based institutional solutions’. According to Zhao, ‘China’s land tenure reform, like elsewhere, is not just about land and property rights but more about how land is governed by the local government and how it is inextricably linked to peasants’ livelihoods and sustainable land use.’23 Along similar lines, Pils argues that any assessment of China’s property regime needs to go beyond issues of economic utility and examine its impact on basic rights and its ability to prevent harm and provide redress.24

Some scholars have noted empirical research showing that many farmers do not support greater autonomy25 and believe that the land adjustment system, under which the allocation of agricultural land to households is adjusted to reflect demographic changes in the household (e.g. an increase or decrease in the size of a family), is fair.26 This highlights the tension between the productive purpose of land and the social purpose of land and the inherent tensions in the official policies. Zhao argues that ‘many Chinese peasants oppose privatization or even an extended land tenure structure as long as they enjoy overall income security under collective landownership.’27 According to Zhao, ‘[c]ollective landownership provides the conditions that enable peasants to move back and forth to their land in response to changing conditions in the wider economy.’28 Similarly, Ho has noted the social purpose of land rights in rural China, arguing that ‘its alleged tenure insecurity is, in fact, the result of its institutional function…it is an institution for the provision of rural social welfare rather than for the commercial transaction of land assets.’29 Implicit in this statement is the argument that in its design of the current legal framework governing rural land rights, the State is caught between

20 Sargeson 2013. 21 Sargeson 2012. 22 Zhu et al 2006, 834. 23 Zhao 2011, 133. 24 Pils 2016b. 25 Zhao 2011; De La Rupelle et al 2008; Vendryes 2010. 26 Ma et al 2014; Ho 2014. 27 Zhao 2011, 135. 28 Zhao 2011, 136. 29 Ho 2014, 17.

10 the social purpose and the productive purpose of rural land and that this has impeded meaningful reforms to date.

Many development scholars have focused on the broader economic, political and social context in identifying the challenges and the complexities of reform. The challenges include obstacles in the exercise of social and political rights by the poor and differences in local conditions and cultural traditions.30 As previously noted, they also point to obstacles in the current legal framework to the migration of farmers from rural areas to urban areas for employment purposes,31 suggesting that farmers are subject to undue constraints in their dealings with their rural land rights and that this leads to sub-optimal outcomes from both a social and economic perspective. Mullen et al, for example, examine household survey data to determine the impact of rural land tenure arrangements on migration and the relationship between land rental rights and increased land tenure security. Ma et al also examine the data from farm household surveys to ‘compare the magnitudes of legal security, actual security and perceived security of farmland tenure in China, and to investigate the causes of currently prevailing land tenure insecurity.’32 Concluding that too much attention is being paid to legal security, Ma et al argue that ‘[p]olicies aimed at improving tenure security by prohibiting land reallocation…cannot neglect local conditions and cultural traditions in their implementation on the ground.’33 Another factor in the broader context is the reliance of local governments on land sales to generate revenue and the ‘power imbalance between local governments and the collective owners of rural land.’34

The English literature generated by the development scholars and the property law scholars has focused largely on the need to strengthen land tenure, to implement a system of title registration to support and facilitate the exercise of rights by farmers and to increase agricultural efficiency and security. However, apart from calls for privatisation of land, the literature has not examined in detail the specific ways in which land tenure should be strengthened or reformed in terms of the specific legal rules that should be adopted for that purpose.

Further, much of the Chinese literature recites the problems and proposes solutions based on assumptions about the efficacy of market-based mechanisms, such as land titling and private transactions, without undertaking a comprehensive analysis of the social and institutional context within which the rules operate and from which the rules derive their legitimacy. Although, as writers such as de Soto have noted, market-based mechanisms are an integral part of any reforms that are aimed at promoting and supporting economic outcomes, they are not the sole criterion by which the effectiveness and suitability of different forms of land tenure should be assessed. The effectiveness and suitability of the rules themselves need to be examined and located within the broader social and economic context.

In other words, the literature that examines the current challenges facing rural land rights does not engage fully with the design and functioning of the legal rules at a technical level or within their broader social and economic context. Instead, the various forms of land tenure that might serve as

30 Zhao 2011. 31 Mullan et al 2011; De la Rupelle et al 2008. 32 Ma et al 2014, 294. For discussion about tenure security and how it is measured, see Chapter 3 Part 3(b). 33 Ma et al 2015, 304. 34 Yuen 2014, 64-65.

11 reform options, including the privatisation of land ownership, are identified and discussed in a highly generalised and abstract manner and without a detailed analysis of the legal rules or the way in which the rules themselves are implicated in problems such as land insecurity, irregular practices and the abuse of farmers’ rights.

(b) The debate over the relevance of traditional property rights to reform

There is a substantial body of literature in Chinese on the adoption or rejection of traditional property rights for the purpose of reform. The debate and the related literature is explored in detail in Chapters 5 and 6 of this thesis. The Chinese literature can be divided into three categories: (1) those who argue that the concepts associated with the traditional property rights should be discarded in favour of ‘modern’ civil law concepts and practices; (2) those who argue that China should borrow from the experience of traditional property rights, particularly perpetual tenancy rights, to strengthen and reform the current system but that China should not adopt them in a literal sense; and (3) those who argue that China should recognise and adopt the traditional property rights in place of the existing land contract management rights.

Those in the first category (i.e. China should reject traditional property rights in favour of modern concepts and practices) argue that the concepts associated with the traditional property rights are anachronistic and incompatible with the modern system and the concepts on which the modern system is built.35

Those in the second category (i.e. China should borrow from the experience of traditional property rights) argue that the experience of traditional property rights such as perpetual tenancy rights should be borrowed to strengthen and reform the existing system of land contract management rights.36 This could involve an increase in the term of the rights (for example, the term of land contract management rights could be increased to 70 years to bring it into line with state-owned land use rights), the recognition of full rights on the part of farmers to assign and otherwise deal with land contract management rights and the removal of restrictions on the parties to whom the rights may be assigned or mortgaged.37 Scholars in this category argue that the focus should be placed on strengthening the rights to deal with land instead of changing the nature of collective ownership or the land tenure system within which land contract management rights currently operate.38

Those in the third category (i.e. China should recognise and adopt the traditional property rights) advocate the recognition and adoption of traditional property rights in a literal sense as a means of replacing or supplementing the existing system of land contract management rights and overcoming the existing restrictions and deficiencies of the current system.39 These restrictions and deficiencies include the following: (1) the system of adjustment, under which the allocation of agricultural land is adjusted to reflect demographic changes (e.g. an increase or decrease in the size of a farming family) and which creates insecurity of tenure; (2) the lack of clarity concerning the nature and scope of land

35 Zhang 2005; Zhu 2008. 36 Wu and Wang 2015; Liang 2014: Li Wenzheng 2008. See Liang 2014: “There is a need to weaken collective ownership in order to strengthen land contract management rights.” 37 Zhang 2014b. 38 Liang 2014. 39 Li and Ni 2014; Li and Shen 2015; Li and Ni 2016.

12 contract management rights, which deters dealings in land and makes it difficult to use such rights as security to raise finance; and (3) interference by the Collective in the enjoyment of land contract management rights, which undermines security of tenure and deters long-term investment in the productive capacity of land.40

Some scholars in this category advocate that collective ownership of rural land should be abolished and replaced with state ownership of rural land and that perpetual tenancy rights should be adopted based on state ownership instead of collective ownership.41 This, they argue, would overcome difficulties in determining the entity through which collective ownership rights are exercised and the abuse of power by local governments.42 Such reform would involve taking actual power to control dealings with land out of the hands of the Collective and vesting passive ownership in the State.43 In this way, full rights to deal with land could be vested in the farmers or rights-holders. As the passive owner, the State would only intervene when the broader interests of society were at stake.44 Others argue that collective ownership should not be replaced with state ownership but instead should be strengthened and serve as a basis on which perpetual tenancy rights may be recognised.45

Scholars in all three categories recognise the tensions and inherent conflicts between the productive purpose of land and the social purpose of land.46 Some advocate that the social purpose of land should be discarded in favour of reforms that would allow farmers to sell or exchange their land in return for agreeing to set aside some of the sale proceeds to provide for their social security. This would mean that after farmers had secured non-agricultural sources of income, they would be able to sell their land rights; however, a portion of the sale proceeds would be allocated to their social insurance account.47

These scholars argue that once the social purpose of land has been separated from the land, land can be freely traded so that investment and the economic efficiency of land can be improved.48 Alternatively, the social purpose of land should be accommodated by dividing the rural land rights into rights than can be sold or leased out and rights that cannot be sold and must be retained by farmers as a social security net.49

The literature concerning the adoption or rejection of traditional property rights for reform purposes has identified the contemporary challenges and contributed to the discourse concerning the underlying objectives of land regulation in terms of the social and productive purposes of land. However, there is relatively little literature in this category that reflects on the way in which the traditional property rights functioned in their historical context and the legal rules governing their design and operation. Much of the Chinese literature recites the problems and proposes solutions based on the traditional property rights without undertaking a comprehensive analysis of the rules

40 See further in Chapter 3. 41 Li and Wang 2011; Liu 2013; Li and Shen 2011; Zhang and Tian 2009; Duan and Zhang 2010; Chu 2008. 42 Li and Wang 2011; Liu 2013; Zhang and Tian 2009; Duan and Zhang 2010; Chu 2008; Yang and Ma 2008. 43 Liu 2013. 44 Li and Shen 2011. 45 Zhang et al 2007. 46 See Chu 2008; Li and Shen 2011. 47 Yang and Ma 2008, 8. 48 Yang and Ma 2008. 49 Li 2007.

13 themselves, the broader social and economic context within which the rules historically operated or the ways in which the rules might be accommodated within the overall system of property rights. In particular, this literature does not consider which form or version of the traditional property rights should serve as the benchmark for reform and the implications of this for the current debates on land reform. In other words, this literature does not engage fully with the historical context in terms of the ways in which the traditional property rights operated and the legal rules – customary or codified – to which they were subject. This is anomalous as there is little point in proposing traditional property rights as a solution to the challenges of today without an understanding of the specific rules by which those rights might be governed or the ways in which the rights might achieve the official policy objectives.

There is very little literature in English that examines the relevance of the traditional property rights to reform in China today. This is surprising and suggests either that the significance of the topic has not been fully appreciated by English writers or that it has been considered and discounted without exhaustive analysis. An exception to the dearth of English literature in this regard is the analysis of the traditional property rights by Robert Ellickson.50

The dearth of literature in English concerning the relevance of the traditional property rights to reform reflects the extent to which the traditional property rights have either been associated with exploitative practices in the past, and been discounted on this basis, or been perceived to be sub- optimal in terms of their economic and social benefits. For example, there are arguments for and against the proposition that dian sales had a positive economic impact. Of the English literature, those who argue in favour of this proposition include Pomeranz.51 Those who argue against this proposition include Zhang,52 Huang53 and Ellickson.54 Those in the latter category argue that dian sales were inefficient, and wasteful. Ellickson, for example, argues that the dian tradition ‘would have greatly discouraged a land buyer from conserving soil and improving the transferred land.’55

Also notable is the variance between the English literature and the Chinese literature in this regard and the lack of any meaningful dialogue to date between the two bodies of literature. As outlined above, much of the Chinese literature highlights the perceived benefits of the traditional property rights in their historical context and rejects the proposition that they should be discounted or dismissed because they were associated with exploitative practices or were sub-optimal from an economic or social perspective. Western scholars, on the other hand, tend either to downplay the uniqueness and utility of the traditional property rights, often relegating them to the position of an historical footnote, or to discount them on the basis that legal reform should move forwards not backwards. Indeed, in view of arguments that dian rights hampered economic growth in traditional China, Ellickson expresses puzzlement that the Chinese ‘seem to have so rarely cast aside a custom that was holding them back.’56 This thesis is an attempt to solve part of this puzzle.

50 Ellickson 2012, 14. 51 Pomeranz 2000. 52 Zhang 2011. 53 Huang 2001. 54 Ellickson 2012. 55 Ellickson 2012, 11. 56 Ellickson 2012, 15.

There is a rich body of literature on the traditional property rights as they operated in an historical context. This literature has been produced by anthropologists, economic historians, legal historians and historians generally and engages with three broad issues that are relevant to the analysis in this thesis. First, economic and legal historians have contributed to an understanding of the evolution of different forms of land tenure throughout history and the age-old struggle to achieve a balance between the rights and powers of the State and those of farmers.57 This struggle is reflected in the rise and fall of private ownership of land and the various periods in which the State has intervened actively in the management of land, as represented by the well-field system of the Western Zhou Dynasty (1050 – 770 BC) and the equitable-field system of the Southern and Northern Dynasties (386 – 589).58

Secondly, there is extensive literature on the broader social and economic context surrounding traditional forms of land tenure. These norms include family ownership, involving the family as the land ownership unit in traditional Chinese society,59 and related questions, including how the family was defined for this purpose and how rights in relation to land were exercised. In addition, the literature examines the impact that family ownership had in terms of dealings in land, including the restrictions on assignability as reflected in the concept of land as patrimony and the pre-emptive rights that relatives and neighbours enjoyed, and also the use of the traditional property rights to circumvent or moderate these restrictions.

Thirdly, the literature provides a detailed understanding of the evolution of each of the traditional property rights and the concepts that supported them, including the concept of divided ownership in the case of perpetual tenancy rights and the concept of residual ownership in the case of dian rights.60 The literature also engages with the economic and social impact of these forms of land tenure and the roles that they performed. These include, on the one hand, the role of traditional property rights in facilitating land consolidation and the exploitation of farmers and, on the other hand, their role in facilitating the emergence of a market-based economy and supporting economic prosperity in the Ming Dynasty (1368 – 1644) and the Qing Dynasty (1368 – 1644).61 Further, the literature traces their survival, modification and decline in Taiwan.62

Importantly, much of the literature highlights the extent to which the traditional property rights were governed by customary law and embodied within private contracts, thereby allowing regional variation in customs and practices and accommodating a bottom-up approach to the design of the rules governing rural property rights. Of particular significance is the extent to which the traditional property rights allowed farmers to deal flexibly with their property rights and to determine how decisions concerning the social and productive purposes of land should be made.

57 Elvin 1973, Kong et al 1996, Zhang et al 1994. 58 See Chapter 4. 59 Shiga 1978, Freedman 1979, Zelin et al, 2004, Cohen 1976. 60 See Zelin 1986 and Palmer 1987 in relation to perpetual tenancy rights; Zhang 1998 and Zhang 2008 in relation to dian rights. 61 Pomeranz 2000; Buoye 2000. 62 Wang 2015.

Although generating a wealth of information and insights in relation to the operation of the traditional rights in their historical context, this literature (particularly the English literature) does not examine what insights the historical experience might offer in the context of the current challenges and possible reform options. In other words, this literature does not engage fully with the current challenges.

(d) Locating this thesis in relation to the literature

This thesis contributes to the literature by locating the traditional rights in their historical context and examining their potential relevance for the purposes of reform. It contributes to the literature in English in three ways. First, it examines the current rules governing land tenure in mainland China and identifies the various ways in which the rules are implicated in the social and economic challenges that motivate calls for reform. Secondly, it analyses the rules governing the traditional property rights and compares them with the rules governing the modern system of land tenure. The comparison reveals certain social and structural norms, embodied within both contract practice and written law, that underpinned the traditional system and continue to inform the system of land tenure in China today. In this regard, this thesis responds to the call from Zelin that ‘we need to know the degree to which the contract culture of the late Qing and early Republic remains as the foundation for grassroots Chinese understandings of property and contract today.’63 This highlights the benefits of studying the past for an understanding of the present, as discussed further in Part 4(a) below.

Thirdly, it extends the literature that examines the weaknesses of the current system and the potential relevance of traditional property rights to reform in mainland China by suggesting conceptual models for the adoption of each of the traditional property rights. For this purpose, it examines the codification of the traditional rights and their subsequent modification in Taiwan. As noted above, Taiwan is a useful comparator for reform in mainland China as it represents the continuation of the civil law reforms in mainland China prior to the 1949 revolution. These reforms involved the codification of the traditional property rights in the Civil Code of 1929, amendments to dian rights in 2010 and the replacement of perpetual tenancy rights with agricultural rights in 2010. The abolition of perpetual rights in Taiwan and their replacement with agricultural rights raises a question about the relevance and suitability of perpetual tenancy rights to reform in mainland China. This thesis explores the possibility that the traditional property rights provide a way to reconceptualise the grant of proprietary rights to farmers within the context of collective ownership of land. In other words, perpetual tenancy rights could replace land contract management rights under the current system and provide security of tenure to farmers without compromising the concept of collective ownership of rural land. Thus, the unique circumstances of land ownership in mainland China give perpetual tenancy rights a potential utility in a way that is not relevant in Taiwan and should therefore be considered as one of the possible reform options.

By examining the traditional property rights by reference to the rules governing them, locating them within both an historical and modern context (including their survival or abolition in Taiwan) and synthesising the different perspectives as outlined above, this thesis seeks to make an original

63 Zelin et al 2004, 34.

16 contribution to the literature concerning the system of land tenure in China and the possible pathways for reform in China today – an issue that is of critical importance to China’s future social and economic well-being. The synthesis that this thesis seeks to achieve can be represented by the area of intersection of the three circles in the following Venn diagram:

historical context

current legal rules challenges

3. Focus, hypothesis and research questions

The focus of this thesis in on the legal structure or rules that support land tenure in China, as distinct from the political, economic and social aspects.64 The Food and Agricultural Organization of the United Nations has defined land tenure in the following terms:

Land tenure is the relationship, whether legally or customarily defined, among people, as individuals or groups, with respect to land…Land tenure is an institution, i.e., rules invented by societies to regulate behaviour. Rules of tenure define how property rights to land are to be allocated within societies. They define how access is granted to rights to use, control, and transfer land, as well as associated responsibilities and restraints. In simple terms, land tenure systems determine who can use what resources for how long, and under what conditions.65

This thesis examines the rules governing rural land tenure in China and how the rules define property rights to rural land. A key focus in all systems of land tenure is how rights are allocated between the State and the people and how the rules are administered by the State.66 There are many rights that may arise in relation to land. In general terms, the rights can be broken into three categories: use rights (e.g. the right to use land for cultivation); control rights (e.g. the right to determine how land should be used or managed) and transfer rights (e.g. the right to sell, to create derivative rights in others such as a mortgage and to transfer the rights to heirs through inheritance).67

This thesis critically evaluates the relevance and suitability of the traditional property rights to reform of rural land rights in China today. The hypothesis that it tests is that the legal and conceptual framework governing traditional forms of land tenure offers insights into reform within the modern context. The criteria for the evaluation of the traditional property rights are the official policy

64 The economic aspect includes the economic importance of land titling and registration as explored by de Soto 2003. 65 See FAO 2002, 7 (para 3.1). 66 The FAO has described land administration as ‘the way in which the rules of land tenure are applied and made operational’. FAO 2002, 12 (para 3.16). 67 FAO 2002, 9-10 (para 3.8).

17 objectives of the State as reflected in written documents, including the objectives of giving farmers stronger property rights and reducing or removing the restrictions on the assignment of property rights in order to encourage the development of a market for the sale and purchase of rural property rights.68

For the purpose of conducting this evaluation, the thesis does the following. First, the thesis traces the evolution of the modern system and examines its perceived deficiencies to provide the context for a consideration of any reforms that are either based on, or inspired by, the traditional property rights. Such an examination enables a comparison to be drawn between the current system of land tenure and the traditional system of land tenure and the rules governing each. The differences between the two are examined across a range of issues, including the way in which control is allocated between the State and private interests and also the nature and extent of the rights that ‘ownership’ of rural land rights should involve, particularly in regard to the assignability of those rights.

Secondly, this thesis locates the traditional property rights within both the historical context and the modern context (including their survival or abolition in Taiwan) in order to identify the way in which they traditionally operated under both their customary version and their codified version69 and to undertake a critical assessment of the arguments for and against their relevance and suitability to reform in mainland China today.

The specific research questions that are examined by this thesis are as follows:

1. What deficiencies of the current system have led to calls for reform? 2. Do traditional property rights— either in their customary or codified form — have the potential to achieve the official policy objectives? 3. If traditional property rights were adopted, what conceptual models could be considered?

Although the thesis examines forms of land tenure that were governed by customary practices in traditional China, its focus is on the formal property rights in the modern context (i.e. property rights as recognised by written law)70 and how the formal rules concerning rural land rights regulate relationships in respect of land, particularly the relationship between the Collective as owner and rural households. The thesis does not undertake a detailed examination of informal, customary or regional property practices in China today or the ways in which land tenure relationships may be influenced by such practices.71

This thesis analyses the traditional forms of land tenure at two levels. The first level is their use as a conceptual model for converting the Collective into a passive owner of land and giving farmers greater autonomy and greater powers with which to create derivative rights, as advocated by the official policies of the State. The second level is the level of actuality; namely, the actual rules

68 This thesis does not examine how these policies have been implemented in practice. 69 As codified by the Civil Code of the Republic of China, which was enacted in 1929. 70 As noted by the Food and Agricultural Organization of the United Nations, ‘[f]ormal property rights may be regarded as those that are explicitly acknowledged by the state and which may be protected using legal means’, FAO 2002, 11 (para 3.10). 71 There is a substantial body of literature on informal property rights generally. See, for example, Ellickson 2001; Ellickson 2006.

18 governing the traditional forms of land tenure and whether they provide insights for achieving the official policies of the State.

This thesis does not attempt to articulate or propose a detailed pathway for the reform of rural land rights in China, as this would require an analysis of the issues from a comprehensive perspective encompassing law, politics and economics.72 Nor does it undertake an in-depth analysis of the different theories concerning property rights and property relations from a Chinese or Western perspective73 or the issues associated with the assertion and protection of property rights in practice, such as the role of the courts. Instead, it focuses on the legal construction of the modern system of rural land rights and the challenges that it has created, evaluates the traditional property rights against the official reform objectives and suggests conceptual models that could be considered for the purposes of reform.

This thesis provides detailed analysis in support of the contention that the rural land rights currently enjoyed by farmers are weak and that the allocation of rights and powers between the Collective as owner and farmers undermines both the security of tenure that farmers enjoy and also the scope of the dealings that they can have with their land.

There is also a question as to whether they qualify as property rights under the Property Rights Law as discussed in Chapter 2.74 Instead, the rights essentially reflect a contractual relationship between the Collective as land owner and the farmers. The restrictions on the assignment of rights by farmers are the most significant indicator of this and reflect a struggle for control over rural land that has characterised various periods throughout China’s long history.75 Under the present system, the rights of farmers are heavily circumscribed in favour of rights that are exercisable by the Collective as owner of the land, largely in order to ensure that farmers have a livelihood and that food security and social stability in rural China are maintained.76 This thesis argues that by circumscribing the proprietary rights of farmers in this way, the State compromises both the benefits that farmers can obtain from the use of land and also the realisation of the policies that the State has formulated to achieve its reform objectives.

4. The research methodologies and materials

(a) Research methodologies

This thesis is an in-depth study of the legal rules governing rural land rights in China and the insights that traditional property rights can provide in terms of reform to the modern system of rural land tenure. For this purpose, the methodology that the thesis adopts is an historical and textual analysis

72 In particular, this thesis does not engage extensively with the question of whether the economic impact of adopting the traditional property rights would be positive or negative. 73 From a Western perspective, the discourse concerning the theory of property rights has been heavily influenced by the ‘bundle of rights’ theory as articulated in seminal works such as Demsetz 1967 and Demsetz 2001. For a discussion of these issues in a Chinese context, see Qiao and Upham 2015. 74 See the discussion in Chapter 2, Part 5(f) below. 75 See Chapter 4. 76 For a recent reference to this reality in the context of rural Xinjian, see Rao et al 2017, 1: ‘In rural Xinjiang it is often problematic to maintain access to land as local governments retain control over land due to concerns about local and regional food security and social stability.’’

19 of the rules and how they evolved and operated in both mainland China and Taiwan. The importance of studying the legal past for an understanding of the present has been noted by legal historians such as Jonathan Rose, who wrote as follows:

Studying the legal past has an important function as it produces knowledge and information about legal institutions and concepts. Some of the earliest legal historians originated a tradition that the past had current utility. As true with Greeks, the initial American legal historians were interested in the past because of its present value.77

This resonates with the writings of Oliver Holmes, who wrote that ‘in order to know what it [law] is, we must know what it has been, and what it tends to become’.78 Holmes’ writings in this regard have been interpreted as meaning that ‘a rule can best be understood by reference to what lawyers call its "origins," meaning the oldest traces the historian can find of something resembling its present form.’79 Consistent with his evolutionary theory of law, Holmes explored the concept of rules as legal survivals that could be adapted to the present.80

Any suggestion that the traditional property rights can provide an appropriate response to the needs of the present because they provided an appropriate response to the needs of the past is likely to be met with an argument that the historical context in which they operated was very different from the modern context. It could further be argued that there is no guarantee that the outcomes will be the same if the traditional property rights were transplanted into a modern context.81 Although both of these statements are true, the counter-argument – which is supported by this thesis – is that the outcome does not need to be the same in order for the experience of the traditional property rights to have some utility today at a conceptual level. Indeed, the test of the utility of the traditional property rights at a conceptual level is whether they have the potential to respond to, or inform, the needs of the present more effectively than the current system.

Accordingly, this thesis traces the evolution of forms of rural land tenure in China by examining not just the rules governing the traditional property rights in a mechanical sense and comparing them with the modern rules, but also the legal norms that underpinned the traditional property rights and the extent to which those norms – or vestiges of those norms – continue to influence or inform the structure and evolution of the modern system of land tenure in China. As Gordon has noted, ‘legal norms and practices aren’t completely plastic and don’t alter every time another set of interests gets its paws on them because they do have some resilience, some long- or medium-term continuity of inner structure.’82

77 Rose 2010, 110. 78 Holmes 1881, as cited in Rose 2010, 116. 79 Gordon 1982, 732, footnote 94. 80 Rabban 2003, 1176 81 As the critical legal historians would argue, even in the same context, the same body of law ‘can always lead to contrary results because law is indeterminate at its core, not just in its applications. This indeterminacy exists because legal rules derive from structures of thought, the collective constructs of many minds, that are fundamentally contradictory.’ Gordon 1984, 114. 82 Gordon 1984, 88. Gordon 1984, at 101, has also expressed this phenomenon as follows: ‘Although they are the product of political conflict, legal forms and practices don’t shift with every realignment of the balance of political forces. They tend to become embedded in “relatively autonomous” structures that transcend and, to some extent, help to shape the content of the immediate self-interest of social groups.’ Maitland expressed

In the context of the issues examined by this thesis, the resilience of norms and practices is reflected in the nature of the traditional relationship between state or collective ownership of land and private ownership of land, the significance of the concept of family ownership and – related to both of these aspects – the historical and modern restrictions on the assignability of land. In this regard, the findings of this thesis support the view of Cardozo that some concepts, such as restraints on assignability, ‘are intelligible only in the light of history’ and that their meaning is ‘unintelligible and arbitrary’ if separated from the past.83 By tracing the evolution of forms of rural land tenure in China and identifying the vestiges of the past in the present, this thesis argues that China’s past does matter to its present and to its future, despite the break from the past that was brought about by the revolution of 1949 and the adoption of a legal system that was radically different from what had come before, at least in the initial three decades or so following revolution.

(b) Research materials and translation of Chinese sources

This thesis draws on both primary sources, including historical documents, written laws and policies, and secondary sources, including official and academic commentaries. The historical documents include land contracts drawn from the author’s personal collection. The collection was built up during the author’s decade spent living and working in China and consists of private land contracts and related documents that have not previously been the subject of research and were acquired lawfully on the open market or donated by persons with the lawful authority to do so.84 The collection contains over one thousand documents spanning approximately four hundred years and originating from many different geographical locations within China. The historical land contracts record transactions involving the creation of perpetual tenancy rights, absolute sales of land and dian sales. Although only a handful of samples from the collection have been chosen for the purposes of this thesis, the collection informs both the writer’s understanding of the rules governing traditional property rights and also the writer’s translation of the relevant rules and concepts into English. The samples have been selected for their representative value and to illustrate points referred to in the analysis.

The translation of foreign legal concepts into English can be problematic where no close equivalent exists in English.85 This is particularly so in the case of the traditional property rights that are the subject of this thesis. Accordingly, each of the chapters that examine the traditional rights – Chapter 5 in the case of perpetual tenancy rights and Chapter 6 in the case of dian sales – devotes the necessary space to an explanation of the Chinese terms and the basis on which they are best understood in English. Except as otherwise indicated, all English translations of Chinese text and material are the author’s own and are based on the following principles:

1. In relation to the translation of Chinese legal concepts into English, accuracy in meaning has been preferred over a literal translation. This is relevant in two contexts:

this as follows: ‘[t]he forms of action we have buried, but they still rule us from the grave.’ Frederic William Maitland 1909, as cited by Rose 2010, 114. 83 Cardozo 1921, 53, as cited by Rose 2010, 117. 84 For example, one of the perpetual tenancy contracts that is extracted in Chapter 5 comes from the archives of the British company, Imperial Chemical Industries (ICI). These archives were handed to the writer by the former Chairman of ICI China, who saved the archives from destruction in the eighties. 85 As noted by Ibbetson, there is a need ‘to beware of what linguists would call “false friends”: things that look alike but which may in fact be different”: Ibbetson 2012, 10.

• where classical Chinese [文言文] uses non-legal terminology or metaphors to describe concepts. For example, the expression duangu [断骨] literally means ‘break bone’ and is used to describe a sale under which the previous owner’s connection with the land is broken (the opposite situation to a dian). In the context of property law, the expression is translated into English as an ‘absolute sale’. Another example is the phrase zhun qi ke ci zhu, wu xu zhu ci ke [准其客辞主，勿许主辞客], which literally means ‘it is permitted for his/her guest to dismiss the host, but it is not permitted for the host to dismiss the guest’. In the context of a perpetual tenancy, this phrase is translated into English as ‘the tenant is permitted to [terminate the tenancy], but the landlord is not permitted to [terminate the tenancy]’; and

• where a phrase in modern Chinese is a truncation or abbreviation of a longer phrase, which often occurs in relation to policies or policy principles. For example, the phrase yin di zhi yi [因地制宜] literally means ‘according to the land formulate appropriately’ but has been translated into English as ‘tailoring the approach to the specific locality’.

2. In cases where there is no close English equivalent, the pinyin of the Chinese term or expression is used. An example of this is the use of the term ‘dian rights’ in place of translating the term dian into English. As discussed in Chapter 6, the term ‘redeemable sale’ perhaps comes closest to the meaning in Chinese. Even this term, however, is somewhat inadequate is it fails to capture the retention of ownership rights by the dian-maker.

3. Semi-official English translations of legislation – namely, English translations that are available on official websites such as the website of the National People’s Congress but do not have any official status – have been revised where the translation is considered to be deficient or suboptimal.

4. Where it aids understanding, the original Chinese text has been included in brackets after the English translation to identify the relevant concept. For example: ‘The Han historian Xun Yue advocated a policy of cultivation without ownership [耕而勿有].’

5. Outline of chapters

This thesis is divided into seven chapters. Chapter Two considers the current legal framework in mainland China. The legal framework covers the development of rural rights since 1949 and the impact of key legislation such as the Land Administration Law, the Rural Land Contract Law and the PRL. The analysis identifies the deficiencies of the current framework and the legal uncertainties that these deficiencies have created in areas such as the nature of collective ownership and land contract management rights. By examining the evolution of law and policy relating to land tenure in China from 1949 to today, the chapter identifies challenges and uncertainties with the rules governing the current legal framework and provides the necessary context for an understanding of the contemporary challenges and official policies discussed in Chapter Three and the analysis in Chapters Four, Five and Six. In addition, the chapter argues that land contract management rights under the current system are weak and do not qualify as proprietary rights, whether by reference to the

22 definition of a proprietary right in the PRL or by reference to the attributes that are commonly associated with proprietary rights such as the ability to assign the rights and to assert the rights against the world at large. It further argues that the associated restrictions on the exercise of rights by farmers impede the realisation of the empowerment objective. The chapter also reveals the unresolved issues that remain in relation to the allocation of rights and powers between the Collective and households and the challenges that China has faced in designing and implementing a system of land tenure that accommodates the dual-purpose objective.

Chapter Three examines the challenges and tensions arising out of restrictions on the scope of rights, tenure insecurity and the uncertain legal status of the household. The chapter then outlines the official policies issued by the Central Government over the years to deal with the challenges and concludes by examining the various calls for reform. By examining the challenges with the current system and the various calls for reform, the chapter provides the context for an understanding of the debate, explored in Chapters Five and Six, about the relevance and suitability of the traditional property rights to the reform process. The various calls for reform raise a question that is central to the focus of the thesis: do traditional forms of land tenure have a role to play in the context of reform to rural land rights in China today and, if so, in what way and for what purpose?

Chapter Four provides the historical and legal context for the traditional forms of land tenure in China, including the nature of private ownership of land and its relationship with the ultimate ownership of land by the Emperor (as proxy for the modern state) and the relevance and importance of family ownership. The historical overview of land tenure in China provides the necessary context in which many of the specific issues concerning perpetual tenancy rights and dian rights in Chapters Five and Six can be understood. It also highlights the extent to which, as noted above, the development of rural property rights in China has involved a struggle for control over rural land between the State and farmers that has characterised various periods throughout China’s long history. In particular, the chapter highlights the traditional restrictions on the assignability of rural land throughout Chinese history as a result of the vesting of ownership rights in rural families (as distinct from individuals) and provides a basis for an understanding of the important role played by the traditional property rights in supporting the empowerment objective and the dual-purpose objective in an historical context.

Chapter Five analyses the first of the two traditional property rights that are the subject of this thesis; namely, perpetual tenancy rights. It starts with an historical overview of perpetual tenancy rights and explores the legal nature and characteristics of such rights. After that, the chapter examines the current legal status of such rights in mainland China and Taiwan and the debate concerning their recognition and adoption in mainland China. The chapter concludes by examining what the debate reveals about the relevance and suitability of perpetual tenancy rights to reform in China today. Of specific relevance to the conceptual models suggested in Chapter 7 is the possibility of using perpetual tenancy rights to reconceptualise the grant of proprietary rights to farmers within the context of collective ownership of land. In other words, perpetual tenancy rights could replace land contract management rights under the current system and provide security of tenure to farmers without compromising the concept of collective ownership of rural land. In this way, perpetual tenancy rights would provide a mechanism for converting the Collective into a passive owner and giving farmers security of tenure and greater autonomy to deal with those rights.

Chapter Six analyses dian rights. It starts with an historical overview of dian rights and then explores the legal nature and characteristics of such rights, the current legal status of such rights in mainland China and Taiwan and the debate concerning their recognition and adoption in mainland China. The chapter concludes by examining what the debate reveals about the relevance and suitability of dian rights to reform in China today. Building on the schema outlined in Chapter 5 – namely, the reconceptualisation of land contract management rights as perpetual tenancy rights – the chapter examines the possibility that dian rights could accommodate the dual-purpose objective by providing farming households with a mechanism by which they could create derivative rights in others whilst maintaining a connection with the land, thus increasing the scope of rights that are available. This would appear to be consistent with a recent policy, referred to as the Separation of Three Rights, calling for the separation of ownership rights, contract rights and management rights. Under this policy, ownership rights would continue to be held by the Collective and farming households would be able to transfer management rights to third parties while retaining a connection to their ‘contract rights’.

Chapter Seven offers answers to the research questions identified in Part 3 above and considers conceptual models for the adoption of each of the traditional property rights as possible reforms that respond to the official policy objectives. The chapter concludes that the conceptual framework concerning traditional property rights offers insights into reform options that should be considered within the modern context. Finally, the chapter outlines the key findings and identifies areas for further research.

Chapter 2 – The Legal Framework for Rural Land Tenure in Mainland China

1. Introduction

This chapter examines the legal framework governing rural land tenure in mainland China today. It focuses on the three forms of land tenure that are relevant to the property rights of farmers – collective ownership, land contract management rights and residential foundation rights – and on the legal and policy consequences of these structures and rules. An examination of the modern forms of land tenure provides the context for an understanding of the contemporary challenges discussed in Chapter 3 and a point of comparison and reference for the traditional forms of land tenure as examined in Chapters 4, 5 and 6.

The analysis commences by defining the concepts and terminology that characterise the modern system of rural property rights and summarising the evolution of rural land tenure since 1949 (Parts 2 and 3). Following that, the chapter examines the concept of collective ownership of land and its legal nature (Part 4). The chapter then undertakes a detailed analysis of the rules governing land contract management rights and residential foundation rights (Parts 5 and 6).

This chapter analyses land contract management rights from two perspectives: (1) the extent to which the rights fall short of the definition of a proprietary right in the Property Rights Law (PRL), which is an internal evaluative perspective and (2) the extent to which the rights and their exercise are determined by contract and fall short of proprietary rights as understood in other jurisdictions, which is an external comparative perspective. The chapter argues that when viewed from both an internal evaluative perspective and an external comparative perspective, land contract management rights are weak and are subordinated to the administrative control of the Collective and the State. This reduces security of tenure and impedes the realisation of the empowerment objective as identified in Chapter 1; namely, strengthening the rights of farmers and reducing the interference of the State and the Collective in land relations and dealings. It also reveals the challenges that China confronts in designing and implementing a system of land tenure that realises the dual-purpose objective of land; namely, serving a productive purpose and a social purpose. As explained in Chapter 1, the conceptual models considered in Chapter 7 respond to the need to increase security of tenure and the scope of rights on the part of farmers in line with the official policy objectives outlined in Chapter 3, and involve a move towards passive ownership and a re-allocation of the rights and powers between the Collective as land owner and farmers as land users.

The chapter concludes (Part 7) by making some observations about rural property rights in China and the relationship between the Collective and farmers. This relationship has evolved from a relationship governed purely by contract to a relationship that formally involves the grant and recognition of proprietary rights under the PRL. However, the proprietary rights are weak as a result of the vulnerability of those rights to adjustment or expropriation and the restrictions imposed on households in terms of the extent to which they may deal with their rights (e.g. by assigning them for value). As a result, the current legal framework is in need of reform.

2. Concepts and terminology

At the outset, it is useful to identify key concepts and terminology that characterise the modern system of rural property rights. A diagram depicting land ownership in China [土地所有权] and the rural proprietary rights (shaded) that derive from land ownership appears below.

Land Ownership

Collective Land State Land

Ownership (rural and Ownership (urban suburban land) land)

Land Contract Construction Allocated Construction Management Use Rights Use Rights Land-Use Rights (granted) Rights

Residential Non-residential Foundation Construction Use

Rights Rights

Collective land ownership [集体所有权])

Collective land ownership arose out of the transfer of private land ownership to the advanced agricultural production cooperatives and communes in the 1950s and 1960s respectively. Collective land ownership rights are exercised by the relevant ‘collective economic organisation’ [集体经济组织] on behalf of the Collective, which is the land-owning entity in the relevant location.

Land contract management rights [土地承包经营权]

The prototype of land contract management rights was household sideline production, which emerged with the communes in the 1960s. The current system of land contract management rights arose out of the Household Responsibility System of the late 1970s, under which land-use rights were granted to rural households on a contractual basis to ‘manage and use’ the land for a period of 15 years (now 30 years). The analysis in this thesis suggests that the right to manage land [经营权], which forms the substance of land contract management rights, should be interpreted as the right not only to use land for agricultural purposes but also to decide how the land should be used for those purposes. It therefore implies autonomy in terms of decisions about how the land is used (provided that it is for agricultural purposes).

Land contract management rights are based on the concept of household contracting [家庭承包经营]), under which the Collective (the issuer or 发包方) issues land contract management rights to households (the contractors or 承包方) to manage the land in accordance with the contract. Land contract management rights can also be obtained through other means. These include competitive tender, auction and public negotiation. The land contract management rights that are obtained through such other means entail a broader scope of rights, such as the right to mortgage and to inherit the rights.1

Holders of land contract management rights can deal with their rights in various ways. The term used to describe dealings in land is ‘circulation’ [流转], which refers to the various ways in which the holder of land contract management rights may circulate or grant rights to others. There are four recognised forms of circulation recognised by the Rural Land Contract Law: a sub-contract, a lease, an exchange of rights and a transfer. There have been traditional sensitivities associated with a lease of cultivated land as a result of the extent to which a lease undermines the policy of self- cultivation by farmers.2

Land adjustment [承包地调整]

Land adjustment is the process by which the area of land in respect of which land contract management rights have been issued is adjusted by the Collective. Initially, this was permitted in order to accommodate demographic changes such as births or deaths in the household. Subsequently, it was limited to a narrow range of circumstances, such as natural disasters.3

Construction use rights [建设用地使用权]

Construction use rights permit the holder of the rights to use land for constructing buildings, structures and other facilities for residential or commercial (i.e. non-agricultural) purposes. The use of collectively owned land for construction purposes is restricted under Article 43 of the Land Administration Law.

Residential foundation rights [宅基地使用权]

Residential foundation rights are a category of construction use rights and are provided to households on a consideration-free basis to enable them to construct residences. Unlike land contract management rights, residential foundation rights are not subject to a limited term and continue indefinitely.

Non-residential construction use rights [非住宅建设用地使用权]

Non-residential construction use rights are also a category of constructions use rights and refer to land used to establish township enterprises and land on which township public utilities or public welfare undertakings are constructed.4

1 See Rural Land Contract Law, Articles 49 and 50. 2 See Part 4(a) below. 3 See PRL, Article 130. 4 Land Administration Law, Article 43.

3. The evolution of rural land tenure since 1949 – an overview

By way of overview, China’s system of land tenure has passed through four main stages since 1949. The first stage can be described as the ‘land reform’ stage (1949 – 1956), during which land was confiscated from landlords as part of the land reform program and re-distributed equally to farmers on the basis of private ownership of land. This stage continued into the first part of the collectivisation process in the early 1950s, where farmers contributed land to the Collective but retained private ownership of land.

The second stage can be described as the ‘collective ownership’ stage (1956 – 1979), during which ownership of land was transferred to the rural cooperatives, which later became the people’s communes. This stage marked the emergence of the concept of collective ownership, which remains the form of ownership for rural land in China today.

The third stage can be described as the ‘household contracting’ stage (1979 – 2007), during which farming households entered into a contracting relationship with the Collective in the form of land management contracts and progressively acquired greater autonomy to farm the land and benefit from the sale of the produce from the land on the rural markets.

The fourth stage can be described as the ‘property rights’ stage (2007 – present), which commenced with the recognition under the PRL that the land-use rights of farmers under land management contracts were proprietary rights and should be treated and protected as such.

The current system of land tenure in rural China reflects developments that primarily occurred in the third and fourth stages as outlined above. The first and second stages are essentially historical in nature, although aspects of the second stage – particularly the origins of collective ownership in the rural cooperatives and the people’s communes – continue to influence the operation of the current system.

Three laws have dominated the design and development of the currents system during the third and fourth stages: the Land Administration Law, which was promulgated in 1986 and revised in 1988, 1998 and 2004; the Rural Land Contract Law, which was promulgated in 2002; and the Property Rights Law (PRL), which was promulgated in 2007. These three laws intersect and overlap in various ways. This gives rise to inconsistencies, some of which are due to the temporal aspects (i.e. the point in time during the evolution of the current system when the law was promulgated) and some of which are due to the different areas of focus. The Rural Land Contract Law, for example, is the most specific in terms of the allocation of rights between the Collective and farming households, whereas the Land Administration Law and the PRL deal with concepts at a more general and fundamental level.

For ease of reference, a comparative table that indicates the areas of intersection and overlap appears in Appendix 1.

4. Collective land ownership

(a) Land reform and private ownership

The revolution that swept the Chinese Communist Party to victory in 1949 was partly driven by the desire to achieve land reform in rural China and to redistribute land to the peasants. The initial phase of land reform did not involve the nationalisation or collectivisation of land ownership (i.e. the vesting of land ownership in the State or the Collective). Instead, the focus was on the equal distribution of land and the vesting of private ownership in the peasants to whom the land had been distributed.

In 1947, the Outline Land Law [中国土地法大纲] was passed by the Working Committee of the Chinese Communist Party Central Committee (CCPCC). The primary objectives of the Outline Land Law were to ‘abolish the feudal and semi-feudal exploitative land system and implement a land system to give land to the tillers [耕者有其田]’,5 ‘abolish land ownership by all landlords’,6 ‘abolish land ownership by all shrines, temples, monasteries, schools, bodies and other organisations’7 and ‘abolish all debts in the villages prior to the land system reform’.8

The Outline Land Law provided in Article 5 that ‘the village people’s congresses and their elected committees, the poor peasants congresses organised by village peasants who [had] little or no land and their elected committees, the peasant representative congresses at the local, county and provincial level and their elected committees [were] the lawful implementing bodies for reforming the land system.’ These representative bodies, which were charged with the task of implementing the land reform and overseeing the redistribution of land, operated as the genesis of the village collective economic organisations, which are now the representative bodies for exercising ownership rights over collectively owned land in China on behalf of the Collective under Article 60 of the PRL.

The Outline Land Law further provided that subject to certain exceptions:

All village land owned by landlords and public land shall be taken over by the village committees and, together with all other land in the village, shall uniformly be distributed equally in accordance with the entire population of the village and without distinguishing between male, female, the elderly or the young, supplementing land shortages with additional land and infertile land with fertile land to enable land to be distributed equally to all of the people in the villages for ownership by individuals.9

The concept of individual ownership of land represented a significant break from tradition, which had been dominated by family ownership of land as discussed in Chapter 4, but was subsequently replaced by collective ownership of land as outlined in Section (b) below.

The Land Reform Law of 1950 implemented the provisions of the Outline Land Law of China and applied to villages but not to the suburbs of the large cities.10 This contrasted with the later

5 Article 1. 6 Article 2. 7 Article 3 8 Article 4. 9 Article 6. The concept of equal distribution was subsequently replaced by ‘to each according to his/her labour.’ See below Section (b)(i). 10Article 35.

29 constitutional definition of collective ownership, the scope of which included land in both the rural and suburban areas. Article 1 of the Land Reform Law provided that the feudal, exploitative ownership system of the landlord class was to be abolished and a system of land ownership by the farmers[农民的土地所有制] was to be implemented.

The focus of the Land Reform Law on distributing land and maintaining private ownership of land by the peasants, as distinct from the nationalisation of land, was reflected in Article 10. This provided that except where the law required ownership of land and other assets to be vested in the State, all land and assets that were confiscated would be distributed, in a unified, fair and reasonable manner, to poor farmers [贫苦农民] who had no land or insufficient land and that such land would be owned by them.

In addition to recognising private ownership of distributed land, the Land Reform Law made provision for land over which the State was to have ownership, representing the formal recognition of state ownership of land. Even though the management of such land was to continue to be undertaken by the original owners, the ownership of such land was to be taken out of the hands of the landlords and vested in the State.11 As a harbinger of the household responsibility system, land that was owned by the State and managed [经营] by private persons was not permitted to be leased, sold or abandoned. If the original managers did not require such land, they were required to hand it back to the State.12

Article 30 of the Land Reform Law provided that after the land reform was completed, the people’s governments must issue land ownership certificates, which would recognise the right of all landowners ‘freely to manage, buy and sell and lease out the land.’ The concept of the right to manage land [经营权] is significant to the evolution of land contract management rights and is discussed in Part 5(a) below.

(b) Evolution from private ownership to collective ownership

The private ownership of land by peasants following the 1949 Revolution was relatively short-lived. After the equal distribution of land to the peasants, it became apparent that there were ongoing difficulties with the agricultural economy due to the fragmentation of land and the inefficiencies arising out of small-scale farming. In particular, some peasant lacked the labour, the livestock and the tools to engage effectively in farming on the distributed land.13 The analysis below traces the evolution of collective ownership of rural land in China. An understanding of the nature of collective ownership is necessary for an understanding of land contract management rights as land contract management rights are derived from – and are subject to the constraints imposed by – collective ownership. An understanding of these constraints and the challenges that they create informs the rationale behind the conceptual models considered in Chapter 7, which involve a move towards

11 Article 19. 12 Article 27. 13 See ‘The Resolution on Agricultural Production Mutual Aid Teams of 15 February 1953 is formally passed’ (News of the Communist Party of China), available at http://cpc.people.com.cn/GB/64162/64165/77552/77569/5328263.html.

30 passive ownership of land on the part of the Collective and the recognition of stronger proprietary rights on the part of farming households.

(i) Collectivisation

On 15 December 1951, the CCPCC issued the ‘Draft Resolution on Agricultural Production Mutual Aid Teams’ (the ‘1951 Resolution’).14 Formally passed on 15 February 1953,15 the 1951 Resolution marked the commencement of the collectivisation period, under which land came to be farmed and managed on a collective basis. In the first phase of the reform, labour was pooled by the members of mutual aid teams, which engaged in farming on a collective basis. In the second phase of the reform, as reflected in the ‘Resolution concerning the Development of Agricultural Production Cooperatives’16 issued by the CCPCC on 9 January 1954 (the ‘1954 Resolution’), the mutual aid teams were encouraged to organise themselves into agricultural production cooperatives [农业生产合作社]) and farmers were encouraged – initially on a voluntary basis – to contribute their land to the cooperative and to farm on a collective basis. The 1954 Resolution also marked the shift away from distributing income to households based on the amount of land that they owned towards the distribution of land based on labour contributions (i.e. the number of workers that the household contributed).

Under the reforms in the 1951 Resolution and the 1954 Resolution, the land and the assets contributed to the cooperatives in theory remained in the private ownership of the farmers. Under the Model Regulations for Advanced Agricultural Production Cooperatives issued on 30 June 1956 (the ‘1956 Model Regulations’),17 however, the cooperatives were organised in accordance with socialist principles, under which the ‘major production material’ that was privately owned by members of the cooperative was transferred to the ownership of the cooperative. Further, collective labour was organised in order to implement the principle of ‘from each according to their ability, and to each according to their work’ without any distinction between male and female, old or young and in accordance with the principle of ‘same work, same pay.’18 In particular, Article 13 required privately owned land, livestock and large-scale farming tools to be transferred to the cooperative for collective ownership [集体所有]. This marked the emergence of the concept of collective ownership by the cooperative. The effect of the 1956 Model Regulations was thus to transfer the production means from private control to the cooperative and to bring an end to the concept of private ownership of rural land.19

14 See ‘Notice of the Communist Party of China Concerning the Draft Resolution on Agricultural Production Mutual Aid Teams’ (News of the Communist Party of China), available at http://cpc.people.com.cn/GB/64184/64186/66656/4492674.html. 15 See ‘The Resolution on Agricultural Production Mutual Aid Teams of 15 February 1953 is formally passed’, above n 12. 16 News of the Communist Party of China, available at http://cpc.people.com.cn/GB/64184/64186/66658/4492856.html. 17高级农业生产合作社示范章程. 18 Article 2 of the 1956 Model Regulations. 19 Vendryes 2010, 88 notes that ‘[b]y the end of the 1950s, 90 percent of rural households belonged to these collectivist structures.’

The Sixty Articles on Agriculture (1962) provided that the rural people’s communes [农村人民公社] were the basic-level unit of China’s socialist society in the villages and also the basic-level unit of China’s socialist political power in the villages.20 Constituted by combining small farm collectives, the people’s communes were ‘jointly formed on the basis of the advanced agricultural production cooperatives’ as a ‘socialist collective economic organisation to implement the principles of ‘from each according to their ability, and to each according to their work’,21 ‘get more pay for more work’22 and ‘no work no food’.23

The people’s communes were administratively divided into the commune,24 which was the combined organisation of all of the production brigades25 under the commune and the production teams.26 The production team, which was the lowest tier of the three-tier system, was the unit that had responsibility for directly organising production and collective social welfare arrangements and from which the modern concept of the ‘Collective’ was primarily derived.27

(ii) Constitutional Recognition of Collective Ownership

The 1978 Constitution recognised two types of ownership of the means of production: socialist ownership by the whole people and socialist collective ownership by the working people.28 In line with the practice of the communes, Article 7 recognised the rural people’s commune sector as a ‘socialist sector collectively owned by the masses of working people’ and that commune members could farm small plots of land for personal needs and engage in limited household sideline production.

As amended in 1982, Article 9 of the current Constitution provides that mineral resources, waters, forests, mountains, grassland, unreclaimed land, beaches and other natural resources are owned by the State with the exception of forests, mountains, grassland, unreclaimed land and beaches that are owned by Collectives in accordance with the law. Article 10 provides that land in the cities is owned by the State and land in the rural and suburban areas (and also house sites and private plots of croplands and hilly land) is owned by Collectives. Article 10 also provides that no organisation or individual is permitted to appropriate, buy, sell or lease land, or unlawfully transfer land in other ways, and that all organisations and individuals that use land are required to make rational use of it.

20 Article 1, available at http://cpc.people.com.cn/GB/64184/64186/66668/4493484.html. 21 各尽所能，按劳分配. 22 多劳多得. 23 不劳不食. 24 公社。 25 生产大队。 26 生产队。See Article 2. 27 See below in Section (d). 28 Article 5.

(i) Land Administration Law

In line with the 1978 Constitution, the Land Administration Law of 1986 provides that the socialist ownership of land involves a system of ownership by all of the people29 and a system of collective ownership by the working people.30 The 1982 amendments to the Constitution maintain this position but provide further that no unit or individual is permitted illegally to possess, buy or sell, lease or otherwise engage in land transfer by unlawful means.31

Prior to 1998, Article 6 of the Land Administration Law provided that except where the law provided that it was state-owned, land in the villages and the suburban areas was owned by the Collective and residential foundation land and private plots and self-cultivated hills were owned by the Collective. This provision was subsequently amended in 1998 (now Article 8) to replace the reference to ‘collective’ [集体所有] with ‘farmer collective [农民集体所有] and also to provide that house sites and private plots of cropland and hilly land are owned by farmer collectives. It is likely that the reference to ‘farmer collective’ was made to distinguish farmer collectives from other types of collective (including urban collectives32) and to reinforce the rights of farmers as collective owners of land in rural China.33

(ii) 2007 PRL

Article 58 of the PRL lists the categories of immovable and movable property owned by the Collective. The list includes ‘the land, forests, mountains, grasslands, wasteland and tidal flats as provided by law’34 together with buildings and production equipment.35

Article 59 provides that such immovable and movable property is collectively owned by the members of the Collective. The concept of membership of a Collective is not defined in any national laws in China.36 A member of the Collective is generally understood to mean a villager [村民] in the relevant locality, his or her children and a person who has become members of a Collective through birth, marriage, adoption or relocation.37 Membership is usually determined by reference to hukou registration.38 The reference to ownership by the members of the collective – as distinct from ownership by the Collective itself – is significant and is discussed further in Section (d) below.

Article 59 further sets out the matters that are subject to the decision of the members of the Collective in accordance with the relevant legal procedures as follows:

29全民所有制。 30劳动群众集体所有制. See Article 2. This is in line with the terminology in the Constitution. 31 Article 2. 32 See PRL, Article 61. 33 See the discussion about the nature of collective ownership in Section (d) below. 34 Article 58(1). 35 Article 58(2). 36 See Wu 2005. 37 Wang et al 2007, 126. 38 Wu 2005.

(1) plans for the contracting of land, and subcontracting of land to other units or to individuals other than those belonging to the Collective;

(2) adjustment to be made to the contracted land by the individual persons among themselves who have the right to land contractual management;

(3) methods for the use and distribution of fees such as compensation paid for land;

(4) matters such as a change in ownership of the enterprises invested by the Collective; and

(5) other matters as provided by law.

The inclusion of the above provision in the PRL reflects a desire to grant more control to farmers over certain aspects relating to the use and management of land, including the contracting and subcontracting of land to outsiders (i.e. units or individuals that do not belong to the relevant collective organisation). This is discussed further in Part 5 below.

The PRL also includes a provision concerning the entity through which collective ownership rights are exercised. As previously noted, collective economic organisations are now the representative bodies for exercising ownership rights over collectively owned land in China on behalf of the Collective under Article 60 of the PRL. Article 60 provides as follows:

(1) For land owned by the Collective of farmers of a village, the collective economic organisation of the village or the villagers’ committee will exercise the right of ownership on behalf of the Collective;

(2) For land respectively owned by two or more Collectives of farmers within a village, each of the collective economic organisations or relevant villagers’ groups within the village will exercise the right of ownership on behalf of the Collectives; and

(3) For land owned by the Collective of farmers of a town or township, the collective economic organisation of the town or township will exercise the right of ownership on behalf of the Collective.39

Despite Article 60, uncertainty continues to exist in respect of the identity of the relevant entity that may exercise ownership rights on behalf of the Collective, as discussed further in Section (d) below.

(d) Nature of collective ownership

The nature of collective ownership in China and the identity of the collective economic organisation – namely, the entity that exercises ownership rights on behalf of the Collective40 – remain unsettled to this day. This has created uncertainty in terms of defining the nature and scope of land contract management rights, rural construction rights and residential foundation rights, determining how rights are allocated between the Collective as owner and farmers as land-users and identifying who has the power to exercise ownership rights on behalf of the Collective. In turn, the uncertainty has facilitated many of the improper and irregular practices as outlined in Chapter 3.

39 This provision mirrors Article 10 of the Land Administration Law and Article 12 of the Rural Land Contract Law. 40 See Rao et al 2017, 3: ‘It is often unclear which entity actually represents “the collective” i.e. the natural village, the administrative village, or the township government – and which of these is the de facto controller of land.’

The distinction between collective or group ownership and private ownership has previously been explored by scholars. Demsetz, for example, has identified three factors that are relevant in determining which of these two forms of ownership is chosen for the purpose of allocating resources in society generally.41 These factors are ‘compactness’; namely, how ‘close’ the members of a group are to each other, whether biological, geographic or social;42 productivity and its relationship with economic organisation;43 and organisational complexity that is significantly influenced by specialisation.44 According to Demsetz, specialisation ‘promotes the development of a complex, interdependent economy that must rely in considerable degree on private ownership of resources.’45

To a large extent, these factors are evident in the development of collective ownership rights in China. The community-based nature of farming, which underpinned the move towards collective ownership, corresponds to the first factor, involving a close social and economic relationship between members of the Collective, who are members of the relevant village as noted above. The concept of household farming, which has driven productivity and the development of the local economy and is undertaken by the family as the economic unit, corresponds to the second factor; namely, productivity and its relationship with economic organisation. The third factor is reflected in the traditional emphasis on small-scale family farming, involving low levels of specialisation in terms of the use of land. Recent trends towards large-scale farming and increased specialisation, however, are behind calls to strengthen land-use rights and the move towards market-based reforms as embodied within the recent policies outlined in Chapter 3.

As discussed in Section 4(b) above, the concept of collective ownership traces its roots back to the advanced agricultural production cooperatives of the late 1950s and the people’s communes that followed. As provided by the Sixty Articles, the production team was the basic ownership unit of collectively-owned land under a three-tier collective ownership system involving the production team, the production brigades and the commune. This three-tier system of collective ownership involves three complementary categories of collective ownership:

1. Collective ownership of land by the villager group [村民小组]. The villager group is the successor to the production team [生产队] and comes within an administrative village [行政村]. Such land includes contracted land for farming, forest land and waterways. Land that is

41 Demsetz 2002. See also the discussion of group ownership of land in Ellickson 1993. 42 Demsetz 2002, 661, notes, by way of example, that a ‘small isolated village within the boundaries of which residents remain for most of their lives is a setting in which collective decision making becomes practical.’ 43 Demsetz 2002, 663, notes that ‘modern farming creates a demand for social organization that encourages farming and that provides for “social sharing” of the yields obtained from this investment…Capitalism uses private ownership of resources to determine what is to be done; socialism, at least of the old variety, uses state ownership.’ 44 Demsetz 2002, 664, notes that specialisation favours private ownership and ‘creates much more organizational complexity than exists in a world in which isolated, self-sufficient small communities predominate.’ 45 Demsetz 2002, 671.

collectively owned by the villager group is used directly by the farmers themselves on an autonomous basis.46

2. Collective ownership of land by the administrative village [行政村]. the administrative village is the successor to the production brigade [生产大队] and acts through a villager committee [村民委员会]. Such land includes land for primary schools and administrative offices. In accordance with the Villager Committee Organisation Law [村民委员会组织法], the villager committee may allocate management responsibility to various villager groups by reference to various residential regions. If, however, there ia a collective economic organisation [集体经济组织] within the village, the ownership rights may be exercised by the collective economic organisation instead of the villager groups.

3. Collective ownership of land by the township [乡镇]. The township is a combination of several administrative villages and the successor to the communes. Such land includes land for enterprises and commercial activities. The land is generally managed by the local people’s government or by the township collective economic organisation [乡镇集体经济组织].

Understood in this way, collective ownership operates as an abstract concept that vests land ownership in an entity known as the ‘Collective’, in the same way as the concept of state ownership of land vests ownership in an entity known as the ‘State’. Such an approach is reinforced by the initial characterisation of collective ownership as ‘a system of collective ownership by the working people’ as referred to in Article 8 of the 1982 Constitution.47

As previously noted, the concept subsequently came to be characterised as ‘ownership by farmer collectives’, as referred to in Article 8 of the Land Administration Law.48 Such characterisation is supported by Article 10 of the Land Administration Law, which provides that land owned by the farmer collectives is operated and managed by the collective economic organisation. Thus, the concept is one of land being owned by the ‘Collective’ and being managed by the ‘collective economic organisation’ on behalf of the Collective.

Under these provisions, farmers are referred to as ‘members of the relevant collective economic organisation’ rather than members of the Collective itself. This supports the concept of collective ownership as outlined above; namely, a reference to non-private ownership of land, similar to state- ownership, which is exercised by the relevant collective economic organisation on behalf of the Collective. The difference between collective ownership and state-ownership, however, is that collectively owned land is owned by a certain group rather than by the whole people. Further, the interests of the group are represented by the entity that has the power to exercise collective ownership rights on its behalf.

46 Land that is collectively owned by the villager groups constitutes the vast majority of all rural collectively owned land in China. 47 劳动群众集体所有制. 48农民集体所有.

However, in an apparent move to strengthen the rights of farmers and to give them greater say in decisions concerning collectively owned land as a bulwark against unlawful expropriation by the Collective, Article 59 of the PRL provides that collectively owned property is ‘collectively owned by the members [emphasis added] of the relevant Collective’ and that certain matters are required to be decided by the members of the Collective instead of by the collective economic organisations, as provided in Article 60 of the PRL.49 Thus, the concept is now one of collectively owned land being owned by the members of the Collective themselves rather than by ‘the Collective’ itself.

This raises a number of questions as to the nature of collective ownership. First, if collectively owned land is considered to be owned by the members of the Collective, the treatment of land contract management rights as a type of usufruct under the PRL appears anomalous for the reason that a usufruct is a right in respect of property owned by another person and a usufruct right cannot arise in respect of property that the holder of the usufruct owns.50 Secondly, the relationship between the members of the Collective and the body that exercises collective ownership rights on behalf of the Collective – namely the collective economic organisation [集体经济组织]51 – is unclear. As discussed in Chapter 3, these complications are exacerbated by the reliance on rural land rights for insurance or social purposes and the extent to which land is used by the State as a tool for achieving its social and economic objectives. The complications are also exacerbated by way in which the current system of land contract management rights allocates property rights between the Collective as owner and farmers. As outlined in Chapter 1, these rights can be broken into three categories: use rights, control rights and transfer rights.

5. Land contract management rights

This Part traces the development and nature of land contract management rights, which are allocated by the Collective to farming households for the purpose of cultivating land in China. The analysis commences with an examination of the concept of management rights under Chinese law. It then provides an overview of the Household Responsibility System, which is the economic foundation for land contract management rights. Following that, the analysis outlines the constitutional and legislative framework for such rights and examines their key attributes, including the nature of land management contracts, the various ways in which farmers may deal with their rights and the powers of the Collective to adjust the rights and to resume land. The restrictions on the rights of farmers to deal with their rights and the powers on the Collective to adjust the rights and resume land go to the heart of the debate concerning the need to increase security of tenure and the scope of rights that farmers enjoy and to achieve a better balance of rights and powers between the Collective as owner and farmers as land users.

Finally, this Part analyses the nature of land contract management rights and the weaknesses of the current framework.

49 See Section (c)(ii) above. 50 See further in Part 5, Section (f) below. 51 The recently-promulgated Civil Code [民法总则] provides that the collective economic organisation has legal person status [法人资格] and constitutes a special legal person [特别法人]. See Articles 96, 99 and 100. As such, it is capable of undertaking civil activities as required for the purpose of performing its functions (Article 97).

(a) Concept of management rights

The concept of management rights [经营权] is an integral part of the design of land contract management rights in China today.

The concept can be traced back to Article 11 of the 1947 Outline Land Law, which required the government to ‘issue land ownership certificates in respect of all distributed land, and recognise the right of the people to manage freely, buy and sell and, in special circumstances, to lease the land.’

This provision is significant in terms of outlining the scope (or bundle) of rights that were understood to constitute the concept of ‘ownership’ [所有权] at the time the Outline Land Law was issued. The reference in Article 11 to ‘manage’52 [经营] figured prominently as the first right referred to in the article. Further, the reference was to managing land ‘freely and without restriction’. This term subsequently gained prominence with the introduction in 1979 of the Household Responsibility System and the supporting legal framework; namely, the system of rural land contract management rights.

The term ‘manage’ imports the concept that the holder of the right has the power not only to use [使用] the land but also to decide how the land should be used. By itself, therefore, it denotes management of land, which can occur either by the owner pursuant to ownership or by the holder of a right that is derived from ownership. The latter is the sense in which the term came to be used in the context of the Household Responsibility System, where rural land is owned by the Collective and the management of the land is contracted to farmers.53

The concept was subsequently adopted in Article 10 of the Land Administration Law, which refers to the management [经营] and administration [管理] of land by the rural collective economic organisations. By distinguishing between management and administration, Article 10 implies that even after management rights are contracted out to farmers, the rural collective economic organisation retains administration rights in respect of the land. The reference to ‘administration rights’ is likely to be synonymous with ‘supervision rights’, as expressly referred to in Article 13 of the Rural Land Contract Law as supervision rights are the rights that are retained and exercised by the Collective.54

(b) Prototype of the Household Responsibility System

In a development that paved the way for the Household Responsibility System, the Sixty Articles of 1962 provided that household sideline production55 was a ‘necessary supplementary component of the socialist economy’ and was ‘ancillary to the collectively owned economy and to the economy that was owned by all of the people’. So long as the development of the collective economy was not harmed and the absolute superiority of the collective economy was guaranteed, the people’s communes were required ‘to permit and encourage the members of the commune to use their

52 This term could also be translated as ‘operate’; however, the term ‘manage’ is considered to be more appropriate in the context of land management and use in rural China. 53 See further in sections (b) and (c) below. 54 See further in Section (e)(v) below. 55 家庭副业.

38 surplus time and holidays to develop household sideline production, to increase the goods in society, to supplement their income and to enliven the rural market.’56 Under this framework, members of the commune were allowed to cultivate household plots,57 which were allocated to them by the commune. The household plots were allocated to the commune members on a long-term basis for use by their families.58 After satisfying the state quotas for agricultural produce, the members of the commune could sell the produce on the market. The produce grown on the household plot was not included within the produce or grain of the commune and was not subject to agricultural tax.59 The management committee of the people’s commune at each level was required to guide and support household sideline production.60

The vesting of the right to use household plots for sideline production in rural households marked the emergence of private plots and was formalised by the Household Responsibility System, as outlined below. It also led to the constitutional and legislative recognition of land contract management rights.

The Household Responsibility System provided the economic foundation for land contract management rights and is therefore of critical relevance for an understanding of the rationale behind, and the trend towards, giving farmers greater autonomy to manage their land. The system was first trialled in 1979 after the end of two decades of political turmoil61 and followed secret experimentation in villages in places such as Anhui Province. The concept involved the granting of land-use rights to rural households on a contractual basis for a period of 15 years. It also involved a reduction in the state quotas that farmers had to meet and a corresponding increase in the amount of produce that they could sell on the free market.

Such was the success of the reforms in increasing agricultural productivity and increasing the living standards of farmers that they were adopted on a national basis in 1981 by a document entitled ‘Summary of the National Rural Work Conference’.62 The Summary noted that the system involved a change in the method of management, under which land was to be managed by families who would take responsibility for profits and losses. Further, the system was based on public ownership of land,63 under which farming households would enter into a contracting relationship [承包关系] with the Collective, which had the ultimate authority to ‘manage and use’ land in accordance with the state plan. The Summary emphasised that the system was different from the private ownership of

56 Article 38. 57 自留地。 58 Article 39. The initial term was 15 years. 59 Article 40. 60 Article 41. 61 Wang et al 2015 note the ‘disastrous outcome for output and rural welfare’ after the collectivisation period in the 1950s, leading to the ‘great famines of 1958-1960 which resulted in the deaths of millions of rural residents.’ 62 Summary of the National Rural Work Conference, available at http://cpc.people.com.cn/GB/64162/134902/8091880.html. 63土地公有.

39 land by individuals prior to the establishment of the rural cooperatives.64 The Summary appears to be one of the earliest documents in which the term ‘contract out’ [承包] appeared.

The Summary stipulated that during the process of establishing and improving the household responsibility system, it would be necessary to maintain collective ownership of land and to pay attention to protecting arable land and the reasonable use of arable land.65 Ownership of land that was allocated by the Collective to its members for long-term use, including household plots, self- cultivated hillsides and residential foundation land, was to remain in the Collective. Accordingly, it was prohibited to buy and sell, lease out, assign or abandon land that was contracted to the members of the Collective and in the event of a failure to comply, the Collective had the right to resume the land. Finally, if members of the Collective were unable to manage the land or to grant sub-management rights to others [转营他业], it would be necessary to return the land to the Collective.

The Summary was significant for three reasons. First, it defined the parameters of the rights that the farmers enjoyed and imposed a prohibition on the sale, lease or abandonment of cultivated land – vestiges of which are evident in the current system of land contract management rights. Secondly, it established the principle that land could be resumed in certain circumstances. These aspects underscored the conception of the arrangement as something that was more in the nature of an administrative contract66 than a proprietary right. Thirdly, the Summary recognised the concept of the grant of sub-management rights to others, which subsequently came to be recognised as a subcontract of land management rights.

(d) 1982 constitutional basis for the Household Responsibility System

The introduction of the Household Responsibility System was supported by the constitutional amendments in 1982. Article 8 recognised the collective ownership of the rural economy and the right of farmers to cultivate household plots and engage in household sideline production. The provision therefore provided a constitutional basis for the concept of a private plot [自留地] for the purposes of household sideline production. The private plot came to be referred to also as ‘grain ration land’ [口粮田] and was distinguished from ‘responsibility land’ [责任田], which was used to produce the mandatory quota of grain for the State and reflected the broader public purpose (productive and social) for which land was managed.67

(e) Legislative framework for land contract management rights

(i) Recognition of the Household Responsibility System

The Land Administration Law of 1986 (the ‘LAL’) was the first law to recognise the Household Responsibility System and to provide for the grant of land contract management rights to farmers.

64 Summary, paragraph 2. 65 Summary, paragraph 4. 66 Administrative contracts are generally understood to mean a contract between private individuals and a government agency or public body, under which the latter acts as a public authority and exercises public law powers and privileges that are not common in a private contract. 67 Responsibility land was also referred to as contract land [承包田].

The key provision in this regard is Article 9, which provides that state-owned land and land owned by farmer collectives may be given to units or individuals to use in accordance with the law. Further, units and individuals that use land have the obligation to protect and manage the land and make rational use of it.

(ii) Rural land contracts

The nature of rural land contracts is outlined in Article 14 of the LAL, which provides that land owned by farmer collectives may be managed under a contract by members of the economic organisations of the relevant farmer collectives for crop cultivation, forestry, animal husbandry or fishery. The duration of such contract is 30 years. The party that issues the contract and the party that undertakes it must sign a contract that stipulates the rights and obligations of both parties. A farming household that undertakes to manage a piece of land under a contract has the obligation to protect the land and make rational use of it in accordance with the specific purposes as provided in the contract. The right of a farming household to manage land under a contract is protected by law.

Detailed provisions concerning rural land contracts appear in the Rural Land Contract Law of 2002 (the ‘RLCL’). Under Article 3 of the RLCL, rural land contracts are expressed to take the form of household contracts68 entered into by households that are ‘within’ (i.e. members of) the rural collective economic organisation [农村集体经济组织内部], reinforcing the community-based nature of the rights. Land in rural areas such as barren mountains, gullies, hills and beaches that are not suited to household contracting, may be contracted in such forms as tender, auction and public negotiation.

The focus of the RLCL on the relationship between the households and the collective owner rather than on the proprietary rights of the households is apparent from Article 4, which provides that ‘the State protects, in accordance with law, the long-term stability of the relationship of land contract in rural areas [农村土地承包关系]. This is underscored by Article 7, which provides that the principles of openness, fairness and impartiality must be adhered to in the relationship of interests among the State, the Collective and individuals69 and must be correctly handled. Article 4 provides that after the land in rural areas is contracted, the nature of ownership of the land remains unchanged and the contracted land may not be purchased or sold [承包地不得买卖].

The provisions of the PRL mirror many of the provisions in the RLCL.70 There are a couple of significant differences. First, unlike Article 16(a) of the RLCL, Article 125 of the PRL includes the right to possess in the content of land contract management rights. In addition, Article 126 of the PRL, which mirrors Article 20 of the RLCL in relation to the 30-year contract term, provides additionally that upon expiry of the term, the contractor may continue to contract the land management in

68 家庭承包. 69 国家，集体，个人三者的利益关系. 70 Article 124 of the PRL mirrors Articles 1 and 2 of the Rural Land Contract Law; Article 126 mirrors Article 20; Article 127 mirrors Articles 22 and 23; Article 128 mirrors Article 32; Article 129 mirrors Article 38; Article 130 mirrors Article 27; Articles 131 and 132 mirror Article 26; Article 133 mirrors Article 46.

41 accordance with the relevant provisions of the State. Some have suggested that this implicitly gives the rights an indefinite term, although the issue does not appear to be conclusively settled.71

(iii) The right to enter into rural land management contracts

The right of farming households to enter into rural land management contracts with the collective economic organisations to which they belong is provided by Article 5 of the RLCL. This states that ‘no organisations or individuals may deprive the members of the rural collective economic organisations of their right to undertake contracts or illegally restrict such right.’ Unless the law otherwise provides, the members of the Collective have the right to be allocated land and to farm the land on the basis of the household contract management system. This reinforces the social purpose of the rights – namely, the allocation of land to farmers to ensure that they have a livelihood – and goes some way towards explaining why land has been kept within the Collective to the extent possible and has not yet become freely assignable. It also highlights the dilemma that China faces: to grant farmers stronger property rights, including the right to transfer the land-use rights on the market would undermine the current system of collective ownership of land as it would transfer the right to manage land outside the membership of the Collective. This reflects the nature of the system as a community-based system of allocating rights to use rural land, where the exercise of rights depends on membership of the Collective and is limited to the members of the Collective.

(iv) The parties to land management contracts

Article 15 of the RLCL provides that the contractor of a household contract is the farming household of the collective economic organisation concerned.72 This does not have an equivalent in the LAL. Although a household for this purpose may consist of just one person, the provision highlights the focus of the system on the household, as distinct from the individual,73 and is a remnant of the traditional concept of family title or family ownership as discussed in detail in Chapter 4.

Article 15 of the LAL provides that collectively owned land may also be managed by units or individuals that do not belong to the economic organisations of the relevant collectives (i.e. outsiders). Article 15 goes on to provide that the grant of rights in such circumstances requires the approval of at least two-thirds of the members of the villagers’ assembly or of the representatives of villagers and the matter must be submitted to the township (town) people’s government for approval. The requirement for approval is repeated in Article 48 of the RLCL. This additionally provides that where units or individuals other than members of the collective economic organisation concerned undertake contracts, the contract is concluded only after an examination of the credit position and management capability of the contractors. This indicates that the issuance of contracts to outsiders will only be permitted if the outsiders are suitably qualified to engage in farming operations.

Thus, although it is possible for land contract management rights to be granted to units or individuals who do not belong to the relevant collective organisation, and are therefore not

71 See Section (f) below and the discussion in Chapter 7 72家庭承包的承包方是本集体经济组织的农户. See also the Civil Code, Art. 56. 73 Fu and Gillespie 2014, 15.

42 members of the rural community, such an arrangement requires both the requisite support of the farmers as well as the approval of the local government. This reinforces the extent to which land is expected to be farmed and managed by members of the local community and the community-based nature of the land contract management system in China.

(v) The rights and obligations of the Collective as issuer of contract management rights

The RLCL contains detailed provisions on the nature of the relationship between the Collective as the issuer of land contract management rights and the farming household as the contractor, including their mutual rights and obligations. Article 13 sets out the rights enjoyed by Collective, including the right ‘to exercise supervision over the rational use and protection of the land by the contractor in keeping with the purpose of use agreed in the contract’. Article 14 sets out the obligations borne by the Collective, including the obligation ‘to avoid illegally modifying and revoking the contract’ and ‘to respect the contractor’s right to make its own decision on production and operation’.

The prohibition on unlawful action by the Collective is repeated in Article 35 of the RLCL. This provides that during the term of contract, the Collective may not take any of the following actions: unilaterally revoke the contract; compel the contractor to give up or modify the right to land contractual management under the pretext that the minority is subordinate to the majority; resume the contracted land by reason of the need to divide the land into ‘grain rations fields’ and ‘responsibility fields’ in order to contract it out through bid invitation; or resume the contracted land to pay off its debts.74 By explicitly prohibiting various activities on the part of the Collective, the provisions in Articles 14 and 35 of the RLCL reveal the challenges that the system faces in terms of encouraging appropriate supervision of land by the Collective whilst discouraging unlawful and abusive practices, as outlined in Chapter 3. The provisions also reinforce the conception of such contracts as being more in the nature of administrative contracts than proprietary rights and detract from the security of tenure that farmers enjoy.

(vi) The rights and obligations of the contractor of contract management rights

Article 16 of the RLCL sets out the rights enjoyed by the household contractor. These include the right ‘to enjoy, in accordance with law, the rights to use the land contracted, to enjoy the benefits from the land and to circulate the right to land contract management.’ The contractor also enjoys the right ‘to make its own decisions regarding the arrangements for production and management as well as the disposal of the produce’ and ‘to obtain appropriate compensation for the contracted land that is expropriated or occupied according to law’. In addition, Article 18 provides that households may, of their own free will, give up land contract management rights.75

Article 17 sets out the obligations borne by a household, including the obligation ‘to keep or use the land for agricultural purposes, and to refrain from using it for non-agricultural development’, and ‘to

74 See also Article 33(1), which provides that ‘no organizations or individuals may compel the contractors to circulate their right to land contractual management or prevent them from doing so.’ 75 See also Article 29, which provides that during the term of contract, contractors may, of their own free will, return the contracted land to the party issuing the contract. Further, where contractors return the contracted land during the term of contract, they may no longer request to undertake a contract for land within the term.

43 protect and rationally use the land in accordance with law, and to refrain from causing permanent damage to the land’. These obligations reflect the need to maintain the agriculture use of land – which is a key priority of the State pursuant to the broader public purpose of rural land management – and the corresponding need to maintain the ongoing viability of the land for agricultural purposes.

(vii) Circulation of land contract management rights

As noted in Part 2 above, the term ‘circulation’ is used to refer to the various ways in which the holder of land contract management rights may circulate or grant rights to others. The ability to circulate land contract management rights and the restrictions that may apply to the relevant forms of circulation are questions that go to the scope of rights that farming households enjoy and are therefore relevant to the achievement of both the empowerment objective and the dual-purpose objective.

The need to permit limited forms of circulation was recognised under the CCPCC Notice Concerning the Work of Rural Villages issued in 1984 (the ‘1984 Document’),76 which encouraged the progressive concentration of land in the hands of those who were able to cultivate the land77 – a theme that continues to resonate today – and provided that those who did not have the capacity to cultivate land or operate other businesses could subcontract78 the rights to another person with the agreement of the Collective. However, a subcontract could not unilaterally change the content of the underlying land responsibility contract [集体承包合同] and was purely contractual in nature. The concept of a subcontract was the first form of land circulation that came to be recognised in law and represented the first step towards increasing the scope of rights that farmers could exercise in relation to rural land.

The recognised forms of circulation were expanded in 1988, when two significant amendments were made to the LAL. First, the reference to ‘lease’ in the prohibition on dealings with land was removed, thereby paving the way for land management contract rights to be leased. Secondly, in line with the constitutional amendments in 1988, the concept of an assignment of land contract management rights was introduced through amendments to Article 2.

Subsequently, various forms of circulation were recognised in the RLCL in 2002. This law provides that circulation can take the form of a subcontract, a lease, an exchange, an assignment or other means as permitted by law.79 Article 33 sets out the principles for the circulation of land contract management rights, including the requirement for circulation to be undertaken after consultation between the parties ‘on an equal footing’ and ‘in accordance with the principles of voluntariness and compensation’;80 the requirement that no change to the nature of the land ownership or to the use of agricultural land be permitted;81 the requirement that an assignee have the capability for

76 See CCPCC Notice Concerning the Work of Rural Villages in 1984, available at http://www.china.com.cn/aboutchina/data/zgncggkf30n/2008-04/09/content_14685167.htm. 77鼓励土地逐步向种田能手集中. 78 转包. 79 Article 32. 80 Article 33(1). 81 Article 33(2).

44 agricultural operation;82 and the requirement that members of the collective economic organisation concerned enjoy priority to acquire the rights under ‘equal conditions’.83 An outline of the specific forms of circulation appears below.

Exchange

Article 40 of the RLCL provides that contractors may, for the convenience of farming or for their own needs, exchange between themselves their contract management rights in respect of land that belongs to the same collective economic organisation. In the case of an exchange, registration is required to give the exchange effect against third parties acting in good faith.84

Article 37 provides that where the right to land contract management is circulated by means of exchange, the two parties must conclude a written contract and the matter must be reported to the Collective for the record. Under the Property Rights Law, an exchange of rights involves an assignment of the proprietary rights from one party to the other party.

Assignment

The assignment of land-use rights was recognised by a constitutional amendment in 1988, which inserted a new sentence in Article 10 as follows: ‘The right to the use of land may be assigned according to law.’ This form of circulation has been the most sensitive of the various forms of circulation. This is because it involves the farming household assigning its proprietary rights to another party and relinquishing its rights to utilise the land for social and productive purposes. The circumstances in which the rights may be assigned has therefore been of critical concern to the State.

The sensitivities in this regard are reflected in the various amendments to the LAL. First, as noted above, Article 2 of this law was amended in 1988 to recognise the concept of an assignment of land contract management rights and to provide as follows:

The rights to use state-owned land and collectively owned land may be assigned in accordance with the law. The specific measures for the assignment of land-use rights will be specified by the State Council.

This provision was subsequently further amended in 1998 to provide simply as follows:

Land-use rights may be assigned in accordance with the law.

Qiao has suggested that the above amendment, which removed the express reference to the assignment of collectively owned land, ‘signaled a change of tone’ against the assignment of rural land rights as a result of the risk of rural land being assigned for non-agricultural purposes.85

Secondly, the 1988 amendments to the LAL inserted an additional sentence in Article 2 as follows:

The state, according to law, implements a system for the use of state-owned land for value.86

82 Article 33(4). 83 Article 33(5). 84 Article 38. 85 Qiao 2016, 94-95.

This exclusion of collectively owned land from the reference to the system for the use of land for value suggested that collectively owned land could not be assigned on the market, even though no such limitation appeared in the 1988 amendments to the PRC Constitution as referred to above. Qiao suggests that the decision not to include a reference to collectively owned land in the above provision was based on the need to maintain the Household Responsibility System and to avoid granting village collectives the right to assign use rights for rural land, which would ‘jeopardize the security of the villagers’ rights to farm the contracted land.’87

The 1998 amendments to the LAL reflected the ongoing ambivalence on the part of the State towards the assignment of land-use rights on collectively owned land, partly as a result of the need to maintain the social purpose of land as a social security safety net and partly as a result of concerns about collectively owned land being used for non-agricultural purposes. These concerns are further discussed in paragraph (x) below and Chapter 3.

Article 10 of the RLCL, which was promulgated in 2002, provides that the State protects the circulation of land contract management rights [土地承包经营权流转] that is undertaken according to law, on a voluntary basis and for value. In view of the previous ambivalence towards recognising the circulation of land-use rights in the LAL as noted above, the reference to the circulation of land contract management rights ‘for value’ is significant and suggests a policy shift in favour of developing a market for the purchase and sale of rural land-use rights, albeit within the tight parameters prescribed by the law.

Article 33(3) of the RLCL provides that an assignee must have the capability for agricultural operation; and members of the collective economic organisation concerned enjoy priority to purchase the land- use rights ‘under equal conditions’.88 In addition, an assignment requires the consent of the Collective under Article 37 and registration of the assignment is required to give the transfer effect against third parties under Article 38.

Article 41 provides that where a contractor has a stable non-agricultural occupation or a stable source of income, the contractor may, with the consent of the Collective, assign the total or part of the land contract management rights to another farming household that is engaged in agricultural production and management, in which case the farming household will establish a new contractual relationship with the Collective. Thereupon, the contractual relationship between the former contractor and the Collective is terminated. This provision is noteworthy insofar as it suggests that the assignment of land contract management rights is limited to the circumstances in which the Collective is satisfied that the contractor has a stable alternative occupation or source of income. This reinforces the social purpose of such rights and the extent to which the rights operate as a social security net.

86 国家依法实行国有土地有偿使用制度。 87 Qiao 2016, 94-95. See also Zhou 2014, who argues that a normal interpretation of the constitutional provisions is that land-use rights in respect of both state-owned and collectively owned land should be assignable and that the current situation, under which there is a lack of equality between state-owned land and collectively owned land (同地不同权), is therefore in breach of the Constitution. 88 The RLCL does not specify how the phrases ‘under equal conditions’ should be interpreted.

Mirroring Article 41 of the RLCL, Article 35 of the 2005 Administrative Measures for the Circulation of Rural Land Contract Management Rights89 defines an assignment as follows:

An assignment occurs where ‘a contractor has stable non-agricultural employment or stable sources of income and, through application to and the consent of the [Collective], assigns part or all of the land contract management rights to another household that is engaged in rural production management and performs the corresponding rights and obligations. After the assignment, the original land contract relationships automatically terminate and part or all of the land contract management rights of the original contractor during the contract period are extinguished.

The above measures confirm that an assignment requires the consent of the Collective. As will be argued in Section (f) below, the requirement for consent weakens land contract management rights. The process of obtaining consent is often complicated by uncertainty over the identity of the collective economic organisation that has the power to give consent on behalf of the Collective and frustrates calls in the official policies for farmers to be given ‘more property rights’.90 In addition, the requirement for consent highlights the degree to which the Collective interferes in matters concerning land management and exercises active ownership of land, as distinct from the passive ownership that is central to the conceptual models considered in Chapter 7.

Subcontract and Lease

The concept of a sub-contract is recognised in the 2002 RLCL and the PRL.91 Article 37 of the RLCL provides that where the right to land contract management is circulated by means of subcontract or lease, the two parties must conclude a written contract and the matter must be reported to the Collective for the record.

Article 39 of the RLCL provides that where a household subcontracts or leases part or all of the land contract management rights to a third party, the contractual relationship between the contractor and the Collective remains unchanged. Further, where the period does not exceed one year, the written contract may be dispensed with. Unlike in the case of an assignment, a subcontract or lease does not require the contractor to demonstrate a stable alternative occupation or source of income.

As will be discussed in Section (f) below and in Chapter 5, a lease under PRC law is a purely contractual arrangement and does not involve the creation of a proprietary right. In addition, although specifically referred to as a form of circulation in Article 128 of the PRL, a subcontract does not appear to create any proprietary rights either.

Contribution of Rights as Shares

Article 42 of the RLCL provides that for the purpose of developing the agricultural economy, contractors may, of their own free will, jointly pool their land contract management rights as shares

89 2005 Administrative Measures for the Circulation of Rural Land Contract Management Rights, available at http://www.moa.gov.cn/zwllm/tzgg/bl/200501/t20050126_311817.htm. 90 See Chapter 3, Part 4(b). 91 See Article 32 of the RLCL; Article 128 of the PRL.

47 in limited liability companies to engage in cooperative agricultural production. This is one of the forms of circulation that has been actively promoted by recent policies in order to encourage large- scale farming as discussed further in Chapter 3, part 4.

Contracts Entered Into Through Means Other than the Household Contract

Article 44 of the RLCL makes provision for the grant of contracts in respect of land in the rural areas such as ‘barren mountains, gullies, hills and beaches that are not suited to household contracts’ and, instead, are contracted through means such as tenders and auctions. Similar to Article 42 as outlined above, Article 46 provides that in the case of contracts for barren mountains, gullies, hills and beaches, the land contract management rights may be converted into shares and distributed to the members of the relevant collective economic organisation and, thereafter, joint-stock cooperative management may be implemented. In line with the desire to keep land within the relevant community, Article 47 of the RLCL provides that where rural land is contracted by other means, the members of the relevant collective economic organisation have priority to enter into the contract under equal conditions.92

Article 49 provides that where a person enters into a contract for rural land through means such as tenders and auctions and obtains the certificate of the land contract management rights after registration according to law or the certificate of the contract management rights in respect of forest land, the rights may, in accordance with law, be circulated through assignment, lease, pooling of rights as shares, mortgage or other means.93 To date, this is the only express basis on which land contract management rights may be mortgaged.94 As noted in Chapter 3, however, a consistent call within the official policies is to permit farmers to mortgage their rights to raise finance and pilot schemes have been adopted for this purpose.95

By contrast, Article 184 of the PRL provides that a mortgage may not be taken over land ownership or ‘the right to the use of the land owned by the Collective, such as cultivated land, house sites, private plots and private hills, except where otherwise provided by law.’ As discussed in Chapter 3, policies have called for farmers to be allowed to mortgage their land-use rights to raise finance, although this is not yet expressly permitted by written law.

(viii) Land adjustment

As noted in Part 2 above, land adjustment is the process by which the area of land in respect of which land contract management rights have been issued is adjusted by the Collective. Land adjustment has been a controversial practice ever since land contract management rights were first allocated to farming households and relates to the question of security of tenure.96 In an effort to

92 Article 47. 93 A similar provision appears in Article 180 of the PRL. 94 In line with Article 49 of the Rural Land Contract Law, Article 180 provides that a mortgage may be taken over land contract management rights in respect of land such as waste land where the rights have been obtained through a tender, auction or a public consultation process. 95 See Chapter 3, Part 4(b). 96 See further in Chapter 3.

48 limit the circumstances in which land adjustment could take place, the 1984 Document stated that before an extension to the term of land use rights, the land could be adjusted by the Collective, after sufficient consultations, where such an adjustment was requested by the people and in accordance with the principle of ‘small adjustments in order to achieve large stability’. Under this principle, a minor adjustment to the land cultivated by individual households would be permitted if such an adjustment were necessary to stabilise and improve the Household Responsibility System. Land adjustment was further curtailed by No. 11 Central Document of the Central Committee of the Communist Party of China in 1993 (the ‘1993 Document’),97 which called for the implementation of measures under which the allocation of land would not be increased in response to an increase in the number of people in a farming household and, correspondingly, the allocation of land would not be decreased in response to a decrease in the number of people in a farming household.98 The reason for this call was ‘to avoid frequent changes to the contract and to guard against the continuing fragmentation of land.’

The 1993 Document also provided that in the small number of regions where secondary and tertiary industries were developed and most labour was turning to non-agricultural sectors and had a stable income, it would be possible to make necessary adjustments to the contracted land where the adjustments were consistent with the wishes of the farmers,99 which recognised the extent to which rural-urban labour migration was occurring.

A further policy document dealing with adjustment was the Opinion on Stabilising and Perfecting Land Contract Relationships, issued by the Agricultural Department in 1994 (the ‘1994 Opinion’).100 Amongst other things, the 1994 Opinion provided that adjustments to the allocation of land were only to be made in circumstances where there was ‘serious inequality in the allocation of land as a result of changes in population’ and after the adjustment had been ‘democratically agreed’. The 1994 Opinion endeavoured to limit land adjustment to the extent possible by providing that it could only be undertaken upon agreement between the members of the Collective.

In a move to place even further limits on the extent of land adjustment and vest greater control over land adjustment in the hands of the farmers, Article 14 of the LAL now provides that during the land contract management term, any appropriate adjustment of the land must be made with the agreement of at least two-thirds of the members of the villagers assembly or of the representatives of villagers and the matter must be submitted to the township (town) people’s government and the agriculture administration department of the people’s government at the county level for approval.

Reinforcing the protection of farmers against involuntary land adjustment, Article 27 of the RLCL provides that during the term of contract, the Collective may not adjust the contracted land. During the term of contract, where special circumstances arise such as natural calamities that seriously damage the contracted land and make it necessary to make proper adjustments to the arable land or grasslands, the matter will be subject to the consent of not less than two-thirds of the members of the villagers assembly of the collective economic organisation concerned or of the villagers' representatives and must be reported for approval to the competent administrative departments for

97 No. 11 Central Document of the CCPCC, available at http://blog.sina.com.cn/s/blog_53b028610106h8tl.html. 98 “增人不增地、减人不减地”. 99 The 1993 Document did not stipulate the procedure for determining the wishes of the farmers. 100 1994 年农业部曾经制定《关于稳定和完善土地承包关系的意见》.

49 agriculture under the relevant township (town) people's government and the people's government at the county level.101 Where the contract provides that no adjustments may be made, the terms of the contract must prevail.102

(ix) Land resumption

Land resumption – namely, the basis on which land contract management rights can be revoked by the Collective – has also been a controversial practice in the administration of land contract management rights and goes to the issue of tenure insecurity as discussed in Chapter 3. Article 37 of the LAL as amended in 1998 provides that units and individuals are prohibited from leaving cultivated land unused or allowing it to lie waste. If land is abandoned for two years continuously, the original issuing unit must terminate the contract and resume the land. This reflects the priority of the State to ensure that land is being farmed productively and that arable land is not allowed to lie waste.

The scope of the resumption powers has subsequently narrowed as a result of Article 26 of the RLCL, which prescribes the circumstances in which contract land may be resumed. Article 26 of the RLCL provides that during the term of contract, the Collective may not resume the contracted land. Further, if during the term of contract, the whole household of the contractor moves into a small town and settles down there, the contractor’s land contract management rights must, in accordance with the contractor's wishes, be preserved, or the contractor must be permitted to circulate the rights according to law. On the other hand, if the whole family of the contractor moves into a city divided into districts during the term of contract and the contractor’s rural residence registration is changed to a non-rural residence registration [非农业户口], the contractor must hand back the contracted arable land or grassland to the Collective. If the contractor fails to hand back the land, the Collective may resume the contracted arable land or grassland. When, during the term of contract, the contractor hands back any contracted land in which the contractor has made an investment, thus increasing its production capacity, or the Collective resumes the land according to law, the contractor has the right to obtain appropriate compensation.103

It has been suggested that Article 26 has a constitutional basis and implements the decision and spirit of the Third Plenary Session of the 15th Central Committee of the Communist Party of China of 1998 to confer long-term and secure land-use rights on farmers.104 In essence, the effect of the provision is that irrespective of the changes that might occur within the household, the Collective must not resume the land. It is only in limited circumstances that the land can be resumed, such as where the contractor has died; the family managing the land has disappeared or a contractor has obtained two parcels of contract land as a result of inheritance. In addition, the provision draws a distinction between the relocation of a rural household to a small town and the relocation of a rural household to a city divided into districts. In the case of the relocation of a household to a small town, the household has the option of either retaining the land-use rights or circulating them in

101 This provision is repeated in Article 130 of the PRL. 102 This is in line with the policy documents of the 1990s and the 1998 revision to the LAL. 103 The provisions are silent as to the procedures for resumption and for the payment of compensation. 104 See Explanation of Article 26 of the Rural Land Contract Law, Fabao (法宝网, 21 December 2010), available at http://cfg.fabao.cn/falvfagui/sfwj/n214197964.shtml.

50 accordance with the law.105 This, it has been suggested, supports the policies of encouraging the healthy development of small cities and towns, where the social welfare system is not as strong as in the main cities and the household needs to rely on the land-use rights as a basic protection.106 On the other hand, where a household has relocated to a large and medium city and formally obtains a hukou (i.e. household registration) in the relevant city, the land must be returned to the Collective.107 In such circumstances, the household will no longer be a member of the rural collective economic organisation and will no longer enjoy the land-use rights as a basic protection. This is considered to be appropriate as the social welfare system is stronger in cities that are divided into districts. Further, in circumstances where the land is returned to the Collective, the land must be used to accommodate adjustments or an increase in the local population. All of these arrangements highlight the social purpose of rural land and the extent to which rural land is used as part of the social welfare system.

Some people have called for Article 26 to be amended on the basis that the dividing line between small towns and large and medium cities is unclear. Further, it is argued, the restrictions limit the growth and development of towns and cities. Accordingly, farmers should be able to retain the land- use rights in either context.108

(x) Conversion of cultivated land for non-agricultural purposes

A previously noted, the Constitution was amended in 1982 to provide that no organisation or individual is permitted to appropriate, buy, sell or lease land, or unlawfully transfer land in other ways, and that all organisations and individuals that use land are required to make rational use of it.109 In line with this, the 1984 Document confirmed that the household plots and land that was subject to the contract responsibility system were not permitted to be bought or sold, leased out or converted into residential foundation rights or land for other non-agricultural purposes. Since the constitutional amendment in 1982, the State has adopted various measures to prevent the unlawful conversion of cultivated land for non-agricultural purposes. In 1994, the Regulations on the Protection of Basic Farmland were issued.110 These set out to reduce the conversion of agricultural land for non-agricultural purposes by designating certain land as basic farmland and certain areas as basic farmland protection areas.111

Article 43 of the LAL now provides that all units and individuals that need land for construction (i.e. non-agricultural) purposes must apply for the use of state-owned land. An exception is recognised where:

105 It is also possible for the household to sub-contract the rights to another person or to arrange for a relative to manage the rights on its behalf. 106 See Chapter 3 for a discussion about rural-urban migration and the social security issues. 107 Article 26 does not apply to forestry land as a result of the additional time required for the benefit of such land to be realised. 108 See Chen 2014. 109 Article 10. 110 1994 年 8 月 18 日国务院发布了《基本农田保护条例》. 111 These were subsequently revised in 1998. For a copy of the 1998 revised regulations, see http://www.mlr.gov.cn/zwgk/flfg/tdglflfg/200406/t20040625_570370.htm.

(1) the collective economic organisations or farmers have lawfully obtained approval to use the land to establish township enterprises or to build houses for villagers; or (2) units and individuals have lawfully obtained approval to use the land owned by peasant collectives to build public utilities or public welfare undertakings of a township (town) or village.

The requirement to convert rural land into state-owned land before it can be used for non- agricultural purposes places a procedural check on the use of rural land for construction purposes.112 The system of control that the State exercises over the purpose of land-use and, in particular, the conversion of agricultural land for other purposes, is reinforced by Article 4 of the LAL, which provides that the State ‘rigidly restricts’ the conversion of agricultural land into construction land and that special protection is given to cultivated land. Article 4 also provides that ‘[a]ll units and individuals shall use land in strict compliance with the purposes of use defined in the overall plans for land utilisation’. Further, Article 8 of the RLCL provides that the rational development and sustainable use of land resources must be maintained and contract land may not be used for non- agricultural development without approval in accordance with the law.

Similar to the issue of land adjustment and land resumption as referred to above, the issue of conversion of cultivated land for non-agricultural purposes creates challenges in rural China today and is discussed further in Chapter 3.

(f) Nature of land contract management rights

Prior to the promulgation of the PRL in 2007, it appeared that, as its name suggests, the concept of land contract management rights involved the contracting out of the right to manage the land rather than the vesting of property rights in farmers. As previously discussed in Part 4 Section (d) above, this was logically consistent with the concept of collective ownership as ownership of rural land by an abstract entity known as the ‘Collective’.

Now, under Part 3 of the PRL, land contract management rights are deemed to be proprietary rights and are treated as a type of usufruct. The concept of land contract management rights as a usufruct, however, does not sit easily with the modern framework under the PRL. This is because if collectively owned land is considered to be owned by the members of the Collective, it appears anomalous to treat land contract management rights as a type of usufruct in terms of the ‘right to possess, use and benefit from the immovable or movables owned by another person’ [emphasis added] under Article 117 of the PRL. This is because such property would not be owned by another person,113 unless the concept of the Collective is deemed to be separate from the members of the Collective for this purpose.

As the above analysis demonstrates, land contract management rights are limited in scope and their exercise is significantly restricted by both the written law and the contract. The restrictions appear to be inconsistent with the definition of a property right under Article 2 of the PRL:

112 Qiao 2016, 75, suggests that the requirement for rural land to be converted into state-owned land (except in the case of the exceptions mentioned in Article 43) before it may be used for construction purposes means that ‘[t]he most important character of [the] dual land ownership is the dominating role of the state landowner over the collective landowner, with the former’s monopoly over rural-urban land conversion.’ 113 See Yuan 2016, 10.

A property right referred to in this Law is the exclusive right of the rights-holder to exercise direct control over a specified thing according to law, including ownership rights, usufruct rights and security rights.

A ‘thing’ includes immovable property and movable property.

Similar to the position in other jurisdictions, the exclusive right to exercise direct control over a thing under Article 2 of the PRL is subject to the right of the State to expropriate immovable ‘for the requirements of the public interest’ and in return for the payment of the relevant compensation.114

A commonly recognised attribute of a proprietary right is the security of tenure that it enjoys; namely, the ability of the holder to enjoy and deal with the right free of interference by others. Another commonly recognised attribute of a proprietary right is an existence that is independent of contract. This is less a question of whether the rights are more extensive than those permitted by contract and more a question of whether the proprietary right is tied to, or dependent on, a contract for its existence and survival.

In theory, if a right is purely contractual in nature, it is vulnerable to termination by the other party subject to the payment of damages for breach, whereas a proprietary right is not vulnerable to contractual termination and requires an independent act to terminate it (e.g. the cancellation of registration pursuant to an order of the court). There are two critical issues in this regard. The first issue is whether the holder of the right can assert the right against the whole world, and not just against the former owner (in the case of an assignment) or the current owner (in the case of a derivative right such as a usufruct). The second issue is whether the law affords adequate proprietary remedies to protect the property right.

An example of the second attribute (i.e. an existence that is independent of contract) is the treatment of a leasehold estate in common law jurisdictions. Although deriving from a fundamentally different system, the common law example of a leasehold estate is useful for the analysis as it highlights the independent nature of a proprietary right vis-à-vis a contractual right and provides a point of reference with which the weak nature of land contract management rights under Chinese law can be contrasted. It also helps to explain the vulnerability of land contract management rights, the lack of proprietary remedies that are available to protect them and the rationale behind calls to strengthen the proprietary rights of farmers and to convert the Collective from an active owner of land to a passive owner. As previously noted, passive ownership by the Collective is a key issue discussed in Chapter 7.

Originally conferring only contractual rights, the leasehold in common law jurisdictions came to be recognised as a proprietary estate in the late fifteenth century as a result of the recognition of the action of ejectment, a proprietary remedy that enabled the lessee to recover possession even though the lessee was not the owner of the land (i.e. the owner of the freehold) and had therefore not previously been considered to enjoy a possessory right in respect of the land. Thus, the leaseholder enjoyed exclusive possession and could assert the proprietary right against the whole world, including the lessor.

114 PRL, Article 42.

The lessee’s rights, however, were tempered by any restrictions in the lease agreement such as a covenant against assignment, a breach of which would entitle the lessor to terminate the lease. However, even if the lessee assigned the lease to a third party in breach of the lease agreement, the assignment was a proprietary act that the lessee could exercise independently of contract and was therefore effective in law to pass the leasehold estate. In other words, even if the contract prohibited an assignment and provided that any assignment would be invalid, an assignment by the lessee in breach of contract was a proprietary act that was effective to pass the proprietary interest to the assignee. Further, although the lessor was able to terminate the lease and recover possession from the assignee, this was pursuant to the remedy of forfeiture, which was a proprietary remedy (not a contractual remedy) and allowed the lessor to re-enter the property and recover possession. Thus, although created by contract, the leasehold estate operated independently of contract as a proprietary interest and required a proprietary remedy for its forfeiture.

By comparison, and as explored further in Chapter 5, a lease is a purely contractual arrangement in both mainland China and in Taiwan.115 In these jurisdictions, a lease does not give rise to a proprietary right (i.e. a right in rem) because a lease is not recognised as a proprietary right under the numerus clausus principle as reflected in Article 5 of the Property Rights Law.

Although deemed to be a proprietary right under the PRL, land contract management rights in China are weak and vulnerable to interference. A number of reasons can be cited to support this assertion. First, the rights are vulnerable to resumption by the Collective.116 Secondly, they are vulnerable to adjustment, which will be valid in circumstances where the requisite approval of the members of the Collective is obtained.117 Further, those provisions that deal with the legal consequences of actions in breach of the law are expressed in terms that suggest in personam rights (i.e. rights against persons) rather than in rem rights (i.e. rights that can be exercised in respect of property). For example, Article 54 of the RLCL provides that if the issuer adjusts or resumes the contract land in breach of law, it has the responsibility, amongst other things, to ‘return the original property’. Further, Article 63 confers the power on a court to ‘invalidate’ an act of infringement by the representative of the collective owner rather than recognising and affirming the property rights themselves. A related point – one that is a common characteristic of laws in mainland China but is particularly relevant in the context of rural property rights – is that apart from Articles 54 and 63 of the RLCL, there are no express provisions that detail the legal recourse that farmers have and the specific remedies that they enjoy against acts that infringe their land contract management rights.

When the restrictive nature of land contract management rights is taken into account – including the obligation to return the rights in the circumstances provided by Article 26 of the RLCL (i.e. where the whole family of the contractor moves into a city divided into districts and the contractor’s rural residence is converted into a non-rural residence registration or hukou) and also the restrictions on assignment – it becomes apparent that the rights are weak and vulnerable to interference by the Collective as owner. This detracts from the security of tenure that farmers enjoy and the proprietary remedies that are available to protect land contract management rights against interference by the Collective or third parties.

115 See Chapter 5, Part 2(h). 116 Article 26 of the RLCL prohibits the issuer from resuming the land [收回承包地] during the term of the contract except in the permitted circumstances; see also Article 131 of the PRL. 117 See Article 59(2) of the PRL, Article 14 of the LAL and Article 27 of the RLCL.

In fact, land contract management rights might be said to be closer in nature to a type of personal servitude as recognised in civil law jurisdictions; namely, a proprietary right that is personal in nature and ordinarily terminates on the death of the holder,118 except that in the case of China, the rights terminate on the ‘death’ or relocation of the family or the household contractor rather than the death of a particular person.

A further point that underscores the weak nature of land contract management rights is that although the rights are theoretically capable of being held in perpetuity under Article 126 of the PRL, they are granted for a limited period (30 years in the case of land for growing crops) and are subject to adjustment as previously discussed. Further, even though there may be circumstances in which the rights may be assigned, the restrictions on the qualifications of the persons to whom they may be assigned, at least without requiring the approval of the members of the Collective and the local government, weakens the rights further.

Some scholars have argued that instead of treating land contract management rights as a usufruct, they should be treated and recognised as a form of qualified ownership [相当所有权] or as a type of personal servitude [人役权].119 According to this argument, land contract management rights are a method by which the members of a Collective can use collectively owned land. As a result, they are not a typical ius in re aliena (right over the property of another) but, instead, a form of qualified ownership [相当所有权].120 Others have drawn attention to the status-based nature of such rights, under which the enjoyment of the rights is based on membership rights (i.e. one’s status as a member of the Collective), which underscores the social purpose of land from a broader public perspective.121

6. Residential foundation rights

Under the LAL as amended in 1998, residential foundation rights are provided by the rural collective economic organisation to members of the Collective on a consideration-free basis as a form of social benefit to guarantee their normal life.122 Unlike land contract management rights, residential foundation rights are not subject to a limited term.

Article 62 provides that a village household may only have one residential site, the area of which may not exceed the limits fixed by provinces, autonomous regions and municipalities directly under the Central Government. Further, villagers must build residences in keeping with the township (town) overall plan for land utilisation123 and must be encouraged to use their original house sites or idle lots in the village to the extent possible. Importantly, Article 62 of the LAL provides that applications for residential sites made by villagers who have sold or leased their houses must not be approved. This provision raises a question that is not conclusively answered in the LAL, the RLCL or the PRL; namely, is it possible for farmers to sell their residences and the related foundation land-use rights?

118 See Li and Ni 2014, 26. 119 Yuan 2016, 10. 120 Yuan 2016, 23. 121 Wu and Wang 2015, 104-105. 122 Sun and Wang 2012. 123 This is formulated by the relevant level of the people’s governments under Article 17 of the LAL.

This is an important question in the context of the phenomenon of small property rights as discussed in Chapter 3, Part (a)(iii).

Article 149 of the PRL provides that when the period of time for the right to the use of land for construction of residences expires, it will automatically be renewed. The automatic renewal of residential foundation rights contrasts with the position in respect of land contract management rights where, as noted above, Article 126 provides that upon expiry of the term, the contractor may continue to contract the land management in accordance with the relevant provisions of the State. Article 152 provides that persons with residential foundation rights who, according to law, enjoy the right to possess and use the land owned by the Collective, may use the land to construct residences and the facilities attached to them in accordance with the law.

Reinforcing the social purpose of residential foundation rights, Article 154 of the PRL provides that when residential sites disappear ‘due to natural disasters or other reasons’, the right to the use of the residential sites is extinguished. However, the Collective must allocate new residential sites to the villagers who have lost their residential sites in such circumstances.

7. Conclusion

The analysis in this Chapter reveals a number of important points about the nature and extent of rural property rights in China. First, despite the recognition of land contract management rights in the PRL as a type of property right, the rights dwell in the space between an administrative contract and property. Although the rights have the attributes of a proprietary interest in terms of the scope or bundle of rights that they contain – including the right to assign and deal with the interest as though it were proprietary – the exercise of many of those rights is subject to the wishes of either the Collective or the members of the Collective, either pursuant to the contract creating the rights or pursuant to the law generally. In particular, the assignment of rights in respect of collectively owned land has always been – and continues to be - a sensitive issue for various reasons, including the risk of farmers losing their safety net, concerns about the potential involvement of outsiders and, importantly, the risk that farmers will be more vulnerable to pressure and interference from other interests if it becomes too easy for them to assign their rights. A related concern is that increasing the assignability of land contract management rights would increase the risk of cultivated land being converted for non-agricultural purposes.124 These concerns have supported a system of active ownership and management of land by the Collective – a system in which the scope of rights enjoyed by farmers is limited and security of tenure of vulnerable.

In relation to the question of the security of land contract management rights, the system recognises the need for the term of the rights to be certain. However, although the rights are capable of being renewed, the renewal of land contract management rights does not occur automatically as in the case of residential foundation rights. In addition, although the legal provisions have been strengthened to protect rural land rights from expropriation and adjustment, there are still circumstances in which this can occur. This increases the vulnerability of the rights and subordinates them to the administrative control of the Collective and the State.

124 See Part 5(e)(x) above.

The following policy dilemma therefore arises as a result of the existing system: in order to reduce the vulnerability of rural property rights to improper and unlawful interference by the Collective and the State, farmers must be given stronger rights and effective remedies to protect those rights; however, a corollary to giving farmers stronger rights is that they must be permitted to exercise greater control over those rights, including control over the circumstances in which the rights may be assigned or otherwise dealt with. In a circular manner, this might then exacerbate the very problems that the State is trying to guard against (e.g. excessive consolidation of farming land and the conversion of farming land for non-agricultural purposes).125

Ultimately, the critical question is how control over rural land in China should be allocated between the Collective as owner and farmers – a question that has not been conclusively resolved to date. This is partly because of the dual purposes of land, under which rural land is expected to perform both a productive purpose and a social purpose, and partly because of a state-driven, top-down approach that prioritises the interests of the broader community over the interests of the household. As previously discussed, this is reflected in the design of the legislative framework, which vests important decisions about land use and land management in the Collective or the members of the Collective and often operates against the interests of households. A legacy of the class-based land distribution of land from landlords to farmers in the fifties and the establishment of the communes in the sixties, this approach inevitably interferes with the property rights of households and their decisions about how they should deal with those rights.

Throughout the post-1949 period, the pendulum has swung from, at one end of the scale, household ownership and household management of land in the early fifties towards, at the other end of the scale, collective ownership and collective management of land in the sixties. From the eighties onwards following the adoption of the Household Responsibility System, the pendulum then swung back to a position in the middle involving a combination of collective ownership of land and household management of land. As Chapter 3 will discuss, various challenges – including the fragmentation of land management (resulting in the need to encourage large-scale farming), the vulnerability of rural property rights and irregular dealings in land by farmers and the collective – have revealed cracks and tensions in the modern system of land tenure, triggering calls for further reforms. A fundamental question is the extent to which farmers should be granted broader rights to deal with their land and the extent to which dealings with property rights should be subject to the priorities and dictates of the Collective or the State. The tensions that this question creates are exacerbated by the concern of the State to ensure the livelihood of rural citizens and their access to an adequate social safety net and also the unsettled nature of collective ownership (and, more broadly, public ownership of land) on which the whole edifice of rural land tenure is currently built.

This thesis will argue in Chapter 3 that the current legal framework is not able to accommodate the official policy objectives in respect of rural land in China, particularly the policy of developing a market for the sale and purchase of rural property rights. Nor is it able to accommodate the objectives around which the reform debate concerning land tenure has revolved; namely, the empowerment objective, under which the rights of farmers should be strengthened, and the dual-

125 For an overview of the dangers of land transfers, particularly in terms of increasing inequality and land concentration, see Vendryes 2014, 983-984. Vendryes argues that ‘[i]n rural areas in developing countries, where capital markets seldom function, where insurance mechanisms are not available, and where people often live near the subsistence level, privatizing land rights is likely to do more harm than good.’

57 purpose objective, under which land tenure should be adapted so that it better facilitates the use and management of rural land for productive and social purposes. As Chapter 3 will demonstrate, by maintaining restrictions on the proprietary rights of farmers under the current legal framework, the State compromises both the benefits that farmers can obtain from the use of land and also the realisation of the policies that the State has formulated to achieve its social and economic purposes.

Accordingly, the current legal framework is in need of reform. The conceptual model considered by this thesis would involve the use of perpetual tenancy rights to convert the Collective from an active owner of land to a passive owner of land and to allocate stronger rights to farmers based on the traditional property rights. It would also involve the use of dian rights to facilitate the use and management of land for productive and social purposes.

Chapter 3 - Rural Land Tenure in Mainland China: Challenges, Policies and Calls for Reform

1. Introduction

This chapter examines the challenges facing rural land tenure in China today, the current policies that are aimed at resolving the challenges and the various calls for reform. By examining the challenges with the current system and the various calls for reform, the chapter provides the context for an understanding of the debate, explored in Chapters Five and Six, about the relevance and suitability of the traditional property rights to the reform process.

The challenges are discussed by reference to the two legal issues identified in Chapter 1: (1) restrictions on the scope of rural land rights and the exercise of rights by farmers; and (2) insecurity of tenure.1 These legal issues relate to the ‘empowerment objective’, as outlined in Chapter 1, which is directed towards increasing the scope of rights that farmers enjoy and strengthening their security of tenure, thereby giving farmers greater agency over their rural property rights.

This chapter commences by canvassing some of the early criticism of the current system. It then outlines the challenges by reference to the above legal issues and identifies the various ways in which the legal rules as outlined in Chapter 2 are implicated in those challenges. It also examines the challenges arising out of the uncertain legal status of the household. Following this, the chapter analyses the current wave of policies in respect of rural land tenure and the inherent tensions arising out of those policies. An analysis of the policies reveals the difficulties and challenges in terms of accommodating the policy objectives within the existing legal framework. The policies are divided into five categories, the first three of which relate to the empowerment objective as identified in Chapter 1 and the fourth and fifth of which relate to the dual-purpose objective. The analysis continues with an outline of the dilemmas arising out of the current wave of policies. Two dilemmas are identified: the difficulties of achieving the policy objectives within the current legal framework and the conflicts and contradictions between the policy objectives themselves.

The chapter then examines the various calls for reform and divides them into three categories: (1) reforms based on the existing system; (2) a move towards a market-based approach that would remove all restrictions on dealings with land-use rights; and (3) a flexible and multi-functional approach. The chapter concludes with an outline of the ways in which the rules are implicated in the current challenges. Of particular relevance in this regard is the extent to which the current rules disempower farmers relative to the Collective and provide opportunities for the Collective and local authorities to interfere with the rights of farmers. The opportunity for interference undermines the empowerment objective and the dual-purpose objective and is a key element behind the conceptual models considered by this thesis. These models would convert the Collective into a passive owner of land and introduce proprietary rights that are based on the traditional property rights.

1 By scope is meant the nature and breadth of rights that may be exercised in respect of land. By security is meant both the term of the rights and also the extent to which the rights are vulnerable to expropriation, resumption, modification or infringement by the Collective or others.

2. Early criticisms of the current system

To highlight the weaknesses inherent in the current system, it is useful to canvas some of the early criticisms of the current system of land tenure after it was adopted in the earlies eighties, particularly criticism of the Household Responsibility System on which the current system is based and from which it derives its primary policy justification.

One of the most trenchant critics of the move away from the collective and centralised approach that characterised the system before the introduction of the Household Responsibility System was William Hinton, who was critical of the move towards ‘privatisation’ and the granting of greater rights to households. 2 Writing in 1989, a decade after the introduction of the Household Responsibility System in 1979 and just after the constitutional recognition of the Household Responsibility System in 1988, Hinton noted the emergence of ‘[n]ew theories defining agriculture as a uniquely individualistic occupation’.3 According to Hinton, these theories had been a reaction against cooperative agriculture and the philosophies underpinning the agricultural collectives of the sixties and seventies. Under these new theories, Hinton wrote, it was believed that ‘only dispersed family management [would satisfy] the requirements set by nature for production in the countryside’.4 As discussed in Chapter 2, the concept of family management vests management rights to agricultural land in farming households rather than in Collectives or people’s communes.

Hinton argued that although the new approach sounded like a ‘total repudiation for cooperative agriculture’, it was justified by the advocates of the contract responsibility system on the basis that it was ‘socialist in form, a system that [gave] individual initiative a chance to develop within a collective framework.’5 Hinton further noted that because of the perception that the centralised approach had not worked as a result of continuing poverty,6 the focus had turned towards the Household Responsibility System.

Hinton argued, however, that the Household Responsibility System had actually led to inefficient land-use and the inability to achieve large-scale production.7 The specific problems with the Household Responsibility System that Hinton identified included the fragmentation of land,8 the increase in disputes concerning land-use and irrigation rights, the destruction and over-tilling of land9 and also stress on grassland and livestock.10 Hinton implied that a tragedy-of-the–commons dilemma had arisen in respect of grassland:

[w]hile the “responsibility system” [had] given many families the incentive they need to work hard and do well, at present, over much of the grasslands the worst possible combination holds sway –

2 Hinton 1990, 12. 3 Hinton 1990, 64. 4 Hinton 1990, 65. 5 Hinton 1990, 66. 6 Hinton 1990, 66. 7 Hinton 1990, 11 ff. 8 Hinton 1990, 78. 9 Hinton 1990, 80. 10 Hinton 1990, 92. This includes over-grazing of land.

privately controlled stock grazing publicly owned lands. No one cares for the land because no one is responsible for it.11

Other problems identified by Hinton included social differentiation where ‘bold contractors assume the use-rights to more property than they can work, then hire poorer neighbors to do the hard, manual work’, 12 the exploitation of waste slopes13 and social polarisation. All of this had occurred, argued Hinton, despite the success of some Collectives,14 leading to ‘the wholesale enrichment of the privileged through the rapid liquidation of public assets.15

Hinton’s book was written almost 20 years before the 2008 CCPCC Decision on Certain Major Issues Concerning Promoting the Development of Rural Reforms,16 which called for farmers to be granted more secure land contract management rights and for the present land contract relationships to be preserved and ‘not to change for a long time’. Although Hinton was an advocate of the ‘self-reliant, planned national reconstruction’ that had occurred in China in the decade or so after revolution17 and was therefore ideologically disposed towards collective agriculture, his criticisms highlighted some of the deficiencies of the Household Responsibility System as perceived by those who were closely involved in agriculture and served as a portent for some of today’s concerns. These include the fragmentation of land, inefficiencies in the use of land and the difficulties of achieving large-scale farming.

Developments in the ensuing years have raised other concerns that were not so evident at the time of Hinton’s book. These include the conversion of agricultural land into land for non-agricultural use, the continuing interference by the State and the Collective in the more secure rights that farmers were supposed to have been granted and the economic boom that has fuelled the enormous and, in many cases, excessive investment in commercial and residential real estate in rural China.

The discussion below relates the challenges to the two legal issues outlined above; namely, restrictions on scope and insecurity of tenure. It then examines challenges arising out of the uncertain legal status of the household as the holder of land contract management rights. This provides the context for an understanding of the various ways in which the legal rules are implicated in the challenges that have motivated the official policy objectives and led to calls for reform.

3. Challenges

(a) Restrictions on scope of rights

The restrictions on scope in terms of the nature and extent of dealings that farmers may enter into in relation to their land-use rights has been associated with various problems as outlined below. The problems can be divided into three categories: (1) under-utilisation and inefficient use of land; (2) irregular dealings and an immature land market; and (3) irregular dealings as reflected in the

11 Hinton 1990, 92. 12 In this regard, Hinton notes that he was ‘reminded of the relationship between landlords and hired laborers in old China.’ Hinton 1990, 107. 13 Hinton 1990, 108. 14 Hinton 1990, 149. 15 Hinton 1990, 150. 16 See Section 4(b) below. 17 Hinton 1990, 13.

61 phenomenon that is referred to as ‘small property rights’. The extent of these problems differs depending on the relevant region in China. For example, problems associated with the under- utilisation and inefficient use of land are likely to be more acute in the less developed regions.18

(i) Under-utilisation and inefficient use of land

Scholars have noted that the restrictions on the assignment of land contract management rights, including the requirement for the holder of such rights to be a farmer and the requirement for approval of the village community to assign the rights to outsiders have led to land lying idle.19 Peng has suggested that the idle land problem is attributable to the inability of urban capital to enter the rural property market as a result of the restrictions on assignment, the inability of farmers to obtain a fair price for their land from those to whom they are able to assign their rights and the reluctance of farmers to discard their previous means of production (i.e. the land) and to abandon the social purpose of land as a social safety net.20 The restrictions on the assignment of rights under the current rules are therefore said to be directly implicated in problems associated with the under- utilisation of land.

(ii) Irregular dealings and an immature land market

Irregular dealings in land by farmers and the existence of an immature land market have been identified as problems arising out of the current system and practices. Many irregular dealings are associated with ambiguities concerning contracts and the contractual arrangements governing land transactions. For example, contracts for the circulation of rights are not standardised and the rights and obligations are not clear. Some contracts simply state that land is circulated to [流转给] or given [给] to a third party without clarifying the nature of the dealing. In some cases, the collective owner [发包方] deals with and assigns land that has already been sub-contracted to another person. Some contracts even purport to engage in the private sale of land.21

In addition to problems associated with contracts, the procedures for land dealings are not clear: in some cases, transactions take place without completion of the relevant legal procedures, such as filing and obtaining approvals; in other cases, the original farmers return from the urban areas to resume farming without knowing from which entity they should request an allocation of land. In other words, the identity of the Collective or the entity exercising collective ownership rights is not clear.22 As a result, difficulties have arisen in terms of fulfilling the right of rural residents to request an allocation of farming land as identified in Chapter 2.

Problems have also arisen due to the immature development of the market for land dealings. Transactions are slow and there are few regulations to guide how transactions should be completed.

18 See Zhao 2011; Sun and Wang 2012. This thesis does not undertake a regional analysis of the nature or extent of these problems. 19 Sun and Wang 2012, 142. 20 Peng 2013, 19. Li and Ni 2014, 26, have also noted that the current legal restrictions on assignment are not conducive to the commoditisation and assignment of land contract operating rights and that these restrictions have led to land becoming idle. 21 The information in the first two paragraphs is summarised from Yan Peng 2014. 22 For an analysis of problems associated with the identity of the collective economic organisation, see Rao et al 2017.

Further, households that wish to obtain land for large-scale production often encounter difficulties in sourcing land or identifying willing sellers. As a result, the development of land rental markets has been slow, even though studies show that the development of land rental markets ‘can potentially have important effects on agricultural efficiency’.23

Deficiencies in social infrastructure have also been identified as impediments to the development of land markets as farmers are reluctant to part with their land, either on a short-term or permanent basis. The deficiencies include problems associated with the hukou registration system;24 wage discrepancies and weaknesses with the social welfare system and social services. These deficiencies impose practical limitations on the exercise of rights by farmers under the current system of rural land tenure.

The rules themselves are open to misuse and abuse. For example, commercial investors have circumvented the restrictions on the use of collectively owned land for non-agricultural purposes by dressing up land expropriation as lease arrangements [以租代征], under which collectively owned land is leased to parties who develop and use the land for non-agricultural purposes in place of obtaining approval to convert the land from collectively owned land into state-owned land as required by the law.25 This results in a situation where building certificates are not issued – or such certificates are improperly issued by the local village – and where the outcome is similar to the ‘small property rights’ problem as discussed below; namely, there is no legal basis for recognising title to the buildings and other structures on the land.

(iii) Irregular dealings – small property rights

A particularly widespread problem that is attributable to the restrictions on assignment of residential foundation rights is the problem that is referred to as ‘small property rights’.26 This describes the phenomenon where farmers purport to sell their houses to unqualified third parties, particularly buyers from the urban areas, in breach of the laws and regulations. The problem is particularly rife in relation to land that is on the border of the rural and urban areas; namely, the suburban or peri-urban zones. Article 10 of the Constitution provides that village land and land in the suburban areas of the cities are collectively owned except where the law provides that such land is state-owned. This creates challenges as cities expand, as urban development and the relocation of residents increase and as urban residents are pushed further out into the suburban areas.

As noted in Chapter 2,27 the relevant laws and regulations provide that collectively owned land should be converted to state-owned land before it may be developed for residential or commercial purposes. However, the urban governments often do not have the money to acquire the land for this purpose and many irregular – and illegal – dealings occur as a result. It was reported in 2011

23 See Vendryes 2010, 93. See also Ma et al 2017, 306: ‘Land rental markets can transfer land to more efficient farmers, i.e., farmers who are able to obtain higher quantities of output from the same levels of inputs used in production.’ Wang et al 2015, 222, note that ‘land rental markets facilitate the consolidation of highly fragmented operational land holdings which can reduce production costs.’ 24 See Part 4, Section (e) below. 25 Liu 2012, 27. Liu notes estimates suggesting that 95% of the land that is used for construction purposes (建设用地) belongs to rural collectively owned agricultural land. 26 小产权. For information on this phenomenon, see Liu 2012 and Qiao and Upham 2015. 27 Chapter 2, Part 5, Section (e)(x).

63 that there were close to 50,000 villages in the cities in China and that about 260 million people lived in small property rights houses on residential land of villages and on collectively owned construction land.28

The small property rights problem has arisen even though the legal prohibition on the sale of residential property of farmers to urban residents is clear.29 Despite the clarity in the legal position, dealings in small property rights have become widespread30 and threaten to disrupt social order should the State take active steps to invalidate them. In particular, a practice has arisen in rural China where villagers, often with the support of the local village committees, engage in what are described as ’second-hand transactions’,31 under which land use rights and residential plots are purported to be sold to third parties on the basis of private agreements and the relevant certificates,32 which are delivered to the purchasers as ‘proof’ of the relevant sale transactions. However, such practices are in breach of the law and are therefore invalid and unenforceable as a matter of law.33

Yang and Ding (2011) note that there was a ‘dawn’ for small property rights housing in 2010, when the Construction Ministry and the local governments gave signals that they would liberalise the position. This followed the 2008 CPC Central Committee Decision that, among other things, called for residential foundation rights to be ‘perfected’. However, the State Land Resources Ministry subsequently dashed these hopes.34 This exemplifies the inherent tensions between the announced policy objectives of the State and the practical challenges encountered in giving them effect, particularly when the polices relate to areas of sensitivity such as social stability. More recently, Qiao has suggested that Chinese land reform is moving in a direction that may lead to the recognition and regularisation of the small-property market.35

Thus, the restrictions on assignment under the current rules have pushed dealings with rural residential property into the shadows and led to an informal, but vast, market for the sale of such property.

28 See Roundtable Discussion 2013. Yang Yuelin and Ding Meng (2011), 104, state that in places such as Shenzhen, small property rights housing constitutes about 40 to 50% of the total housing area. 29 See Article 153 of the Property Rights; Article 63 of the Land Administration Law and 国务院办公厅 1999 年颁布的《关于加强土地转让管理严禁炒卖土地的通知》规定. See also the Notice of the Office of the State Council on Strictly Implementing Laws and Policies Relevant to Rural Collective Construction Land, No. 71, 2007: ‘Farmer residences must not be sold to urban residents. Approval must not be granted to urban residents in respect of the possession and construction of residences on rural collective land and the relevant departments must not issue land use certificates or building certificates.’ 30 See Qiao 2016, 107ff for an outline of the attempts by the central government to ban small property; see also Liu 2012. 31 二手交易. 32 These include rural construction permits that are issued for the construction of residential property and collective land-use certificates that are issued to farmers in respect of residential plots. Typically, these certificates contain explanatory notes to the effect that the private sale, lease or transfer of the rights is strictly prohibited, that the certificate must be held by the land-user and must not be used for the mortgage or transfer of the land-use rights. 33 The author has acted as an expert witness in relation to PRC law in a Family Court case in Australia in which the terms of a divorce settlement concerned the arrangements in respect of small property rights in China. 34 Yang and Ding 2011, 104. 35 Qiao 2016, 74.

(b) Insecurity of tenure

Vendryes suggests that ‘[j]ust as land reallocation was arguably the main issue of the first two decades of the [Household Responsibility System], unilateral land seizure [by local authorities] has emerged as the main problem today.’36 As noted in Chapter 1, the impact of illegal takings on farmers and on social cohesion and stability has been significant and has involved violent protests and social disruption and dislocation.37

Ho similarly notes that evictions caused by urban sprawl have triggered the greatest conflict in China.38 This is largely a reflection of the extent to which the income from land grant fees has become a source of revenue for local governments to repay their debts and to meet fiscal deficits.39 Such rent-seeking is often accompanied by unlawful actions and interference by the rural collective economic organisations or the township governments and administrative departments and includes forced dealings with land against the wishes of the farmers; arbitrary adjustment to or cancellation of the land contracts of farmers; and forced leasebacks, under which farmers are forced to lease their land to the authorities, ostensibly on the basis of maximising resources and achieving large- scale operations.40 The insecurity of tenure caused by unlawful actions by rural collective organisations or the township authorities has resulted in four sub-optimal and detrimental outcomes, each of which is outlined below.

First, land insecurity results in farmers investing less in the land and using less fertiliser. De la Rupelle et al have noted that ‘a household with less security in relation to a given plot will use less fertilizer.’41 Secondly, land insecurity acts as a constraint on rural-urban migration by farmers. As noted by de la Rupelle et al, ‘land use rights insecurity acts as a constraint on the migration decisions of Chinese rural households due to the threat of collective authorities seizing the land of out- migrating individuals…We can thus expect people facing a higher risk of losing their land use rights to migrate less, or for shorter periods.’42 This problem is exacerbated by the restrictions under the current rules on farmers assigning or leasing their land to outsiders.43

36 Venryes 2010, 91. 37 See Pils 2016 (exploring extrajudicial protests and resistance); Sargeson 2013 (exploring the relationship between violence and development); Sargeson 2012 (exploring the impact of urban transformation on women’s rights). 38 Ho 2014, 13. 39 See Biddulph 2015, 124, who notes that ‘the fiscal problem of local government…fosters reliance on development projects as a source of revenue.’ The temptation on the part of local governments to extract revenue from land development is heightened by the gap between the compensation paid to farmers – calculated as a multiple of the productive yield over a period of time – and the value of the land-use rights once converted into commercial, fully assignable development rights. 40 See Yan 2014. 41 De La Rupelle et al 2008, 28. See also Vendryes 2010, 94, who notes a survey by Deininger and Jin 2009 showing that ‘a higher level of land rights security leads to higher investment’. 42 De La Rupelle et al 2008, 28. Ma et al 2016, 396, identify three risks associated with rural-urban migration: (1) the risk of land reallocation by village groups; (2) the risk of land expropriation by local governments for infrastructure development; and (3) tenants refusing to return land. 43 See Vendryes 2010, 94, who notes surveys that ‘migration is easier when there is a possibility of transferring out land’ and Mullan et al 2011, 129, who note that tenure insecurity reduces migration: ‘[W]e observe that increasing the security of land tenure, in the absence of complete rental rights, reduces the likelihood of migration…However, rental rights in combination with increased security tenure raise the probability of migration.’

Thirdly, there are inherent tensions between the goal of maximising the productive use of land and the goal of maintaining land as a form of social security, particularly if social security is defined by reference to the interests of the family or household rather than the interests of the individual.44 These tensions are exacerbated by the ongoing practice of land adjustment or reallocation, both of which continue to occur despite the legal prohibitions.45 On the one hand, land adjustment increases social security on the part of the community as a whole. On the other hand, it decreases tenure security on the part of individual households for the reason that tenure security is ‘an important element of social security’46 and production efficiency at the household level.47

The dilemma that these tensions create are reflected in the divergent views on the part of farmers in rural China and the challenges that this creates in terms of the design of land tenure. Surveys of farmers indicate that some farmers would prefer to have more secure land rights to ‘encourage them to make more land conservation investments’.48 Others prioritise the social purpose of land and favour land adjustment over tenure security for the reason that they support an egalitarian distribution of land in line with demographic changes.49 In addition, Vendreys notes that ‘there is no general or unequivocal preference for more private, extended, or secure land rights’50 and cites studies by Kung and Liu showing that

…support for collective land readjustment was strongest in places where the economy remained mostly agricultural, and was higher among the poorest households. Their interpretation was that farm households in this context saw land as an insurance device that must evolve according to family changes, and that this objective was better attained through administrative rather than market allocation processes. [Kung and Liu] also stressed the egalitarian spirit of post-Maoist rural society.51

In explaining these divergent views, Vendryes has noted that ‘the fact that Chinese rural citizens have lost the limited social safety net and public services they enjoyed during the collectivist era is likely to play an important role in increasing the attractiveness of collective and more-or-less egalitarian processes of land allocation’.52 Echoing the concerns expressed by Hinton, Ho identifies in the various studies ‘a paradoxical distinction between collective versus individual interests’:

Whereas we saw earlier that the overall majority of farmers support an insecure tenure as a means of collective social security, a certain proportion also hopes for more secure tenure themselves…41% of

44 See the discussion in Section (c) below in relation to the uncertain legal status of households. 45 Qiao 2016, 77, notes the results of a 2005 seventeen-province survey, which showed that 30.3% of villages carried out land reallocation after 1998. 46 See Ma et al 2014, 295; Vendryes 2010, 89 and 92. 47 Vendryes 2010, 89. 48 Ma et al 2016 302. 49 Ma et al 2016, 301-302. 50 Vendryes 2010, 96, citing Kung and Liu 1997, 33-63. Ma et al 2016, 386, note a survey conducted by Wang et al in 2011 showing that ‘as much as 60 per cent of the responding farmers do not endorse the central government’s attempt to stabilize farmland tenure.’ 51 Vendryes 2010, 96. See also De La Rupelle et al 2008, 27. See also Zhao 2011, 138: ‘In remote poor areas in particular, land is primarily used for subsistence by the majority of peasants, which requires its equal distribution to accommodate demographic changes.’ 52 Vendyres 2010, 97. For a comprehensive summary of the general literature concerning the arguments for and against land rights privatisation, including in relation to China, see Vendryes 2014.

the farmers find that the current lease terms is too short; the result is that they shirk from making long-term investments.53

Ho notes the view that ‘redistributions are necessary to ensure that everyone in the village has equal access to land’54 and that a distinction should be drawn between ‘minor and major land distribution’ – the former arising out of the redistribution of land between households as a result of births and deaths and the latter arising out of a wholescale reallocation of the entire village’s agricultural lease rights55 – and suggests that insecure land tenure is more credible when the social purpose of land and the preferences of farmers are taken into account.56 As discussed in Chapter 1, the social purpose of land is a significant factor in the challenges that have arisen under the current system of rural land rights. Indeed, Ho has argued that ‘the form of the Chinese rural lease system (insecure tenure) is the outcome of its present function (provision of social welfare)’57 and that China’s rural land lease ‘is an institution for the provision of rural social welfare rather than for the commercial transaction of land assets.’58 The contradictions discussed above highlight the need to have forms of land tenure that accommodate the dual-purpose objective as outlined in Chapter 1.

Irrespective of the reasons for the divergent views of farmers, studies have shown that actual tenure security is lower than legal tenure security.59 In addition, perceived tenure security, which refers to household perceptions of tenure security, ‘is also much lower than legal tenure security…and seems to be related to actual tenure security.’60

The results of the studies measuring the various elements of tenure security – namely, legal tenure security, actual tenure security and perceived tenure security – highlight the divergence between the formal position as reflected in the written laws governing rural property rights in China and the practices and perceptions on the ground. The findings from recent empirical research undertaken by Rao et al (2017), for example, indicate that ‘official land documents do not substantially enhance perceptions of tenure security, and that the official legal tenure institutions do not effectively provide perceived security of tenure’.61 In other words, despite the theories of development economists such as de Soto, formalised property rights as represented by registration systems and land certificates do not inevitably increase tenure security as perceived or enjoyed by farmers in China.

53 Ho 2014, 21-22. 54 The need to pre-empt conflicts caused by demographic change and to maintain social stability in areas such as rural Xinjiang has been identified as one of the factors in this regard: see Rao et al 2017, 5. 55 Ho 2014, 17. 56 Ho 2014, 21. 57 Ho 2014, 13. 58 Ho 2014, 17. 59 As noted by Ma et al 2014, 300, legal tenure security ‘uses legal title or land registration as proxies for legal tenure security’. Legal tenure security has increased significantly because of legislation such as the 1998 Land Management Law and the 2002 Rural Land Contracting Law (Ma et al 2014, 386). Actual tenure security ‘uses indicators of the actual control of property to measure tenure security, for example the size of the bundle of rights (transfer rights, mortgage rights, etc.), the duration of holding different rights, or past land readjustment experience.’ Ma et al 2014, 296. 60 Ma et al 2014, 301. 61 Rao et al 2017, 16.

These findings further ‘highlight the discrepancy between the state’s institutional intention (to enhance the tenure security of farmers) and the actual outcomes in rural China.’62 Thus, written law and formal institutions have had a limited impact on actual tenure security and perceived tenure security. This reveals the entrenched disconnect between law and practice and the inability of the legal framework to provide security of tenure, whether actual or perceived.

Fourthly, as noted in the literature on dignity takings mentioned in Chapter 1, insecurity of tenure has led to serious social unrest. This is manifested in protests by farmers whose land has been expropriated and in violent resistance where the law has failed to respond to and protect farmers against abusive practices.63

The uncertain legal status of the household as the holder of land contract management rights has created various challenges in terms of determining the rights and obligations between the members of the household and regulating dealings in land. Under PRC law, members of the Collective who operate in accordance with land management contracts are defined as ‘rural contract management households’ [农村承包经营户].64 As the contractor of rural land management rights,65 the household has the status of an independent civil entity that has the capacity to enter into contracts and incur civil liabilities.66 The household [农户] has been defined as an entity that is composed of marital relations and blood relations, which is usually constituted by two or more family members.67

Prior to the promulgation of the PRL in 2007, there was uncertainty over the nature of the relationship between the members of the household and their respective rights and obligations in respect of the land contract management rights that had been allocated to the household. These challenges have become more acute as rural-urban migration has increased and members of rural households have begun to rely less on land for their livelihood. In addition, as land contract management rights have begun to assume proprietary characteristics under laws such as the RLCL,

62 Rao et al 2017, 16. The authors of this study suggest that interpersonal trust and political trust are more relevant in enhancing perceived tenure security and that ‘legal tenure institutions need to take into account the local and informal norms of tenure that have already proved themselves to be useful in coping with land tenure insecurities.’ That said, other studies have noted the positive impact of official land documents on rural-urban migration and on the lease of land to non-relatives. See Ma et al 2017, 324, who note the impact of land certificates in stimulating temporary migration’, albeit encouraging part-time farming with relatively low technical efficiency. See also Wang et al 2015, 229, who note that the possession of land documents and fewer major land reallocations encourage households to rent land to non-family members and that the effects of land documents were stronger in 2008 than in 2000. The authors explain that ‘in the absence of formal tenure security, lessors prefer renting out land to relatives because it is easier to prevent squatting in the case of relatives than non-relatives,’ indicating that ‘more law-compliant documents have greater incentive effects on land transfers to non-relatives.’ 63 As noted by Pils 2016a, 888, ‘some victims unable to seek redress through judicial avenues have been driven into extrajudicial protest and resistance.’ See also Biddulph 2015, 13: ‘Widespread abuse of powers to expropriate land and buildings has led to growing public anger, with large numbers of people protesting against what they considered to be unfair treatment.’ 64 See Article 27 of the General Principles of Civil Law. Article 28 of the General Principles of Civil Law provides that debts incurred by household management are borne by the household assets. See also Articles 55 and 56 of the Civil Code. 65 Rural Land Contract Law, Article 15. 66 For a discussion of the legal issues prior to the promulgation of the PRL, see Bai 2003. 67 Bai 2003.

68 including the ability to be assigned and exchanged for value, there has been an increase in the incidence of disputes between the members of the household in respect of dealings with land.

The disputes have arisen partly because of uncertainty over the nature of the rights of the members of the household inter se and how they should be treated from a legal perspective, particularly in terms of the authority of the household head [户长] and the relationship between the household head and the other members of the household. Different theories have been proposed to explain the status and authority of the household head, including the following: (1) the household head is the representative of the household and thereby has full authority to undertake civil relations and bind the household; (2) the household head is an agent of the members of the household and is therefore subject to the principles of law governing agency, which would include a duty to act reasonably and in good faith; and (3) the structure of the household is akin to a partnership, under which the powers of the household head are similar to those of an executive partner.68

An answer to the question of the nature of the rights of the members of the household inter se appears to have been provided by Chapter 8 of the PRL. Chapter 8 recognises two forms of co- ownership: co-ownership by shares and joint co-ownership. Under co-ownership by shares, co- owners share ownership in proportion to the amount of their shares in the relevant asset.69 Under joint ownership, co-owners enjoy joint ownership that is not divisible into shares. Commentaries in respect of the PRL suggest that the relationship between a husband and a wife and family relationships normally give rise to joint co-ownership.70 Further, during the period of joint co- ownership, each co-owner exercises rights and assumes obligations equally in respect of the jointly owned assets.71 On this basis, it appears that the members of the household enjoy joint co- ownership in respect of land contract management rights and the assets that are created through the exercise of such rights.

The doctrinal basis for the authority of the household head, however, remains uncertain. Article 97 of the PRL provides that the disposal of jointly owned property requires the consent of all of co- owners unless the co-owners otherwise agree. On this basis, any dealings with the land contract management rights by the household head would require the consent of all of the adult members of the household or agreement in advance that the household head has the authority to make decisions on behalf of the household. The apparent authority of the household head to make decisions on behalf of the household is reflected in the practice by which the land-use rights certificates are issued in the name of the household head (as household representative), even though all the members of the household are listed in the relevant household hukou registration.

Problems have also arisen in practice as a result of the need for a person to be a member of the Collective before the person can be officially recognised as a member of a household. These problems have been particularly acute for women in the case of virilocal marriage, where a woman moves away from her original village and joins her husband’s family in a new village. In many cases, such women lose their claims in respect of land in their original village and are not formally

68 See Bai 2003. 69 PRL, Article 94. 70 Although there is nothing to exclude the members of a family from expressly choosing co-ownership by shares over joint co-ownership, it is likely that this would be inconsistent with notions of equality under the household contract management system. 71 Legal Affairs Office 2007, 37.

69 recognised as being members of the Collective in the new village.72 This undermines the equal rights of women as provided in Chinese legislation and policies and has resulted in the exclusion of women in decisions concerning dealings with land and other gender-related problems and inequalities.73

Deficiencies in the legislation and policies governing land management have further exacerbated the problems encountered by women. As Sargeson has written:

Although Article 30 of the [RLCL] stipulated that women who marry virilocally retain rights in their natal households’ contract land unless the village into which they marry allots them a plot, its prohibition against villages’ adjustment of land among households negated the mechanism providing in-marrying women with farmland. Revisions to the Marriage Law changed the marital regime from full community property (in which assets acquired both before and during the marriage are jointly owned by spouses) to partial community property (only assets acquired during the marriage are jointly owned; assets acquired prior to marriage remain individual property). Thus, women marrying into households with 30-year land contracts and houses lost their rights in marital land or housing.74

The above extract highlights the ways in which the rules and policies work may sometimes work against each other. In the case of virilocal marriage, for example, the rules and policies against adjusting land in response to changes in family demographics operate in favour of tenure security but against the interests of those women who are not recognised as being members of the Collective and thereby do not have any claim to land in their new village.

4. Policies

As noted in Chapter 1, the criteria used by this thesis for the evaluation of the relevance and suitability of traditional property rights to reform are the official policy objectives of the State as reflected in written documents. This part therefore outlines the current wave of policies in relation to rural land tenure that commenced in 2006 and the relevant policy objectives.75 An examination of the evolution of the current wave of policies over the past decade or so reveals a gradual shift in focus from working within the current legal framework to reforming the system of land contract management rights. As explained further in Section (f) below, a significant development occurred in 2016 with a policy call for the separation of ownership rights, contract rights and management rights in respect of rural land. Although lacking specificity in terms of the legal reforms that might be introduced to achieve its objectives, this policy call supports a key assertion of this thesis; namely, the current legal framework is unable to accommodate the policy objectives of giving farmers stronger property rights and encouraging the development of a market for the sale and purchase of

72 In theory, this could apply equally to men who move to a new village, although the impact is greater on women as women have traditionally been expected to move to their husband’s village upon marriage. As noted by Balme 2009, 188, ‘there is no national legislation defining the criteria for being a member of a collective economic organization. Therefore, such determinations have generally been left to local “democratic procedures” [i.e. undertaken by the village committee]. The principle of village self-government, combined with the current lack of uniform implementing regulations, allows each village to formulate its membership criteria based on what it believes is right or fair, or simply on what it believes is its own best interests.’ 73 For a detailed analysis of the gender asset gap in contemporary China, the inequalities that this has created and the increasing challenges as China urbanises, see Sargeson 2012 (exploring the impact of urban transformation on women’s rights). For a discussion of this issue in the context of court cases, see Balme 2009. 74 Sargeson 2012, 39. 75 A table summarising these policy objectives is contained in Chapter 7, Part 2.

70 rural property rights. It also underscores the need to consider how the current legal framework might be reformed and the potential relevance and suitability of traditional property rights.

(a) The current wave of policies

The current wave of policies in relation to rural land tenure in China can be said to have commenced in 2006 with a speech by Premier Wen Jiabao at the National People’s Congress outlining the Three Rural Issues.76 This speech foreshadowed many of the provisions in the PRL, which was promulgated in 2007. It also provided the conceptual framework for many of the policies that ensued. Although the subsequent policies have differed in terms of their scope and emphasis, they are broadly consistent with the principles as articulated by Premier Wen in this speech.

Although operating more as a means for categorising challenges in the countryside than as a conceptual framework for reform, the Three Rural Issues have served as a rallying cry for maintaining the momentum of reforms in rural China. In broad terms the ‘three rural issues’ (三农问题) are the issue of agriculture,77 the issue of rural areas78 and the issue of farmers.79 In relation to the issue of farmers, which is most directly relevant to the analysis in this thesis, Premier Wen stated that on no account should China commit an historical mistake by changing the basic land management system:

China’s reforms start with villages, and reforms to villages start with land contracts…contract land is not only an important production material for farmers, it is also the most basic life security for farmers…On the basis of the Household Responsibility System, farmers may enter the market through commoditised production and, on the basis of the voluntary assignment of contract management rights in accordance with the law, farmers can gradually increase their production scope.80

Premier Wen’s speech was significant for four reasons. First, it highlighted the dual-purpose of rural land – namely, the social purpose and productive purpose of land – and the relevance of this to the formulation of laws and policies on rural land tenure. Secondly, it highlighted the need to develop a market for the voluntary assignment of land contract management rights to encourage farmers to increase their production and achieve large-scale farming. As previously discussed in Chapter 2, the development of a market for the assignment of land-use rights goes to the question of the scope of rural land rights and has been identified as an essential component of the current policies.

Thirdly, Premier Wen’s speech highlighted the need to exercise strict controls over the use of land for construction purposes. In his speech, Premier Wen noted that a large amount of cultivated land had been converted into non-agricultural use in recent years. He further noted that although the conversion of collectively owned land had been a factor in the rapid development of urban construction, it had led to farmers receiving insufficient compensation for their rights and the sacrifice of a large amount of good arable land. If not checked, the Premier stated, the blind expropriation of land would result in farmers losing their land, which would cause serious issues for

76 See Wen 2005. 77 This relates to the question of how to industrialise agriculture in China and includes achieving economies of scale of agricultural production and guaranteeing food security. 78 This relates to the question of how to reduce the disparity of economic and cultural development between urban and rural areas and how to reform the household registration system. 79 This relates to the question of how to improve the income level of farmers and safeguard their rights. 80 Wen 2005.

71 villages and the ongoing development and stability of the entire economy. In particular, the Premier noted the difficulties in preserving basic farmland and the unlawful expropriation of cultivated land in some regions, which had caused incidents amongst the farming population and threatened stability. All of this related to the question of security of tenure and the extent to which rural land rights are vulnerable to expropriation, resumption or adjustment.

Fourthly, Premier Wen’s speech stated that as the laws and regulations were ‘relatively complete’, legal means should be adopted to manage land appropriately and guarantee the rights of farmers. This appeared to be a call for greater enforceability of rights and more effective management of land.

The table in Appendix 2 sets out the key policy objectives announced since 2006 and the documents in which the policies are embodied. The policy objectives since 2006 are divided into five categories: (1) increasing the scope of rights; (2) increasing the security of tenure; (3) encouraging large-scale farming and other innovations; (4) introducing social reforms; and (5) reforming the system of land contract management rights.

The discussion below analyses the policies with reference to the above policy objectives.

(b) Increasing the scope of rights

The call to increase the scope of rights that farmers may exercise in respect of their land – including the different ways in which farmers can circulate or assign their rights to others – has been a recurring theme in both China’s policy pronouncements since 2006 and also the debates concerning legal reforms. The 2008 CPC Central Committee Decision on Certain Major Issues Concerning Promoting the Development of Rural Reforms (the ‘2008 Decision’) recognised this objective and the necessary preparatory work for its achievement; namely, clarifying property rights,81 establishing a system of registration and issuing certificates to farmers.

To support and facilitate dealings in land, policy documents in 2010 and 2013 detailed the specific arrangements for registering rights and issuing certificates. These arrangements are ongoing and are consistent with subsequent policy documents. The 2010 document, entitled ‘Certain Opinions on Strengthening and Making Overall Arrangements for the Development Efforts in the Cities and Countryside and Further Laying a Foundation for Agricultural and Rural Development’, identified the need to accelerate the work of confirming and registering title and issuing certificates for rural collective land ownership, land contract management rights, residential foundation rights and non- residential construction land-use rights. The document called for the issuance of collective land ownership certificates to each rural collective economic organisation with ownership rights to be completed within three years.

The 2013 document, entitled ‘Certain Opinions on Accelerating the Development of Modern Agriculture and Further Strengthening the Vitality of Rural Development’, identified the need to develop the registration system for land contract management rights and called for this work to be completed within a period of five years (i.e. by the end of 2017). It also called for an acceleration in the work (as referred to above) of registering and issuing certificates in respect of rural collective land ownership, residential foundation rights and non-residential construction use rights.

81产权明晰.

The call to facilitate the circulation or assignment of land contract management rights was reinforced by a decision in 2013 entitled ‘Decision on Major Issues Concerning Comprehensively Deepening Reforms’ (the ‘2013 Decision’). The 2013 Decision called for the improvement of the secondary market for the leasing, transfer and mortgage of land. In addition, subject to preserving and improving the system for the protection of cultivated land, the 2013 Decision stated that farmers would be permitted to develop rural commercial operations by contributing their land contract management rights as shares in cooperatives. This was referred to as part of the process of granting farmers ‘more property rights’ as members of the collective economic organisations and actively developing cooperatives in which farmers would hold shares and have the right to own, enjoy the economic benefit of, sell, mortgage and inherit such shares.

In addition, the 2013 Decision reiterated the call in the 2008 Decision to establish a unified construction land market for both urban and rural areas. Under this proposal, rural collectively owned non-residential construction land-use rights would be permitted to be sold, leased and contributed as shares in companies on an equal basis with state-owned land and on condition that it complied with planning and use controls.82 One of the benefits of unifying the non-residential construction land market in the urban and rural areas is that it would be easier for urban capital to flow into the rural market for non-residential construction land and would increase the value of the relevant land-use rights.

The 2013 Decision also called for the system of rural residential foundation rights to be reformed, for certain areas to be selected to pilot the mortgage and transfer of such rights and for the channels for farmers to increase the income from their property to be expanded.83 As noted by Yuen, however, it adopted a much more cautious tone in relation to residential foundation rights than in relation to non-residential construction land.84

The 2013 Decision was followed by an Opinion jointly issued by the General Office of the CPC Central Committee and the State Council entitled ‘Opinion Concerning Guiding the Orderly Circulation of Rural Land Management Rights and Developing Appropriate Scale Operations’ in November 2014 (the ‘2014 Opinion’). The 2014 Opinion promoted pilot schemes for creating mortgages and security over land contract management rights. It also called for an acceleration of the development of the market for land circulation and for standardised contracts to be adopted for this purpose.

The policy pronouncements in respect of increasing the scope of rights identify the reasons behind the calls for reform. The reasons include the need to facilitate capital investment in agriculture and to enhance the ability for farmers to increase their income through using their land rights as security for finance. However, the policy pronouncements do not identify the reforms that are required to achieve the policy objectives.

An important question is what reforms would need to be made to the current legal framework to support the policy objective of increasing the scope of rights. In terms of land contract management

82 It has been suggested that the reference to compliance with planning and its use controls means that ‘there is some way to go before such land is fully marketable….and its marketability will be limited to certain areas such as industry, commerce and tourism and the development of commodity housing will still be prohibited.’ Roundtable Discussion 2013. 83 2013 Decision, Paragraph 21. This is directed at the small property rights problem. 84 Yuen 2014, 61.

73 rights, the 2013 Decision states that, subject to preserving and improving the system for the protection of cultivated land, farmers will be granted the right to possess, use, enjoy the economic benefits of, assign and mortgage land contract management rights.85 As noted in Chapter 2, however, land contract management rights are divided into two categories for this purpose. On the one hand, an assignment of land contract management rights that are granted pursuant to a household contract requires the consent of the Collective as issuer.86 In addition, there is no express basis on which such rights may be mortgaged. On the other hand, land contract management rights that are obtained through means other than household contracts (i.e. through tenders and auctions) may be freely transferred and mortgaged after registration and the issuance of the relevant certificate.87

One possible reform would be to treat both categories in the same way with the result that the requirement for consent of the issuer in respect of an assignment of rights granted pursuant to a household contract would be removed and such rights would be capable of being mortgaged.

In terms of residential foundation rights, any reform that would permit the free assignment of such rights would require the abolition of the prohibition on the sale of rural residences to urban residents. In terms of non-residential construction land-use rights and, as previously noted, all collectively owned land that is used for construction purposes must be converted into state-owned land, except where the land is used to establish township enterprises.88 In addition, the LAL limits the sale or lease of collectively owned land for non-agricultural construction.89 Any reform that achieves a unification of the non-residential construction land market in the urban and rural areas would therefore require an amendment to the LAL to permit construction land-use rights on collectively owned land to be bought and sold for general commercial purposes instead of being limited to use by township enterprises under Article 43 of the LAL.

All of the above reforms would require reform to the system of land contract management rights and, in particular, reform to the nature of the relationship between the Collective and farmers as holders of land contract management rights. This issue is considered further in Part 5 below.

The need to increase the security of tenure for farmers has been recognised as an important measure in several policy documents since Premier Wen’s speech on the Three Rural Issues in 2006. The 2008 Decision called for farmers to be given more secure land contract management rights and for the extent of land expropriation to be reduced. The 2012 CCPCC and State Council Certain Opinions on Accelerating the Development of Modern Agriculture and Further Strengthening the Vitality of Rural Development stated that the procedures for the expropriation of land should be regularised and provisions governing compensation for the expropriation of collectively owned rural land should be issued as soon as possible. Along similar lines, the 2013 Decision called for a reduction in land expropriation and the regularisation of the procedures for land expropriation.

85 2013 Decision, Paragraph 20. 86 RLCL Article 37. 87 RLCL Article 48. 88 LAL Article 43. See Chapter 2, Part 5(e)(x). 89 LAL Article 63.

In addition, the 2014 Opinion states that without the written mandate of the farmers [没有农户的书面委托], the village basic level organisation does not have the right to decide on the circulation of contract land and should not use the excuse that the minority should follow the majority in deciding that land should be consolidated and put out to tender. The reference to ‘village basic level organisation’ [农村基层组织] is significant as it includes the villager committee [村民委员会], which is one of the bodies that has power to exercise collective ownership on behalf of the Collective under Article 60 of the PRL. Other improper practices identified by the 2014 Opinion include the unlawful conversion of agricultural land into construction land though the use of a lease as a basis for expropriation.90

Once again, the policy pronouncements in respect of increasing the security of tenure identify the reasons behind the calls for reform but do not identify the reforms that would need to be made to the legal framework to achieve the policy objectives. As this thesis argues, a key element of any reform in this regard is to convert the Collective into a passive owner of land.

(d) Encouraging large-scale farming and other innovations

The call to encourage large-scale farming and other innovations has also been a recurring theme in the policy documents since 2006. The 2008 Opinion, for example, identified the need to develop various forms of large-scale farming, including family farms and rural specialist cooperatives.91 It also identified the need to encourage investment and high-tech innovation in farming and diverse, multi- level forms of farming, including rural alliances and cooperatives.92

This policy objective was a major focus in the 2013 Decision, which called for the joint development of family management and collective management, cooperative management and enterprise management. In particular, the 2013 Decision called for the State to encourage the market-based circulation of contract management rights to specialised operators, family farms, farmer cooperatives and agricultural enterprises in order to develop large-scale operations in their various forms.

The reference to family management alongside collective management is significant in terms of reinforcing the centrality of family farming. According to reports, the Ministry of Agriculture has stated that a family farm is an innovative form of agricultural management where the members of a family provide the main labour resources to engage in large-scale commercial farming and use the farming income as the main source of family income. Family farming is undertaken by households that are registered in the village and where the scale of farming achieves a certain level and is relatively stable. For example, a family farm in grain production would arise where the lease term or contract term is five or more years and the land under management is 50 mu (for regions where there are two harvests each year) or 100 mu (for regions where there is one harvest each year).93

90 See the discussion in Part 3(a)(ii) above. 91农民专业合作社. 92农户联合与合作. 93 See ‘Revealing the Secrets of Family Farms’ (Communist Part of China News, 14 February 2013), available at http://theory.people.com.cn/n/2013/0214/c40531-20487104.html.

The continuing emphasis on family farming was reiterated in the 2014 Opinion, which noted the need to uphold collective ownership of rural land, to stabilise household contract rights, to reinvigorate land operating rights and to develop the family contract operating system in its various forms, including family operations, collective operations, cooperative operations and enterprise operations.

Reflecting some of the inherent tensions between the various policy objectives, the 2014 Opinion warns that although large-scale operations should be promoted and farmers should be encouraged voluntarily to combine their land94 to resolve the problems associated with the fragmentation of land, it is important to prevent the excessive concentration of land [土地过度集中]. Although the practical effectiveness of this policy warning is difficult to determine, the statement highlights the dilemma that China faces in terms of maintaining the right balance between the various policy objectives and the continuing importance of family farming. It is possible that one of the reasons why family farming remains an aspiration of rural land management is to provide a check against the excessive concentration of land – a concern that was a significant factor in the conditions leading to the revolution of 1949.

(e) Introducing social reforms

In recognition of the extent to which land reform depends on broader factors, the policies since 2006 have discussed various areas of social reform in connection with rural land tenure, particularly in relation to solving the employment, housing and social insurance needs of people whose land has been expropriated and strengthening the system of social insurance in the countryside generally.95

Along these lines, the 2013 Decision called for a more balanced allocation of public resources between urban and rural areas and measures to ensure that farmers receive a fair share of the profits from land-value appreciation and to improve the agricultural subsidiary system and insurance system.96 The 2013 Decision also calls for reform of the hukou (i.e. household registration) system to help farmers become urban residents. For this purpose, the 2013 Decision calls on the State to relax the controls concerning the migration by farmers to urban areas and to set reasonable requirements for farmers to obtain a hukou in large cities. Further, public services should be made available to all residents in cities, including farmers, in respect of an affordable-housing system and a social security net.97 In this regard, the calls in the 2013 Decision appear to be primarily aspirational or policy- oriented in nature and have not yet resulted in practical reforms.

The migration of farmers from the rural areas to the urban areas has also prompted various calls in the policy documents. For example, the 2016 ‘Certain Opinions Concerning Deepening and

94并地. 95 See the 2008 Opinion. 96 2008 Opinion, Paragraph 22. 97 2008 Opinion, Paragraph 23. Reform to the hukou system occurred in July 2014 when a single national resident registration system was established for both rural and urban residents. See Bingqin Li 2015. Li notes that the ‘idea is to provide long-term residents with equal access to social services and welfare. But, ultimately, access to urban social services depends on the resources and political will of local governments. Cities that are either unwilling or unable to invest more in social services can use the flexible settlement criteria to set up alternative barriers for entry to replace the older hukou barrier. The largest cities, such as Shanghai and Beijing, have made it even more difficult for migrants to settle down permanently than before. A number of medium- sized cities have also introduced policies to favour highly-skilled migrants at the expense of low-skilled ones.’

Promoting the Agricultural Supply Side Structural Reforms and Accelerating the New Momentum for Cultivating Rural Village Development’ calls for the development of various fund-raising channels to provide compensation to farmers who voluntarily withdraw from contracted land and their rural residences and settle in the cities in accordance with the regulations. Once again, these calls appear to be primarily aspirational or policy-oriented in nature and do not appear to have been translated into legislative reforms to land tenure.

(f) Reforming the system of land contract management rights

In addition to calling for farmers to be granted ‘more complete and secure land contract management rights’, the 2008 Opinion called for the present land contract relationships to be preserved and not to change for a long time. The meaning of the phrase ‘not to change for a long time’98 is equivocal and could have one or both of the following meanings: (1) the land contract management system, which has family contract management as its foundation, itself should not change; and (2) the contract term, which is set at 30 years by law but is capable of being renewed, should be considered to be indefinite, subject only to being terminated in the circumstances prescribed by law. The second meaning has been reinforced by the 2017 Xi Jinping Report at the 19th CCP National Congress, which confirmed that ‘the current round of contracts would be extended for another 30 years upon expiration.’ This was repeated most recently in the CCP Central Committee and State Council Opinions on Implementing the Rural Vitalization Strategy, which was issued in 2 January 2018 (the ‘2018 Opinion’).

The centrality of family management over rural land was reiterated in the 2013 Decision, which called for an acceleration in the building of a new system under which the fundamental position of family management would be maintained. The call has been repeated in subsequent policy documents. In an apparent conceptual development, one that was detailed in the 2016 Opinion described below, the 2014 Opinion advocated the separation of land ownership [所有权], contract rights [承包权] and management rights [经营权], partly to encourage farmers to lease their management rights or otherwise deal with the rights in a way that would achieve large-scale production.99

In line with the 2014 Opinion outlined above, the 2016 Opinion on Measures Concerning Perfecting the Separation of Ownership Rights, Contract Rights and Management Rights in respect of Rural Land (the ‘2016 Opinion’) was expressed to be issued ‘in respect of the separation of rural land ownership rights, contract rights and management rights.’

The 2016 Opinion refers to the ‘Separation of Three Rights’ as a major innovation following the introduction of the Household Responsibility System and notes that it ‘complies with the desire for farmers to retain land contract rights and to circulate land management rights.’ This, the 2016 Opinion suggests, would better protect the interests of the Collective, the households and the land management entities by, among other things, clarifying ownership rights, facilitating land circulation, enhancing the allocation of land resources, cultivating innovative forms of management, promoting the development of appropriate scale production and providing rigorous guarantees for building

98 长久不变. 99 See Chapter 2, Part 5(a), in relation to the interpretation of management rights.

‘new socialist villages’. The ‘Separation of Three Rights’ was repeated in the 2018 Opinion but is yet to be supported by detailed policies or rules.

Included in the principles that underpin the ‘Separation of Three Rights’ is the principle of giving farmers the right to choose whether to circulate their land free of coercion, maintaining the integrity of collective ownership of rural land and also tailoring the approach to the specific locality.100 The umbrella catch-cry101 adopted to describe the purpose of the reform is ‘Implement Collective Ownership, Stabilise Household Contract Management Rights102 and Deregulate Land Management Rights’103. The 2016 Opinion clarifies that management rights are derivative rights based on household contract management rights.

The concept of the ‘Separation of Three Rights’ has been the subject of considerable debate, particularly among legal scholars who identify the conceptual difficulties in distinguishing between contract rights and management rights.104 Li and Ni 2016, for example, argue that the concept is logically inconsistent and needs to be clarified. In their view:

To separate land contract management rights into contract rights and management rights on a functional basis is inconsistent with basic legal principles. Land contract management rights are a complete set of civil rights. It is possible to divide them into different functions but it is not possible to divide them into land contract rights, land management rights or land-use rights. The rights that the receiving party obtains are not land management rights but, instead, part of the functions separated from land contract management rights.105

Further, in their view, ‘neither land management rights nor land-use rights are legal rights…Chinese law does not make separate provision for management rights and does not recognise independent management rights that are separated from land contract management rights.’106 The practical implication of this is that the circulation of management rights would not be effective in passing or creating any property rights under the law as currently drafted.

100 因地制宜. 101 落实集体所有权，稳定农户承包权，放活土地经营权. 102 The 2016 Opinion notes that household contract management rights are the basis for the rural system and that it is necessary to stabilise the existing contracting relationships and ensure that they do not change for a long time [长久不变]. It also provides that ‘irrespective of how they are circulated, collective land contract rights belong to rural households and no organisation or individual can replace the land contract position of rural households or unlawfully appropriate or limit the land contract rights of households.’ Further, ‘during the process of perfecting the “Separation of the Three Rights”, it is necessary comprehensively to protect the powers of the households to use, circulate, mortgage and to withdraw from their contracted land’ and ‘it is not permitted unlawfully to adjust household contracted land or to impose on farmers the requirement to withdraw from their land contract rights as a precondition to relocating to the city.’ 103 The 2016 Opinion notes that the management entity should have the pre-emptive right to continue to use the land after the contract has expired and, with the written consent of the contract household or its authorised agent, to re-circulate and mortgage the land. 104 See, for example, Li and Han 2017, who note that the concept has been supported by the economists but questioned by the legal community and that the debate is similar to the debate accompanying the separation of ownership rights and land contract management rights, reflecting an ‘old question’ concerning the nature of land contract management rights. See also Li 2016, 9. 105 Li and Ni 2016, 20. 106 Li and Ni argue that the traditional system of dian rights can provide a conceptual framework for the realisation of the ‘Separation of the Three Rights’. See further in Chapter 6, Part 5(d).

Some scholars argue that the concept is logically consistent insofar as the term ‘management rights’ refers to the rights that are held by the management entity after circulation and which are derived from the land contract management rights. That said, scholars acknowledge that the framework surrounding the Separation of Three Rights and the relevant concepts need to be clarified, together with the question of how to delineate and locate the three rights within the current conceptual framework.107 Other scholars have suggested that the term ‘contract rights’ primarily refers to the status of farmers as a member of the collective and that the term ‘management rights’ refers to the rights that may be separated from land contract management rights and circulated to other rural management entities.108

In line with the 2016 Opinion, the ‘Certain Opinions Concerning Deepening and Promoting the Agricultural Supply Side Structural Reforms and Accelerating the New Momentum for Cultivating Rural Village Development’, issued by the State Council on 31 December 2016, calls for the deepening of reforms to the system of rural property rights in accordance with the Separation of Three Rights. The concept was reiterated in the 2017 Xi Jinping Report at the 19th CCP National Congress.

The above debate in respect of the conceptual framework surrounding the Separation of Three Rights reveals the difficulties inherent in any attempt to achieve reforms within the current legal framework. As noted by Li and Ni, the current framework governing land contract management rights does not recognise a separation between contract rights and management rights, at least not in term of recognising proprietary management rights. The closest that the current framework comes to recognising such an arrangement is a sub-contract, under which the holder of land contract management rights sub-contracts the right to farm land to a third party. As previously discussed, however, a sub-contract does not appear to confer any proprietary rights on the third party and the contract between the holder of the rights and the Collective as issuer remains on foot.109 Accordingly, there are conceptual difficulties in accommodating the concept of the Separation of Three Rights within the current legal framework. Of particularly relevance for the purposes of this thesis is the possibility of such a concept being accommodated by the recognition of dian rights.110

(g) The policy dilemmas

When viewed against the challenges discussed in Part 3 above, two dilemmas for legal reformers arise out of the current wave of policies. The first dilemma is that, on the one hand, the current rules governing land tenure in China are inadequate to protect farmers against abusive practices that decrease tenure security on the part of farmers and to give them access to the full economic benefit of their rights. As a result, it is difficult to achieve the policy objectives within the current legal framework. On the other hand, there is uncertainty over the nature of the reforms that should be adopted to achieve the policy objectives and there is potential for reform to undermine – or to call into question – some of the fundamental tenets underpinning the current system of collective land ownership.

107 See Li and Han 2017. 108 Yuan 2016, 22. 109 See Chapter 2, Part 5(e)(vii). 110 See further in Chapter 7, Part 3(b).

For example, as part of the policy solution for the ‘Three Rural Issues’, China’s then Premier, Wen Jiabao, called for the voluntary assignment of land contract management rights to allow farmers to increase their production scope, to allow them to realise value for their rights and to protect them against the unlawful expropriation of their rights. This call is consistent with the subsequent policies that have been issued. It also supports the productive and social purposes of land under the dual- purpose objective in terms of giving farmers greater agency to determine how to benefit from the value of their rights. However, any reform to the rules that would remove the restrictions on the assignment of rural property rights would fundamentally change the nature of the land contract relationship between the Collective as owner of rural land and the members of the Collective to whom land contract management rights are granted. In particular, and as previously discussed in Chapter 2, such reform would convert the nature of the relationship from an essentially administrative relationship – under which rights to cultivate rural land are granted by the collective to members of the collective on terms that the collective exercises administrative supervision over the rights and reserves the right to adjust the land and to resume the land in certain circumstances – to a proprietary relationship under which the Collective remains the owner of the land but in all other respects (and subject to compliance with the laws governing the use of land) the holders of rural property rights are free to deal with the rights as they deem fit, including freely assigning the rights for value on the market.

The second dilemma, one that is related to the first dilemma, is that there are direct conflicts and contradictions between the policy objectives themselves. This is particularly acute as between, on the one hand, the policy calls to encourage large-scale farming to increase agricultural productivity and overcome the deficiencies of dispersed family management and, on the other hand, the policy calls to maintain the centrality of family management111 and to develop the family contract management system in its various forms.112 The 2014 Opinion expressly alluded to this dilemma when it warned that although large-scale operations should be promoted and farmers should be encouraged voluntarily to combine their land, it was important to prevent the excessive concentration of land. As previously discussed, another contradiction arises out of the rules that increase tenure security by prohibiting land adjustment based on demographic changes but operate against the interests of women who engage in virilocal marriage.

These conflicts and contradictions create uncertainty as to the nature and extent of the policy objectives and whether the overarching focus is to reinforce the tenets underpinning the existing system – such as the centrality of family management – or, instead, to introduce more fundamental reforms to the existing system. Exacerbating the dilemma in this regard is the speed at which changes on the ground are occurring, partly because of rural-urban migration and urban transformation, and the increasing disconnect between the legal framework and the underlying social structure that it seeks to govern.

This dilemma is exacerbated by the extent to which reform to rural property rights inevitably touches on other areas of reform, including the system of social insurance, the hukou registration system, rural-urban migration and urban transformation. In particular, because of the social purpose of land, some farmers may be more concerned about the social welfare aspects of land allocation as

111 2013 Decision. 112 2014 Opinion.

80 previously discussed. This means that reform to rural property rights cannot be considered in isolation and is often co-opted or appropriated as part of the process of achieving or maintaining other policy objectives. These other policy objectives include the policy of maintaining the redline of 1.8 billion mu of arable land and keeping rural-urban migration within manageable limits.

Of relevance to the analysis in this thesis is that the policies confirm the two objectives around which debate concerning legal reform has revolved; namely, the empowerment objective, which calls for an increase in the scope of rights and security of tenure enjoyed by farmers, and the dual- purpose objective, which calls for land tenure arrangements to be adapted so that they facilitate the use and management of land for both social and productive purposes. The critical question, however, is how land tenure should be reformed for this purpose of achieving these objectives. The discussion below examines some of the calls for reform to the legal framework governing rural land tenure.

5. Calls for reform

The full implementation of the policy objectives as outlined above will require reforms to the legal framework of rural land tenure. As noted in Chapter 1, those who call for reforms to the legal framework broadly fall into three categories: (1) those who argue that reforms should proceed on the basis of the existing system; (2) those who argue that a move towards a market-based approach is required where farmers have more secure land rights and can make their own decisions about how to deal with their property rights – for some, this means privatisation of land;113 and (3) those who argue that a flexible and multi-functional approach is required that takes account of local conditions and realities, including the social purpose of land in rural China.114 It should be noted that these categories are not exhaustive. However, they provide clear demarcation lines for the purpose of analysis. A summary of these three categories appears below.

(a) Reforms based on the existing system

As reflected in the policy documents outlined above, the official focus to date appears to have been on accommodating reforms within the existing system of collective ownership and land contract management rights. The relevant reforms, which have been implemented in practice, include the corporatisation of farming operations, family farms and rural cooperatives. All of these reforms are designed to encourage greater land efficiency through implementing large-scale farming.

Over the past decade or so, different regions within China have experimented with rural land reforms. Some of these reforms are irregular and either are in breach of the existing legal and regulatory framework or are of questionable legality. The irregular reforms include the 2005 Administrative Measures of Guangdong Province for the Circulation of the Right to the Use of Collectively-owned Land for Construction Purposes, which were expressed to be issued for the purpose of ‘regularising the orderly market for the circulation of collectively owned construction land-use rights’ in Guangdong Province. These measures, which regulate the selling, leasing, assignment, subleasing and mortgage of the right to use collectively-owned land for construction purposes, recognise a much broader range of circumstances in which collectively owned land may be

113 See De La Rupelle et al 2008: ‘On first sight, Chinese rural institutions thus appear to form an effective barrier to land exchanges and labour movements…All these analyses ultimately militate for a radical privatisation of land rights in China on the grounds of efficiency as well as equity.’ 114 See Zhao 2011, who calls for pro-poor, as distinct from pro-market, land tenure designs.

81 used for non-agricultural, construction purposes than those circumstances permitted by the LAL and the RLCL and are subject to challenge on this basis. For example, Article 8 of the measures provides that collectively-owned land may be used for various non-agricultural construction purposes, include the establishment of different kinds of industrial and commercial enterprises and foreign-invested enterprises.

Three other reforms warrant specific mention. The first reform is the concept of land shares,115 under which farmers contribute their rural land contract management rights as shares in rural cooperatives, which undertake farming operations on a self-governing basis, and become shareholders in the cooperatives and receive dividends accordingly. This reform is a legitimate reform that is based on Article 42 of the RLCL. As noted in Chapter 2, this article provides that farmers may pool their land contract management rights as shares to engage in cooperative agricultural production.116

The second reform is the concept of land trusts,117 under which farmers entrust their rights to trust companies, which manage and deal with the rights for their benefit and as commercial operations that are independent of the farmers. Such an arrangement is structured under the Trust Law and usually involves the trust company being empowered to manage the land-use rights on behalf of the farmers, often in respect of land that has fallen idle as a result of urban migration, with the farmers receiving distributions from the income generated by the land. This reform is not expressly supported by the laws governing rural property rights. At the same time, there is no express prohibition on the use of the Trust Law for this purpose either.

The third reform is the concept of land tickets,118 under which farmers reclaim abandoned rural collectively owned construction land that was used for residential use, village enterprises, public amenities and other public interest endeavours and convert it into cultivation land for agricultural produce. They can then apply to the relevant local government for certificates of land-use rights in respect of the land, which are referred to as ‘land tickets’. Through rural land transactions, the farmers may then sell those rights to third parties, including companies that may negotiate with the authorities of the State for the land to be converted into state-owned land and included in the plan for the use of construction land for commercial purposes.119

To promote experimental reform and in addition to the reforms undertaken within the existing legal framework such as the three reforms outlined above, the National People’s Congress Standing Committee issued a decision on 27 February 2015 entitled ‘Decision concerning Authorising the State Council to Temporarily Adjust the Implementation of the Relevant Laws and Regulations in Thirty-Three Experimental Counties, Cities and Districts, including Daxing District of Beijing City’ (the ‘2015 Decision’). Expressed to be issued for the purpose of ‘reforming and perfecting the rural land

115 土地股份. 116 See Chapter 2, Part 5(e)(vii). 117 土地信托. 118 地票. 119 This reform was first trialled in Chongqing in 2008 and subsequently extended to Chengdu in 2010 pursuant to an approval document issued by the National Development and Reform Commission: http://www.ndrc.gov.cn/rdzt/gggj/zywj/200804/t20080414_249619.html. It appears to be based on the provisions of Chapter 3 of the Rural Land Contract Law, which enable rights in respect of waste land to be obtained through means other than the household contact system. See Chapter 2, Part 5(e)(vii).

82 system, promoting the modernisation of China’s special agricultural sector and innovative urbanisation and providing practical experience’, the 2015 Decision permits the adjustment, including suspension, of provisions concerning the expropriation of rural land, the entry of rural construction land into the market and the administration of residential land on a trial basis until 31 December 2017. Calling for the reforms to be appropriate for the relevant region, the Decision identifies three ‘bottom lines’: (1) public ownership of land must be maintained; (2) the redline of 1.8 billion mu of arable land must not be broken; and (3) the interests of the farmers must not be harmed. The Decision identifies those provisions of the LAL that may be adjusted for the purpose of the trial.120 The outcome of the trials remains to be disclosed as at the time of writing.

(b) A move towards an unrestricted market-based approach

Those who belong to the second category (i.e. those who argue that market-based reforms should be adopted such as the unrestricted sale and purchase of rural property rights on the market) generally agree that any move towards a more market-based approach would require a comprehensive social insurance system, one in which there would be less reliance by farmers on land as a source of social security.121 It would also require policy makers to ‘pay more attention to land tenure security perceptions at the household level as these are the basis for economic decision- making by rural households’122 and to lift or relax the restrictions on dealings with land-use rights and residential foundation rights by farmers and rural households. In particular, it has been argued that farmers should have greater power to deal with the building ownership rights that attach to their residences and in respect of which they hold residential foundation rights, which would alleviate the small property rights issue.

Some have argued that progress in the reforms to rural land rights in China to date has been too limited and too slow and is a long way from resolving the problems. According to this view, the core of the problem is the system of land tenure itself. Until land contract management rights can be given a market value, it will be impossible to mortgage them as it would be impossible freely to convert them into value on the market. Further, if it is only those farmers that resettle in the city who can voluntarily sell their residences for value, it will not be possible to attract capital into the country from outside and small property rights residences will not be able to enter the market and be freely traded.123

The views of Zhao124 and Ho125 are representative of the views of those who fall into the third category (i.e. those who argue that a flexible and multi-functional approach is required that takes account of local conditions and realities). Each acknowledges the multiple facets to the challenges and the multi-functional nature of land and land-use rights but does not make specific proposals as

120 These include the following articles: LAL, Articles 43, 44, 47, 62 and 63. 121 See, for example, Sun and Wang 2012, 143, who argue that China should establish a comprehensive social insurance system in the countryside and remove the restrictions on the right to deal with houses by rural residents: ‘such restrictions are unfair and a form of discrimination and are not beneficial in terms of guaranteeing the lawful rights and interests of farmers.’ See also Ma et al 2014, 303. 122 Ma et al 2014, 303. 123 See Qian 2016, 147. 124 Zhao 2011. 125 Ho 2014.

83 to the form that a multi-functional approach would take. Zhao highlights the extent to which ‘China’s land tenure reform, like elsewhere, is not just about land and property rights but more about how land is governed by the local government and how it is inextricably linked to peasants’ livelihoods and sustainable land use.’126 Accordingly, ‘[a]ny attempt to instigate large-scale agriculture is unrealistic simply because of the dependency on land as basic means of livelihoods for the vast Chinese peasantry.’127

To Zhao, the answer does not lie in increasing security of tenure or privatisation. In particular, Zhao suggests that privatisation would not bring about the benefits that people claim but ‘would lead to poverty and deprivation of the majority of peasants’, arguing that ‘[so] long as the social and political rights of the poor are not enshrined in law and enforceable, it is unrealistic to pursue the course of land privatization.’128 Instead, Zhao argues:

[t]he power to control, or simply the power of access, is of greater practical significance than legal ownership. Aside from the power issue, it is important to understand the multifunctional relationships vested with property and the underlying ideology, culture, legal regulation and property practice.129

Accordingly, Zhao argues that a practical, flexible approach is required that takes local conditions into account and under which local communities are ‘given the right to utilize their resources in ways that best suit their own interests through the establishment of small-scale collective property systems’ and ‘flexibility…to decide on a particular land use arrangement deemed appropriate for the specific village setting.’130 For this purpose, ‘diversified land tenure systems encompassing both individual and collective landownership and land use rights should be explored’.131 In particular:

Future land laws and policies may need to give more attention to peasant participation in decision making and actively support their initiatives in determining the types of land rights they need for a specific type of land use and management. Innovative forms of tenure, which address the constraints on livelihoods and natural resources, should be pursued.132

Along similar lines, Ho argues that the solution to the challenges today requires a ‘multi-layered, multi-dimensional perspective’ under which ‘China’s less urbanized and commercialized inland rural regions should be viewed and analysed in a different light than the industrialized peri-urban zones.’133 According to this view, the institutional credibility of China’s land tenure system, particularly in the less developed regions, should be assessed less by reference to its institutional form and tenure insecurity and more by reference to its institutional function; namely, ‘to function as a safety net for farmers.’134

126 Zhao 2011, 133. 127 Zhao 2011, 136. 128 Zhao 2011, 141. 129 Zhao 2011, 138. 130 Zhao 2011, 143. 131 Zhao 2011, 143. 132 Zhao 2011, 145. These innovative forms include small-scale collective property systems. 133 Ho 2014, 24. 134 Ho 2014, 23. According to Ho (2014), 24, ‘[c]redibility is about finding out what works in a given space and time-dependent context before the question of form is even asked’.

The move towards a flexible approach, one that is multi-functional in nature, is attractive insofar as it would take regional differences and local conditions into account. Its main challenge, however, is how to reform the legal framework to accommodate such an approach. As will be argued in this thesis, it is possible that the adoption of traditional forms of land tenure would accommodate a flexible approach along the lines outlined above.135

6. The implication of rules in the current challenges

The above overview of the challenges and tensions facing rural China today reveals weaknesses in the rules governing rural land tenure and the extent to which the rules themselves are implicated in irregular and abusive practices. A key example of this is the way in which the rules regulate the relationship between the Collective and the holders of land-use rights and allocate rights and the obligations between them. As reflected in the restrictions on the assignment of land contract management rights and residential foundation rights, the rules disempower farmers relative to the Collective. This disproportionately favours the latter over the former, both in relation to the scope of rights enjoyed by farmers (i.e. their ability to deal with their rights as they choose) and also in relation to the protection that they enjoy against land adjustment or expropriation (i.e. their security of tenure). Indeed, as reflected in the use of lease arrangements to achieve the commercialisation of land for non-agricultural purposes and the rent-seeking practices of local authorities, the rules themselves are open to misuse and invite irregular and abusive practices. As a result of the weaknesses in the rules, the State encounters difficulties in implementing its policy objectives of strengthening the rights of farmers and promoting the development of markets for land transactions. In part, this is because of the dual purposes that land has traditionally served and the reluctance of the State and local authorities to surrender control over the ways in which land is managed and the purposes for which land is used. This leads to inconsistencies in the policies of the State and conflicts between the public interests of the State and the private interests of farming households.

The analysis of the rules and the challenges that have arisen – particularly concerning the level of control over dealings in rural land that is exerted by the Collective and the role of the Collective as an active owner of rural land – reveals that the system of land tenure in rural China today is primarily administrative in nature. In other words, despite the reforms brought about by the PRL, rural land- use rights are essentially administrative contracts dressed in the language of proprietary rights.

The various calls for reform raises a question that is central to the focus of this thesis; namely, do traditional rights have a role to play in the context of reform to rural land rights in China today and, if so, in what way and for what purpose?

Chapter 4 explores the historical and legal context for the traditional forms of tenure in rural China, together with the social and economic context within which they operated, as the precursor to an examination of the specific rights that are the subject of Chapters 5 and 6; namely, perpetual tenancy rights and dian rights respectively.

135 See further in Chapter 7.

Chapter 4 – The Historical and Legal Context for the Traditional Forms of Tenure in China

1. Introduction

As noted in Chapter 1, there are many who have suggested that perpetual tenancy rights and dian rights are relevant to reform. This requires an understanding of the historical and legal context in which they operated and the structural factors that influenced their emergence and development. This chapter examines this context and provides a basis on which to compare the traditional system with the modern system and the challenges confronting each one. In particular, the chapter considers how the traditional forms of tenure allocated rights and powers between the State as the ultimate owner of land and farmers, and also how the traditional system supported the empowerment objective and the dual-purpose objective.

Three structural factors are considered. The first factor is family ownership. Family ownership is relevant as it explains the ways in which traditional forms of land tenure responded to the needs of individual families and thereby achieved the dual-purpose objective. This factor was particularly relevant in the case of dian rights. The second factor, which is related to the first, is the existence of restrictions on the assignment of land. As they related to perpetual tenancy rights and dian rights, these restrictions were designed to keep land within family ownership and the local community. The third factor is taxation. As noted below, the payment of taxation provided the basis for the legal recognition of rights in respect of land. Taxation was also a factor in bringing about perpetual tenancy rights and dian rights as, in each case, the rights initially enabled a transfer of the right to use and manage land without a transfer of the primary duty to pay tax to the State. Tax was subsequently imposed on dian sales. Although taxation has not been a central factor in the design and development of rural land rights in China today, it is important to be aware of the relevance of taxation as a factor in the development of the traditional forms of land tenure as tax was a factor (albeit not the sole factor) in terms of the frequency of their use.

This chapter is organised into five parts. Part 2 outlines perpetual tenancy rights and dian rights in anticipation of the detailed analysis in Chapters 5 and 6. Part 3 provides an overview of the general historical and legal context within which the traditional forms of tenure emerged and operated. This overview supports the contention, as noted in previous chapters, that a fundamental question in China today is how to allocate rights between the State and farmers and, concomitantly, the degree of control that the State should exercise over the use and management of rural land.

Part 4 examines the traditional concept of family ownership and its impact on dealings with land, including the requirement for land to be equally divided between the sons upon family division. Part 5 considers private constraints on the assignability of land that were based on custom, customary law and social conventions. Part 6 examines issues concerning taxation. Part 7 concludes by making some observations on the structural factors underpinning the traditional forms of tenure in China and comparing the historical context with the modern context. This comparison is relevant to the analysis of the potential suitability of the traditional property rights to reform in China today.

2. An outline of perpetual tenancy rights and dian rights

(a) Perpetual tenancy rights

Perpetual (sometimes translated as permanent) tenancy rights occupied a unique place, both in the development of practices in relation to land and in Chinese economic history. Perpetual tenancy rights involved the granting of land use rights to farmers on a perpetual basis in return for the payment of rent, usually on a fixed basis, to the land owner. This form of tenure was of particular importance to the economy in the Ming and Qing Dynasties after the concept of divided ownership rights was recognised. Under the concept of divided ownership, the holder of perpetual tenancy rights enjoyed more-or-less absolute rights in relation to the use of the land, including the right to sell and otherwise deal with the land in the capacity of an owner, and the owner of the land remained as a passive owner for whom the sole benefit from ownership of the subsoil rights was the receipt of rent from the holder of the perpetual tenancy rights.

(b) Dian rights

Like perpetual tenancy rights, dian rights occupied a unique place in the development of practices in relation to land and in Chinese economic history. Dian rights involved the transfer of land by the owner (the ‘dian-maker’) to another party (the ‘dian-holder’) on terms that the dian-maker reserved the right to redeem the land at some point in the future. They appear to have been more common than transactions involving perpetual tenancy because of the extent to which they were used as a means of raising finance for short-term needs and as a means of adjusting the amount of farming land that was needed by a household in response to changes in household demographics.

The arrangement enabled the dian-holder to obtain a proprietary interest in the land for the term of the dian together with the possibility of obtaining absolute ownership if the dian-maker did not redeem the land as agreed in the dian contract. As the holder of proprietary rights in respect of land, the dian-holder could deal with the rights by creating a sub-dian in favour of third parties and mortgaging such rights on terms that were subject to the rights of the dian-maker. A dian was different from perpetual tenancy rights insofar as the arrangement did not involve the payment of rent by the dian-holder to the dian-maker. Instead, the dian-holder paid a dian price at the beginning of the arrangement in return for the right to farm the land during the dian period and to enjoy the produce from the land. On this basis, the economic return that was enjoyed by the dian- holder was based on the agricultural productivity of the land instead of the increase in the capital value of the land.

Unlike perpetual tenancy rights, dian rights were a form of limited-term tenure; namely, the term was limited either by reference to the specific term as agreed in the dian contract or, in circumstances where the dian-maker had the right to redeem the land at any time, at the option of the dian-maker.

3. An overview of the historical and legal context

The traditional forms of land tenure that are the subject of this thesis – namely, perpetual tenancy rights and dian rights – emerged over the past millennium alongside the rise of private rights to land in China. These traditional forms of tenure were of critical importance to the Chinese economy

87 during the Ming and Qing Dynasties. They emerged largely in response to, and as a means of ameliorating, restrictions relating to the assignment of land. These restrictions arose out of family ownership and a desire to keep land in the hands of the family and the local community. They also emerged in response to the requirements of the State concerning taxation and the attempts on the part of the State to maintain control over rural land dealings.

The discussion in this Part 3 focuses on three aspects that are relevant in terms of locating the traditional forms of tenure within the broader historical and legal context. First, the discussion outlines the evolution of private rights to land in China and demonstrates that the current calls for greater autonomy on the part of farmers are part of an historical continuum that concerns the fundamental question of how to allocate powers and rights between the State and farmers. Secondly, the discussion outlines the interaction between custom, customary law and the formal legal system. Thirdly, the discussion outlines the social and economic challenges in which the traditional forms of tenure have been implicated as a basis for understanding their potential relevance to reform in China today.

(a) The evolution of private rights to land in China

The nature and extent of private rights to land – together with the alienability or assignability of those rights – are factors that have fluctuated throughout Chinese history. State-ownership of land, on the other hand, was consistently recognised since the Zhou Dynasty and was reflected in the popular saying: ‘no land below heaven does not belong to the Emperor; no land boundaries are not determined by the emperor’s officials’.1

Although the system of land tenure since the revolution of 1949 and as outlined in Chapter 2 represents a decisive break from the system that preceded it, there had been earlier periods in Chinese history when the State played an active role in allocating rights in respect of land and prohibited or restricted the assignment of land. The active role of the State was most evident in the well-field system, which arose during the Western Zhou Period (1050 – 770 BC), and the equitable- field system, which arose during the Southern and Northern Dynasties (386 – 589 AD). The discussion in Sections (b) – (e) below outlines each of these systems, provides an overview of the position in the Ming and Qing Dynasties and the Republican Period by way of comparison and analyses the historic question about how to allocate powers and rights between the State and farmers.

The discussion in Sections (f) and (g) examines the interaction between custom, customary law and the formal legal system and the social and economic challenges respectively.

(b) The well-field system

The well-field system was developed in the Western Zhou Period (1050 – 770 BC). Under this system, land was granted to the aristocrats in return for feudal dues and services to the Emperor. The land was then sub-granted to farmers on the basis that it was divided into nine sections; the eight outer sections were private fields [私田], which were cultivated by farmers for their private benefit, and the centre section was a public field [公田], which was collectively cultivated by the farmers for the

1溥天之下，莫非王土；率土之滨，莫非王臣. See Kong et al 1996, 6. See also Jamieson 1970, 90.

88 purposes of paying taxes to the State.2 The basic approach was that each of eight families would be granted 100 mu of land and 100 mu of land would be collectively cultivated for the State. Land in the remote areas was subject to regular allocation and adjustment based on the quality of the land and demographic factors.

Under the well-field system, land was initially not permitted to be purchased and sold. Instead, the land was required to be managed by those to whom it was granted by the State.3 By the second-half of the Zhou Dynasty, however, large-scale grants of land were made to the aristocrats and, with the weakening of imperial power and the strengthening of aristocratic power, a gradual separation arose between ownership rights and use rights. The separation of ownership rights and use rights paved the way for the subsequent division of interests in land such as divided ownership.4 Accordingly, the aristocrats started to exercise disposal rights in respect of surface rights [田面权], the value of which became more important than ownership of the land itself.5 However, the disposal of surface rights required the consent of the State.6 Although the requirement to obtain the consent of the State restricted the right to assign the surface rights, it reflected State recognition of the separation between the ownership and use of land.

The well-field system, and the feudal system that supported it, declined from the Spring and Autumn Period (770 – 479 BC) until the Warring States Period (476 – 221 BC), by which time a private land ownership system had arisen and land ownership was permitted to be freely transferred.7

Quoting from the Han historian and writer, Xun Yue, Nie notes that the well-field system of the Western Zhou Period was only feasible when land was plentiful and people were sparse. In circumstances where the population had increased and there was a shortage of land, the well-field system was not effective. Instead, measures were required to impose maximum limits on the amount of land that people could possess and to limit the purchase and sale of land to reduce land consolidation. Nie notes that Xun Yue advocated a policy of cultivation without ownership [耕而勿有]), under which ownership of large tracts of agricultural land was vested in the State and farmers only enjoyed possession and cultivation rights, but not the right to buy or sell. This helped to achieve the ideal of ‘land to the tiller’ [耕者有其田] and bears a resemblance to the philosophical basis underpinning the system of today.8 These circumstances justified the introduction of the equitable- field system [均田制], which was first introduced in 485 AD during the Southern and Northern Dynasties (386 – 589 AD) and survived for about 300 years through to the Tang Dynasty (618 – 907 AD).

2 Kong et al 1996, 8. 3 This was reflected in the expression tian li bu yu [田里不鬻]. 4 See the discussion in Chapter 5, Part 2(b). 5 As noted by Kong et al 1996, 19, by the latter half of the Zhou Dynasty, possessory and usufructuary rights to land became stabilised and fixed and gradually transformed into a form of ownership rights. See also Kong et al 1996, 54-55. 6 Kong et al 1996, 17. 7 This system was known as shou tian ‘授田’. For a discussion about the decline of feudalism and the impact of land tenure, see Fu 1981. 8 See Nie 2009, 84-85.

Under the equitable-field system, which involved greater control by the State than the well-field system, land was granted by the State to people who were of a tax-paying age to farm until old age and death. When people reached the age of 66 or died beforehand, the land was required to be returned to the State. Elvin notes that institutions such as the equitable field system ‘were designed to defeudalize society, in the sense of ending the fragmentation of authority, controlling the aristocracy and replacing the great estates with communities of free peasant smallholders.’9 By the Sui and Tang Dynasties, however, the equitable-field system had become unstable for various reasons.10 These reasons included the relaxation of restrictions on the purchase and sale of land,11 the illegal acquisition of land by powerful families and the pressure of taxation on small farmers, leading to vagrancy.12 By the time of the Song Dynasty, private land ownership was firmly entrenched and land consolidation had increased.13 With the withdrawal of the State from active control of rural land and the emergence of a landed class, the large private estates or manors ‘had become the foundation of a new and distinctive social order based on the enserfment of much of the peasant population and [exerted] a dominant influence over most of the rest.’14

(d) The Ming and Qing Dynasties and the Republican Period

Developments during the Ming Dynasty and the Qing Dynasty reflected a continuing decrease in control by the State over the management and use of land and led to a shift from the large estates as referred to above to what Elvin has described as a ‘new and distinctive rural order’:

The landlord and the pawnbroker took the place of the manorial lord; financial relationships displaced those of status. The members of the gentry who ran rural projects now did so as professional managers, and not as owners of land directly interested in the outcome of their labours. Class consciousness and social mobility among the peasantry increased; and society became restless, fragmented and fiercely competitive.15

This shift came about as a result of a number of factors, including peasant rebellions16 economic and social developments, which ‘had weakened the manorial system’17 and the fact that ‘free tenants working family-size units were more productive than larger groups of unfree labourers working larger units as a managed work force.’18 There was also a move towards the large-scale commercialisation of land and an increase in the volume of land transactions accordingly.19

In addition, in a development that led to the increase in perpetual tenancy, tenants ‘were increasingly disposed to resist paying their rents’ and ‘it was often said that “collecting rents was a path to be feared”’, partly because tenants and local officials often colluded to evade the payment

9 Elvin 1973, 54. 10 Elvin 1973, 59-61. 11 Nie 2009, 85. Nie notes that perpetual fields granted to officials could be purchased and sold, which led to land consolidation and the destruction of the equitable-field system. 12 Elvin 1973, 62-63. 13 Nie 1973, 85. 14 Elvin 1973, 69. 15 Elvin 1973, 235. 16 Elvin 1973, 246-248. 17 Elvin 1973, 248-249. 18 Elvin 1973, 252. 19 See Pomeranz 2008.

90 of rent to the landlords.20 The exodus of landowners to the cities gave rise to the phenomenon of absentee landlordism, which strengthened the foundation for the emergence of perpetual tenancy rights and divided ownership as discussed in Chapter 5.

The collapse of the Qing Dynasty in 1912 ushered in a period of Republican government, together with civil law reforms along Western lines. As discussed in detail in Chapters 5 and 6, these reforms codified the traditional forms of tenure and located them within a comprehensive civil law framework. Although these reforms were significant, they did not affect the fundamental nature of private ownership of land.

(e) The allocation of rights between the State and farmers

As noted in Chapter 1, the history of land tenure in China reveals the ongoing struggle to achieve a balance between the rights of the State and the private rights of farmers. Nie has noted that ‘from the creation of the State, land rights in China have been divided into shared ownership between the State and other owners’.21

With each cycle involving an increase in intervention by the State in the exercise of rights to land, several critical factors have been in play. One factor is the wish of the State to maintain control (including through taxation) to ensure its self-survival, particularly after wars and civil upheaval.22 A related factor is the need to ensure the fair distribution of land and to maintain social stability. This has justified various policies and practices including the allocation and adjustment of land by the State for both residential and cultivation purposes,23 the recognition of different categories of land for the purpose of transfer and inheritance24 and the principle of equal inheritance among male heirs as discussed in Part 4 below.

A further related factor has been the need to avoid private abuses involving the exploitation and subjugation of farmers through land consolidation (caused by the growth of large estates) and to limit the exercise of control by private landholders.25 Other factors relate to the increase in the productive use of land and the agrarian economy. For example, greater efficiency in the use of land and the desire to open up wasteland for cultivation prompted the State to recognise stronger rights over land in return for the cultivation of wasteland.26

20 Elvin 1973, 249-251. 21 Nie 2009, 83. 22 For a reference to the retreat from privatisation that was caused by instability following the fall of the Roman Empire and the Great Depression of the 1930s, see Demsetz 2002, 669. 23 This was evident in the Western Zhou Period during the implementation of the well-field system and in the Western Jin Period and the Southern and Northern Dynasties during the implementation of the equitable-field system. 24 During the Sui and Tang Dynasties, land granted to ordinary people included allotted rice fields [口分田], perpetual fields [永业田] and private fields for residential purposes [私田]. Allotted rice fields had to be returned to the government upon old age and death. Perpetual fields, on the other hand, could be inherited. 25 This was particularly evident during the Song and Ming Dynasties, where attempts were made to free tenants from their ‘bondage to the soil’. See Fu 1981, 13-17, for an outline of the exploitation that occurred in the landlord economy during the Ming and Qing Dynasties. 26 This was evident in both the Western Zhou Period during the implementation of the well-field system, and during the Three Kingdoms during the implementation of the policy of reclaiming wasteland by garrison troops and peasants [屯田].

A critical tool in the exercise of control over land by the State throughout history was the imposition of restrictions on the assignability of private rights to land (including the requirement for the consent of the State for the assignment of rights).27 One common characteristic throughout the history of land tenure in China is that assignability has been treated as an attribute of ownership, which was enjoyed by the State rather than by private landholders. Accordingly, the concept that derivative rights (i.e. rights derived from land ownership such as land-use rights) may be freely assigned without the consent of the State as land-owner has not been consistently recognised or supported. The underlying assumption is that the identity of a party to whom rights have been granted by the owner of land is of material importance to the owner and, consequently, the State as owner should have a say in whether the rights should be assigned to others. This perception reinforces the in personam nature of rights to use land (i.e. rights that attach to a specific person and are not exercisable by others) and diminish the in rem nature of those rights (i.e. rights that attach to property and may be transferred to, and asserted against, others). It has also justified a high level of intervention on the part of the State at various times during Chinese history.

A critical question concerning the allocation of rights between the State and farmers is who should determine the social purpose of land (i.e. the use of land to fulfil social purposes such as providing families with a livelihood and as a fall-back against poverty or destitution) and the extent to which the interests of the broader community and the State should be prioritised over the interests of the family in this regard. The historical review of rural land tenure in China reveals that this process of determining the priorities between the interests of the broader community and the interests of the family has changed over time. The evolution of land tenure since 1949 is characteristic of a highly statist approach in terms of the high level of control that the State or the Collective exercises over the use and management of land.

As the State relaxed its control over land and private ownership emerged during the Ming and Qing Dynasties, private restrictions emerged that revolved essentially around family ownership as discussed in Part 4 below and the interests of the broader community as discussed in Part 5 below. These private restrictions decreased over time as a result of the emergence of free markets for the transfer of land (which reached its apotheosis in the Qing Dynasty) and also as a result of the traditional forms of tenure that are the subject of this thesis.

(f) The interaction between custom, customary law and the formal legal system

As the analysis in Chapters 5 and 6 will reveal, the traditional rights that are the subject of this thesis originated in customary practices as embodied in private contracts.28 They arose partly as a means of avoiding the requirements imposed by customary practices themselves, including the requirement to give relatives and neighbours pre-emptive rights to purchase in the case of an assignment29 and partly as a means of avoiding the requirements imposed by formal law, such as the requirement to register the transaction and pay tax.30

27 This was evident in the Western Zhou Period and the Han Dynasty, where the policy of ‘cultivation without ownership [耕而勿有]’ was advocated, under which ownership of large tracts of agricultural land was held by the State and farmers only enjoyed possession and cultivation rights, but not the right to buy or sell. 28 See Zelin 2004, 24. 29 See Part 5 below 30 See Part 6 below.

Prior to the codification of these traditional rights during the process of civil law reform in the early twentieth century, the customary practices as embodied in contracts were recognised, to varying degrees, in court cases, the legislative codes and administrative rulings.31 Thus, although the emergence of customary law has been disputed by some,32 this thesis argues that the customary practices satisfied the two elements that have traditionally been considered necessary for custom to harden into binding norms or customary law; namely, ‘proof of an objective practice within a relevant community and a subjective determination of the value of the norm, whether expressed as a sense of legal obligation or the reasonableness of the rule.’33

Throughout history, however, there was a wide divergence between regions in relation to the customary practices and the norms governing the traditional property rights. The extent of this divergence, and attempts to achieve uniformity throughout China, resulted in the codification of these customary practices in the early twentieth century. Tawney, writing in 1932, suggested that the best pathway for reform during the Republican Period would be to adopt the most reasonable custom and to recognise perpetual tenancy rights in this context:

The very variety of customs, which differ widely from place to place in the rights which they accord to landlord and tenant, itself offers, indeed, a possible basis for a policy [for rural reform]. An alternative course to a flat reduction of rents would be, in fact, to ascertain the best custom obtaining, and to make it of general application, with the necessary local variations to suit local conditions. It might be suggested, for example, that the reasonable custom under which, in parts of the country, the tenant has security while he pays his rent, which the landlord cannot raise, and can freely sell, mortgage [i.e. make subject to a dian] and bequeath his rights in the land, should be taken as a model, and tenures elsewhere, so far as circumstances allowed, assimilated to it.34

The codification of the rights pursuant to the Civil Code that was enacted in 1929 and came into effect in 1930 was part of the process of re-balancing the rights and obligations of the parties – a process that began in the early twentieth century and has continued until as recently as 2010 when amendments to the Civil Code in Taiwan replaced the provisions on perpetual tenancy rights with agricultural rights and modified the provisions governing dian sales. Although codification prevented the development of the rights as a matter of customary law, custom still retains some relevance in certain provisions of the Civil Code, as will be discussed in Chapters 5 and 6.

In addition, the Civil Code in Taiwan reflects the structural factors underpinning the general customary practices that supported the traditional forms of tenure throughout the Ming and Qing Dynasties. As will be discussed in Chapters 5 and 6, the structural factors included the need for forms of land tenure that allowed the owners of land to maintain a connection with the land, either

31 Buoye 2000, 35 notes that ‘contractual agreements based on customary law governed economic relationships between households.’ 32 See Chapter 5, Part 2(i). 33 Li 2015a, 30, notes that dian rights were traditionally created by customary law and were of a proprietary nature and cites the views of the Taiwanese scholar, Chen Ronglong: ‘the use of customary law to create proprietary rights must be tightly constrained. First, it must have become an established practice and have been repeated. Secondly, it must have legal effect in terms of being perceived by those who practise the custom as giving rise to obligations that should be observed; thirdly, it must have supplemental effect; in other words, it must fall outside the scope of a modern property right or security; fourthly, it must be appropriate.’ See also Bederman 2010, xi. 34 Tawney 1932, 100.

93 for economic or social reasons, the need for dealings in land to take the interests of the family into account and the need for land institutions to confer a full range of proprietary rights on the owners and users of land in relation to dealings with the land, including the right to assign the rights and to create derivative rights in others.

Finally, mention should be made of the role of the formal legal system, including the courts, in recognising private property rights and resolving legal disputes concerning private property rights. In his study of violent disputes over property rights in eighteenth-century China, Buoye writes that ‘[p]rivate mediation or official adjudication were the socially acceptable venues for the resolution of disputes.’35 Although Buoye identifies the shortcomings of the legal system as part of the reason for resorting to violence in the context of property disputes, he notes that ‘the courts were accessible’ and ‘county magistrates were normally competent, thorough and fair when adjudicating disputes’.36 Buoye observes that

magistrates were flexible and innovative in their decision making, relying on the legal code as well as custom and culture to settle disputes. Unfortunately, the economic changes that generated property- rights disputes also undermined the shared ethical norms of rural communities that, given the limited resources at the disposal of county magistrates, were critical to enforcing official decisions. With limited means to coerce compliance with their decisions, no matter how skilled the magistrate might have been, violence was difficult to avoid, and disputants were less likely to seek mediation when the parties to a dispute viewed changes in economic institutions as unjust.37

Thus, reflecting weaknesses in the system of today, difficulties associated with the enforcement of decisions was a major factor that led to violence and the resolution of disputes through means other than resort to the formal legal system and the courts.38

(g) The social and economic challenges

As will be discussed in Chapters 5 and 6, the traditional forms of tenure (particularly dian rights) have been implicated in various abusive practices arising out of the exploitation of farmers and land consolidation. As argued in Chapter 6, however, these abusive practices appear to have had more to do with the weaknesses of the legal system and the uncertainty of local customary practices as described above than with the inherent deficiencies of the concepts themselves. Indeed, scholars such as Pomeranz highlight the extent to which the traditional forms of tenure supported economic development and the emergence of a market for land transactions.39 In addition, it could be argued that they are ideally suited to the needs of a rural economy where the lack of a developed credit economy militates in favour of valuing land by reference to its agricultural use rather than by reference to its value as a commodity of exchange.

35 Buoye 2000, 6. 36 Buoye 2000, 15, 35 and 214. Buoye, 196, argues that ‘in most cases violence did not reflect a failure of official adjudication’. 37 Buoye 2000, 15. 38 Buoye 2000, 214. Buoye explains that in addition to the lack of resources, enforcement problems were ‘related in part to the Qing law of avoidance’, under which ‘[e]very magistrate was an outsider in his jurisdiction and was dependent on an entrenched local staff for enforcement.’ For a discussion about violence in the context of the modern system, see Chapter 1, Part 2(a). 39 See Chapter 5, Part 2(d).

4. Family ownership and dealings with land

Many writers have noted that it was the family, rather than the individual, that constituted the land ownership unit in traditional Chinese society.40 Although the family or jia [家] was not explicitly designated as the basic unit of ownership in the Qing Code or the earlier codes, the concept of family ownership was upheld in the provisions dealing with the assignment of property.41 Further, in keeping with the need to protect the interests of past and future generations, the sale of ancestral land was banned.42

Family ownership informs the concept of land as patrimony; namely, an asset that is passed from one generation to the next and should remain in the family as it is constituted from time to time. It also supports the concept of the equal division of family property between sons as it reflects the need for land to support the livelihood of all offshoots of the family as represented by the male line.43 Family ownership therefore informs an understanding of the social purpose of land in traditional Chinese society and serves as a point of reference and comparison for household ownership under the modern system of land contract management rights.

The centrality of the family as the basic unit of ownership survived into the Republican Period, despite the attempt by the Civil Code to ‘make the individual the receptacle of rights such as those of property’,44 and also continued to inform customary practices in Taiwan.45

The concept of family ownership raises three questions that are relevant for the comparison with the modern system: (i) How was the family defined? (ii) What status and authority did the family head enjoy? and (iii) What were the implications of family ownership in terms of dealings in land? Each of these questions is considered below.

(a) How was the family defined?

At the outset, it is relevant to note that the family in traditional Chinese society could be defined by reference to different societal levels and for different purposes. Thus, the term ‘family’ could be used in the same way as ‘clan’ to refer to those who were descended from a common male bloodline; it could be used in the same way as ‘household’ to refer to those who combined their labour and pooled their contributions to a common fund or account; it could also be used in the same way as the term ‘conjugal family’ to refer to a married couple and their progeny.

40 Cohen 2004, 43; Jernigan 1904, 34; Jamieson 1970, 1-3; Pomeranz 2008a, 113. Zelin 2004, 36, footnote 22: ‘While the Civil Code seeks to make the individual the receptacle of rights such as those of property, popular practice appears to have continued to vest property in the household.’ 41 Zelin, Ocko and Gardella 2004, 4. 42 Zelin, Ocko and Gardella 2004, 21. 43 This was different from the concept of primogeniture in England, the objective of which was to maintain the great estates as instruments of political power and to make it easier for the feudal system in terms of the collection of feudal dues and the exercise of control by the feudal lords. 44 Zelin 2004, 36, footnote 22. 45 Commenting on his anthropological research in the Taiwanese village of Yen-liao in 1976, Cohen 1976, 82-83, notes that the household remained as the major property-owning unit ‘even though it [had] no legal existence as such in terms of the contemporary national legal system.’ Cohen notes that customary practices survived also in the areas of inheritance, where the conflict between contemporary inheritance laws, which recognised the rights of women to inherit, and traditional customary practices, which recognised inheritance by sons alone, was resolved ‘by having women sign away all claims when they marry or upon their father’s death.’

In traditional China, the concept of family did not just denote a collection of individuals related by blood as reflected in the different ways in which the term ‘family’ might be defined as outlined above; it extended to land and other property and to past and future generations. In language that reflects a somewhat romanticised view of society but nonetheless captures the concept of family, the agrarian sociologist Martin Yang has written as follows:

As we have noted, to the Chinese mind, a family is not merely a group of related people, but also the land, the houses, the livestock, and the family reputation…A Chinese family is made up not only of living persons but also of the dead of past generations and the prospective children of the future, and all share in the ownership of the property. If the property of the living generation is inherited from the previous one, then the present members are merely the stewards who keep it intact and hand it down to a new generation.46

This has been echoed by the Japanese scholar of Chinese history, Shuzo Shiga, who notes that in China, ‘family or household [(jia)] meant a group of persons who, united by the male bloodline, shared their wealth.’47 In language that resonates with the extract from Yang above, Shiga identifies the components of a family as being ‘human beings and property, nothing more.’48 Shiga further writes that although ‘the unit of the social division of labor was the individual’, the members of the household pooled their contributions in a thoroughgoing manner, which was described as ‘common living, common budget’.49 McAleavy has described this pooling arrangement as follows:

The general rule was that the fruit of the labor of all family members, whether they worked at home on the family land, or earned money from jobs outside the home, had to be put in the common fund from which the family supported itself and which, on partition, was divided among those entitled.50

As noted in Chapter 3, the term ‘household’ [农户] in a rural context has been defined as an entity that is composed of marital relations and blood relations, which is usually constituted by two or more family members.51 Under the recently promulgated Civil Code in mainland China, a rural contract management household [农村承包经营户] is defined as ‘members of the rural collective economic organisation who have obtained rural land contract management rights in accordance with the law and undertake family contract management’.52 Accordingly, there appears to be a degree of commonality between the traditional and modern definitions of a family or household; namely, an entity that is composed of marital and blood relations and which pools assets to undertake a common enterprise.

(b) What status and authority did the family head enjoy?

As noted above, under the traditional Chinese legal system, ownership was considered to be enjoyed by the family rather than the individual, with authority over the household accounts

46 Yang 1945, 81. 47 Shiga 1978, 121. 48 Shiga 1978, 121-122. 49 [同住共财]. This has also been translated as ‘common living and joint wealth’. See Shurmann 1956, 511. 50 McAleavy 1955, 546. 51 Bai 2003. 52 Civil Code, Article 55. See also General Principles of Civil Law, Article 27.

(including authority to dispose of family property) vested in the family head.53 Shiga describes the position of the family head (jiazhang) as follows:

[Jiazhang] (head of the household) means the oldest member54 of the earliest generation in the household. It signifies merely the first person in a naturally determined order of sequence and does not particularly signify a post to which a certain person is to be assigned. The one called [jiazhang] according to the order of sequence is regarded as the person of prime responsibility charged with the household accounts…The question of rights of ownership is determined solely on the basis of the mutual status relationship between father and son, elder and younger brother, husband and wife, and the like; and the [jiazhang], being a representative of the whole family, has no privileges where the ownership of household property is concerned. Thus, the household was to be divided, not inherited.’55

The final point in the above quote, namely that the household was to be divided and not inherited lies at the heart of a debate between scholars as to the nature of family ownership and whether family property was held on the basis of co-ownership between the father and the sons or, instead, on the basis that only the household head had legal ownership and disposal rights in respect of the property and, for this purpose, the father and the sons were ‘a continuum of the same personality’.56

The first concept of co-ownership, under which legal ownership was vested not just in the father but also in the sons, was advocated by the Japanese scholars Nakata Kaoru and Niida Noboru and was based on the proposition that ‘joint family property exists between ascendants and descendants in the direct line (i.e. between sons, fathers and grandfathers).’57 Shiga, by contrast, has argued that although all family members contributed to the ‘common budget’ of the ‘common account’, into which the labor of all of the family members [was] pooled for the benefit of the family as a whole and from which all expenses were defrayed, ‘only the father had [the power to exercise] legal ownership in terms of being able to dispose of the property’.58 Further the exercise of disposal rights did not require the agreement of the sons, even though the sons formed a single unit of ownership of property with the father and were therefore responsible for household debts.59 According to Shiga, ‘the important business of the household had to be managed by the head himself or in

53 Nie 2009, 86. 54 The oldest member could either be male or female. 55 Shiga 1978, 121-122. Jamieson 1970, 101, writes that land ‘was not in theory deemed to be strictly the personal property of the owner or occupier for the time being, but rather the heritage of the family or tribe generally, of which the occupant was a member. Subject to his life-interest, they had all a more or less qualified interest in the reversion, and on his death it was bound to come to one or other of them, with further reversionary rights over.’ 56 Shiga 1978, 109-110. 57 Schurmann 1956, 510. 58 Shiga 1978, 110-112. 59 Shiga 1978, 128-133. Shiga, 119, describes the phenomenon whereby the father and the sons constituted a single unit of ownership of property as ‘the rule of the single father-son unit’ or, at 121, ‘what Professor Hsu calls a father-son identification”.’ Shiga, 120, notes that the husband and wife were also regarded as a single unit.

97 keeping with his instructions – as was only to be expected, as long as the household was a single unit.’60

The above debate is relevant in terms of determining who enjoyed legal authority to deal with family property and, therefore, whether the household head had power to assign legal ownership without the consent of others. If consent of the other family members was not required, Shiga’s conceptualisation of family ownership and the power of the family head appears to be more compelling than the proposition that family ownership operated as a form of co-ownership.

The debate resonates with the uncertainties concerning household ownership under the modern system of land contract management rights. As outlined in Chapter 3, Part 3(c), although the members of the household appear to enjoy joint co-ownership in respect of land contract management rights and the assets that are created through the exercise of such rights, the doctrinal basis for the authority of the household head remains uncertain.

Under the traditional understanding, the authority of the family head in respect of household property continued only for so long as the family remained a single unit. This understanding is inextricably connected to the issue of household division or fenjia.61 Household division occurred as a result of both external factors and internal factors. The external factors varied throughout history and included economic pressures, taxation (particularly heavy levies on wealthy families) and the separation or death of family members as a result of warfare and banditry.62 Internal pressures, which have generally been regarded as being more dominant, included family disagreements, the incidence of which increased as the size of families grew.63 Wakefield notes that the father had paramount authority to divide the household by virtue of his status as the family head and that a deceased father’s widow had similar authority. On the other hand, if family division was initiated by the sons, the agreement of the parents would be required.64

As Shiga has noted, the concept of family ownership underpinned, and was defined by, the absolute rule of equal division of family property between brothers upon household division.65 It was on household division that the concept of ‘common living, common budget’ terminated. Shiga defines those who belong to a common male bloodline as members of a clan zu [族] or zong [宗] and those who are in a relationship of ‘common living, common budget’ as members of a household jia [家], of which each couple and their children were known as the conjugal family fang [房].

Household division was therefore the process by which a fang established itself independently and became a jia in its own right.66 The relationships can be depicted as follows:

60 Shiga 1978, 128. Note that in the event of the death of the household head, the sons became joint owners until division. See Jamieson 1970, 102. 61 See Wakefield 1998. 62 Wakefield 1998, 34-35. 63 Wakefield 1998, 36 – 39. 64 Wakefield 1998, 53. Wakefield notes that if a father was opposed to family division, ‘a son still might prevail if the lineage members and relatives agreed to the division. The father still had to sign the division document, however.’ 65 Shiga 1978, 113. 66 Shiga 1978, 117.

族/宗 (common male

bloodline)

家（common living, joint

wealth – 同居共财）

房 (conjugal family)

As noted above, it was on the basis of the concept of family ownership that it was said that the household was to be divided, not inherited.67 In other words, the concept of inheritance did not make sense in circumstances where land was already considered to be owned by those who would otherwise have inherited it.68 A corollary to this is that the family head did not have the right to determine who should inherit, as would apply in the case of testamentary rights over property.

As noted in Part 5 below, although the absolute assignment of land was within the authority of the family head under the traditional system, the exercise of this authority was constrained by the concept of pre-emption under social conventions and customary law. It was within this context that both of the traditional rights that are the subject of this thesis provided a basis on which land dealings could take place whilst preserving family ownership of land and avoiding a breach of custom. The concept of pre-emptive rights on the part of close relatives is discussed further in Part 5 below.

The concept of family ownership and the role of the family head as the representative of the family for legal purposes had implications in terms of dealings in family property, particularly land and the alienability or assignability of land. First, Schurmann has noted that the dominant position of the family head and the religious practices associated with ancestor worship ‘emphasized family unity, encouraged ancestor consciousness, and manifested the relationship between ancestral land and property.’69

67 Shiga 1978, 121-122. 68 Similarly, as noted by Schurmann 1956, 511, family ownership meant that ‘[a]ccording to law, junior members of a family could not be accused of stealing, but only of appropriating (i.e. for their own use) family property.’ This was reflected in a commentary on a Ming statute on property transmission, which Schurmann 1956, 511, quotes: ‘In common living and joint wealth, what is there that is not one’s own possession? However, [all] is collectively managed by superiors and elders…Inferiors and juniors must not arbitrarily [use it]. (Legally) this is not called “robbery” but “appropriation” [擅]. In effect, if inferiors and juniors use wealth, this is in accordance with the law. But they may be accused of arbitrarily using it without asking [their] superiors and elders.’ 69 Schurmann 1956, 513.

Secondly, as discussed further in Part 5 below, the rights of the family head to dispose of land was curtailed by the requirement to offer close agnates,70 neighbours and dian-holders the first right of refusal.71 Thirdly, Schurmann identifies the practice of dian sales as one of the factors limiting the assignability of land on the basis that it prevented the absolute assignment of land by families.72

It appeared to be established that the family head should deal with property in the interests of the family.73 Accordingly, as noted by Shiga, a gift by the father during his lifetime was regarded as invalid since it reduced the total value of the household property.74 Further, the sale of household property without the authority of the head or other than for the benefit of the family as a whole was considered to be shameful or to ‘offend the ethical sense’. As Fei wrote in relation to the situation in 1947:

To sell a piece of land inherited from one’s father offends the ethical sense. “No good son will do that. It is against filial piety.” This comment sums up the traditional outlook. Personal familiarity with a particular piece of land as the result of continuous work on it is also a cause of personal attachment to the land. It is very common for people to work on the same piece of land from early adulthood to death. To say that their land is an integral part of their personality is scarcely an exaggeration. The non-economic value of the land complicates the transactions in land. Although land has its non- economic value, it does not in any sense lose its economic value. The sentimental and ethical reactions to the selling of land do not rule out completely the possibility of land transactions. People sometimes need money urgently. Economic strain compels them to treat the land as an economic commodity. But I found no case of alienation except under real pressure. Even then the process usually takes a roundabout form.75

The concept of land as patrimony, however, has been challenged by other writers. As Shiga has written:

The expression “household property” [(jiachan)], if it comes to that, was nothing other than a designation of wealth managed by such a joint account as has just been described. There is no feeling of landed property that should remain intact for generations in the expression “household property”. Land did, to be sure, most commonly constitute the bulk of household property, but that very land could, depending on the household income and expenditure, be bought and sold, with comparative nonchalance.76

From one perspective, the apparent contradiction between the above quotes can be reconciled on the basis that the disposal of family property was permissible so long as it was in the interests of the household and authorised by the household head. It is difficult, however, to reconcile the concept of land as patrimony – namely, an asset that is passed from one generation to the next which should

70 Agnates are persons descended from the same male ancestor. 71 Schurmann 1956, 513. 72 Schurmann 1956, 514-516. This point is explored further in Chapter 6. 73 Pomeranz 2008, 113, has noted that ‘since the household to which property belonged was in principle eternal, each household head was really more a custodian of its land and other property than its possessor.’ See also Demsetz 2002, 668, who makes reference to family ownership of farms in Europe: ‘The farm and its land were not to be sold but, by custom, were to be kept in trust for the family.’ 74 Shiga 1978, 145. 75 See Fei 1947, 181-183. For an account of the extent to which land was an integral part of one’s personality, see Buck 1931. 76 Shiga 1978, 114-115.

100 remain in the family as it is constituted from time to time – with the concept of land as a marketable commodity.

The tension between the concept of land as patrimony and the concept of land as a marketable commodity has been the subject of extensive debate by scholars in recent decades, both in the English literature and the Chinese literature. Cohen has pointed to “evidence of lack of sentimental attachments to the land on the part of the owners’ and has argued that the ‘much heralded attachment of so-called peasants to their land is part of the larger fabrication of a tradition-bound “peasant mentality”... Rational rather than sentimental concerns made land desirable.’77

It is difficult to determine which concept is an accurate description of the attitude of farmers towards land. This thesis suggests that both concepts are accurate and that the main point of contention between scholars is the question of which concept has been the more dominant. Irrespective, it appears clear that developments in the eighteenth century precipitated a trend towards the treatment of land as a marketable commodity. Buoye, for example, notes that

an increase in the relative value of land created incentives for stringent enforcement of established property rights and the elaboration of new economic institutions to safeguard newly emerging property rights. Psychologically, historic notions of property and land were eroded as the evolving concept of land as an alienable commodity increasingly challenged the long-standing notion of land as inviolable patrimony.78

In view of the above debate, this thesis suggests that the shame in selling land was associated less with the concept of land as patrimony and the need to preserve ancestral property, and more with dealing with land other than with the authority of the family head or in accordance with the interests of the family unit. In other words, as suggested above, the disposal of family property was permissible so long as it was in the interests of the household and authorised by the household head. It is also possible that the concerns related as much to the social purpose of land as it did to the sentimental attachment to land. In other words, land was important because it was the best (if not the only) form of social insurance and a means of livelihood, not necessarily only because it represented ‘inviolable patrimony’.

Further, even though the State recognised the family as the basic unit of ownership, it did not significantly limit the dealings of families with their land.79 Writing in relation to the Qing legal system, Zelin et al have noted that although ‘the relationship between the state and the people [could] be described as one of state paternalism’ and ‘[o]ne might then reasonably expect the imperial code and customary practice to limit in significant ways the ability of people to use and dispose of their property…the codified law of the imperial state is a reasonably laissez-faire document.’80 In other words, it did not concern itself with private ordering or intrude significantly into areas that were governed by custom or customary law.

77 Cohen 2004, 48. Other scholars, however, have recognised the significance of property as ‘inviolable patrimony’. See Buoye 2004, 94, 104 and 105. 78 Buoye 2004, 94. See also Pomeranz 2009, 104, who notes that by the second half of the 18th century, land came to be treated more as a commodity than inviolable patrimony. 79 Ocko 2004, 203, has described the family as ‘a bounded space into which the state would not intrude’. 80 Zelin, Ocko and Gardella 2004, 21.

101

5. Private constraints on the assignability of land

Weber has argued that the free assignability of rights is an essential element of free ownership of land or ‘Freies Eigentum’.81 Schurmann has argued that two of the historical conditions for capitalist societies – (1) maximum assignability of property; and (2) identification of property with the individual – were lacking in China. Even though there was steadily increasing assignability of property from the Tang Dynasty onwards, it was ‘always accompanied…by oppressive and restrictive forces. These oppressive and restrictive forces [had] a social and religious, and not an economic base.’ Schurmann argues that the notion of Freies Eigentum or ‘free ownership’ of land never developed in China, at least along individualistic Western lines. According to Schurmann, the factors limiting Freies Eigentum included the following: (1) joint family property (or family ownership); (2) the concept of prior option or pre-emption; and (3) the concept of limited tenure as reflected in dian sales.82 This thesis agrees with Schurmann’s statement that the history of land in China ‘is not the history of the rise of real property’ but ‘the history of the evolving alienability and transferability of land, specifically cultivated land.’83

As far back as the Song Dynasty, customary law provided that relatives – namely, those who were not part of the family or jia in terms of the concept of ‘common living, common budget’ – and neighbours enjoyed the right of first refusal.84 The right of first refusal appears to have been designed to keep land within the community, which was traditionally wary of outsiders.85 Cohen has suggested that the requirement to offer close relatives and neighbours the first right of refusal constituted a check on the family head, in whom the power to deal with the land was vested.86 However, by the time of the mid-Ming Dynasty, restrictions such as the right of first refusal for relatives had gradually declined.87 Buoye suggests that the relaxation of legal restrictions to assignment, such as the requirement to obtain approval from relatives and neighbours was an ‘indication that the concept of land as an alienable commodity was supplanting the historical concept of land as inviolable patrimony’.88 In any event, Pomeranz has argued that ‘there is no reason to think that kin prerogatives interfered with the efficient functioning of late imperial and republican land markets.’89

In referring to the restrictions over dealings in land, Kroker has suggested that they also reflected the interests of the broader village community as part of the social aspect of property.90 The

81 See Ford 2010, 47-48. 82 See Schurmann 1956, 509-510. 83 Schurmann 1956, 509. 84 Kong et al 1996, 430. Schurmann 1956, 514. 85 See Kroker 1959, 138. 86 Cohen 2004, 45. 87 Schurmann 1956, 514. Pomeranz 2008, 113, 119-120, notes the gradual decline of some restrictions such as the right of first refusal for relatives: ‘there is no reason to think that kin prerogatives interfered with the efficient functioning of late imperial and republican land markets.’ See also Zhang 2011, 152-153, who considers the right of first refusal and its impact on the assignment or assignability of land. 88 Buoye 2000, 68. 89 Pomeranz 2008, 113. 90 Kroker 1959, 133, goes on to say that ‘’there is an unspoken belief that ownership of land is governed by a system of rules accepted by all members of the community, just as the position of an individual in a given group is determined by a whole set of ethical, social and ritualistic norms.’

102 strength of the connection between land and the broader village community was expressed by Kroker as follows:

[T]he connection of the fields with the village community is so strong that the community and the fields cannot become divorced from each other or forever disassociated. The fields do not change their position and neither do the altars in the fields, but they may change their proprietors, of whom the new one may not have membership in the village community which assembles at the altar. Or, to put it in a more general way, fields may come to be owned by persons who are members of different village communities. And these new owners, on account of their newly acquired fields, must pay contributions to the village community just as if they had become members of that community. An owner is therefore not free to sell his property at pleasure unless the prospective buyer is willing to continue to contribute to the community exactly the same amount as the seller has done. His power of domination over his fields can therefore hardly be called limitless or absolute.91

Kroker further states that ‘land, so it appears, is not deemed strictly to be the personal property of the owner or of his family but rather the heritage of the village community, of which the occupant is a member, although it would be somewhat overstating the point were we to lay too much stress on the term village community.’92 Kroker’s caution against overstating the interests of the village community resonates with the proposition in this thesis that although land was imbued with a wider social purpose that transcended the interests of the family, the main entity on whose behalf the rights to deal with land were exercised was the family (through the family head) and the concerns of the broader community did not intrude significantly into decisions concerning land transactions. In other words, the power to execute dealings in relation to land was vested in the family head and it was for the interests of the family – rather than the broader community – that the family head was expected to act.

By contrast, the modern system of land contract management rights ties the exercise of the rights closely to the interests of the broader community. As noted in Chapter 2, the RLCL defines rural land contracts as household contracts entered into by households that are within (i.e. are members of) the rural economic organisation.93 In addition, members of the relevant collective have a right to be allocated land and to farm the land on the basis of the household contract management system.94 Further, if a household wishes to assign its land-use rights, the other members of the collective economic organisation enjoy priority to purchase the rights ‘under equal conditions’.95 Finally, although it is possible for land contract management rights to be granted to units or individuals who do not belong to the relevant collective organisation, and are therefore not members of the rural community, such an arrangement requires both the consent of the members of the Collective as well as the approval of the local government.

6. Taxation as a basis for the legal recognition of private rights in respect of land

91 Kroker 1959, 136. 92 Kroker 1959, 136. 93 RLCL, Article 3. 94 RLCL, Article 5. 95 RLCL, Articles 33(3) and 47.

103

In traditional China, the obligation to pay tax operated as an essential incident of ownership of land. The payment of tax was the sine qua non for the recognition of property rights by the State96 and tax receipts, together with red deeds,97 ‘were…considered fully valid proof of property rights.98 In fact, it was the transformation from the State’s reliance on rent to the State’s reliance on taxation that reinforced the shift towards the formal recognition of private property in China. Writing in 1888, Jamieson noted that subject to the payment of tax, ‘the private owner [had] as absolute a property in [land] as he [could] have under any government.’99 Although one might challenge the notion of absolute property in land and query the suitability of comparing China with other jurisdictions, Jamieson’s observation highlights the important role that tax played in terms of bringing private property rights within the formal recognition of the State.

The central importance of tax as an incident of ownership of land meant that ‘occupation [or possession] alone without payment of tax did not confer title.’100 Unlike the position in other jurisdictions, the traditional formal Chinese legal system did not recognise proprietary title on the basis of possession alone.101 If the possessor of land was not registered as the formal owner of land and was therefore not under a corresponding duty to pay taxes to the state, the rights of the possessor were not recognised by the State. The determinative nature of taxation in terms of the recognition of ownership, at least in a formal sense, reinforces the control that the State exercised over dealings with land in traditional China. As Palmer has noted in relation to the situation during the Qing Dynasty:

In imperial Chinese law all land under cultivation had to be registered. Those persons who failed to meet this requirement were liable to have their land confiscated. On registration, stamped title deeds were issued by the county magistrate. These documents were known as ‘red deeds’ (hongqi) because they were impressed with an official red seal. Where title was conveyed from a registered owner to another party a three per cent transfer tax was levied and any new owner without his own heading in the county magistrate’s land registers was charged a substantial fee for opening a fresh tax-payer’s entry. Not surprisingly, many sales were not registered and even in cases where they were it was the common practice to understate ‘the purchase money in deeds of sale of land in order to reduce the ad valorem duty to be paid on registration’ (CSO 1901, Ext. 53 memorandum dated 19 March 1901)…Of the various strategies and techniques developed for the purpose of avoiding the payment of these fees the most important, in the present context, were the unregistered sale and the perpetual lease….102

96 See Matsubara 2011. 97 Red deeds were deeds on which tax had been paid. See further below for a definition of ‘red deeds’. 98 Osborne 2004, 121. Osborne, 133, notes that ‘the registration of land for taxation marked the end of the probationary period in which the farmer and the land established their ability to produce, and it was usually at this point, not before, that the farmer gained title.’ Further, 154, ‘[a] sealed contract or proof of tax payments seems to have established a quid pro quo – in effect, a quasi-contractual relationship between the taxpayer and the state in which the acceptance of tax payments created an obligation on the part of the state to acknowledge the rights in question.’ 99 Jamieson 1970, 62, 97-98; see also Palmer 1987, 4-5. 100 Palmer 1987, 19, referring to the Qing Code [大清律例]. 101 See Brenner and Isett 2002, 615. 102 Palmer 1987, 25-26. Osborne 2004, 155, notes that as a result of doubts over enforcement, registration ‘did not outweigh the trouble and expense of tax payments’ and, 157, ‘the surest guarantee of one’s rights seems to have been their acknowledgment by the local community’. This underscores the customary law nature of these rights; namely, informal enforcement through the local community rather than formal enforcement.

104

The ‘unregistered sale’ and the ‘perpetual lease’ are references to the traditional property rights that are the subject of this thesis; namely, dian rights and perpetual tenancy rights. As Palmer notes, these rights played an important part in regulating the relationship between private land-holders and the State as it allowed the owner of land (and the taxpayer) to deal with land without transferring the obligation to pay, or register for the payment of, tax. Accordingly, and as further discussed in Chapters 5 and 6, the traditional forms of tenure initially operated as a means of circumventing the requirements in respect of taxation and registration, although dian transactions were subsequently made subject to the requirement to pay tax.

7. Observations on the factors underpinning the traditional forms of tenure in China

In the traditional context, dealings with land had to accommodate three concerns: (1) family ownership; (2) private constraints on the assignability of land, including the requirement to give relatives and neighbours a pre-emptive right to purchase property; and (3) the requirements of taxation. It was in this context that the traditional forms of tenure emerged as a means of circumventing or ameliorating these concerns.

Various similarities and differences can be discerned between the traditional approach and the modern approach under China’s system of land contract management rights. First, the family or household was the economic unit for farming purposes. However, whereas the family was the unit of land ownership under the traditional system (subject to ultimate ownership of land by the Emperor), the introduction of collective-ownership of rural land after the 1949 revolution involved the negation of the family as the basic unit of land ownership and its replacement with the Collective. The transfer of the unit of ownership of rural land from the household to the Collective represented a break from the past and the elevation of the interests of the broader community (and, by proxy, the State) over the interests of the household. As explained in Chapter 2, collective ownership and management proved to be sub-optimal in the context of the advanced production collectives and the communes and ultimately led to the introduction in 1979 of the Household Responsibility System, under which greater control over land and land management was placed in the hands of households.

Secondly, the family or household head occupy a similar position under the traditional system and the modern system in terms of being the person in whom the formal property rights are vested or granted. One difference, however, is that the authority of the family head under the traditional system continued only for so long as the family remained a single unit; namely, until household division. By contrast, the modern system does not expressly recognise the division of household property. This is partly because household division would involve a private adjustment to the identity of the holders of land-use rights and would be inconsistent with the control and allocation of such rights by the Collective.

Thirdly, there is a similarity between the traditional system at certain times and the modern system in terms of the relevance of the interests of the broader community and, specifically, the pre- emptive rights that the broader members of the local community enjoy in respect of land transactions. As noted in Part 5 above, however, the modern system of land contract management rights ties the exercise of the rights more closely to the interests of the local community than the

105 traditional system, even though the cohesion of the local community is under challenge today because of the mobility of rural labour and the phenomenon of rural-urban migration.

As discussed in this Chapter, one feature that both the traditional system and the modern system share is that the social purpose of land, whether defined by reference to the interests of the family or by reference to the interests of the broader community and the State, has operated as an important factor in the design and operation of the rural land system. The social purpose of land is reflected in the need to preserve land to support the livelihood of the family and in the need to preserve the status of the family (and its rights and obligations) as a member of the local community. However, the social purpose of land since 1949 has prioritised the interests of the broader community and the State over the interests of the family or household. In addition, by contrast with the modern system, the traditional system supported a relatively free market for transactions in land. As Chapters 5 and 6 will explain, one of the benefits of the traditional property rights was that they allowed the family to maintain a connection with the land through its residual ownership of land – and thus satisfy the social purpose of rural land – whilst at the same time supporting a market for transactions in land.

106

Chapter 5 – Perpetual Tenancy Rights

1. Introduction

As posited in Chapter 1, the debate concerning legal reform to rural land tenure in China has revolved around two broad objectives, which are used for the purposes of considering reform models: the empowerment objective and the dual-purpose objective. The empowerment objective calls for the rights of farmers to be strengthened and for the interference of the State and the Collective in land management and land dealings to be reduced. Included within this objective are two specific calls, which respond to the official policy objectives outlined in Chapter 3. The first call is to increase the scope of rights, including the right on the part of farmers to assign their land-use rights for value and to mortgage their land-use rights to raise finance. The second call is to increase the security of tenure that farmers enjoy. Essentially, this involves reducing the interference of the State and the Collective in decisions concerning land allocation and adjustment, and granting farmers greater autonomy to make their own decisions as to how they wish to deal with their rights. It also involves increasing the certainty in respect of the term of land-use rights and the remedies that are available to protect those rights.

As outlined in Chapter 3, insecurity of tenure has resulted in various sub-optimal and detrimental outcomes, including inadequate investment in land and its productive potential, constraints on rural- urban migration, tensions arising out of the use of land for social security purposes and social unrest brought about by abusive practices. This chapter examines whether the adoption or adaptation of perpetual tenancy rights would help to satisfy the empowerment objective in terms of strengthening security of tenure. As foreshadowed in Chapter 1, this would involve using perpetual tenancy rights to reconceptualise the grant of proprietary rights to farmers within the context of collective ownership of land. In other words, perpetual tenancy rights could replace land contract management rights under the current system and provide security of tenure to farmers without compromising the concept of collective ownership of rural land. In this way, perpetual tenancy rights would provide a mechanism for converting the Collective into a passive owner and giving farmers security of tenure and greater autonomy to deal with those rights. The perceived benefit of perpetual tenancy rights as they operated under the concept of divided ownership is that they conferred on the holders all the substantive attributes of ownership, including protection from land resumption and interference by the land owner.

Further, this chapter examines whether perpetual tenancy rights could serve as a basis for accommodating the dual-purpose objective. The dual-purpose objective calls for the design and introduction of forms of land tenure that enable land to perform both a productive function and a social function. As outlined in Chapter 3, the social function of land is closely tied to its ability to be used and managed for the benefit of the household. Accordingly, there have been calls for reform to the system of land tenure to enable a farming household to assign its rights to manage rural land without completely severing its connection with the land. In addition to reconceptualising land contract management rights as perpetual tenancy rights, reforms could enable farmers themselves to grant such rights – or limited-term rights that would operate along the lines of agricultural rights

107 in Taiwan1 – to third parties. This might satisfy the policy of the Separation of Three Rights, which is directed towards enabling farmers to maintain rights in relation to land while facilitating the transfer of land to third parties for large-scale farming.2

As noted in Chapter 1, a key issue concerning land tenure in any jurisdiction is how rights should be allocated between the State and farmers and how rules governing land tenure should be administered by the State. In examining the relevance and suitability of perpetual tenancy rights to reform in China, it is necessary to understand the differences between the codified version of perpetual tenancy rights as recognised under the Civil Code of the Republic of China in 1930 and the customary version as recognised prior to codification. It is then necessary to consider which version would be appropriate for reform purposes.

This chapter commences by providing an historical overview of the evolution of perpetual tenancy rights from the customary version of perpetual tenancy rights to the version as codified during the Republican Period. The overview includes an examination of the survival of perpetual tenancy rights in Taiwan and their ultimate replacement by agricultural rights [农育权] in 2010. As noted in Chapter 1, an understanding of the factors behind the abolition of perpetual tenancy rights is of critical importance to an understanding of the potential relevance and suitability of these rights within the context of property law reform in mainland China. Their fate in Taiwan would suggest that they no longer have any significant relevance in a modern context. However, this thesis argues that the fundamental differences between the system of land tenure in mainland China and Taiwan justify their consideration in the context of reform in mainland China today. In particular, a key difference between mainland China and Taiwan is that the system in Taiwan recognises private ownership of rural land.

The discussion is followed by an analysis of a lease. The analysis of a lease builds on the discussion in Chapter 2.3 The analysis is relevant in terms of highlighting the treatment of a lease under the current systems in both Taiwan and mainland China as a contractual, non-proprietary right and the deficiencies of a lease as compared with proprietary rights such as perpetual tenancy rights and agricultural rights.

Following this, as part of the question of whether custom has a role to play in the context of reform today, the historical overview examines the ongoing relevance of custom in Taiwan after perpetual tenancy rights were codified. The overview concludes by examining the treatment of perpetual tenancy rights in mainland China after 1949 and the unsuccessful attempts to include a form of tenure based on perpetual tenancy rights in the PRL.

The chapter then examines the debate to date concerning the recognition and adoption of perpetual tenancy rights and what the debate reveals about the relevance and suitability of perpetual tenancy rights to reform in China today. The analysis informs the question of whether perpetual tenancy rights promote the reform objectives and, if so, which version of perpetual tenancy rights – customary or codified – would be more appropriate.

1 See the discussion in Part 2(g) and (h) below. 2 See Chapter 3, Part 4(f). 3 See Chapter 2, Part 5(f).

108

2. Historical overview of perpetual tenancy rights

(a) The historical origins of perpetual tenancy rights

As noted in Chapter 4, perpetual tenancy rights traditionally involved the granting of land use rights by land owners (the ‘subsoil holders’) to farmers (the ‘surface holders’) on a perpetual basis in return for the payment of rent, usually on a fixed basis, to the land owner.

The origins of perpetual tenancy rights are diverse and can be traced back to the Song Dynasty.4 Although in its embryonic form perpetual tenancy could be described as the right to cultivate land in return for the payment of rent and was analogous to a lease5 or a usufruct, the rights associated with it subsequently expanded by the middle of the Ming Dynasty to include all of the rights of an owner, including the right to assign, the right to create rights in others6 and to pass title or control through the division of family property.7 Palmer has noted that ‘because they possessed hereditary rights of production, surface holders could not be ejected from their farms at the whim of the subsoil holders.’8

Zelin writes that ‘[d]uring the early Qing it was not uncommon for landlords to permit their tenants to reclaim adjoining [or marginal] land with no increase in rent’ and associates its origins with the growing trend towards absentee landlordism in the late Ming and Qing Dynasties, where landlords decided to invest more in non-agricultural activities and were happy to grant tenants perpetual rights to cultivate land, particularly new or reclaimed land, in return for a stable income in the form of relatively low fixed rents.9 Wakefield has described the traditional divide between landlords and tenants in the following terms:

Rich landlords usually referred to land by a name or a number: the name of the tenant or the amount of rental income. In marked contrast, tenants referred to land by a name and often by the area or the borders that marked it. In other words, landlords divided rental income; tenants divided land. This observation suggests that wealthy landlords had less concern with the exact location of the land and the production process than with rent and who was responsible for its payment. The tenant was concerned with the payment of rent but perhaps more importantly with the land and the agricultural production process…10

To express it in different terms, the landlords looked solely to rents, which in many cases were fixed, for wealth-generation rather than to the productivity of land and the investment of capital for that

4 Kong et al 1996, 364. 5 Palmer 1987, 25-26. 6 This included the right to lease, to create sub-perpetual tenancy rights [转佃] and also to sell under a dian contract. 7 See the discussion concerning family ownership in Chapter 4, Part 4(b), and, in particular, the reference to family property being divided, not inherited. 8 Palmer 1987, 85-86. 9 Zelin 1986, 506. 10 Wakefield 1998, 208-209.

109 purpose.11 Elvin has explained the phenomenon of absentee landlordism and perpetual tenancy rights as follows:

[A]bsentee landlordism brought its familiar concomitants: rights of permanent tenure and multiple ownership. In much of southern China the original proprietor had the so-called rights to the subsoil, while the permanent tenant had the rights to the surface, both of which could be sold separately. How this arose is not entirely clear. Sometimes landlords gained permanent tenure as an incentive to more efficient farming and to improvements; but perhaps the simplest explanation is the Chinese proverb: “Long tenancy becomes property.”12 The forces at work may be sensed from the following obscure but suggestive passage from an early nineteenth-century gazetteer for a department in Fukien: …When their unpaid debts to the landlord have piled up over a number of years, these tenants are in effect farming as if they themselves were the landlords…Whatever the causes, by the early twentieth century between one-third and two-fifths of the land farmed by tenants in the lower Yangtze valley was held in permanent tenure.13

The availability of fixed rent appears to have had a significant influence in terms of strengthening the rights of tenants as a result of the additional security that this offered to tenant farmers.14 Zelin notes that tenants often obtained such rights ‘by the payment of a fee or rent deposit, although not all tenants who [paid] such fees can be considered permanent.’15 A rent deposit ‘was a lump-sum cash fee paid to the landlord in order to obtain the right to cultivate a piece of land’ and appeared to serve two purposes: to protect the landlord against rent default and to provide a source of capital under which the landlord could lend the deposit back to the tenant in circumstances where the tenant was in need.

Palmer notes that in some regions, such as Xin’an, the beneficiaries of grants of uncultivated land by the State granted perpetual rights to use land to ‘impoverished immigrant cultivators’ whom they had recruited to develop the land.16 In such circumstances, the original grantees (or ‘owners’) remained responsible for the payment of tax. In other circumstances, the creation of perpetual tenancy rights was the product of illegal tax farming agreements under which powerful interests would assume the obligation to pay tax from small farmers in return for receiving rights over the land, which ‘encouraged small farmers to place themselves under the protection of large and influential local lineages and, in particular, to come to terms with the latter so that they might pay taxes on the farmers’ behalf.’17

As noted in Chapter 4,18 perpetual tenancy rights were also used as a means of circumventing the requirement to pay taxes such as transfer tax and stamp duty on the transfer of land.19 Instead of the parties to an absolute sale transaction paying tax on the transfer of title and registering the sale

11 For a reference to the relationship between the absent landlord and the land, which often appeared to be purely financial, see Fei 1947, 185 – 186, citing Tawney 1932, 67-68. As written by Tawney 1932, 36: ‘Nor must it be forgotten that the nominal owner is often little more than the tenant of a money-lender.’ 12 久佃成业. This described the customary position instead of the legal position that was dependent on registration for tax purposes as discussed in Chapter 4. 13 Elvin 1973, 253-254. 14 See Brenner and Isett, 2002, 615. 15 Zelin 1986, 506. See also Jamieson 1970, 108. 16 Palmer 1987, 14. See also Kong et al 1996, 439. 17 Palmer 1987, 23. 18 Chapter 4, Part 6. 19 Palmer 1987, 17.

110 in the name of the purchaser, the owner would grant perpetual tenancy rights to the purchaser and remain as the registered tax payer. In addition to enabling the purchaser to avoid the need to pay tax on the sale of land, the grant of perpetual tenancy rights enabled the subsoil owner to circumvent the customary restrictions on assignment, under which relatives had a pre-emptive right to purchase the land. By granting surface rights, the subsoil owner’s connection with the land was maintained and the pre-emptive right of relatives was not triggered.20

In addition, perpetual tenancy rights were used in circumstances where the owner of land sold the land pursuant to a dian sale, but remained on the land as tenant and subsequently came to enjoy perpetual tenancy rights in respect of the land through agreement with the holder of the dian rights.21 The practice was stronger in certain regions in China, such as the region known as the paddy region in Southern China, and less strong in others, such as Ba Xian (eastern Sichuan), which was the subject of Zelin’s study in 1986.22

An example of a perpetual tenancy deed appears below. As was generally the case, the focus of the arrangement was on cultivation rights, as distinct from a broader range of rights.23

立过佃户人张德兴，因有本身…地一段，坐落在房山县西南…四至分明。今情愿过与李泰名下永为耕户耕种，不准李姓另种另典，言明压租银三十五两正，年例小租钱五百文，准其客辞主，勿许主辞客。立字之后，如有另人争论，有取租张姓一面承管，不与佃户相干。此系两家情愿，各无反悔，恐口无凭，立过佃字一样两纸，各执一纸为证。乾隆九年十月十五日立过佃字据人张德兴亲笔。

The grantor of the tenancy, Zhang Dexing, has a…parcel of land that is located in Xinan, Fangshan County…with clear boundaries. [The grantor] today voluntarily transfers [the land] into Li Tai’s name as the tenant perpetually to cultivate [the land]. Li is not permitted otherwise to [use] or dian [the land]. It is clearly agreed that the rental deposit is 35 liang of silver exactly, and the annual rent will be 500 copper cash. The tenant is permitted to [terminate the tenancy], but the landlord is not permitted to [terminate the tenancy]. After this contract is entered into, if it is disputed by any other person…Zhang will deal with [the dispute] by himself and it will not be of concern to the tenant. This is the voluntary [act] of both parties, neither of whom has any regrets. As word of mouth provides no evidence, this contract is entered into in two counterparts, with each party holding one counterpart as evidence. Entered into in the ninth year, tenth month and tenth day of [the reign of the Emperor] Qianlong and drawn up by Zhang Dexing himself.

The right of the tenant to terminate the tenancy and the prohibition on the landlord terminating the tenancy (even if there was default in the payment of rent) effectively conferred security of tenure on the tenant and formed the basis on which the concept of divided ownership emerged as outlined below.

(b) The emergence of divided ownership

The practice of granting perpetual tenancy rights reached its apotheosis in the emergence of divided ownership, under which custom recognised a distinction or separation between the rights of the owner to the subsoil and the rights of the holder of perpetual tenancy rights to the surface or topsoil.

20 Kong et al 1996, 528-529. 21 For a discussion about these circumstances, see Fei 1947, 183ff. 22 Zelin 1986. 23 This example is drawn from Kong et al 1996, 593.

111

Divided ownership had become well-established by the nineteenth century. Generally known as yitian liangzhu [一田两主] or ‘one field, two owners’, the essence of divided ownership was captured by Freedman as follows:

In Fujian and at least some parts of Guangdong, as in other areas of China, a distinction was made between rights in the subsoil and rights in the surface. The holder of the subsoil rights collected rent from the holder of the surface rights but he could not arbitrarily terminate the latter’s tenancy. With respect to the rights in the surface, the tenant exercised the privileges of an ‘owner’. He could dispose of his rights in the same manner as an outright owner disposed of his. The surface-holder might in turn take a tenant, but the latter did not enjoy the privilege of security of tenure inhering in surface rights. Tax to the state was paid, at least in theory,…by the owner of subsoil rights.24

The above confirms the notion that perpetual tenancy rights conferred security of tenure on the tenant and that the party who had the primary relationship with the State was the owner of the subsoil, who remained liable for the payment of taxes.

The rights to the subsoil were variously referred to as subsoil rights tiandiquan [田底权] or ‘bone land’ digu [地骨] or tiangu [田骨]; and the rights to the surface were variously referred to as surface rights tianmianquan [田面权] or ‘skin land’ dipi [地皮] or tianpi [田皮].25 Perpetual tenancy itself also came to be known by a variety of different names.26

Nie explains that the difference between perpetual tenancy rights in their original form and perpetual tenancy rights under divided ownership was that the holder of perpetual tenancy rights, in their original form, could not unilaterally assign the rights to another person without the consent of the subsoil owner. The concept of divided ownership, however, meant that the holder of perpetual tenancy rights could unilaterally assign the rights – or some of the rights – to another person, and even if the holder fell into arrears in the payment of rent, the subsoil owner could not recover the land,27 thus reinforcing the security of tenure that the holder of the surface rights enjoyed. As previously discussed in Chapters 2 and 3, this contrasts with the tenure insecurity on the part of the holders of land contract management rights in China today.

It has been suggested that the point at which perpetual tenancy rights became proprietary in nature was when they survived a change of owner or landlord, and that it was when the rights became assignable and inheritable that the transition to yitian liangzhu or ‘one field, two owners’ occurred.28 As Pomeranz has noted, assignment also became easier as the right of first refusal on the part of relatives in respect of the surface rights over which perpetual tenancy was held gradually declined.29 Zelin has noted that ‘[o]ne privilege frequently associated with permanent tenancy…was the right

24 Freedman 1958, 15, as cited by Palmer 1987, 7, who states that these observations are, broadly speaking, valid. 25 Palmer 1987, 6 and footnote 12. Kong et al 1996, 439. 26 Kong et al 1996, 593: 长耕 [chang geng]; 世耕 [shi geng]; 永耕 [yong geng]; 长租 [chang zu]; 永佃 [yong dian]; 永远耕种 [yongyuan gengzhong]; 永远给种 [yongyuan geizhong]; 等等. 27 Nie 2009, 86. 28 Nie 2009, 86. Palmer 1987, 26. 29 Pomeranz 2008, 102 and 116 See also Buoye 2000, 68.

112

[of the tenants] to transfer their cultivation rights or to sublet (zhuandian). Landlords appeared to acquiesce in this practice, although it was not accepted by all landlords.’30

In its evolved form under the concept of divided ownership, when perpetual tenancy rights became identified as the concept of yitian liangzhu or ‘one field, two owners’, the rights protected the holder against resumption by the landlord, even when rent was outstanding.31 The strengthening (or hardening) of the proprietary rights of the surface soil owner over time has been attributed to various factors, including absentee landlordism and either the inability of the State to regulate the practice or its tacit acquiescence in the practice. Initially, the subsoil owner retained the right of resumption if the surface owner defaulted in the payment of rent or died without heirs.32 However, landlords increasingly experienced difficulties in recovering land when the holders of perpetual tenancy rights fell into arrears in the payment of rent.

These difficulties appear to have been as much due to weak enforcement mechanisms as they were to the hardening of the rights themselves.33 Brenner and Isett note that although landlords were able to ‘secure state support to diminish the rights of topsoil owners to transfer topsoil rights, to capture transfer fees that had previously gone to the owner and seller of the topsoil rights, and to strengthen their own standing to evict rent-delinquent tenants…[t]he fact remains that these gains were themselves only briefly held, as the full arrival of the Taipings in the delta in 1860 essentially destroyed the newly emerging status quo and left tenants with greater security in land than before.’34

The weakening of rights on the part of landlords appears to reflect an earlier trend towards protecting tenants against eviction by landlords. Kong et al note that the law of the Song Dynasty protected the interests of tenants as part of the process of standardising tenancy relations; namely, the arrangements between the owners of land and those who cultivated the land. One way in which the law achieved this was to stipulate that outstanding rental had to be recovered through government procedures and landlords could not take steps unilaterally to force payment.35 All of this highlights the increasing disconnection between subsoil owners and the land and the hardening of rights on the part of the holders of perpetual tenancy rights.

(d) The benefits of perpetual tenancy rights

Historians and anthropologists have debated the benefits that divided ownership brought to the economy and land markets in later imperial and republican China. With reference to developments during the Ming Dynasty, Pomeranz has suggested that despite the difference with Western models, ‘Chinese land markets were quite efficient, and provided the incentives needed for a very productive agriculture; secure tenants, for instance, responded to their strong position by behaving like owners

30 Zelin 1986, 510. 31 See Nie 2009. See also Kong et al, 526, 593. 32 Palmer 1987, 25-26. Palmer notes that reversion as a result of the failure of the surface owner to produce heirs was remote as a result of the practice of male adoption. 33 For a discussion about the difficulties of evicting tenants for failure to pay rent and the tolerance of absentee landlords, see Fei 1947, 185. 34 Brenner and Isett 2002, 642. 35 Kong et al 1996, 363.

113 and investing heavily in improving the land.’36 Further, ‘Chinese property systems seem to have facilitated transfers of usage rights and ownership to those who were positioned to make the most productive use of the land, and to have provided the security and flexibility needed to encourage long-range investment in the productivity of the land.’37 As noted in Chapter 3, the importance of ensuring that land is placed in the hands of those who are able to cultivate the land has been a policy objective in mainland China since the early eighties.38

Palmer too has suggested that

…the surface-subsoil institution of divided ownership not only enabled the most powerful lineages in the region to concentrate their own manpower on the more productive fields but also served as an instrument for extracting resources from outsiders willing to cultivate more marginal lands, thereby helping to ensure that their more fortunate members could concentrate on the politically useful, prestigious and productive pursuits of scholarship, administration and commerce.39

Zhang has noted that the division of land into subsoil and surface rights that occurred under perpetual tenancy rights effectively doubled the available land for the purpose of inheritance and was advantageous in respect of the division of family assets because it gave rise to property rights in the surface that could be divided and inherited. Further, the traditional property concepts placed their primary emphasis on use rights [收益权] and not on treating property in accordance with a system that recognised absolute, exclusive and closed ownership rights. In this context, ‘the separation of ownership and use rights was common.’40

(e) The foreign concessions in China

The versatility of perpetual tenancy, particularly as it came to be recognised under the concept of divided ownership, was reflected in the fact that a variant of perpetual tenancy provided the basis on which foreigners acquired real property in the foreign concessions in China such as Shanghai. As noted by Chen Yu:

Although the Qing Government allowed foreigners to acquire real property in China, it was unacceptable to sell land to barbarians. Consequently, rent-in-perpetuity system was formulated on the basis of traditional Chinese land exchange scheme. It legalized foreigners’ acquisition of real property, and at the same time maintained China’s territorial sovereignty.41

Similar to the original form of perpetual tenancy arrangements entered into between Chinese nationals, the arrangements concerning foreigners required the foreigners to pay rent to the State and gave the State the right to resume the land for failure to pay rent.42 Unlike the domestic

36 Pomeranz 2008, 101. Pomeranz notes the increase of land transactions during the Ming dynasty and the proverb: ‘In 1,000 years, a piece of land has 800 owners’, highlighting the prevalence of assignment and land transactions. 37 Pomeranz 2008, 102. 38 See Chapter 2, Part 5(e)(vii). 39 Palmer 1987, 40. 40 Zhang 2013. 41 Chen 2005, 4. 42 One difference between perpetual tenancy rights as they were enjoyed by foreigners and perpetual tenancy rights as they applied to Chinese citizens under the Civil Code was that there was no prescribed period before

114 arrangements, however, the assignment of rights by the foreigner was subject to various restrictions and requirements as indicated in the example set out below. The process for acquiring rights to land in the foreign concessions began with the Chinese owner entering into a deed of perpetual lease with the foreign purchaser. As noted by Jamieson

registration [was] effected through the Consulate of the Purchaser (or Lessee rather) at the proper office of the local authorities, which at Shanghai [was] the [Daotai]. Instead, however, of merely stamping the Deed of Lease and returning it to the Purchaser, the [Daotai] [retained] in his office the deed of lease and the old title deeds, if any, and [issued] a fresh Deed under his seal, in which he [recited] the names of the native Vendor and the Foreign Purchaser or Lessee, and [declared] that he [agreed] to and [confirmed] the Lease in perpetuity.43

The deeds came to be known as Daoqi (道契) after the imperial Chinese official (Daotai) who oversaw the circuit of Shanghai in the Qing Dynasty. An example of a deed of perpetual lease and the title deed issued by the authorities appears below.44

The Deed of perpetual lease provided as follows:

立永远出租基地文契严尚乡今将自置坐落上邑。。。情愿央中永远出租到洋商处为业三面言明凭中议定时值出租价银计洋六百元正

当立契日其价一并收清另立条据为凭其地自出租之后凭从得主管业耕种收册过户承粮取租起造华洋房屋开构筑路概由得主之便与失主永不干涉门房上下并无言阻如有重交叠卖来历不清以及别项纠葛失主自愿理直承租人年租每亩制钱一千五百文须预付以供粮赋此系两相允洽各无异言恐后无凭立此永远出租基地文契为照。

。。。

The party entering in to this perpetual lease of land, Yan Shangxiang, today…through a middleman voluntarily leases in perpetuity to the foreign business as owner the land in Yi in Shanghai County. The three parties have expressly agreed, through the middleman, that the current lease price is 600 foreign dollars exactly.

It is confirmed that the price has been paid in full on the day of signing and that a receipt has been issued as evidence. From the date of the lease, the proprietor is permitted to manage and cultivate the land, register the transfer of interest, collect rent in the form of grain, build a foreign house, construct a roadway at the proprietor’s convenience without interference from the seller. The neighbours on all sides have no objections. If there are disputes caused by competing transactions and the circumstances of sale are not clear or there are other disputes, the seller will resolve them by himself. The annual rent payable by the proprietor is one thousand, five hundred cash per mu and must be paid in advance in the form of grain. This is the agreement between the parties and there

resumption could take place. Instead, the State could resume the land at any time after the foreigner was ordered to pay the rent. 43 Jamieson 1970, 99. See also Jernigan 1904, 35. 44 From the author’s personal collection, which includes documents from the ICI archives.

115 are no differences of view. As word of mouth provides no evidence, this deed of perpetual lease is entered into as proof of the transaction.45

The English Title deed issued by the authorities provided as follows:

That if the said Renter, his or their Successors or Assigns, shall hereafter make over his or their interest in the Ground now rented to another party, without reporting the same to his or their Consul for his assent and concurrence, and through him to the Special Envoy and Intendant for the time being, and for the due registration of the Transaction in their respective Records; or if the said Renter neglect to pay Yearly in advance the sale Low Rent of Fifteen Hundred Cash per mow, after being ordered to do so, then, and in each of these several cases, this Deed shall become null and void, and the proprietorship of the said Land, Houses and Tenements, shall revert to the Lord of the Soil.

The requirement to pay rent to the State, failing which the State [i.e. the ‘Lord of the Soil’] could resume the land, had parallels with the requirement to pay taxes on private land except that under the conventional version of perpetual tenancy (i.e. that adopted outside the foreign concessions), the liability to pay tax remained with the owner of the subsoil. As noted before,46 it was the payment of taxation that formed the basis for the recognition of property rights by the State and it was tax receipts and ‘red’ or official deeds that evidenced property rights. Possession alone did not confer title.

(f) The Republican period

The rights and obligations of the parties under customary perpetual tenancy arrangements were largely determined as a matter of custom in the relevant location.47 As noted at the beginning of this chapter, perpetual tenancy rights were codified during the Republican period. It was the codified version that continued in Taiwan after the 1949 Revolution on mainland China and which was subsequently replaced by agricultural rights in 2010. The inclusion of perpetual tenancy rights in the Property Rights Section of the Civil Code of the Republic of China in 1930 was the first occasion on which the rights were recognised by written law. Zhang has described the codification of perpetual tenancy rights as a process of abstraction, under which the main issue was how to make provision for the separation of the ‘skin’ of the land and the ‘bones’ of the land, as expressed in anthropomorphic terms. Zhang goes on to explain that traditionally, the surface rights could be regarded as true ownership. However, the Civil Code of 1930 maintained the principle of exclusivity of property rights, under which a piece of land could not have two or more owners.48 Because the system could not accommodate divided ownership, the Civil Code defined perpetual tenancy rights as a usufruct right [用益物权] rather than as a type of ownership.

45 The translation is the author’s. 46 See Chapter 4, Part 6. 47 For an understanding of the different customary practices, see Collection of Reports of Custom Surveys on Civil Matters 1998. 48 This can also be referred to as the concept of single patrimony.

116

In codifying perpetual tenancy rights (and dian rights as will be discussed in Chapter 6) as distinct from simply recognising such rights as existing under custom, the Civil Code limited the development and evolution of these rights as a matter of customary law, even though some provisions recognised custom as an exception to the formal requirements as discussed at the end of this chapter. Under the customary version of perpetual tenancy, the rights and obligations between the parties were governed by custom except for those aspects that were stipulated by contract. As reflected in the deed extracted above, the contract made provision only for fundamental issues such as the description of the land, the rental deposit, the annual rent and the security that the tenant enjoyed against termination by the landlord. By contrast, the Civil Code prescribed the detailed relationship and allocation of rights and obligations between the holder of perpetual tenancy rights and the owner of the land. The provisions in the Civil Code of Taiwan dealing with perpetual tenancy rights (now repealed) are set out in Appendix 3. These provisions highlight the extent to which the holder of perpetual tenancy rights exercised full rights in relation to the land and the extent to which the land owner was a passive owner who enjoyed limited rights, such as the right to terminate the perpetual tenancy in the prescribed circumstances.

(g) Taiwan and the replacement of perpetual tenancy rights with agricultural rights

As noted in Chapter 1, perpetual tenancy rights have been abolished and replaced with agricultural rights in Taiwan. Their fate in Taiwan would suggest that they no longer have any significant relevance in a modern context. The discussion in this section examines the reasons for their abolition and argues why their consideration in the context of reform in mainland China today is justified.

Perpetual tenancy rights were utilised in Taiwan between 1949 and 2010 but with decreasing regularity. Zhang notes official statistics indicating that from 2005 to 2010, there were only 159 registrations of perpetual tenancy rights, involving 271 parcels of land with a land area of 530,000 square metres. Further, during that period, 150 registrations were cancelled, involving 411 parcels of land and a total land area of over 800,000 square metres. The gradual decline of perpetual tenancy in Taiwan appears to have been an inevitable result of the agricultural reforms that occurred in the fifties.49 These reforms, which the Nationalist government implemented after relocating its base to Taiwan, included rent reduction, which made perpetual tenancy less attractive to land owners, the sale of public land at concessional prices and the acquisition of privately leased land for sale to farmers, both of which enabled farmers to buy their own land instead of entering into perpetual tenancies. These reforms were designed to support the self-tilling farmer policy’ [自耕农之土地政策],50 which has had parallels in mainland China.51

In February 2010, Chapter 4 of the Property Rights Section of the Civil Code of the Republic of China, which governed perpetual tenancy rights as extracted in Appendix 3, was deleted.52 In its place, the Civil Code now recognises agricultural rights.53 The provisions governing agricultural rights in

49 See Zhang 2013. 50 For an outline of the reforms, see Zhang 2013. 51 See Chapter 2, Part 4(a). 52 Order No. 0990022461. Pre-existing rights still continue to be governed by the previous provisions. See www.land.moi.gov.tw/law/new/990628 土登修正.doc, accessed on #. 53农育权.

117

Taiwan’s Civil Code are extracted in Appendix 3. The following table outlines key differences between agricultural rights and perpetual tenancy rights as previously provided by the Civil Code.

Issue Perpetual tenancy rights Agricultural rights

Term Perpetual No more than 20 years

Assignability Assignable Assignable except where the contract provides otherwise or there is a custom to the contrary

Ability to lease Not able to be leased Not able to be leased except where custom permits the lease of the ‘agriculture work structure’

Ability of owner to terminate Terminable where the holder Terminable where the holder leases the land or fails to pay leases the land in breach of law rent for two years (except or custom, or fails to use or where custom provides preserve the use of land otherwise) appropriately in accordance with the rules

Agricultural rights were introduced to support the ‘small landlords, big tenant-farmers’ [小地主大佃农] policy in Taiwan, to expand the scale of agricultural operations while allowing small landholders to continue to own land and to ensure that both small landlords and big tenants were able to obtain the protection of proprietary rights that was not available under a contractual lease.54 According to information on the Taiwan government website:

The “small landlords, big tenant-farmers” program was rolled out by the Council of Agriculture (COA) in May 2009 to revitalize the many small and fallow plots of farmland scattered throughout Taiwan, often owned by elderly farmers. Those unwilling or no longer able to cultivate their land are encouraged to lease to young professional farmers or agricultural groups. The tenant-farmers, meanwhile, receive guidance on expanding their business scale, incentives for growing import- substitution or exportable crops, as well as subsidies for leasing or improving land, switching crops and contract farming. The COA also offers them interest-free rent loans, low-interest (1 percent) business loans, farming equipment grants and disaster relief assistance.

As of the end of 2012, the program helped 18,265 landowners lease 9,579 hectares of farmland to 1,328 tenants. The average farm size operated by a tenant was 7.2 hectares, more than seven times that of ordinary farms, which averaged 1.1 hectares. Also, the average age of tenant-farmers was 44 years while other farmers across Taiwan averaged 62 years in age.55

54 Zhang Qingyong 2013. 55 See http://www.ey.gov.tw/pda_en/Dictionary_Content.aspx?n=A240F8389D824425&sms=D8F3EB15472D7847&s

118

As noted in the extract above, the problem of small and fallow plots of farmland in Taiwan was partly due to the aging farming population and the reluctance of farmers to sell their land. As discussed further below, it was also due to the reluctance of younger farmers to lease land from the older farmers as a result of the weak status of a contractual (i.e. non-proprietary) lease. The decrease in the average age of tenant-farmers from 62 years to 44 years as a result of the introduction of proprietary agricultural rights highlights the positive impact of proprietary rights in a rural context.

The program was part of the third stage of agricultural reform in Taiwan. The first stage had occurred between 1949 and 1953. Known as the 375 Rent Reduction plan, the first stage reforms imposed a cap of 37.5 per cent of the annual harvest on rent payable to landlords and the sale of state-owned farm land in order to ensure that land was available to farmers for tilling. The second stage occurred between 1983 and 1986 and involved loans to enable farmers to purchase land and the introduction of reforms to promote cooperative operations and mechanisation.

As noted above, the focus of the third stage, which coincided with the amendments to the Civil Code in 2010 and the introduction of agricultural rights, aimed to encourage elderly farmers to lease their land to younger farmers.56 It was considered that agricultural rights would overcome the previous reluctance of farmers to enter into long leases.57 As discussed in the following section, the reason for this was that leases were contractual and not proprietary in nature and were therefore vulnerable in the event of an assignment of ownership by the landlord.58 By contrast, agricultural rights (as was previously the case with perpetual tenancy rights) survive an assignment of ownership by the land owner.

At this stage, it is important to examine the reasons behind the decline of perpetual tenancy rights in Taiwan, including why they did not provide elderly farmers with an incentive to grant rights to younger farmers. This is important because the decline of perpetual tenancy rights in Taiwan may suggest that they would not be relevant in the context of mainland China.

Several reasons have been given for the gradual decline of perpetual tenancy in Taiwan. According to the above government website, the system of perpetual tenancy rights had created a perpetual separation between ownership and use, which affected the reasonable use of agricultural land by, amongst other things, reducing the incentives to maximise the productive yield of the land, and was inconsistent with modern agricultural policy.59 This had resulted in decreasing registrations of such rights over the years. Further, Zhang argues that, historically, the emergence of divided ownership had caused the subsoil ownership to ‘shrivel to a rent-collection right [收租权] and to become marginalised.’ This undermined the integrity of the concept of ownership under the Civil Code.60

=FCB30CD97702CF3F. Trials had begun as early as 2003. See ‘Small Landlords, Big Tenant Farmers: Dounan’s Success Story’, available at http://www.taiwan.gov.tw/print.asp?xItem=27667&ctNode=1913&mp=999. 56 Zhang Qingyong 2013. 57 Ibid. 58 See ‘Amendment to Property Rights in the Civil Code’ (Liberty Times Net, 6 January 2010), available at http://news.ltn.com.tw/news/business/paper/364291. 59 See the information on the following website:www.moj.gov.tw/HitCounter.asp?xItem=183122&mp=001 60 Zhang 2013.

119

In Taiwan, perpetual tenancy rights became redundant as land became available for farmers to buy. However, as farmers grew older, they hung onto land and were reluctant to grant perpetual tenancy rights to others. To do so would have meant losing effective control of their land in perpetuity. In addition, as noted above, their rights under perpetual tenancy essentially shrivelled to a rent- collection right. In the context of private ownership of land, this reduced the incentive on the part of owners to invest in the land and to maximise its productive yield.

From the perspective of the holders of perpetual tenancy rights, the obligation to pay rent would also have limited their capital with which to invest in the productive yield of the land and would also have represented a cost that is likely to have been outweighed by the benefits of purchasing land outright. At the same time, farmers without land and without the ability to buy land were reluctant to enter into leases as leases did not offer the protections that a proprietary right would offer.

It was for these reasons that Taiwan introduced agricultural rights as a limited-term form of land tenure in place of perpetual tenancy rights.

The decline of perpetual tenancy rights in Taiwan does not undermine their potential relevance to reform in mainland China. This is because the system of land ownership is fundamentally different in each jurisdiction. In Taiwan, rural land may be privately owned. In mainland China, rural land is owned by the Collective. In Taiwan, the rights of the land owner were perceived to have become limited and circumscribed by perpetual tenancy rights, despite the provisions in the Civil Code preserving certain rights on the part of the land owner.61 In mainland China, by contrast, the opposite problem has occurred; namely, rural land contract management rights are limited and circumscribed by the rights and powers of the Collective, despite the recognition of land contract management rights as proprietary under the PRC Property Law.

Thus, the question in mainland China is not whether perpetual tenancy rights might infringe the rights of private land owners but, instead, whether they would provide a basis on which the rights and obligations between the Collective and farmers could be re-allocated in a manner that could achieve the official policy objectives. In particular, perpetual tenancy rights would provide a basis on which to convert collective ownership of land from active ownership into passive ownership.

In addition, as outlined at the beginning of this chapter, the experience of agricultural rights in Taiwan may be relevant to mainland China in terms of operating as a limited-term proprietary right that could be granted by farmers in favour of third parties and which would overcome the deficiencies of a contractual lease as outlined in the following section.

(h) Comparison with the lease as a contractual, non-proprietary right

As previously noted,62 the treatment of a lease in mainland China and Taiwan provides a point of reference with which land contract management rights can be contrasted. It also helps to explain the vulnerability of land contract management rights, the lack of proprietary remedies that are available to protect them and the rationale behind calls to strengthen the rights of farmers and to convert the Collective from an active owner of land to a passive owner.

61 See, for example, the right of the land owner under Article 845 to revoke the tenancy if the holder of perpetual tenancy rights leased the land to another person. 62 See Chapter 2, Part 5(f).

120

From a modern perspective, the understanding of a perpetual tenancy as a type of ‘lease’ – or the reference to a perpetual tenancy as a ‘perpetual lease’ as it is sometimes called – is mistaken. This is because a lease, as a matter of law in both mainland China and Taiwan and as outlined in Chapter 2, is a purely contractual arrangement and does not give rise to a proprietary right.63 At this point, it is useful to examine the nature of a lease by way of comparison with perpetual tenancy rights and agricultural rights.

In some respects, a lease has the same effect as a proprietary right. In particular, the relevant laws in both Taiwan and mainland China provide that the transfer of ownership in respect of the property that is subject to a lease does not affect the lease contract. In other words, a lease contract survives the transfer of ownership in respect of the leased property. However, this arises by operation of law rather than as a result of the lease itself being a proprietary right. In addition, although this ensures that the lease contract remains in effect subsequent to the transfer of ownership, the rights of the lessee remain vulnerable to the risk that the lessor wrongfully terminates the contract and simply has to pay damages for breach instead of facing a proprietary action for recovery of possession by the lessee.

Article 425 of Taiwan’s Civil Code provides as follows:

第 425 條(租賃物所有權之讓與)

出租人於租賃物交付後，承租人占有中，縱將其所有權讓與第三人，其租賃契約，對於受讓人仍繼續存在。

Article 425

After the lessor delivers the leased property, whilst the lessee has possession, the lessor may transfer ownership to a third person, [however] the lease agreement continues to exist in respect of the transferee.

Similarly, Article 229 of the PRC Contract Law provides as follows:

第二百二十九条

租赁物在租赁期间发生所有权变动的，不影响租赁合同的效力。

Article 229

Any change of ownership to the leased property during the term of the lease does not affect the validity of the lease contract.64

The above provisions suggest that even though a lease is not a proprietary right, the outcome of a change of ownership on the part of the lessor should be the same as if the lease operated as a proprietary right. In other words, the rights of the lessee under the lease contract are not affected. In each case, however, the doctrinal basis for the survival of the lease contract in the context of a change of ownership is unclear. It is possible that the provision in Taiwan and mainland China

63 In Taiwan, a lease is governed by Section 5, Chapter 2, Part II of the Civil Code, which deals with special types of obligation [各種之債]. A lease is not included in Part III, which deals with rights in rem. Similarly, in mainland China, a lease is governed by Articles 212-236, Chapter 13 of the PRC Contract Law and not the PRL. 64 See also Supreme People’s Court of China 1988, Article 119.

121 operates as a statutory novation, under which the lease contract between the original lessor and the lessee is replaced with a new contract on the same terms between the assignee of the leased property and the lessee. In this regard, although the effect of the provisions in Taiwan and mainland China appears to be the same, the wording of Article 425 of Taiwan’s Civil Code is clearer in terms of confirming that the lease contract binds the transferee of the leased property.

At first glance, these provisions appear to lead to the same outcome as would apply in the context of a proprietary right. However, there are four important differences. First, as a contractual right [债权], a lease is effective without registration, whereas a proprietary right requires registration to take effect.65 Secondly, a lessee is not able to grant a sub-lease without the consent of the lessor, except in the case of a sub-lease of part of a house.66 Thirdly, a lease is always subject to a maximum term.67 Fourthly, as noted, although each of the above provisions states that the lease agreement survives an assignment by the lessor, the critical factor that determines the proprietary nature is whether the lessor may elect to terminate the lease agreement and pay damages for breach or, instead, whether the lessee can obtain a proprietary remedy to prevent such an outcome from occurring. The introduction of agricultural rights in Taiwan, which are limited in term to 20 years, avoids the lease’s lack of a proprietary nature and therefore entitles the holder of the rights to the protection of proprietary remedies.

(i) Custom, customary law and the intersection with the written law – Taiwan and Mainland China

As noted in Part (f) above, the previous provisions in the Taiwan Civil Code governing perpetual tenancy rights and the new provisions governing agricultural rights in Taiwan recognise exceptions to the mandatory application of the provisions in the case of ‘custom’. It is therefore relevant to consider the definition of ‘custom’ and its relevance in the provisions that previously governed perpetual tenancy rights and the provisions that currently govern agricultural rights. As Jamieson has noted, prior to the codification of perpetual tenancy rights, their validity rested ‘solely on local custom.’68

Articles 1 and 2 of Taiwan’s Civil Code provide as follows:

第 1 條

民事，法律所未規定者，依習慣；無習慣者，依法理。

Article 1

If the law does not make provision in respect of a civil matter, the case shall be decided according to custom. If there is no such custom, the case shall be decided according to legal principles.

第 2 條

65 PRL, Article 9. 66 See Article 224 of the PRC Contract Law. 67 See Article 214 of PRC Contract Law (a lease term may not exceed twenty years) and Article 449 of Taiwan’s Civil Code (the period of a lease shall not exceed twenty years). 68 Jamieson 1970, 108; Buoye 2004, 111-112: ’Based on his extensive study of Ming and Qing contracts, Yang Guozhen argued that magistrates respected customary law and when settling cases followed custom and contract rather than “empty regulations” to render decisions.’

122

民事所適用之習慣，以不背於公共秩序或善良風俗者為限。

Article 2

Only those customs that are not against public order and good morals shall be applied to a civil matter.

Further, Article 757 of Taiwan’s Civil Code recognises the relevance of custom in creating property rights:

第 757 條(物權法定主義)

物權除依法律或習慣外，不得創設。

Article 757

No rights in rem shall be created unless otherwise provided by statute or custom.

This should be contrasted with Article 5 of the PRC PRL. As previously noted in Chapter 2, Article 5 adopts the numerus clausus principle and provides that the content of property rights is to be determined by law [物权的种类和内容，由法律规定]. In relation to the use of custom to resolve civil disputes, the law in mainland China has now moved closer to the position under Articles 1 and 2 of Taiwan’s Civil Code. This is because Article 10 of the newly-promulgated Chapter 1 of the Civil Code in mainland China, which sets out general principles, now provides as follows:

第十条

处理民事纠纷，应当依照法律规定；法律没有规定的，可以适用习惯，但是不得违背公序良俗。

Article 10

The resolution of civil disputes shall be in accordance with the provisions of law; where the law does not make provision, custom may be applied, but [the application of custom] must not be in breach of public order and good morals.

At first glance, this might appear to open up the possibility of recognising traditional proprietary rights as a matter of custom; however, it is unlikely that this provision would result in the recognition of customary rights as proprietary rights. In particular, as noted in Chapter 2, there are two obstacles to recognising customary proprietary rights. First, as outlined above, Article 5 of the PRL adopts the so-called numerus clausus principle by providing that ‘the categories and contents of a property right are stipulated by law’.69 In addition, as noted above, Article 9 provides that the creation of immovable property rights becomes effective only upon registration. An additional obstacle is the legal principle recognised in mainland China that specific laws should override general laws in the event of a conflict. That said, the promulgation of the other chapters of the Civil Code – which is yet to occur as at the date of writing – and their impact on property rights may be determinative in this regard.

69 Note, however, that some scholars have argued that the definition of ‘law’ includes judicial interpretation and, consequently, that traditional property rights such as dian rights should be considered to be property rights on the basis that they have been recognised in judicial interpretations. See Shen 2013, 136. Professor Shen Weixing himself argues that the term ‘law’ in Article 5 should be interpreted broadly and that it should include judicial interpretations. See also Shen 2013.

123

The only provision in the PRL that makes reference to custom as an alternative to written law is the following provision, which relates to relationships with neighbours:

第八十五条

法律、法规对处理相邻关系有规定的，依照其规定；法律、法规没有规定的，可以按照当地习惯。

Article 15

Where laws and regulations make provision for resolving relationships with neighbours, the issues will be resolved in accordance with the provisions; where laws and regulations do not make provision, the issues may be resolved in accordance with local custom.

By comparison, Article 757 of Taiwan’s Civil Code recognises the relevance of custom in creating property rights by providing that property rights may not be created ‘unless otherwise provided by statute or custom’ [emphasis added].

One of the challenges with all of the above provisions is how to determine or prove custom, particularly in view of the divergent, potentially conflicting, customary practices that are found in China70 and how custom should be applied in disputes that are cross-regional in nature. William Hung, in his 1934 book Chinese Law and the Civil Code,71 highlighted the difficulty of determining custom as follows:

In view of the vast scope of area and the diversity of usages in various localities, custom in China has occupied a place of importance in the application of laws, especially at times when no accepted civil laws were in existence. The first article of the Civil Code, or, in other words, the book on General Provisions, approves the applicability of custom to all civil matters in the absence of express provisions, and allows it to take the precedence of legal principles, in which are included the Supreme Court decisions and explanations.

The term “custom” is a vague one. It shall not be taken advantage of without proper restrictions. Primarily, custom, to be enforceable in law, shall not be contrary to the public order and good morals. But this is only one of its elements. It has been wisely laid down in one of the Supreme Court cases that the following four elements should exist in every custom: (1) It must have been undoubtedly believed by the general public as having the force of law; (2) It must have been unanimously and continuously followed by the public for a specific length of time; (3) There must be no express provisions governing the same matter; and (4) It must not be contrary to the order and interests of the public.72

Prior to the codification of perpetual tenancy rights, the extent to which divided ownership was governed by customary law, as distinct from customary practices, has been the subject of some

70 The variation in custom is reflected in the phrase ‘三里不同风，五里不同俗’ (literally ‘there are different practices within the space of three li and different customs within the space of five li’). Tawney explained it as follows: ‘In China, as in mediaeval Europe, the state has been weak, and local particularism strong. Custom, which means in effect the law of the locality, has created rights as secure, and obligations as binding, as those which in the West have been established by legislation.’ Tawney, 1932, 35. 71 Hung 1934. 72 Hung 1934, 13-14. Hung went on to identify the need for courts to have a proper guide as to whether an alleged custom prevailed in a particular place and whether the custom complied with the four elements identified in the quote.

124 debate. Palmer has noted that the transfer of property rights ‘was ordered by a variety of sophisticated rules and contractual devices that are best considered as customary law.’73 Other scholars, such as Ocko, on the other hand, have recognised the importance of contracts in terms of embodying custom and customary law but have tended to shy away from recognising customary law for this purpose.74 Along similar lines, Zhang argues that perpetual tenancy rights were based on traditional practices (i.e. custom) and not on customary law as the rights in question were completely governed by contract and were subject to the requirements and claims of the parties involved.75

As stated in Chapter 1, this thesis argues that if one accepts the notion that custom hardens into customary law when it is recognised, to varying degrees, by legislation, administration and adjudication, perpetual tenancy rights prior to codification and the concept of divided ownership should qualify as being governed by customary law because they were recognised by government officials and courts when intervening to resolve disputes.

Whether it was based on customary law or solely on customary practices, there is no doubt that the written or positive law of the Qing Dynasty looked askance at customary perpetual tenancy rights and attempted either to ban them or restrict their scope, a position that continued until the rights were codified during the Republican Period.76 As previously noted, this was partly due to the use of such rights to circumvent the requirement to pay taxes on the transfer of land and to register the transfer, and the consequential inability of the State to exercise control or oversight in respect of such land transactions.

In relation to mainland China, Palmer notes that the practice survived after 1949 and ‘was common in many regions until its elimination as a result of the land reform campaigns of the People’s Republic during the early 1950s’.77 The position in the PRC is discussed below.

(j) People’s Republic of China

The existence of divided ownership was expressly recognised in the Land Reform Law of 1950, Article 12(2) of which provided as follows:

第十二条

…

原耕农民租入土地之有田面权者，在抽动时，应给原耕者保留相当于当地田面权价格之土地。

Article 12

…

73 Palmer 1987, 5-6, noting in footnote 10 that ‘there was no well-developed body of statutory or case law to determine the various rights arising out of the surface-subsoil division of ownership.’ 74 See Ocko 2004, 192. See also Zhang 2011, 151; Brenner & Isett 2002, 614-615; Allee 1994, 124. 75 Zhang 2013. 76 Zhang 2011, 167. See also Zhang, 151; Zuo and Li 2007, 75. 77 Palmer 1987, 85-86.

125

If a tiller possesses the surface rights of the land he rents, a portion of land equivalent to the price of the surface rights…shall be reserved for him if the land is drawn upon for redistribution.’

Palmer suggests that this provision ‘[represented] a statutory attempt to confiscate the subsoil rights without appropriating the cultivator’s surface rights.’78 The subsoil rights were subject to confiscation as they were owned by landlords, whereas the surface rights were held by poor farmers to whom land was distributed during the land reform process. The provision subsequently became redundant because of the shift from private ownership of land to collective ownership as outlined in Chapter 2.

(k) The drafting of the PRL

Many scholars debated the question of whether perpetual tenancy rights should be recognised by the law in the lead-up to the promulgation of the PRL in 2007. Professor Liang has explained that the following reasons were given by those who advocated that perpetual tenancy rights should be recognised: (1) land use rights had been tied to production contracting arrangements [联产承包] and were non-proprietary as they required the contractor to operate in accordance with the provisions of the contract and the wishes of the representative of the Collective who had granted the rights; and (2) the contractor could not freely assign the rights without the consent of the collective owner of the land.79

In his draft of the PRL, Professor Liang Huixing included a chapter on rural land use rights. The latter was drafted ‘with reference to the reasonable content and design of the traditional civil law system of perpetual tenancy rights.’80 Such a chapter did not ultimately find its way into the final draft of the PRL.

In the explanatory text for his draft law, Professor Liang noted that the land use rights that farmers enjoyed under the system that existed before the PRL81 were based on contract and were purely contractual in nature. As a result, the rights were weaker than proprietary rights and ‘did not enjoy exclusivity and…could not withstand the various types of interference and infringement by the issuer (the owner of the land) and the village administrative organisations.’ Through recognition in the PRL and the establishment of an immovable property registration, Professor Liang argued, the rights to use contracted land would be transformed into proprietary rural land use rights. In this way, the household production contract responsibility system could ‘transition into a system of usufruct rights’.

Professor Liang’s draft made provision for a system of rural land use rights that could not just be exercised by members of a particular community but were available to all farmers (i.e. even those farmers who were not members of the relevant local community) and would be acquired not through administrative allocation by the collective but through contract in accordance with market principles. In addition, the holder of rural land use rights would be able freely to assign the rights without the need to obtain the consent of the Collective (subject to any restrictions as provided by law). When exercising and protecting their rights, the holders of rural land use rights could not only

78 Palmer 1987, 2, footnote 2. 79 Liang 2000, 513-514. 80 By ‘civil law system’, Professor Liang was referring to the Civil Code as adopted in 1930. 81 These rights were enjoyed pursuant to the LAL and the RLCL.

126 defeat the claims of third persons, they could also defeat the claims of the owner of the land. This, then, was a call for such rights to be enforceable against the world (including the Collective) and to be fully proprietary in nature.

Arguing that the term ‘contract operating rights’ was not apposite to the grant of proprietary rights, Professor Liang suggested that the term ‘rural land use rights’ should instead be used and that the payment of rent should not be a prerequisite to their creation or existence.82 Instead, it should be left to the parties to determine whether rent should be paid.

In defining the rights and their content, Professor Liang’s draft drew on the experience of the perpetual tenancy system under the Civil Code in Taiwan.83 There were, however, various differences, some of which were more substantial than others. First, Professor Liang’s draft provided that the term of rural land use rights should be limited to 50 years; however, the term would be renewed automatically for another 50-year term on the basis of the original conditions, except where the holder of the rights clearly indicated an intention not to continue to use the land, the holder had been in default in the payment of rent for a total of five years, or the holder unilaterally changed the use of the land in a manner that prevented the land from being restored to its original condition. In providing for the automatic renewal of rural land use rights without restriction, this would have achieved the same outcome as in the case of perpetual tenancy rights.

Secondly, unlike perpetual tenancy rights in the Civil Code, Professor Liang’s draft imposed a cap on the rent amount as a proportion of the income from the land, which proportion was to be determined by administrative regulations of the State Council. Like perpetual tenancy rights, however, the holder of the rights could request a reduction in, or waiver of, rent where the use of the land was affected by an event of force majeure.

Thirdly, Professor Liang’s draft permitted rural land use rights to be leased in whole or in part without the requirement to obtain the consent of the land owner, except where the ability to lease was prohibited when the rights were created. By contrast, the now-repealed Article 845 of Taiwan’s Civil Code prohibited the holder of perpetual tenancy rights from leasing out the land. According to Professor Liang, the reasons for the prohibition in Taiwan included that a lease would be incompatible with the wishes of the owner of the subsoil. In addition, it would go against the policy in Taiwan of protecting self-cultivation by the surface owner if the surface owner had the right to lease the rights to a third party.

Fourthly, Professor Liang’s draft provided that rural land use rights that were obtained by auction (including waste land owned by the state or the collective) could be assigned to third parties. However, rights in respect of such land could only be assigned to parties who were engaged in rural production operations. In addition, rural land use rights could not be mortgaged. The reason given for such restrictions was to prevent the segmentation of the rural community into those who had land and those who did not have land, reflecting the social purpose of land as discussed elsewhere in this thesis.

82 This is similar to the position in Taiwan in relation to agricultural rights under Article 850-4 (see Appendix 3). 83 Liang 2000.

127

Fifthly, Professor Liang’s draft provided expressly that rural land use rights could be inherited, underscoring the proprietary nature of the rights. By contrast, the RLCL provides that it is only the income accrued from the contract, as distinct from the land contract management rights themselves, that may be inherited in accordance with the provisions of the Succession Law. On the other hand, in the case of the death of a contractor for forest land, the successor may, within the term of contract, continue to undertake the contract.84

Sixthly, Professor Liang’s draft provided that the owner of the land could not revoke the rural land use rights except in two circumstances: (1) where the outstanding amount of rent owing by the holder of the rural land use rights was equal to the total amount of five years’ rent (except where more generous restrictions had been imposed when the rights were created); or (2) the holder of the rural land use rights unilaterally changed the use of the land in a manner that prevented the land from being restored to its original condition. This mirrored the position in respect of perpetual tenancy rights in the 1930 Civil Code, except that the relevant term for revocation as a result of the non-payment of rent under the 1930 Civil Code was two years.

Finally, Professor Liang’s draft contained a provision requiring the holder of rural land use rights to use the land reasonably, to maintain the soil fertility of the land and not to cause damage to the permanent nature of the land. This was similar to the requirement under the provisions governing agricultural rights in Taiwan, which replaced the chapter on perpetual tenancy rights in 2010, for the holder of the rights ‘to maintain the productive nature of the land and its permanent ongoing use’ (Article 850-6). Similar to the reforms in Taiwan, by replacing the perpetual terms with a term of not more than 50 years, Professor Liang’s proposal marked a departure from perpetual tenancy rights per se and towards a new kind of land tenure that borrowed from perpetual tenancy rights.85

As compared with the conceptual model for the adoption of perpetual tenancy considered by this thesis in Chapter 7 of this thesis, Professor Liang’s model of rural land rights was based more on enhancing the existing system than on adopting perpetual tenancy as it operated under either the codified framework in Taiwan or the customary version. In particular, Professor Liang’s draft was subject to a limited term, which is likely to have detracted from the perceived tenure security. Further, Professor Liang’s draft imposed a restriction on mortgaging rural land rights, which would have been inconsistent with the subsequent policies of the State as outlined in Chapter 3.

3. The debate concerning the recognition and adoption of perpetual tenancy rights

As noted in the introduction to this chapter, the debate concerning the relevance of perpetual tenancy rights speaks fundamentally to the nature of land tenure in rural China. In particular, as noted below, it is perceived by many, particularly those who would advocate in favour of its adoption or adaptation, as a means of achieving the empowerment objective and, in particular, greater security of tenure for farmers. This is because it involved a passive form of ownership that

84 RLCL, Article 31. This can be contrasted with Article 50, which provides that where the land contract management rights are obtained through bid invitation, auction or public consultation and the contractor dies, the benefits derived from the contract which are due may be inherited in accordance with the provisions of the Succession Law; and within the term of contract the successor may continue to execute the contract. 85 See further in Part 3(ii) below.

128 enabled the holder of the perpetual tenancy rights to use the land ‘as though it were the owner’ and limited the rights of the land owner to collecting rent (where applicable) and, in the case of the codified version of perpetual tenancy, exercising termination rights in narrowly prescribed circumstances.86 The holder of the perpetual tenancy rights therefore had greater security of tenure than in the case of a contractual lease.

Perpetual tenancy rights have been considered alongside a range of options that have been identified in the literature for reform to rural land rights in China. The two main options are as follows:

1. Reforming the current system of rural collective ownership, which would involve drawing on, or borrowing from, the historical experience of perpetual tenancy rights to strengthen the existing system; and 2. Recognising perpetual tenancy rights, either on the basis of state-ownership of land or on the basis of collectively owned land.

In examining the historical experience with perpetual tenancy rights, some writers have drawn parallels with the current system of rural land contract management rights, viewing such rights as a weak version of perpetual tenancy rights without specifically identifying the relevant version of perpetual tenancy rights for this purpose.87 At this point, it is useful to highlight some of the key differences between perpetual tenancy rights, under both the customary and codified versions, and land contract managements rights.

First, as noted in Chapters 2 and 3, land contract management rights are issued based on the status of the holder as a member of the collective economic organisation, whereas perpetual tenancies were not subject to any restrictions as to who could obtain the topsoil rights (except to the extent of any customary rights of pre-emption that applied). Secondly, although both perpetual tenancy rights and land contract management rights involve the right to possess, use and derive benefit from land owned by another person, land contract management rights are primarily determined by, and subject to, contract. Under the current legal framework, such rights are vulnerable to adjustment and resumption, as outlined in Chapter 2, and are therefore capable of being exploited, as outlined in Chapter 3. Further, the rights are subject to the active supervision of the Collective as the owner of the land. In many respects, it is the right to supervise on the part of the Collective and the contractual nature of the relationship between the Collective and the farmers, involving a lack of express proprietary rights and remedies on the part of the holder, that create the potential for abuse and exploitation.

By contrast, although perpetual tenancy rights were also created by contract, the contract normally did not restrict the proprietary rights of the topsoil owner in any way. Instead, the rights were governed either as a matter of custom (before the codification of the rights in the 1930 Civil Code) or pursuant to the relevant provisions of the 1930 Civil Code. An example of the impact of custom was

86 Under the provisions of the Civil Code of Taiwan governing perpetual tenancy rights, termination rights on the part of the land owner were limited to an unauthorised lease by the holder and the failure to pay rent for the prescribed period of time: see Articles 845 and 846 as set out in Appendix 3. 87 See, for example, Li Min 2007 and Wu and Wang 2015, who argue that land contract management rights are effectively a new type of perpetual tenancy.

129 the autonomy of the topsoil owner in determining what crops to farm and how to use the land. In addition, as previously noted, in most cases the landlord was a passive landlord, simply collecting rent, whereas the issuer of land contract management rights under the modern system issues the rights to the holder not to generate an income directly from the land but, instead, to provide a ‘life guarantee’ as part of the social purpose of rural land.88 The current land contract management rights, therefore, operate on a basis that is less secure than traditional perpetual tenancy rights. The qualified nature of the rights limits the security of tenure that farmers enjoy and the extent to which they can exercise agency in respect of the use of land and dealings in respect of land.

Thirdly, perpetual tenancy rights continued in perpetuity, except where otherwise agreed, whereas land contract management rights are subject to a fixed term, although capable of being renewed. In addition, under the current system, the land can be taken back if the farmer abandons the land or lets it go to waste. This ties the farmers to their land and makes it less likely that they will seek alternative sources of income.89

The discussion below responds to the following two questions: (1) what views have been put forward concerning the adoption or rejection of perpetual tenancy rights as part of the reform of rural land rights today; and (2) What does the debate reveal about the relevance and suitability of perpetual tenancy rights to reform in China today?

1. What views have been put forward concerning the adoption or rejection of perpetual tenancy rights as part of the reform of rural land rights today?

As outlined in Chapter 1, the views concerning the adoption or rejection of perpetual tenancy rights can be divided into three categories: (1) those that advocate that the historical experience of perpetual tenancy rights is anachronistic and should be discarded in favour of ‘modern’ forms of land tenure; (2) those that advocate that the historical experience of perpetual tenancy rights should be borrowed for the purpose of strengthening or reforming the existing system of land contract management rights but that China should not adopt them in a literal sense; and (3) those that advocate that perpetual tenancy rights should be adopted in place of land contract management rights. Those in the third category – namely, those who advocate that perpetual tenancy rights should be adopted in place of land contract management rights – are motivated by the need to give farmers greater security of tenure, an important component of which would be to convert the Collective (or the State) into a passive owner of land and thereby reduce its interference in land-use and land dealings.90

The analysis below discusses the reform options and views in each category and evaluates them against the criteria outlined in Chapter 3; namely, the official policy objectives of the State, including giving farmers more secure property rights and increasing the scope of rights that famers may exercise. By contrast with the proposal put forward by Professor Liang prior to the promulgation of the PRL, most of the arguments have been made in the years following the promulgation of the PRL.

A table outlining the different views in each category is set out below.

88 Wu and Wang 2015, 104-105. 89 See the discussion about rural-urban migration in Chapter 3, Part 3(b) above. 90 See further in section (iii) below.

130

Reform option Views

China should discard the historical • Perpetual tenancy rights are inconsistent with the experience and adopt modern forms of concept of ownership and would fundamentally land tenure change the relationship between the Collective and farmers • Rural land privatisation should be considered

China should borrow from the historical • The term of land contract management rights experience of perpetual tenancy rights but should be extended and the restrictions on should not adopt them in a literal sense assignment and mortgage should be removed • Land contract management rights should enjoy a perpetual term with restricted rights to assign and mortgage • Land contract management rights should enjoy a perpetual term with unrestricted rights to assign and mortgage • The experience of perpetual tenancy rights should be borrowed to strengthen the secondary market for land contract management rights and the proprietary nature of sub-contract rights

China should adopt perpetual tenancy • Land ownership should be passive and non- rights based on passive ownership by the interventionist Collective or the State • The social purpose of land should be separated from its productive purpose

(i) China should discard the historical experience (and adopt modern forms of land tenure)

(a) Views

Those who advocate that the historical experience with perpetual tenancy rights should be discarded claim that the practice is anachronistic in today’s China and incompatible with modern concepts of land tenure. Yuan, for example, argues that perpetual tenancy rights and land contract management rights are fundamentally different in terms of their value orientation and legal nature, and that perpetual tenancy is inconsistent with the concept of ownership.91 Accordingly, to adopt perpetual tenancy rights would be to destroy the value system embodied within land contract management rights as it would fundamentally change the relationship between the Collective and the farmers.

This question of the value system embodied within land contract management rights was debated in the lead-up to the promulgation of the PRL in 2007. Foreshadowing the subsequent policy developments, Zhu, for example, argued that instead of recognising land contract management

91 Yuan 2016, 15. This inconsistency, Yuan suggests, explains the abolition of perpetual tenancy rights in Taiwan and their replacement with agricultural rights.

131 rights as proprietary rights (as subsequently occurred under the PRL),92 a standardised form of rural collective ownership rights should be established, under which the farmers would receive rural collective ownership rights and operate through a land cooperative [土地合作社]. In other words, the land cooperative would be the body through which ownership rights are exercised and would be separate from the administrative and economic bodies. The reason why this option was preferred by some is that unlike perpetual tenancy rights on state-owned land, it would take decisions about land management outside the control of government, both local and central, and would avoid expropriation of rural land. It would also not require any amendment to the Constitution as it would be consistent with the existing provisions under which rural land is collectively owned. This option would have involved replacing the existing Collective with a land cooperative and issuing collective ownership certificates to the farmers to protect them from land appropriation.

At the other end of the scale, privatisation was debated prior to the promulgation of the PRL. Writing in 2005, Cai and Fang advocated rural land privatisation on the basis that this would increase tenure security; increase assignability of land, productivity and the efficient allocation of rural resources; promote the transfer of surplus labour; and better serve the social purpose of rural land, thereby achieving greater social stability.93

(b) Evaluation

Broadly speaking, the views against the adoption or adaptation of perpetual tenancy rights divide into two extremes. At the one extreme, there is support for the current system on the basis that it is consistent with the concept of collective ownership and that the adoption of perpetual tenancy rights would disturb the value system underpinning collective ownership. This view downplays the importance of tenure security and advocates in favour of maintaining the existing system under which the relationship between the Collective and the farmers is governed primarily by contract and the Collective continues to perform an active role in decisions concerning land use and dealings with land. Although supporting the status quo, this approach does not acknowledge the challenges confronting the current system and does not accommodate the official policy objectives as outlined in Chapter 3 in terms of strengthening and increasing the rights of farmers and encouraging the development of a market for the sale and purchase of rural property rights.

At the other extreme, there are calls for rural land privatisation. Although attractive in terms of removing the formal influence of the Collective (and the State) in rural land ownership, such an approach would conflict with the consistent policy pronouncements that collective ownership of land should be preserved. Further, private ownership of land would need to be supported by reliable and internally consistent forms of land tenure and the options in this regard have not been explored in any detail by the literature to date.

92 Zhu 2007, 75. Zhu argues that this would be to introduce a form of state-owned perpetual tenancy[国有永佃]. 93 Cai and Fang 2005. The writers note the social function of land and how the current system supports migration to the city. They also refer to the current restrictions on cross-regional assignment of land-use rights and how the current system increases the risk of idle land.

132

(ii) China should borrow from the historical experience of perpetual tenancy rights (e.g. by extending the term and the autonomy of the contractor) but should not adopt them in a literal sense

Those who fall into the second category can be divided into sub-categories based on the ways in which the historical experience with perpetual tenancy rights should be borrowed for the purpose of reforming the current system.

(a) The term of land contract management rights should be extended and the restrictions on assignment and mortgage should be removed

This option represents the minimalist option in terms of borrowing from the experience of perpetual tenancy rights but would be significant in terms of expanding the rights otherwise. Zhang, for example, argues that China should borrow from the experience of perpetual tenancy rights to reform land contract management rights on the ground that this would grant farmers greater property rights in line with the Third Plenary Session of the 18th CCPCC, which called for farmers to be granted greater property rights, including the right to assign and mortgage their land rights.94 Zhang calls for the term of land contract management rights to be increased to 70 years to bring it into line with state-owned land use rights. Further, farmers should have full rights of disposal to overcome the unequal relationship between the collective owner of rural land and the farmers. Although the current rules allow subcontracting, assignment and lease of the rights, control is in the hands of the Collective and there are too many restrictions. This option would involve abolishing the requirement for consent from the Collective and the removal of restrictions on the parties to whom the rights may be assigned. To overcome the challenges that exist in terms of enforcing mortgages over land contract management rights under the current system, a market for rural land exchange should be established, together with a system of land rights registration. In justifying the historical experience with perpetual tenancy rights, Zhang further argues that perpetual tenancy rights achieved an appropriate balance of rights between the owner of the surface rights and the owner of the subsoil rights.95

(b) Land contract management rights should enjoy a perpetual term with restricted rights to assign and mortgage

This option would involve maintaining the existing system (including the ongoing relevance of the land management contract in determining the rights and obligations between the parties and the restrictions on assigning and mortgaging the rights) and making express provision for land contract management rights to enjoy a perpetual term. Some restrictions on assignment, however, should remain. Zuo,96 for example, argues that the restrictions on assignability of rural land rights should be removed, but only to the extent of allowing the farmers to assign their rights freely within the collective economic organisation. Farmers should not be able to assign their rights to persons outside the collective economic organisation.

94 Zhang Li 2014b, 213. 95 Ibid. 96 Zuo 2010, 159.

133

This option would involve maintaining the existing system (including the ongoing relevance of the land management contract in determining the rights and obligations between the parties) and making express provision for land contract management rights to enjoy a perpetual term, but removing the restrictions on assignment. Ma Jiajun, for example, argues that in line with the historical experience of perpetual tenancy rights, the term of the existing land contract management rights should be converted into a perpetual term, which would achieve greater security for farmers and greater investment in the productive use of land. Further, farmers should have the right to mortgage their land use rights and the restrictions on assignment should be removed so that farmers can treat land as a form of capital and not just as a livelihood guarantee. In other respects, including the power of the Collective to resume the land in certain circumstances, the current system should be maintained.

This, Ma argues, would represent a small adjustment [小调整]) in the context of maintaining stability (大稳定) and would be consistent with the Third Plenary Session of the 17th CCPCC (October 9–12, 2008), which resulted in the 2008 Decision on major issues concerning rural reform and development and highlighted the need to improve the land transfer system and establish a modern rural finance system in China.97

Whilst recognising the need for any reform to proceed on the premise of recognising land contract management rights, Liang argues that any decision in respect of the assignment of rights should be determined by the contractor and should not involve the issuer; namely, the system should permit greater autonomy to farmers. Underscoring the potential relevance of perpetual tenancy rights, if only by analogy, Liang notes that a characteristic of Chinese history is that management rights [经营权]) have been separated from ownership rights [所有权] and have been exercised by farmers independently and ‘free from interference by the landlord.’ However, with the system of collective ownership, the farmers have neither ownership rights nor management rights. According to Liang, there is a need to weaken collective ownership in order to strengthen management rights.98

(d) The experience of perpetual tenancy rights should be borrowed to strengthen the secondary market for land contract management rights and the proprietary nature of sub-contract rights

Some writers highlight the relevance of the historical experience with perpetual tenancy rights in relation to establishing a secondary market for land contract management rights; namely, perpetual tenancy rights could provide a basis on which land contract management rights are freely traded without the need to change the underlying collective ownership of land. Noting the concerns of scholars when land contract management rights were first introduced that they were not correct from a theoretical and logical perspective,99 Wu and Wang examine the concept of a subcontract and argue that in the case of a subcontract, the ’secondary contracted management rights’ derived

97 Ma 2010, 101. 98 Liang 2014, 33. 99 Wu and Wang 2015, 103. This was because the rights were not truly proprietary and were designed more as a means of administrative control.

134 from the land contract management rights are in the same nature as perpetual tenancy rights; namely, the subcontractor obtains the rights through the payment of rental and enjoys the full rights that the contractor enjoys.100 Unlike a contractual lease, however, the subcontractor should enjoy the contract management rights of the contractor and should have a proprietary right. Accordingly, the contractor should not be able to terminate the proprietary right by breaching the contract and paying damages.101 Wu and Wang note the uncertainty as to the proprietary nature of a subcontract102 and argue that by including subcontracts alongside exchange arrangements and transfers, Article 128 of the PRL implicitly recognises that a subcontract should involve the creation of a proprietary interest.103 Accordingly, the rights of the subcontractor should survive the change of the contractor in the same way as a perpetual tenancy survives a change in the ownership of the subsoil.104

(e) Evaluation

The view in this category essentially involve extending the period of the land contract management rights and granting farmers a broader range of rights to deal with land free of the requirement to obtain consent from the Collective. Such an approach would increase the scope of rights that famers may exercise and strengthen their security of tenure during the period for which the rights were issued.

This approach would not, however, overcome the deficiencies of having a system under which rights are primarily determined by, and subject to contract as outlined above. In particular, it assumes a degree of ongoing control by the Collective over the use and management of land. Although this approach would weaken collective ownership rights vis-à-vis land contract management rights, it would not strengthen security of tenure in terms of creating proprietary rights that are not vulnerable to adjustment or interference by the Collective. It is this aspect that has motivated calls for the adoption of perpetual tenancy rights on the basis of passive ownership as examined below.

(iii) China should adopt perpetual tenancy rights on the basis of passive ownership by the Collective or the State

As noted in the introduction to Part 3 above, a significant number of those who advocate adopting perpetual tenancy rights are motivated by the need for farmers to achieve greater security of tenure and to convert the Collective or the State into a passive owner of land, thus reducing its interference in land use and land dealings generally and preventing abusive practices. This option would involve curtailing the rights and powers of the owner, reducing the relevance of the land management contract in determining the rights and obligations between the parties and leaving most aspects to be governed by legislation.

100 Ibid, 106. This would create a form of circulation that is similar to agricultural rights in Taiwan. 101 Wu and Wang 2015, 106. 102 Ibid, 108. Wu and Wang note that because the RLCL does not confirm the legal effect of a sub-contract, there has been confusion in practice, which has resulted in the sub-contract falling into an ambiguous grey zone. 103 Wu and Wang 2015, 106-107. 104 Along the lines of the traditional expression’倒东不倒佃’ (a change of landlord does not result in a change of the tenant). Wu and Wang 2015, 106.

135

Some writers argue that as they currently operate, land management contract rights should be treated as a type of perpetual tenancy. Sheng, for example, examines the historical development of perpetual tenancy rights and the three sources of these rights: (1) the rent deposit system; (2) the development of waste land; and (3) the system of dian sales.105 Sheng suggests that the current land system is a type of perpetual tenancy, under which the Collective is the owner of the subsoil rights and the household is the holder of the perpetual tenancy rights. The reasons for conceiving of land contract management rights as a type of perpetual tenancy is that the rights are effectively perpetual under the RLCL and the PRL; the farmers pay a fixed rent to the collective owner; and farmers may subcontract, lease and assign their rights to others. In addition, if one takes the investment by farmers over a 30-year period, the value would represent 100% of the value of the surface rights, which ‘virtually squeezes out the subsoil rights and thereby results in the identity of the subsoil owner fading away’.106

Sheng acknowledges, however, that the current system does not equate completely with perpetual tenancy rights because assignment requires consent, the subsoil rights cannot be assigned as they belong to the Collective and the rights of the holders of land contract management rights have been weakened as they may only be used for agricultural purposes. Further, if the land use is changed to construction use, the land must first be converted to state-owned land. According to Sheng, the goal should be to convert the current land contract system into a complete perpetual tenancy system, under which the Collective or the State operates as a passive owner and only has sovereign rights over land to collect taxes, which should not conflict with the other rights to land.

The arguments in favour of converting collective ownership of rural land into passive ownership are outlined below.

(a) Land ownership should be passive and non-interventionist

One option that has been suggested by those who advocate the adoption of perpetual tenancy rights is that such rights be recognised on top of state ownership of land. This would be achieved by converting land ownership from collective ownership – which is seen to be more vulnerable to exploitative practices by the Collective– into rural state ownership. Under this model, ownership of land would be vested in the State and permanent tenancy rights would be vested in the farmers.

Li Wenzheng notes that in the lead-up to the promulgation of the PRL, two views were expressed by those calling for China to draw on the theories of perpetual tenancy. The first view held that the existing rights should be converted into long-term rights and should be granted proprietary status by legislation.107 According to this view, the resistance towards converting collective ownership into state ownership stemmed from the magnitude of the compensation that the State would be required to pay to the local Collectives in order to acquire collective ownership and convert it into state ownership. The second view held that a system of perpetual tenancy rights on the basis of state ownership should be established without the need to pay compensation to the local Collectives. Li advocates the latter on the basis that most farmers consider land to be state-owned in any event

105 Sheng 2014. 106 Sheng 2014, 11-12. 107 This is what ultimately occurred in the PRL.

136 and also that the value of collective ownership is measured more in terms of power and control than in financial terms.108

Li and Wang advocate that converting land ownership from collective ownership into rural state ownership should maintain the agricultural use of land but would allow for rights that are enjoyed either on a long-term or unlimited-term basis. This, they argue, would increase the tenure security of land contract operating rights, which had, prior to the PRL, been a contractual right rather than a proprietary right and would also overcome difficulties in determining the entity through which collective ownership rights should be exercised.109 The model would incorporate a system of registration and would make provision for the circumstances in which the rights would be extinguished, the establishment of a secondary exchange market and the introduction of measures (including subsidies) to ensure that young people had access to permanent tenancy rights and could purchase them on the secondary market. It is argued that such an approach would increase the initiative of farmers and also increase investment and land efficiency.110

Writers such as Liu highlight the current problems with collective ownership, including the ambiguity concerning who represents the interests of the Collective in exercising collective ownership rights and the extent to which actual power over dealings in land are vested in the collective economic organisation rather than the farmers.111 Liu argues that the future ownership system should be passive. Accepting that it is not possible to overturn public ownership of land in China and that private ownership would not resolve all of China’s problems in any event, Liu argues that there is a need to shift the focus from ownership to actual use and limit ownership rights to collecting rent. Further, an approach under which perpetual tenancy rights are built on top of passive state ownership (without a representative exercising actual power) would be better than building them on the existing system of active state ownership or building them on top of collective ownership. The concept of passive state ownership would best suit China’s needs and would be in line with international experience. Such an approach, however, would require constitutional amendment to remove the dual state ownership/collective ownership system.

Similar views have been expressed by Li and Shen, who argue that the State, as passive owner, should only get involved in land use and land dealings when the interests of society were at stake. Noting that, in reality, land contract operating rights under the current system are contractual rather than proprietary in nature, Li and Shen argue that passive state ownership would accommodate large-scale operations and overcome the arbitrary abuse of power by local officials. It would also be in line with the traditional concept that ‘no land below heaven does not belong to the Emperor’ and

108 Li 2008, 96. 109 Li and Wang 2011, 41. 110 Li and Wang 2011, 42. 111 Liu 2013, 136. Writers such as Zhang and Tian 2009, 226, also note that the identity of the members of the Collective for the purpose of exercising collective ownership rights is unclear and argue that state ownership of rural land, with the state having ultimate ownership, would be the appropriate solution. Duan and Zhang 2010, 58, also point to the lack of clarity in relation to the exercise of collective ownership rights as a reason for adopting a system of perpetual tenancy rights on the basis of state ownership of land, although they note that there would be operational challenges in terms of how such a system should be implemented.

137 would recognise the reality that rural land in China has both a social purpose and a productive purpose.112

Some writers have argued that the social purpose of land should be separated from its productive purpose. These views are outlined below.

(b) The social purpose of land should be separated from its productive purpose

Some writers attribute the weaknesses of the current system to the social purpose that land performs. Yang and Ma, for example, note the conflict between, on the one hand, the social purpose of land as identified by the State (which requires equal allotment of land, regular adjustment in line with population changes and restrictions on exchange) and, on the other hand, the productive purpose of land and the requirements that need to be satisfied in order to increase the productivity of land and the economic efficiency of agriculture. These requirements are as follows: (1) large-scale production; (2) stability of tenure; and (3) assignability. Noting that the proprietary nature of rural land use conflicts with the social purpose of the land and that the use of land for social purposes, involving readjustment, has hindered the long-term investment in land and the development of the market for the sale of rights, Yang and Ma argue that that farmers should be able to exchange land for social security. For this purpose, all ownership should be converted into state ownership and farmers should be granted perpetual tenancy rights. Once farming people had secured non- agriculture sources of income, they should be able to sell their land rights; however, a portion of the sale proceeds should be allocated to their social insurance account.113 Yang and Ma further argue that once the social purpose of land has been separated from the productive purpose of land, proprietary rights can be freely traded so that the economic efficiency of land can be improved.114

Similar views have been expressed by Chu. Chu highlights the deficiencies with the family responsibility system, including the reality that ‘the current rural land system in China was established at the beginning of the eighties in the twentieth century for the purpose of resolving the livelihood problem of farmers.’115 Pursuant to this system, restrictions were placed on the movement of land and labour and each household was allocated only 19 mu of land. This, Chu notes, has resulted in the fragmentation of land. Accordingly, Chu argues that collective ownership should be replaced by state ownership with complete rights to deal with the land vested in the farmers. In addition, the purpose of land needs to switch from performing a social purpose to performing a productive purpose.116

As noted in the introduction to Part 3, those who advocate that perpetual tenancy rights should be adopted in place of land contract management rights are motivated by the need to give farmers greater security of tenure as well as to increase the scope of rights that they exercise. An important component of this approach would be to convert the Collective (or the State) into a passive owner of

112 Li and Shen 2011, 90. 113 Yang and Ma 2008, 8. A similar view was expressed by Li 2007, 24, who advocates dividing rights into right that can be sold or leased out and rights that cannot be sold. 114 Yang and Ma 2008, 8-9. 115 Chu 2008, 62. 116 Chu 2008, 63.

138 land and thereby reduce its interference in land-use and land dealings. According to this view, a fundamental weakness of the current system is that the Collective has too much power and, consequently, there is a need to re-allocate rights and powers between the State or Collective as land owner and farmers as land users. In addition, because the control that the Collective exercises over land use is motivated partly by the social purpose of land and conflicts with the productive purpose of land, it is necessary to move away from reliance on land for social purposes towards emphasising the productive purpose of land.

This thesis argues that this approach – namely, a move towards passive ownership of land and emphasising the productive purpose of land – is consistent with the official policy objectives as it would do the following: (1) strengthen the rights of farmers; (2) increase the scope of rights that farmers may exercise freely in respect of land; and (3) encourage the development of a market for the sale and purchase of rural property rights.

2. What does the debate reveal about the relevance and suitability of perpetual tenancy rights to reform in China today?

It should be acknowledged that the situation in mainland China today is different from the historical context in which perpetual tenancy rights operated in at least two important respects. First, rural land is collectively owned – a reality that is unlikely to change in the foreseeable future for political reasons.117 Secondly, land use and dealings with land are subject to greater restrictions today than in traditional China and, consequently, any reforms must be cognisant of the requirement to satisfy the policy objectives of the State, including the need to preserve the minimum amount of arable land and to ensure that social security needs are met. That said, the traditional property rights, particularly perpetual tenancy rights, have modern parallels that qualify them as potential solutions to the modern challenges. These challenges include how to recognise rural land rights that are proprietary in nature while, at the same time, maintaining collective ownership of land. The challenges were debated extensively in the lead-up to the promulgation of the PRL – as reflected in Professor Liang’s draft chapter on rural land-use rights – and continue to be debated today as a result of the ongoing deficiencies with the current system and the resulting irregular and abusive practices as outlined in Chapter 3.

The analysis of the different views in the debate suggest that a significant number of people who advocate borrowing from the historical experience of perpetual tenancy rights for the purpose of strengthening or reforming the existing system are motivated by the need to increase the ability of farmers to deal with their land through the sale of their rights and through the use of their rights to raise finance, either on the basis of permitting rural land rights to be mortgaged or on the basis of other arrangements such as dian sales. Thus, the focus is on the development of a market for rural land rights to facilitate a broader range of choice on the part of farmers as to how they would like to deal with their land. The focus is therefore on increasing the scope of rights through strengthening the existing system.

On the other hand, as previously noted, a significant number of those who advocate adopting perpetual tenancy rights in place of land contract management rights are motivated by two drivers.

117 This was reinforced by the Xi Jinping Report at the 19th CCP National Congress.

139

The first driver is the need to rectify the deficiencies inherent in the concept of collective ownership of rural land as discussed in Chapters 2 and 3, including the restrictions on dealing with land and uncertainty over who can make decisions on behalf of the Collective. The second driver is the need for farmers to achieve greater security of tenure and to convert the Collective (or the State) into a passive owner of land, thus reducing its interference in land-use and land dealings and preventing abusive practices on the part of the Collective or those who purport to exercise their authority on behalf of, or with the support of, the Collective. Accordingly, many people who are in favour of adopting perpetual tenancy rights contemplate the introduction of a substantially new system of rural land tenure in China.

Even in the case of those who advocate that China should discard the historical experience and adopt modern forms of land tenure, such views are usually still accompanied by calls for major reforms to the current system, including calls for a return to previous forms of land tenure such as land cooperatives or more radical calls for the privatisation of land ownership. Thus, irrespective of the categories into which the views fall, the need for reform is widely acknowledged in the debate surrounding the adoption or rejection of traditional property rights.

For those who advocate the adoption of the traditional property rights, as reflected in perpetual tenancy rights and dian sales, the traditional property rights are viewed as enabling China to maintain its state – or collective – ownership of land (which also has its roots in tradition), whilst giving farmers the autonomy to deal with their rural land rights freely and to determine the extent to which the social purpose of land should be taken into account in relation to such dealings. The possibility of adopting perpetual tenancy rights (and a suggested conceptual model for that purpose) is explored further in the discussion of reform options in Chapter 7.

140

Chapter 6 – Dian Rights

1. Introduction

Building on the schema outlined in Chapter 5 – namely, the re-conceptualisation of land contract management rights as perpetual tenancy rights – this chapter explores whether dian rights could accommodate the dual-purpose objective by providing farming households with a mechanism by which they could create derivative rights in others whilst maintaining a connection with the land for social purposes. The chapter also explores the related question as to whether dian rights would accommodate the Separation of Three Rights policy, under which policy ownership rights would continue to be held by the Collective and farming households would be able to transfer management rights to third parties while retaining a connection to their ‘contract rights’.

Historically, dian sales were relevant in terms of achieving the social purpose of land as they involved the transfer of the right to use and manage rural land on the basis that the dian-maker retained a form of residual ownership during the dian term and had the choice of redeeming the right to use and manage land at some point in the future. This choice was particularly relevant in the context of household ownership, as discussed in Chapters 2 and 4, under which land use rights are held by households (instead of by individuals) and dealings with the rights are expected to be undertaken in the interests of the household. In a modern context, the social purpose may relate to the migration of household members from the rural areas to the urban areas for employment purposes. Alternatively, the social purpose may relate to a need for short-term credit in circumstances where a loan secured by a mortgage over the land-use rights would not be appropriate.

A related question is whether dian rights would accommodate the empowerment objective by granting more secure rights than a contractual lease or a sub-contract, both of which are non- proprietary in nature, and thereby increase the flexibility for the use and management of land. A further question that informs the analysis in this chapter is the rationale behind the recognition of dian rights in traditional China; specifically, the reasons for preserving the dian-maker’s connection with the land and whether these reasons are relevant to mainland China today.

This chapter contains six parts. Part 2 explains the concept of a dian and the different ways in which it was structured. Part 3 provides an historical overview of the dian throughout the various periods in Chinese history. The overview commences with an examination of the dian throughout the dynastic periods and then considers the codification of the dian during the Republican period. As is the case with perpetual tenancy rights, in examining the relevance and suitability of dian rights to reform in China, it is necessary to understand the differences between the two versions of the dian; namely, the codified version of the dian as recognised under the Civil Code of the Republic of China in 1930 and the customary version as recognised prior to codification. The evolution and historical significance of the dian give rise to two questions: why was the dian codified and to what extent was it implicated in abusive practices? A related question is whether it was exploitative per se, or simply used as a tool for exploiting farmers.

141

After outlining the evolution of the dian prior to 1949, the historical overview then examines its current status in mainland China, including the unsuccessful attempts to include it in the Property Rights Law (PRL), and its ongoing recognition in Taiwan. As noted in Chapter 1, the experience in Taiwan is relevant as it represents a continuation of the civil law reforms that occurred in mainland China prior to 1949 and provides an important comparator for reform in mainland China today. Even though dian rights continue to be recognised in Taiwan, like perpetual tenancy rights they have experienced a significant decline. It is therefore relevant to consider whether the reasons for their decline in Taiwan are applicable to mainland China or whether, as this thesis will argue, they have a continuing relevance in mainland China because of their potential to accommodate the official policies of the State.

Part 4 considers the reasons behind the prevalence of the dian in pre-modern China. Part 5 examines the current debate over the recognition of the dian as a property right and critically evaluates the views for and against the recognition of the dian. It concludes with some comments about what the debate reveals in terms of the relevance and suitability of the dian to reform in China today.

2. The concept of a dian

The dian has been a feature of land tenure arrangements in China since ancient times. Although it was subject to, and regulated by, various decrees, codes and legislative provisions throughout its long history, and to a much greater extent than perpetual tenancy rights, the dian’s nature and operation were primarily shaped by custom and traditional practices. Consequently, it is difficult to find an equivalent term in English, a language that is inextricably connected with a very different legal tradition from that of China. It has been translated into a variety of terms in English, including a ‘conditional sale’, a ‘redeemable sale’, a ‘mortgage-sale’, a ‘land pledge’ and a ‘live sale’. The last term (namely, a ‘live sale’) is a direct translation of the Chinese term.1 The term ‘redeemable sale’ comes close to capturing the nature of the arrangement as a sale of land subject to the right on the part of the original owner to buy back or redeem the land at some point in the future. However, even this term is somewhat inadequate as it fails to capture the unique ownership rights that the dian engendered under its traditional form. As a result, this thesis uses the terms 'dian', ‘dian rights’ and 'dian sales' to refer respectively to the concept and the transactions to which it gave rise.

Additional difficulties arise as a result of the extent to which the dian underwent various metamorphoses throughout China’s history, particularly in the early Republican Period as China embraced Western-inspired civil law reform, and also the extent to which custom and practice differed between regions in China.

As noted in Chapter 4, a dian was an arrangement under which the owner of land (which, for the purposes of this paper, will be referred to as the ‘dian-maker’) transferred the land to another person (the ‘dian-holder’) in return for the payment of money by the dian-holder (the ‘dian price’), which was usually between 5/10 and 8/10 of the full purchase price of the land.2 The sale was subject to the right of the dian-maker to redeem the land at some point in the future on repayment

1 活卖. 2 Xie 1999, 455.

142 of the original dian price. Until the dian-maker redeemed the land, the dian-holder was entitled to deal with the land as ‘owner’, including farming the land and enjoying the produce from the land. Under the customary version of the dian, however, the dian-maker remained as the owner of the land and continued to bear the responsibility for paying taxes in respect of the land.

The workings of a dian are illustrated in the dian contract set out below, which was entered into in 1928:3

立写典地契人赵贺氏因为使用不便今将自己祖遗坡地贰段计地四亩伍分其地东北门外今出契请愿典与李赖赖名下耕种同中典价大洋壹拾元整一典三年为满有银洋白地取赎无洋不计年限恐口难凭立字存证。

公证人王三台蔺建亨

民国拾柒年十月十一日

立典地契人赵贺氏

同中人赵锡钤李艺

The person signing this dian contract, Zhao He, for reasons of convenience, today enters into a contract to transfer voluntarily by dian the four-and-a-half mu of sloping fields (two plots), accessed through the northeastern gate, left to him by his ancestors into the name of Li Lai to cultivate. The price agreed through the brokers is ten silver dollars exactly. At the end of three years, the harvested land may be redeemed for silver dollars. The term will not be limited if there are no silver dollars [with which to redeem the land]. This contract is entered into to provide evidence as an oral contract is difficult to rely on.

Witnesses Wang San Tai Lin Jian Heng

11 October 1928

The person signing this dian contract Zhao He [signed with a cross]

3 From the author’s personal collection.

143

Brokers Zhao Xi Qian Li Yi

[With attached official contract, red seals and duty stamps]

There are two elements in this contract that are worth mentioning. First, the contract contains a typical phrase to explain the reason for the dian-maker to enter into the dian sale: ‘for reasons of convenience’. Although expressed in general terms, this phrase came to be used as an alternative reference to the dian-maker’s need for short-term funds.4 The inclusion of this phrase legitimises the transaction and, together with the signature of the witnesses, reduces the risk of a challenge to the rights of the dian-holder. Secondly, the contract provides for a minimum dian period of three years. The effect of this is that the property is redeemable at the end of three years and after the crops have been harvested. The reference to redeeming ‘the harvested land’ (i.e. after the crops have been harvested) highlights the extent to which the return to the dian-holder was dependent on the productive yield of the land.

(a) The dian period

Under the customary form of the dian (i.e. before the civil law codification that commenced at the end of the Qing Dynasty and culminated in the 1930 Civil Code), the details of the arrangement were mostly subject to the agreement of the parties, who could decide whether to stipulate a dian period (namely, the minimum period during which the dian-holder could possess and use the land), or, alternatively, not to stipulate a period at all, in which case the dian would continue in perpetuity and the dian-maker could redeem at any time.5 However, if the contract provided for the arrangement to become an absolute sale in the event that the dian-maker did not redeem at the end of the dian period and the dian-maker failed to redeem at that point, the dian-holder would become the absolute owner of the land and the relationship between the dian-maker and the land would be severed. Even if a dian period was specified, so long as there was no provision for an absolute sale, the dian-maker could redeem at any time after the period had expired. The example above contemplates that the land may be redeemed at any time after three years.

Set out below are various formulations of the dian period as appearing in contracts from the author’s collection:

• ‘Redeemable at will’ [随便回赎], representing an open-ended dian term during which the property may be redeemed at any time;6

4 This is borne out in the documents in the author’s collection and the standard wording that was used for dian contracts throughout history. 5 Ellickson has described this as a ‘strong-form dian’. See Ellickson 2012, 8-13, and Zhang 2011, 23 and 26, both of whom suggest that a strong-form dian would not require the dian-maker to compensate the dian-holder for any improvements to the land. 6 Dian contract dated 12 December 1923.

144

• ‘A dian is granted in the name of [dian-holder] for a period of five years’ [出典与 [#] 名下至五年为满], representing a fixed term dian term;7 • ‘The [property] may not be redeemed within five years; it is permitted to redeem the property within 10 years, whereupon the fees such as the taxes paid to transfer registration and the fees of the brokers will be repaid together’ [五年之内不可回赎，又批十年之内回赎. 过户完税中笔等费一并偿还], representing a fixed dian term that has a floor and a cap and therefore becomes absolute after 10 years. 8

Irrespective of whether a dian period had been stipulated, if the dian-maker offered to sell the property to the dian-holder outright, the dian-holder could obtain absolute ownership of the property by making a supplemental payment (or a series of supplemental payments) to the dian- maker.9 An example from the author’s collection provides for a conversion of a dian sale into an absolute sale by the payment of the ‘market sale price offset by the previous dian payment’ [内有先典价补充].10

On occasion, the dian was combined with a loan transaction and treated as a form of security.11 This is likely to have occurred in circumstances where the dian period was relatively short and the dian- holder leased the land to the dian-maker in return for the payment of rent (namely, the sole purpose of the dian-holder was to receive payments of rent and the repayment of the principal and not to benefit from the productive yield of the land). However, it is not accurate to describe the standard dian arrangement as a credit or security arrangement or as a type of lease. This is because no interest on the dian price was payable to the dian-holder by the dian-maker, and no rent was payable by the dian-holder to the dian-maker during the dian period. As Jamieson, writing in 1919, explained, it was more accurate to speak of it as the loan of land than the loan of money.12

(b) Supplemental payments

One of the most common circumstances in which the dian-maker lost the right to redeem the land was where the dian-holder made a supplemental payment to the dian-maker, thereby converting the arrangement into an absolute sale.

The concept of supplemental payments – specifically, their nature and function - has been the subject of vigorous debate by scholars of Chinese legal history. The debate has been complicated by the existence of different practices between regions in China.13 Zhang has explained that the traditional rationale for the dian as a special type of sale transaction was that in the period between the date on which the parties entered into the contract for the sale of land and the date on which

7 Dian contract dated 1 December 1934. 8 Dian contract dated August 1920. 9 See Section (b) below. 10 Sale contract dated 12 January 1937. 11 Yang 1988, 40-41. 12 Jamieson 1970, 99. See also Li 2008, 84, citing Zhongguo Shehui Kexueyuan Lishi Yanjiusuo [the History Institute of the China Academy of Social Sciences], dunhuang ziliao (di 1 ji) [Dunhuang Materials Volume 1] (1961): ‘According to the terminology of the ancients in China, the special characteristic of a standard dian was that no interest was payable on the money and no rent was payable on the land [物无利头, 地无雇价].' 13 See Zhao 1998, 462-463.

145 tax on the sale was paid and the official stamp was affixed to the contact (i.e. the date on which an absolute sale occurred),14 there was scope for the transaction to change or to be terminated for various reasons.15 As Yang explains further:

Prior to [the date on which tax on the sale was paid and the official stamp was affixed to the contact], the seller could demand that a supplemental payment be made on the excuse that the original price was insufficient, or on the excuse that the grain tax had not been paid [to the government]; the seller could also ask to redeem the land on the basis that the seller’s economic position had improved; … the seller could also sell the land to a third party.16

Prior to the legal reform in the Qing Dynasty, there was no limit on the frequency with which the dian-maker could request supplemental payments. In some regions, it was customary for several supplemental payments to be made.17

Li argues that an understanding of the nature of supplemental payments assists in an understanding of the dian as a sale and purchase relationship. According to Li, supplemental payments were divided into ‘intermediary’ payments18 and final payments.19 The effect of the latter was to convert the arrangement into an absolute sale.20

According to this analysis, intermediary payments provided relief for the dian-maker in circumstances where the relative positions of the dian-maker and the dian-holder were, or had become, unequal. This could occur, for example, where the dian-holder had paid too little for the dian or the value of the property subject to the dian had increased since the transaction was entered into, irrespective of whether the dian-holder intended ultimately to take absolute ownership of the land. Li argues that in the latter circumstances, the dian-holder had a custom-based moral obligation (namely, an obligation as recognised by the community who observed the relevant customs) to the dian-maker to provide assistance in the event that the dian-maker encountered an emergency.21 According to Li, it was because law-makers did not understand this function of a supplemental

14 The latter date was referred to as tuishou (推收). According to Yang 1988, 31, this was the ‘determinative link in the sale and purchase of land’. Only after this point was reached was the buyer considered to be the lawful, complete owner of the land. Since the Eastern Jin Dynasty, tuishou was completed when tax was paid and the official stamp was affixed to the contract. Another term that was used interchangeably with tuishou was guoge (过割), which referred to the process by which the contract was registered and the tax liability was transferred from the old owner to the new owner. See Jamieson 1970, 97. 15 Zhang 2008, 97. 16 Yang 1988, 32. 17 See the practice in Jiangsu Province, as noted in Yang 1988, 241. 18 Zhongzhao [中找]. 19 Zhaojue [找绝]. 20 Li 2008, 86. 21 Li 2008, 86. See also Feng 2004, 218, who refers to demands from dian-makers for ‘compassionate loans’. Pomeranz 2008, 126, suggests that in such circumstances, ‘the sellers in these transactions were not getting a continuing claim on a specific plot of land in return for foregoing receipt of the full sale price; they were getting a custom-based claim on the consideration of the person… who had acquired their land, in an environment in which they may have had few other potential patrons. See also Xu 2007, 118, who argues that even though Qing law imposed restrictions on the term of a dian, ‘at the same time it allowed the dian-maker some relief through means of a supplemental payment.’

146 payment that the civil law reform of the Republican Period inappropriately limited it to one payment only.22

Some scholars attribute the popularity of supplemental payments during the Qing Dynasty to the increasing turnover of land and ‘sustained rises in rents and land prices’.23 Other scholars highlight the negative aspects of supplemental payments, such as the extent to which dian-holders gave in to demands from dian-makers because tax had not been paid on the contract and were therefore in a relatively weak position because their rights were not formally recognised by the State.24

In short, it appears that supplemental payments provided the means by which the relationship of the parties under a dian sale could be adjusted to take account of changing circumstances and were part of the bargaining process by which the parties incrementally moved towards an absolute sale and the severance of the dian-maker’s connection with, or residual ownership of, the land.

3. Historical overview of the dian

The analysis in this Part traces the transformation in the status of the dian from a property right governed primarily by custom as in the dynastic periods, to a property right that was incorporated into, and regulated comprehensively by, the Civil Code of the Republican Period. Subsequently, after the founding of the People’s Republic of China, the dian ceased to be recognised as a formal property right. Throughout the historical development of the dian, both custom and written law had to find answers to a couple of recurring questions; namely, how to allocate the rights and obligations between the parties to a dian sale and, more broadly, how to regulate its use and operation. As the analysis will show, there was a trend towards strengthening or hardening the proprietary nature of dian rights in the hands of the dian-holder. In addition, it appears that the intention behind the detailed provisions of the Civil Code during the Republican Period was to achieve greater fairness and transactional certainty between the parties and thereby reduce the incidence of disputes.

(a) Dynastic periods

Legal historians have traced the roots of the dian as far back as the Northern Qi Dynasty (550-577).25 The records at the time referred to it as a tiemai (贴卖) transaction, under which waste land was permitted to be sold under a dian sale for a period of seven years and cultivated fields were permitted to be sold under a dian sale for a period of five years. After the applicable period, the money and the land would be returned to the respective parties. By the Tang Dynasty, the term dianmai26 had come into currency, together with a number of other terms used to describe

22 Li 2008, 86. 23 See Feng 2004, 221. See also Pomeranz 2008, 124, who notes that ‘[i]n some cases, these supplementary payments were said to reflect not just the differences between the original price paid and the full purchase price of the land at that time, but the increased value of the land since the initial transaction.’ 24 See Jing 1994, 70. 25 Kong et al 1996, 208. 26 Dianmai literally means ‘dian sale’ [典卖].

147 possessory security.27 When the term tie (贴) was used, it referred to a transaction that was subject to a buy-back option.28

During the Tang Dynasty (618-907), however, references to dianmai began to appear in imperial edicts.29 Some rules were issued during the Five Dynasties period (907-960), including the requirement for official contracts to be used and for the contracts to bear a stamp indicating that government tax had been paid. In addition, the contract had to be signed by the government official [官人], the middleman [牙人], the owner [业主] and the neighbours on all four sides [四邻].30 It was not until the Northern Song Dynasty (960-1127) that the dian was systematised in practice and a clear distinction was drawn between absolute sales and dian sale.31

According to many legal scholars and in line with the discussion in Chapter 4, the prevalence of dian sales – and the reluctance of peasants in ancient China to sell land outright – had its roots in the patriarchal clan system, involving family ownership, and concerns about livelihood. Instead of selling land outright, farmers who were in difficult and desperate times would sell land under a dian sale in the hope that they could redeem the land after a certain period of time had passed.32 Zhang et al have suggested that the law at the time favoured the dian-holder, who was not only able to obtain the use and benefit of land at a price that was much lower than the sales price, but could also obtain the ownership of the land when the dian-maker was unable to redeem the land at the end of the period.33 The dian-holder also benefitted from provisions that prohibited the dian-maker from redeeming the land in circumstances where the dian-maker could not produce the contract.

The Song Criminal Law imposed a 30-year restriction on the term of a dian sale and stipulated the procedures for its creation, under which non-kin parties could only purchase the land under a dian sale after it had been offered first to relatives and then to the neighbours on the four sides.34 This highlights the importance of the pre-emptive rights of relatives and neighbours and also the importance of keeping rural land within the local community as part of the broad social purpose of land, which placed its focus on preserving the interests of the broader village community.35

In the Southern Song Dynasty (1127-1279), the rights and powers of the parties were further refined by customary practices. The dian-maker could only redeem the land at the end of a specified redemption period, which followed the end of the dian period.36 If redemption did not occur by the end of the redemption period, the dian-holder could not obtain ownership, but instead had the right to assign the dian rights to a third party and recover the dian price from the sale proceeds. In

27 These included zhiya [质押], meaning 'pledge' and diandang [典当]), meaning 'pawn'. See Kong et al 1996, 249. 28 Kong et al 1996, 249. 29 For example, an edict provided that the dian-maker was under an obligation to bear the tax payable by the original owner, indicating that at the time the dian was considered to be lawful. See Lin 2008, 31. 30 Kong et al 1996, 260. 31 Zhang et al 1991, 471 and 474. 32 Kong et al 1996, 356 and 532. 33 Zhang et al 1991, 474. 34 Zhang et al 1991, 475. See also Kong et al 1996, 362 and 430. 35 See the discussion in Part 5 in Chapter 4. 36 This foreshadowed the civil law reform during the Republican Period. See further in Section (b) below.

148 addition, if the dian-maker wished to sell the land, the dian-holder had a pre-emptive right to purchase the land.37 Kong et al suggest that by the Southern Song Dynasty, absolute sales were relatively uncommon, most land transactions took the form of dian sales and most dian-holders leased the land to third parties.38

During the Song Dynasty (960-1279), the relatively weak position of the dian-maker, and the consequential opportunity for exploitation by the dian-holder, were reflected in the following practice:

Some wealthy households purchased the land of poor peasants under a live sale. Later they would plant trees. When the original owner attempted to redeem the land at the end of the dian period, the wealthy households would demand the price of the trees in addition to the dian price in order to coerce the original owner into abandoning the land.39

This reflects a challenge that the dian has encountered throughout history and to this day; namely, how to balance the rights and obligations between the parties to a dian sale. This challenge is explored in Part 4 below.

According to Zhang et al, the law in the Ming Dynasty (1368-1644) continued to protect the interests of the dian-holder by imposing penalties on any dian-maker who entered into a second dian sale,40 and by stipulating that the dian-holder was able to obtain ownership of the property or transfer it to a third party in order to recover the dian price if the dian-maker was unable to redeem the property at the end of the dian period.41

Dian sales experienced extensive development in the Ming Dynasty, together with pledges [质当] and mortgages [抵押]. The law regularised these rights and incorporated them into written provisions, a process that has been described as representing ‘clear progress in the history of civil law in China.’42 The provisions drew a clear distinction between a dian sale and an absolute sale, stipulating that property subject to a dian sale could be redeemed and property subject to an absolute sale could not be redeemed. As a result, ‘the concept of a dian sale was liberated from the traditional confusion between a dian sale and an absolute sale.’43

Despite the incorporation of dian sales into written law, the law of the Ming Dynasty did not contain any provisions in relation to the term of a dian sale and it was popularly said that a dian sale could

37 Zhang et al 1991, 475. 38 Kong et al 1996, 437. By the time of the Song Dynasty, a number of terms had come into use to describe an absolute sale, including juemai [绝卖], meaning 'absolute sale', yongmai [永卖], meaning 'perpetual sale', duangumai [断骨卖], meaning 'break-skeleton sale' and daozu [倒祖], meaning 'to overturn the ancestors'. See Kong et al 1996, 432. 39 Kong et al 1996, 360. The authors explain that although the original owner was expected to compensate the dian-holder for any trees that had been added to the land, dian-holders took advantage of this to engage in fraud. 40 This was to uphold the principle that a piece of property could not have two owners [一物不得两主]. 41 Zhang et al 1991, 486. 42 Kong et al 1996, 531. 43 Kong et al 1996, 532.

149 survive for one thousand years.44 This is said to have created much uncertainty in relation to the status of land, both as a result of the indefinite period within which the dian-maker could redeem and also as a result of the failure of many contracts to specify whether a sale transaction was a dian sale or an absolute sale.45

The law during the Qing Dynasty (1644-1911) followed the model established in the Ming Dynasty but deleted and consolidated certain provisions.46 In addition to preserving the general thrust of the Ming law as outlined above, the law provided that:

Henceforth, in respect of all private contracts for the sale and purchase of property, if the transaction is a dian sale, the contract must make reference to redemption. If the transaction is an absolute sale, the contract must make reference to an absolute sale and not to redemption. In respect of contracts entered into before the 18th year of the Emperor Qianlong [i.e. 1753] where it is unclear whether they are dian sales or absolute sales, if the contract was entered into within 30 years prior to that date and the contracts do not make reference to an absolute sale, supplemental payments are permitted in accordance with custom. If the contract was entered into more than 30 years prior to that date and the contracts make reference neither to an absolute sale nor to redemption, it shall be considered to be an absolute sale and no supplemental payments shall be permitted.47

Despite the imposition of a maximum 30-year term for dian contracts that made reference neither to an absolute sale nor to redemption, the Qing law did not impose any limit on the term of a dian sale for contracts that did contain reference to the right to redeem.48

Tax, however, was a matter in respect of which the Qing law did make detailed provision. Initially, no tax had been payable on live sales and on mortgage transactions. The law subsequently provided that tax was payable by the dian-holder on these transactions, albeit at a rate that was half the rate applicable to absolute sales.49 Kong et al note that in order to save tax, many absolute sales were dressed up as dian sales, which caused disruption and forced the Qing government to impose the same tax on all transactions.

The provisions on dian sales were subsumed in the Qing Penal Code,50 which was enacted in 1909 and constituted a major reform to China’s civil law at the end of the Qing Dynasty. The Qing government commenced work on a draft civil code51 in 1907, which was completed in 1911, just before the revolution of 10 October 1911, which marked the beginning of the Republican Period.52

44 Kong et al 1996, 533 [一典千年活]. 45 Kong et al 1996, 533. 46 Yang 1988, 302. See also Yang 1988, 34. 47 Yang 1988, 303-304. The purpose of this reform appears to have been to increase certainty and reduce the incidence of disputes. 48 See Zhang et al 1991, 499. Zhang et al note that this gave rise to disputes and that the Ministry of Revenue later issued rules, which provided that the period for a dian sale could not exceed 10 years. See also Kong et al 1996, 602-693. 49 See Kong et al 1996, 601. 50 大清现行刑法. 51 大清民律草案. 52 Zhang Jinfan 1991, 616. Zhang notes that the Qing government engaged two Japanese scholars, Kōtarō Shida and Yoshimasa Matsuoka, to draft the Code. The first three chapters, dealing with general principles, creditor

150

This draft code, which was never enacted, did not include provisions on dian sales,53 an omission that was later rectified during the early republican period in a second draft civil code. This was based on the first draft and completed by the Northern Government in 1926.54

(b) Republican period

After the establishment of the Nationalist government led by Chiang Kai-shek in 1927, the Civil Code of the Republic of China was enacted in 1930 and included both civil law provisions and commercial law provisions.55 Like the second draft civil code of the Northern Government, the Civil Code included a chapter on dian sales.

In a break from tradition during the Qing Dynasty, the Civil Code provided that the term of any dian sale could not exceed 30 years. In addition, if the dian-maker did not redeem the property upon repayment of the original price within two years after the expiry of the dian period, the dian-holder would immediately obtain ownership of the property.56

Zhang argues that the restrictions imposed by the Civil Code on the term and redemption rights in respect of a dian sale exemplify how the collision of customary law and Western civil law caused dian sales ‘to deviate from their original form and to be reconstructed.’57 Of relevance in this regard was the extent to which the Civil Code curtailed the freedom of contract that the parties to a dian sale had previously enjoyed. Under the law of the Qing Dynasty, the 30-year restriction applied only in circumstances where the contract did not specify whether it was an absolute sale or a dian sale. The Civil Code, on the other hand, imposed the 30-year restriction on all contracts, including contracts where the parties clearly intended to create a dian sale. In other words, a maximum term of 30 years was applied in respect of all dian sale contracts and failure to redeem at the end of the two-year redemption term resulted in the dian-holder immediately obtaining ownership, irrespective of the intentions of the parties as set out in the contract.

According to Zhang, the intention behind the reform was to ‘resolve an historical problem and to strengthen social economic order through swift and resolute means.’ Zhang quotes the concerns of legislators at the time in relation to dian sales, including that dian sales reflected a trend towards ‘individual’ interests over the common interests of society. According to the comments of a law- maker, allowing parties too much freedom to determine the terms of a dian sale would lead to abuse and would harm the interests of society. In Zhang’s view, this explains why the legislative

rights and property rights respectively, were based on the civil code of Germany and Japan. The last two chapters, dealing with family law and inheritance, adopted China’s civil law norms. 53 Yang 1988, 305, notes that at the time a dian sale was mistakenly believed to be the same as a pledge of immovable property under Japanese civil law. 54 Zhang et al 1991, 619. The Northern Government was installed during the period of the Northern Warlords (1912-1927), and governed prior to the establishment of the Nationalist Government in Nanjing in 1927. 55 Zhang et al 1991, 621. 56 Zhang et al 1991, 622. In other words, there was no obligation on the dian-holder to make a supplemental payment on expiry of the two-year redemption period. 57 Zhang 2008, 98.

151 reform as reflected in the restrictions outlined above accorded less protection to individual interests and ‘sacrificed ownership rights in the quest for social order.’58

The strengthening of the social economic order as suggested by Zhang is likely to be a reference to the greater transactional certainty that arose through the curtailment of the rights of the dian-maker, the hardening of the proprietary rights of the dian-holder and the avoidance of a situation where the ultimate ownership status of land remained unresolved indefinitely. The reforms also highlighted the emphasis that the State placed on protecting interests of the community as a whole and maintaining social stability through reducing the incidence of disputes in society.

The table in Appendix 4 traces the evolution of the dian by reference to the limits on the dian term, the outcome at the end of the dian term, the limits on supplemental payments and other characteristics. The information reveals two points that highlight the differences between the customary version of dian sales and the codified version. First, over a period of some 14 centuries until the Republican Period, there was a gradual relaxation of the limits on the dian term. By the time of the Ming and Qing Dynasties, which was the period in which dian sales were most active, no limits on the dian term were observed, although the written law of the Qing Dynasty changed the default position from a dian sale to an absolute sale in circumstances where the contract did not make express reference to whether the transaction should operate as a dian sale or an absolute sale.

Secondly, there was a trend towards conferring stronger rights on the dian-holder, which is consistent with the gradual strengthening of the proprietary nature of dian arrangements (including the right on the part of the dian-holder to deal with its rights without the consent of the dian-maker) and the treatment of dian rights as broadly equivalent to ownership rights. In particular, from the Ming Dynasty onwards, the dian-holder could obtain ownership or sell to a third party if the dian- maker failed to redeem at the end of the dian term. Further, if the dian-maker did not wish to redeem, the dian-maker could sell the land to a third party. By the time the rights were codified, however, restrictions were imposed to limit the freedom of the parties to a dian sale and to prescribe the rights and obligations of the parties, culminating in the 2010 amendments to the provisions on dian in Taiwan as examined further in section (e) below.

(d) People’s Republic of China

After the founding of the People’s Republic of China on the mainland, the Civil Code enacted by the Nationalist government was repealed as part of the wholesale rejection of the former legal system.59 As a result, the legislative basis for dian sales was lost and they fell back into customary practices.60

58 Zhang 2008, 99-100. 59 The Civil Code remained effective in the Republic of China on Taiwan, where it is still in effect to this day. 60 Lin 2008, 32.

152

(i) Recognition in regulations and judicial opinions

The continuing existence of dian arrangements, combined with the impracticality of stamping them out immediately, meant that they had to be recognised and regulated. This was achieved by means of government notices, regulations and judicial opinions. Initially, provisions on dian sales were issued as part of the land reform programme in the 1950s, which involved the confiscation of land belonging to the landlords and the re-distribution of the land to farmers.61

Despite the land re-distribution programme, the practice of entering into dian sales continued after 1949. An example from the author’s collection is dated 16 April 1954 and is expressed to govern a dian sale in respect of the three-year period from 10 February 1952 to 10 February 1955. The contract was completed on a standard form issued by the People’s Government of Chuan Cheng County in Shandong Province and reflects the same elements of a dian transaction as existed before 1949.

Inevitably, however, the operation of dian sales had to conform to the realities of ‘New China’. This included a reduction in the scope of the property that could be the subject of a dian sale. Since ownership of land in the PRC came to be vested in the state or the Collective, a dian sale could only operate in respect of urban houses.62 In addition, in a reversal of the approach under the previous Civil Code, the authorities recognised a minimum redemption period of at least 10 years after the dian term had expired. Where the contracts did not make provision for the circumstances in which an absolute sale would occur, dian-makers were able to redeem the property at any time after expiry of the dian period. It is likely that this came about as a result of the perceived need to protect the interests of dian-makers, particularly given the traditional strength of dian-holders relative to dian-makers.63

The absence of a legislative basis for the dian continues to this day. The debate surrounding the dian, and whether it should be formally recognised in legislation, came to a climax during the drafting of the Property Rights Law (PRL) and has not since abated. The drafting of the PRL took place over a period of many years, commencing in 1993. The dian was included in the first two drafts of the PRL but omitted from the third draft64 and the following four drafts, apparently without any official explanation for its omission.65

(ii) The drafting of the PRL

Similar to the position with perpetual tenancy rights, many scholars debated whether dian sales should be recognised by the law in the lead-up to the promulgation of the PRL in 2007. In his draft of

61 See Cui and Shen et al 2005, 136-143 for an outline of the regulatory development since 1949. See also Liang 2000, 580-582. Prior to the 1949 Revolution, the CCP had issued regulations on dian sales in the revolutionary areas, particularly in relation to the resolution of disputes arising out of them. See Lin 2008, 32. 62 For an overview of various cases concerning dian sales that have been considered by PRC courts over the past 30 years, see Wang 1998. 63 Cui and Shen et al 2005, 142. 64 As evidence of the general interest in the law, over 10,000 submissions from the public were made after the third draft of the PRL was publicly released in July 2005. See Hu 2007, 3. 65 See Bai 2008.

153 the PRL, Professor Liang Huixing included a chapter on dian rights. Professor Liang was of the opinion that the PRL should make provision for dian sales even though its popularity had declined.66 In Professor Liang’s view, a dian could serve as a means of raising finance and provide an additional choice for the people. Further, it would be beneficial to economic development and the legal order.67 Noting that an option to buy back was a contractual right and was weaker than a proprietary right and vulnerable to the risk of a sale to a third party by the dian-holder,68 Professor Liang argued that a dian over residential property would be convenient for those who did not want to sell their property and wished to avoid the inconvenience of placing the property in the hands of a leasing agent to manage the relationship under a lease.69

As proposed by Professor Liang, dian sales would operate as a usufruct right,70 under which the dian- maker would retain ownership rights in respect of the property that was subject to the dian.71 A dian would apply just to buildings and residential foundation rights in respect of the buildings.72 It would not apply to rights over rural land (i.e. arable land) as the law prohibited the assignment and mortgage of such rights.73

Where the parties agreed to a specific term, the maximum dian term would be 20 years and the dian-maker would not be able to redeem the property within the term (i.e. the right of redemption would be triggered only at the end of the dian term and not at any time during the dian term).74 Further, if the dian-maker failed to redeem the property within a period of two years from the end of the agreed term, the right to redeem would be extinguished and the dian-holder would immediately obtain ownership of the property.75

Where a dian term had not been agreed, the dian-maker would be able to redeem the property for the original price at any time, except that if the dian-maker did not redeem within 20 years from the date on which the dian was created, the dian-holder would obtain ownership of the property.76 The dian-maker would need to give six months’ prior notice to the dian-holder to redeem the property.77

As the dian was a proprietary right, the dian-holder would have the right to assign its dian rights without the requirement to give notice to the dian-maker. An assignment would result in a novation of the rights and obligations as between the dian-maker, the dian-holder and the assignee.78 Similar

66 Liang 2000, 581. Professor Liang noted that a dian belonged to the customary law system but was incorporated into the written law during the Republican Period. It reverted to the customary law system on mainland China after 1949, receiving the recognition of the People’s Government and the protection of the People’s Courts. 67 Liang 2000, 582. 68 Liang 2000, 581. 69 Liang 2000, 582. 70 Liang 2000, 583. 71 Liang 2000, 588. 72 For a similar argument, see Sun and Wang 2012. 73 Liang 2000, 582, 585. 74 Liang 2000, 586. 75 Liang 2000, 595. 76 Liang 2000, 596. 77 Liang 2000, 579. 78 Liang 2000, 587.

154 to the pre-emptive right of a lessee, a dian-holder would enjoy a pre-emptive right (留买权) to purchase the property if the dian-maker intended to assign the property.79

The dian-holder would have an obligation to take care of the property as though it were the owner of the property.80 Finally, if the dian-maker intended to assign the rights that were subject to the dian, the dian-holder would be able to obtain ownership by paying the difference between the dian price and the market price of the property. Professor Liang described this as a provision in respect of supplemental payments, which would arise upon the agreement of both parties and would give rise to a purchase and sale contract.81

Professor Liang’s proposal in respect of dian rights appears to have been motivated primarily by the convenience that dian sales offered, a factor that is considered further in section 4(iii) below. It also appears to have been motivated by the need for transactional certainty and a fair allocation of rights and obligations between the parties to a dian sale.

A key difference between Professor Liang’s draft and the conceptual model as considered by this thesis in Chapter 7 is that the model considered by this thesis would apply to rights over farming land and would co-exist alongside perpetual tenancy rights. As in the case of perpetual tenancy rights, Professor Liang’s draft was designed to accommodate the existing system instead of undertaking a more fundamental reform to the system of land tenure.

(iii) The PRL

As previously noted in Chapter 2, the fate of the dian (namely, its exclusion from the category of property rights that are currently recognised by Chinese law) appears to have been sealed by Article 5 of the PRL. This states that the type and content of property rights are to be determined by law. By implication, property rights are recognised by Chinese law only where they are embodied in written law. On this basis, it appears that the dian can be treated under current Chinese law as a contractual arrangement only, unless the concept of ‘law’ is given a broad interpretation to include judicial interpretations as suggested by Shen.82

(e) Taiwan

As noted in Chapter 5, the Civil Code was amended in 2010 to replace perpetual tenancy rights with agricultural rights and to amend the provisions on dian rights. The main purposes of the amendments were as follows: (1) to clarify the circumstances in which the dian-holder would obtain ownership of the dian property (Art. 911); (2) to make it clear that land and buildings could not be dealt with separately (Arts 915 and 917); (3) to impose an obligation on the dian-holder to maintain the sustainable use of the dian property (Art. 17(1)); (4) to clarify the waiver of pre-emptive rights by the dian-holder (Art. 919); (5) to make provision for a sub-dian (Arts 924(1) and (2)); and (6) to make provision for determining the value of improvements or repairs to the dian property (Art. 927).

79 Liang 2000, 589. 80 Liang 2000, 591. 81 Liang 2000, 597-598. 82 See Shen 2013, 136 and the discussion in Chapter 5, Part 2(i).

155

The provisions of the Civil Code, as currently applicable in Taiwan, are set out in the table in Appendix 5, which compares the original text with the text as amended in 2010.

As noted at the beginning of this chapter, even though dian rights continue to be recognised in Taiwan, they have experienced a significant decline, as reflected in the decrease in registrations in recent decades.83 Wang Tay-sheng writes that during the latter period of Japanese rule in Taiwan, dian relationships had been replaced by the concept of a pledge of immovables under Japanese civil law. As Yang has noted, a dian sale was mistakenly believed to be the same as a pledge of immovable property under Japanese civil law.84 After the war, Wang writes, very few people used the dian in Taiwan except in the Kinmen and Matsu islands, which had not been under Japanese rule. Wang further notes that although there were fewer dian registrations than perpetual tenancy registrations, the dian was maintained in the 2010 amendments to the Civil Code but perpetual tenancy was removed.85

The replacement of dian relationships with a pledge of immovables during the period of Japanese rule in Taiwan (1895 – 1945) as noted by Wang is likely to have been a significant reason for the decline of the dian in Taiwan. Other reasons include the agricultural reforms in Taiwan since 1949,86 which increased the availability of farming land for purchase by farmers, and also the introduction of agricultural rights in place of perpetual tenancy rights as a form of proprietary lease. Although the economic rationale behind a dian transaction is fundamentally different from that of a proprietary lease as discussed in Part 5(c) below, the availability of agricultural rights as an additional type of land tenure in Taiwan is likely to be a factor in the continuing decline of dian transactions in Taiwan today.

This thesis argues in Parts 5 and 6 below that despite its decline in Taiwan, the dian provides a conceptual model for potential reform in mainland China.

4. Why were dian sales so prevalent in pre-modern China?

The right to redeem lay at the heart of the dian and is what made it attractive as compared with an absolute sale. It enabled owners of land to preserve a connection with the land and the opportunity to redeem the land at some point in the future. That the right to redeem was the most important feature of the dian is reflected in the fact that until the legislative reform that was introduced towards the end of the Qing Dynasty, the parties to a dian sale were free to decide when the right to redeem could be exercised.

Three reasons can be advanced for the prevalence of dian sales in the context of China’s traditional agrarian society:

83 Wang 2015, 157, notes that over a period of 10 years prior to the amendments to the Civil Code in 2010, there were only 223 registrations, which was lower than the 267 registrations in the case of perpetual tenancy rights. 84 Yang 1988, 305. 85 Wang 2015, 157. 86 See the discussion in Part 2(g) of Chapter 5.

156

• the importance of preserving ancestral property for the benefit of future generations and the associated shame of selling ancestral property - this is referred to in this thesis as the ‘patrimony’ factor; • the extent to which people depended on land for their survival - this is referred to in this thesis as the ‘livelihood’ factor and corresponds to the social purpose of land as discussed in this thesis; and • the flexibility and versatility of dian sales and the extent to which they were compatible with China’s economy and credit society in imperial times – this is referred to in this thesis as the ‘convenience’ factor.

A fourth reason that has been given for the prevalence of dian sales is tax avoidance; namely, as an incentive for people to enter into dian sales in order to avoid paying tax on absolute sales. Although this practice existed, most commentators downplay the overall significance of this to the popularity of dian sales.87 This argument is supportable when it is recognised that responsibility for tax remained with the dian-maker and that consequently there must have been other reasons that justified the arrangement from the perspective of the dian-maker.

The above reasons are inter-related to varying degrees and may have existed either separately or in combination. The relative significance of each, particularly the patrimony factor and the livelihood factor, has been the subject of lively debate in both Chinese and English scholarship. The discussion below considers each of these factors in turn.

(i) The patrimony factor

According to historical sources, a dian sale allowed the Chinese, who traditionally obtained their good name through filial piety88, 'to avoid society's censure and the psychological pressure associated with selling ancestral property.'89 Selling ancestral property was considered to be a disgrace to one's ancestors and something that a prodigal son would do.90 The connection between the ancestors and land was reflected in the belief that land was 'the continuation, from generation to generation, of the body and spirit of the ancestors'.91

Although the patrimony factor was relevant, there are cogent reasons for concluding that it was not determinative in explaining the prevalence of dian sales, particularly in the light of the increasing commoditisation of land during the late Ming Dynasty and the Qing Dynasty as noted by Buoye and other scholars.92 As this thesis suggested in Chapter 4, if there was disgrace in selling ancestral

87 See Zhao 1998, 455. 88 Zhong xiao er hao ming (重孝而好名). See also Xu 2007, 112; Yang 1988, 318. 89 Zhang 2008, 98. 90 Zhao 1998, 456. 91 Lin 2008, 35. A similar motivation appears to be behind the popularity of land pledging in traditional Indonesian society. See Haar 1948, 109, who notes that ‘because of the possibility of recovering fields, which are valued as family or inherited property, pledging is greatly preferred over sale.’ 92 See the discussion in Part 5 of Chapter 4.

157 property, it is possible that it related as much to dealing with property other than in the interests of the family as it did to the treatment of land as inviolable patrimony.

(ii) The livelihood factor

This thesis suggests that the livelihood factor, which is part of the broader social purpose of land, played a greater role in the prevalence of dian sales than the patrimony factor as outlined above. The main reason for this is that in China’s traditional agrarian society, livelihood was directly dependent on land and its produce. In an environment in which there was no social insurance, very few channels for generating a return on savings and widespread economic instability (including inflation), it is not surprising that land was considered to be the safest asset and the bedrock of one’s subsistence. In addition, transactions involving the dian sale of land were the most common (if not the only) means by which people in rural China could raise finance if they ran into financial difficulties.

It appears to be widely accepted that in many transactions, land was sold under a dian sale as a result of an urgent need for finance on the part of the dian-maker.93 A dian sale was preferable to an absolute sale because it preserved the hope on the part of dian-makers that they could recover the land at some point in the future. In this context, it has been suggested that ‘sellers who used “live sales” were essentially buying an expensive form of insurance…, giving the buyer an advantageous price in return for certain limited guarantees against utter destitution.’94

Other scholars have drawn attention to the visceral relationship between peasants and the land. As Lin has explained:

The roots of agriculture are in the land. The earliest influence on the national spirit came from the land. As the population increased, the land that was available for use became smaller. On the basis of the basic aspiration for self-preservation, people will not lightly leave their land. The mentality of cherishing the land was just as described by the text in the [collected public judgments of the Ming and Qing]: 'For the impoverished peasant households, each inch of land is the product of their sweat and blood. As soon as it is sold under a dian sale to another person, the family, young and old, will suffer adversity, bitterness, hunger and cold and accumulate their savings bit by bit in order to buy it back. Such sentiment [towards the land] is extremely pitiable.'95

Cohen is less convinced of the sentimental aspect of the visceral relationship that existed between farmers and the land, referring to this as ‘part of the larger fabrication of a tradition-bound “peasant mentality”’.96 Although Cohen’s argument that ‘[r]ational rather than sentimental concerns made land desirable’ is attractive in view of the emergence of active land markets from the middle of the Ming Dynasty onwards, the above extract from Lin suggests that the visceral relationship between farmers and land did play some role in decision-making by farming households.

93 This was reflected in the common terminology that was employed in dian contracts to identify the purpose of the sale. For example, ‘For urgent and proper use’ (为因急迫正用). 94 Pomeranz 2008, 124. 95 Lin 2008, 35 quoting Jiang 2004. 96 Cohen 2004, 48.

158

(iii) The convenience factor

There appears to be little doubt that the popularity of the dian was strengthened by its flexibility and versatility. Zhao argues that dian sales were popular because they accommodated the changing consumer-worker ratio of peasant families,97 allowing additional land to be purchased when the ratio was high and land to be sold when the ratio was low.98

Dian sales were also convenient as they were self-regulating and, in theory at least, did not rely on the intervention of the law or courts for their practical operation. From the perspective of the dian- makers, their residual ownership (as reflected in the dian contract and as verified by the middleman and neighbours who signed the contract) provided a basis on which they could redeem the land at the end of the dian term or demand supplemental payments. From the perspective of the dian- holders, their ‘ownership’ of the land, coupled with their actual possession, was sufficient to give them the certainty of tenure that they required. Unlike the position of creditors holding a mortgage granted as security for credit, for which recourse to the courts was necessary for enforcement purposes, dian-holders did not need to have recourse to courts in order to exercise their rights.99

In short, there are views in support of the argument that dian sales were ideally suited to the needs of a rural economy since they provided land owners with a means of raising credit that was widely accepted and recognised on the basis of custom and practice, and was much less complex than modern credit concepts, which require a sophisticated legal system for recognising debt and enforcing asset security such as mortgages.

(iv) Evaluating the factors supporting dian sales

There appears to be little doubt that the initial motivation behind the emergence of dian sales was to preserve land within the family and, indirectly, within the local community. As previously noted, there was a strong presumption against the absolute sale of land to third parties and a strong presumption in favour of preserving ancestral land. Dian sales provided the means by which finance could be obtained through the sale of land, whilst allowing the dian-maker to retain a residual form of ownership. Accordingly, dian sales kept alive the possibility that complete ownership could be re- acquired at some point in the future, which provided a form of insurance against poverty and thus played an important role in enhancing and preserving livelihood.

There are inherent difficulties in attaching relative weight to the patrimony and livelihood factors, since an assessment of each of these necessarily requires an analysis of the subjective motivations of landowners at the relevant time. This thesis suggests that the most likely reasons for the prevalence of dian sales, particularly during the Ming and Qing Dynasties as land became more commoditised, are two-fold: first, the fact that it had become an established practice; secondly, the flexibility and convenience that it offered to the dian-maker as a means of raising credit and the flexibility and

97 Zhao 1998, 457-459. Zhao draws on the ideas of the Russian rural sociologist Alexander Chayanov and his consumption-labour-balance theory. 98 Zhao 1998, 457-459. 99 See Shi 2009, 73.

159 convenience that it offered to the dian-holder as a means of increasing wealth through the acquisition and cultivation of land.

The benefits of dian sales as suggested by these three factors need to be weighed against their disadvantages and weaknesses, particularly the use of the customary version for exploitative purposes as discussed in Section 5(b) below. The following discussion analyses the debate surrounding the recognition of dian rights in mainland China and evaluates the arguments against the criteria outlined in Chapter 3; namely, the official policy objectives of the State, including giving farmers more secure property rights and increasing the scope of rights that famers may exercise.

5. The debate: arguments for and against recognising dian rights

As previously noted, a lively debate over whether dian sales should be recognised in the PRL preceded its promulgation in 2007. In this Part 5, the main arguments in support of recognition are canvassed, together with the main arguments against recognition. A review of the scholarship in this area suggests that more time and energy in the debate has been spent by those who argue in favour of recognition than those who argue against recognition. Although this might reflect the fact that the view of the latter has prevailed to date, it has been suggested that more people support the retention of dian sales.100 Accordingly, this section sets out each of the main arguments in support of recognition and, where relevant, sets out the corresponding counter-arguments.

There are four arguments that can be gleaned from the literature in favour of recognising the dian: (1) it is uniquely Chinese and should be recognised for this reason, irrespective of whether it is compatible with modern concepts; (2) it reflects Chinese values, including the need for a family to preserve its connection with its ancestral land whilst using land as a means of raising finance, particularly on an emergency basis; (3) it meets a modern need in terms of the efficient use of capital and the maximisation of resources; and (4) it serves as an option for reform to China’s current system of rural land tenure. Although the first two arguments are less relevant than the third and fourth arguments in terms of the reform focus of this thesis, they nevertheless highlight factors that have influenced the debate concerning the recognition of the dian and the emotive nature of the arguments. The third and fourth arguments speak directly to issues that are the subject of the analysis in this thesis; namely, the relevance and suitability of the dian to reform. Each of these arguments is critically evaluated below.

(a) A unique Chinese tradition

One of the most passionate and emotive arguments that has been made in support of recognition of the dian is that it is uniquely Chinese. Many scholars have argued that dian sales are unique to China and that no other concept matches it completely in any other legal jurisdictions around the world.101 They emphasise the importance of retaining traditional customs, lamenting the modern disregard for customary practices and the blind adoption of Western systems ‘in the belief that they are more

100 See Yang 1988, 320-321, who (writing in 1998) notes that those who support retention are in the majority. A review of material over the past two decades suggests that this is still the case today. 101 See Bai 2008, 266.

160 suitable for the Chinese people than a right that has been around for thousands of years.’102 For these scholars, the retention of dian sales is often presented as a matter of national pride.103 According to this view, the retention of dian sales would be beneficial to protecting national culture and preserving national self-respect.104

On the other side of the debate, scholars argue that although dian sales have a long history, they are fundamentally incompatible with China’s modern civil law system.105 This view is often supported by the argument that the function of dian sales has been replaced by modern concepts, such as sale and lease arrangements and a loan that is secured by a mortgage.106 In addition, it has been argued that the conditions for the growth and existence of dian sales – primarily, the shortage of channels for raising credit – no longer exist in view of economic changes in China.107

As a justification for recognising a dian, this argument does not respond directly to the official policy objectives of the State and is relatively weak. Although the length of its use and the strength of its economic impact appear to have been unique in China, there are counterparts in other jurisdictions such as Korea and Vietnam.108 That said and as explained more fully in section (c) below, it should not be assumed that imported civil law concepts from other jurisdictions, such as the pledge over immovable property as recognised in jurisdictions such as Japan, would operate in the same way. Ultimately, the utility of the concept lies in its potential to operate in a contemporary context and meet contemporary needs. Accordingly, although this argument can be disregarded when evaluated against the official policy objectives of the State, it cannot be dismissed outright.

(b) Reflects Chinese values

Related to the above argument is the view that dian sales reflect or embody Chinese values. Li, for example, argues that the roots of dian sales lay in the cultural tradition of filial piety and that dian sales should be retained from a cultural perspective.109 Further ‘to deny the dian is actually to deny the characteristics and customs of traditional culture.’110 Other writers have noted the ethic of ‘respecting one’s ancestors and assisting the poor and the weak.’111 It is also claimed that dian sales ‘embody national values such as harmony.’112

The reference to ‘assisting the poor and the weak’ appears to relate to the way in which dian sales preserved ownership rights on the part of the dian-maker and kept alive the hope that the property

102 See Lin 2008, 32-37. 103 Ibid, 36. 104 Xu 2007, 113. See also Yang 1988, 319. 105 Zhang 2005, 8. 106 See further under section (c): meets a modern need. 107 Zhu 2008, 45. 108 For the evolution of the dian in Vietnam, see McAleavy 1958. There are also some striking parallels between a dian and a land pledge in Indonesia, which do not appear to have been noted by any Chinese scholars. See Haar 1948, 109-113. 109 Li 2013. 110 Li 2013. 111 See Bai 2008, 266; Xu 2007, 113. 112 Hexie (和谐). See Lin 2008, 33; Sun 2006; Xu 2007, 117.

161 could be redeemed at some point in the future.113 This was particularly relevant in the context of family ownership and an environment in which land served as form of social insurance and was expected to serve the dual-purpose objective.

One scholar has stated that ‘from the design of the system, it can be seen that by the time of its development to the Qing Dynasty, the system of dian sales had become a means of helping the poor by postponing land consolidation.’114 This contrasts with the views of those who oppose the retention of the dian on the basis that it was through dian sales that peasants were exploited and land consolidation occurred. Zhu, for example, argues that ‘entering into a dian sale to circumvent the law [presumably, the requirements in respect of an absolute sale] provided the conditions for land consolidation.’115 Further, Zhu argues, ‘it was under the combined effects of poverty, sale restrictions and consolidation that the unique system of dian sales appeared in Chinese society.’116

Along similar lines, other scholars argue that instead of protecting the poor and the weak, dian sales were exploitative in nature, since they provided rapacious landlords with the means of appropriating the land of the peasants, most of whom did not have the means to buy back the land and recover full ownership. For example, it has been suggested that in the Ming and Qing Dynasties, dian sales were subject to exploitation by dian-holders, who delayed the buy-back of land by dian-makers through various pretexts until the redemption period had expired and the dian-maker was no longer able to exercise its rights.117

There is no doubt that farmers were exploited in traditional China. The role of dian sales as a cause of exploitation or simply a tool by which exploitation occurred is an empirical question that this thesis cannot answer and one that has not been tested in a rigorous manner to date. This thesis acknowledges that the open-ended and uncertain nature of the rights and obligations of the parties under the customary version of the dian would have facilitated exploitative practices – a point that has been considered by the existing literature.118 As previously noted, one of the justifications for the codification of the dian was to achieve greater fairness and transactional certainty between the parties and thereby reduce the incidence of disputes.

This thesis suggests that any argument that the dian should be recognised solely on the basis that it reflects traditional Chinese values is weak. Even if certain values (e.g. the concept of an harmonious society) are recognised and embraced today, there are significant differences between the past and

113 See Huang 2005, 2, who states that ‘more important than its function of raising finance and providing a means for emergency funds was the custom by which property rights of people in the country who had encountered adversity could be protected through favourable conditions for redemption by the dian-maker.’ See also Yang 1988, 318. 114 Xu 2007, 118. 115 Zhu 2008, 43. 116 Zhu 2008, 43. 117 Zhang et al 1991, 474. 118 See, for example, Shi 2009, 73. Shi acknowledges that the reasons why dian sales have not found their way into modern law include the risks for people who are in a weak position (in most cases, Shi argues, this the weak party was the dian-maker who entered into dian sales as a result of the urgent need for money) and also the extent to which it was responsible for land consolidation prior to 1949 and a part of the ‘exploitative system’. Nonetheless, Shi argues in favour of its retention on the basis that its advantages outweigh its disadvantages.

162 the present in terms of the specific context that determines the relevance of those values. In the traditional environment in which land was the only means of subsidence, it is easy to understand why dian sales were important in terms of providing a channel for raising emergency finance while preserving the hope on the part of farming households that they could recover land when their fortunes improved. In a modern context, however, the focus of the official policies of the State is less on preserving land as a means of subsidence and more on increasing the security of land tenure and the scope of dealings that farmers can undertake in respect of land. The social function of land is still relevant, but it is more relevant in terms of giving farming households the choice to maintain a connection with their land and deal with their rights in the interests of the household than protecting them from utter destitution. Sections (c) and (d) below speak to various factors that are more relevant to the suitability of the dian in a modern context.

Many scholars argue that dian sales remain highly relevant today and meet both an economic and social need. This argument arises out of two perceived advantages with dian sales: (1) their perceived flexibility over other arrangements; and (2) their economic benefit in terms of increasing the efficient use of capital and the maximisation of resources.

As evidence for the first perceived advantage, scholars have identified the flexibility of a dian sale in circumstances where an owner of an apartment does not need to use it for a period of time, but does not want to lease it out119 and does not want to sell it.120 In addition to arguing that a dian sale has advantages over a lease and a sale transaction, these scholars also highlight its advantages over a mortgage in terms of providing a means for raising finance. In the view of one scholar, a dian sale is more secure for the dian-holder (i.e. the party providing the finance) than a security right such as a mortgage or a pledge over immovable property, since the dian-holder can directly exercise its rights without recourse to the courts and without the need to incur the registration and enforcement costs that accompany the creation of a security interest.121 Although this may appear to weaken the position of the dian-maker, the critical question from the perspective of the dian-maker is whether the law provides sufficient protection in respect of the rights of the dian-maker. Indeed, this was part of reason behind the codification of the rights and obligations of the dian-maker and the dian- holder and the recent amendments in Taiwan. Other scholars acknowledge that the customary version of a dian was subject to uncertainty in relation to its term, the registration arrangements, supplemental payments and the circumstances in which the dian-maker could redeem the property. They argue, however, that it could and should be adapted to meet the actual needs of society as reflected in the codified version in Taiwan.122

In support of the second perceived advantage (namely, the economic benefit that dian sales offer in terms of increasing the efficient use of capital and the maximisation of resources), scholars have

119 A lease, it is argued, is more onerous than a dian sale as a result of the expense incurred in engaging a leasing agent. Also, a lease is not a proprietary right. 120 See Yang 2007, 11. See also Bai 2008, 266; Jia and Zhang 2010, 114. 121 See Shi 2009, 73. For other arguments on the irreplaceable nature of dian sales, see Cui and Shen et al 2005, 146-147; Liu 2012. 122 See Shi 2009, 73. See also Chen 2007, 156; Cui and Shen et al 2005, 145-147.

163 argued that dian sales perform the dual function of facilitating the circulation of funds within the economy and maximising the value from the use of property. The dian-holder benefits from the ability to use the property and the dian-maker benefits from the use of the funds. In this way, a dian sale can increase the efficient use of capital and assets in society.123

The argument that a dian meets a modern need is strengthened by the fact that Chinese law does not currently recognise any arrangement under which the holder of land-use rights may transfer the rights for an agreed period on terms that the transferee may enjoy the income from the use and management of the land in return for the right of the original holder to redeem the rights at the end of the period. In this regard, a dian is fundamentally different from a sub-contract or a lease, each of which has a non-proprietary nature under the current system as explained in Chapter 2.

In the case of a dian, the dian-holder acquires the potential economic benefit from the use of land for the agreed period together with the possibility of obtaining the land-use rights if the dian-maker does not redeem and the pre-emptive right to acquire the land-use rights if the dian-maker decides to sell the rights. Under such an arrangement, the dian-holder has a reasonably expectation of recovering the capital that it has expended to enjoy the income from the use of the land for the relevant period. Its main concern is whether the return from the land is greater than the return that could have been generated through investing the capital in other areas. Accordingly, the arrangement is designed to incentivise the dian-holder to invest in the land to maximise its potential return.124 From the perspective of the dian-maker, the arrangement is designed to unlock the capital value of the land to enable the dian-maker to do other things with the funds for the relevant period.

In the case of a sub-contract or a lease, on the other hand, the payments do not take the form of a capital investment but, instead, represent an unrecoverable operating cost for the use of the land during the relevant period. Although the outcome might be the same in financial terms, the economic motivations are fundamentally different.

On the other side of the debate, some scholars argue that dian sales have lost their vitality and that their function has been replaced by other concepts.125 These include a loan secured by a mortgage, under which finance can be raised with the support of a mortgage over land-use rights and building ownership and a pledge. According to this view, dian sales have lost their relevance in the commodities market economy as more choices have arisen for raising credit.126 It thrived in traditional times when other means for raising credit were either limited or undeveloped.127

The counter-argument is that a dian is structurally and economically different from a mortgage or pledge over immovable property as a mortgage or pledge operates as security for the loan of money, which is repayable by the original holder of the land-use rights, and usually does not involve the

123 Bai 2008, 266. See also Shi 2009, 73; Yang 1988, 318; Mo and He 2010, 34. 124 As previously noted, under Article 927 of the Taiwan Civil Code, the dian-holder can claim the value of any improvements to the land, which is generally not possible in the case of a lease. 125 See Zhu 2008, 44; Zhang 2005, 7. See also Peng 2013, who challenges the proposition that a dian can reconcile the contradictions between the reality of rural migration and the legal restrictions on assignment 126 See Zhu 2008, 44. According to this view, if people have an urgent need for funds, they can either sell their property or raise a loan on the security of a mortgage: see Xu 2007, 112. 127 Zhang 2005, 7.

164 transfer of possession to the lender. A dian, on the other hand, involves the transfer of possession to the dian-holder for the purposes of enabling the dian-holder to generate a return from the productive use of land. In accommodating the specific economic motivation as outlined above – namely, the benefit from making a capital investment in the productive use of land for the agreed period – the dian offers flexibility over other arrangements and increases the efficient use of capital and the maximisation of resources. This argument is developed further in Chapter 7 of this thesis.

(d) An option for reform

Li and Cai advocate conceiving of land contract management rights in the form of a dian. Under this proposal, the grant of land contract management rights would be conceived as the creation of a dian in favour of the household by the Collective. This, they argue, would be in line with the traditional approach under which, irrespective of whether the land was subject to a dian sale or an absolute sale, the Collective as seller would maintain a bare thread of ownership [‘卖而不断’, ‘断而不死’]; however, it would be necessary to abandon the concept of an absolute transfer of ownership to the dian-holder if the Collective did not redeem at the end of the dian period as this would be inconsistent with public ownership of land. Instead, if the Collective did not redeem the land at the end of the relevant period, the right to redeem should be subrogated [代位请求权] to a body such as a land reserve organization [土地收储机构], which could exercise the right to redeem and extinguish the dian rights.128 Li and Cai also advocate applying the concept of a dian to resolve the ‘small property rights’ issue.129

Li and Ni similarly explore the option of using a dian to support a market for the sale and purchase of land contract management rights. As noted above, this would involve conceiving of such rights as a dian transaction between the Collective and the household that holds the rights. However, instead of farmers acquiring transferable rights through the payment of money to the Collective as in the traditional context, the dian price would represent the entitlement of a household to social security. Having agreed to take the rights as their entitlement to social security, the household could then sub-dian the rights to third parties and the sub-dian would take the place of a sub-contract under the current system.130 The use of a dian on this basis, the writers argue, would recognise the distinction between ownership, contract rights and management rights [营权] and would be in line with the 2016 Opinion on Measures Concerning Perfecting the Separation of Ownership Rights, Contract Rights and Management Rights in respect of Rural Land. Li and Ni argue that the arrangements for welfare housing in the cities and towns [保障住房] should be conceived in the same way.131

There are two options for using the dian to accommodate the call in the 2016 Opinion to recognise a distinction between ownership, contract rights and managements rights. The first option, as

128 Li and Cai 2012, 109. 129 Li and Cai 2012, 110. Under their proposal concerning small property rights, the concept of an ‘absolute transfer’ to the dian-holder would be discarded and replaced with the power of the dian-maker to sell to a third party that is qualified to purchase the rights in question with the dian-holder enjoying lien rights as security. See also Li and Ni 2014, 29; Sun and Wang 2012, 142-144; Yang and Ding 2011, 105 and Liu 2012, 28. 130 Li and Ni 2016, 21. 131 See Li and Shen 2015, 63-65; Li and Ni 2014, 29-30.

165 suggested by the above scholars,132 would be to conceive of land contract management rights as a dian sale from the Collective to the farming household,133 which could then be assigned on the market to third parties in the form of a sub-dian. Under the second option, a dian could be conceived as part of the bundle of rights that constitute perpetual tenancy rights enjoyed by farmers; namely, as a means of allowing the holders of perpetual tenancy rights to deal with their land in a way that enables them to maintain a connection with the land.

This thesis suggests that the second option would be more coherent from a conceptual perspective. This is because the transformation of land contract management rights into dian rights granted by the Collective in favour of the farmers would involve a degree of artificiality as a result of collective ownership of land in China and the inability of farmers to take ownership of the land at the end of the dian period. In addition, this thesis suggests that perpetual tenancy rights would provide a more coherent basis for the grant of rights by the Collective to farmers and that dian rights could be recognised as a type of usufruct that exists alongside perpetual tenancy rights.

(e) What does the debate reveal about the relevance and suitability of the dian to reform in China today?

There are several reasons that could be advanced to explain the support that the dian has received from scholars who are calling for it to be recognised as a property right and the reason as to its relevance and suitability for reform today. First, one could point to its effectiveness as a means of raising credit, particularly in a rural context with an undeveloped system of credit, and increasing the efficient use of capital. In this respect, the effectiveness of the dian derives from the fact that it enables an owner of land to raise finance from a party who is more interested in generating a return from the possession and use of land than from the payment of interest by the borrower as would occur with a loan secured by a mortgage. As such, the dian responds to the official policy objective of increasing the scope of rights that farmers may exercise. In addition, it appears to accommodate the policy of the Separation of Three Rights, under which farmers are able to transfer management rights whilst retaining contract rights.

A dian also avoids the practical and psychological burden that debt finance would impose on the holder of the land-use rights as there is no repayment obligation on the dian-maker and if the dian- maker does not redeem the land, the ownership automatically passes to the dian-holder. In addition, although a pledge over immovable property would operate in a similar manner to a dian in terms of transferring possession to the lender and enabling the lender to generate a return from the use and management of the land, a pledge would not explicitly allow the lender to claim value for any improvements to the land along the lines of Article 927 of the Taiwan Civil Code. Accordingly, the pledge does not enable the lender to obtain any ‘equity’ in the land through investing in it and increasing its value and productive potential.

Secondly, one could point to the convenient nature of the dian in terms of providing the dian-holder with broad rights to deal with the land whilst maintaining ownership rights on the part of the dian-

132 Li and Cai 2012; Ni and Li 133 Li and Cai 2012, 109.

166 maker. As such, the dian accommodates the dual-purpose objective of providing a form of land tenure that facilitates both the productive and social purpose of land. That said, it is relevant to acknowledge that the dian-maker may be in a weaker position economically and to consider whether the interests of the dian-maker can be appropriately protected by law and by legal remedies.

Thirdly, one could point to the historical significance of the dian and the extent to which it reflects Chinese culture and traditional practices, unlike many modern civil law concepts that have been imported to China from outside. It is also a legal concept that is relatively unique, one that lies at the heart of what many scholars would consider to be China’s legal tradition. As noted above, however, any argument that the dian should be recognised solely on the basis that it reflects traditional Chinese values is open to question in view of the different contexts between the past and the present.

Similar to the argument made in relation to perpetual tenancy rights, this thesis suggests that in view of the comprehensive legislative framework governing property rights in mainland China today and the need for dian rights to operate as rights that are derived, directly or indirectly, from state ownership or collective ownership, it would be more appropriate to consider the adoption of the codified form of dian rights whilst recognising a limited role for custom along similar lines to the provisions governing dian rights in Taiwan. As set out above, the provisions governing dian rights in the Civil Code of Taiwan recognise custom in the context of a sub-dian or lease of the dian property (Article 915).

Finally, the experience of the dian in Taiwan is instructive to potential reform in mainland China for two reasons. First, it demonstrates the continued existence of this form of land tenure in a rural context despite its decline in use and the emergence of agricultural rights as a new form of land tenure. As previously discussed, the decline in popularity of the dian in Taiwan is attributable as much to its being subsumed within the concept of a pledge of immovable property during the period of Japanese rule of Taiwan as it is to its perceived lack of relevance in a modern context. Secondly, the experience in Taiwan presents a version of dian rights – namely, the codified version as currently in effect under the Civil Code of Taiwan – that provides a model for potential reform in mainland China. The possibility of adopting dian rights and using it as a conceptual model for that purpose is explored further in the discussion of reform options in Chapter 7.

167

Chapter 7 – Reform Models

This thesis has examined a question of pressing concern in China today: how to reform the legal framework governing rural land rights in a way that better protects the rights of farmers and supports the official policies of the State. Of the many reform proposals, the call to reintroduce traditional forms of land tenure has been amongst the most prominent and hotly debated. This thesis has engaged with the question of the relevance and suitability of traditional forms of land tenure to the needs of reform today.

The hypothesis that this thesis has tested is that the legal and conceptual framework governing traditional property rights offers insights into reform options that are relevant within the modern context. The criteria for the evaluation of the traditional property rights are the reform objectives as reflected in the official policies of the State.

As noted in Chapter 1, the debate about legal reform has revolved around two objectives. The first objective is to strengthen the rights of farmers and to reduce the improper or unnecessary interference of the State and the Collective in land relations and dealings – this thesis has referred to this objective as the ‘empowerment objective’. The second, related objective is to adapt land tenure arrangements so that they facilitate the use and management of land for both productive and social purposes – this thesis has referred to this objective as the ‘dual-purpose objective’.

In evaluating the feasibility of traditional property rights to reform, this thesis has traced the evolution of the modern system and has compared the current system of land tenure and the traditional forms of land tenure and the rules governing each. The traditional property rights have been examined within both the historical context and the modern context (including in Taiwan).

A key question for reform is whether the current land contract managements rights are capable of meeting the official policy objectives and, if not, what reforms might be introduced to meet those objectives. As discussed in Chapter 3, these policy objectives include giving farmers more secure property rights and increasing the scope of rights that famers may exercise. The policy objectives are also aimed at encouraging the development of a market for the sale and purchase of rural property rights. These objectives speak to the empowerment objective identified by this thesis. In addition, the State has called for reforms that would enable farming households to transfer management rights to third parties while maintaining a connection with the land, as reflected in the policy of the Separation of Three Rights outlined in Chapter 3. This objective speaks to the dual-purpose objective identified by this thesis and supports the possibility that dian rights could serve as a conceptual model for this purpose. As noted in Chapter 1, this thesis analyses the traditional property rights at two levels: the conceptual level, which examines whether the rights can serve as a model for converting the Collective into a passive owner of land and giving farmers greater autonomy; and the level of actuality, which examines the rules themselves and whether they provide insights for achieving the official policies of the State.

A relevant question in determining whether the current legal framework is capable of meeting the official policy objectives is whether the rights operate effectively as proprietary rights in terms of the

168 way in which rights and powers are allocated between the Collective as owner and farmers. Chapter 2 analysed land contract management rights from two perspectives: (1) the extent to which the rights fall short of the definition of a proprietary right in the PRL, which is an internal evaluative perspective; and (2) the extent to which the rights and their exercise are determined by contract and fall short of proprietary rights as understood in other jurisdictions, which is an external comparative perspective. The chapter argued that when viewed from both an internal evaluative perspective and an external comparative perspective, land contract management rights are weak and are vulnerable to the administrative control of the Collective and the State. The chapter further argued that the rights and powers exercisable by the Collective as owner undermines both the security of tenure that farmers enjoy and also the scope of the dealings that they can have with their land and impedes the realisation of the empowerment objective and the dual-purposes objective. In particular, the current rights lack two attributes that are commonly associated with proprietary rights: protection from adjustment or expropriation, which is an aspect of security of tenure, and the ability freely to assign the rights to third parties without the requirement to obtain administrative approval, which is an aspect of the scope of rights.

This chapter provides answers to the research questions posed in Chapter 1, namely:

1. What deficiencies of the current system have led to calls for reform? 2. Do traditional property rights have the potential to achieve the official policy objectives? 3. If traditional property rights were adopted, what conceptual models could be considered?

As part of the answer to question 3 above, the chapter analyses each of the traditional property rights against the evaluation criteria and suggests models for consideration in the mix of reform options. These are just suggested models – as noted in Chapter 1, the question of whether traditional proprietary rights should be recognised and adopted, either in full or in part, depends on a range of factors, including political and economic factors, all of which are beyond the scope of this thesis. What the models do, however, is provide insights into possible reforms to the legal framework governing land tenure in rural China that respond to the official policy objectives.

After providing answers to the above questions, the chapter explores the concepts of household ownership and pre-emptive rights. These concepts are relevant as they have been a significant structural factor in the design of land tenure in both an historical and modern context. The chapter concludes by identifying key findings and areas for further research.

1. What deficiencies of the current system have led to calls for reform?

As this thesis has argued, at the heart of the debate over the relevance and suitability of traditional proprietary rights to the reform of rural land rights is the question of what security of tenure farmers should enjoy and the scope of rights that they should be able to exercise. From a practical perspective, the question is how control and access to land should be allocated between the State and farmers. The dilemma for policy-makers and law-reformers is that giving farmers greater security and a broader scope of rights inevitably involves giving them greater control over the exercise of rural land rights and, consequently, greater autonomy to decide what is in their interests, whether from the perspective of the productive or social purpose of land. If China is to achieve its official policy objectives, including facilitating a market for transactions in rural land-use rights while

169 preserving arable land and reducing the risk of irregular or improper practices, it will be necessary to shift the focus from direct control by the Collective over land use and land transactions to indirect control through other means. As proposed in Chapter 5, these indirect controls would include general legislative and regulatory mechanisms, such as environmental laws and zoning or planning requirements, and would involve converting the Collective into a passive owner that should only interfere where there is a breach of these laws or requirements.

As outlined in Chapter 2, the post-1949 legal framework has moved away from the concentration of the ownership and management of rural land in the one entity (i.e. the Collective) to a separation of ownership (collective ownership) and management (household management). In addition, the reforms since the introduction of the Household Responsibility System in 1979 have involved the vesting of greater management rights in the hands of households and a move towards rural property rights that dwell in the space between an administrative contract and property. As discussed in Chapter 3, however, the implementation of the policies concerning rural land management inevitably involve conflicts and contradictions between the interests of farmers and the broader interests of the State, including maintaining the redline of 1.8 billion mu of arable land and keeping rural-urban migration within manageable limits. Accordingly, private interests, which revolve around the interests of the household, continue to vie for supremacy with public interests, which subordinate the private interests to the interests of the broader community and, ultimately, to the interests of the State itself. This subordination is reflected in the treatment of land as a form of social insurance, the legal requirements that hinder rural-urban migration as discussed in Chapter 2 and the challenges that the current legal framework has caused as discussed in Chapter 3. The modern challenges reflect the historical tension between private land ownership and control by the State in China, as discussed in Chapter 4, and the ongoing tension between the use of land as a tool of social policy and the use of land for private purposes.

As outlined in Chapter 3, China currently faces a number of fundamental challenges in relation to the use and management of rural land, including the under-utilisation of agricultural land, which is one of the factors driving the reforms to encourage large-scale farming, abusive practices involving the unlawful expropriation and conversion of agricultural land for non-agricultural purposes, and irregular dealings in land generally. These challenges have triggered and perpetuated a range of human consequences, including social unrest and gender-based discrimination against women, and have been cited as justification for the policy objectives of granting farmers more secure land rights and greater scope and autonomy to decide how those rights should be exercised.

Before examining the possibility of adopting or borrowing from the traditional proprietary rights, it is useful briefly to restate the limitations of the current system from a rules-based perspective and as they relate to the questions of security of tenure and the scope of land contract management rights, and to identify the various reform options. In terms of security of tenure, the current term of land contract management rights appears to be indefinite under Article 126 of the PRL, under which the holder of the land-use rights may continue to hold the rights after the contract period has expired. However, the position is not conclusively established as the article provides that the continuation of the rights is ‘in accordance with the relevant provisions of the State’. As outlined in Chapter 2, although subject to various restrictions, the law recognises circumstances in which the land-use rights may be expropriated and adjusted against the wishes and interests of the holder of the land-

170 use rights. Consequently, in terms of protection from expropriation and modification or adjustment, security of tenure under the current system is vulnerable, both in law and in practice.

In terms of scope, an assignment of land contract management rights currently requires the consent of the issuer except in circumstances where the rights were obtained through tender, auction or public negotiation.1 Similarly, a mortgage of the rights is only possible where the rights were obtained through tender, auction or public negotiation.2 An exchange of land-use rights is possible without consent, but the party with whom the land-use rights may be exchanged must be a member of the same collective economic organisation, which reinforces the community-based nature of the modern system of land tenure.3 A sub-contract and lease of the land-use rights – both of which are contractual in nature as discussed in Chapters 2 and 5 – are unrestricted.4 As provided in the law, however, the contractual rights and obligations between the Collective and the household remain on foot in such circumstances5 and neither a sub-contractor nor a lessee acquires any express proprietary rights or remedies.

The above limitations and the powers of the Collective to interfere in the exercise of rights by farmers undermine the official policy objectives of giving farmers more secure property rights, increasing the scope of rights that famers may exercise and encouraging the development of a market for the sale and purchase of rural property rights.

As outlined in Chapter 3, those who call for reform to the legal framework broadly support one of the following three reform options:

1. Strengthening the existing system of land-use rights while maintaining certain restrictions such as limited assignability; 2. Moving towards an unrestricted market-based approach; and 3. Adopting a multi-functional approach that takes the needs of the local community into account and accommodates diversified forms of land tenure, including the traditional forms of tenure.

This thesis argues that the first reform option – namely, modifying the existing system of land contract management rights – is not tenable in terms of achieving the policy objectives of the State. This can be attributed to various factors. First, the contract-based approach to the allocation and regulation of rural land rights weakens the rights enjoyed by farmers and vests too much control and power in the hands of the Collective and the State. Secondly, it appears that community-based forms of tenure no longer have the relevance that they used to have, particularly in view of rural- urban migration, even though the concept of family or household ownership is still relevant. Indeed, a system of rural land tenure that allows rural land rights to be circulated only within certain communities appears to be fundamentally inconsistent with the official policy objective of achieving a market for the sale and purchase of land-use rights. Thirdly, any system that involves a high degree of intervention or control on the part of the Collective or the State through consent or other

1 RLCL, Article 49. 2 RLCL, Article 49. 3 RLCL, Article 40. 4 RLCL, Article 39. 5 See Chapter 2, Part 5(e)vii).

171 requirements is likely to undermine the market value of land-use rights and the ease with which land-use rights can be traded on the secondary market.

The second reform option identified above – namely, moving towards an unrestricted market-based approach that would remove all restrictions on the sale and purchase of rural land rights, whether on the basis of the traditional property rights or otherwise – would involve a radical overhaul of the current system, including rights of pre-emption that are designed to keep land within the hands of the local community. It would also be inconsistent with the underlying structural factors that underpinned the traditional system of land tenure and continues to underpin certain aspects of the modern system. As outlined in Part 2 below, these structural factors include the need for rural land to be used and managed for the benefit of both the household and the local community and the imposition of appropriate restrictions that accommodate this need. Accordingly, this reform option would appear to be inconsistent with the official policy objectives.

This thesis argues that the third reform option, which would include adopting traditional property rights, merits consideration. As argued in Chapter 3, this is because the traditional property rights would enable China to maintain its current system of public land ownership whilst giving farmers stronger rights that would qualify as property rights under Article 2 of the Property Rights Law, which defines a property right as the exclusive right to exercise direct control over property.6 This would allow farmers the autonomy to deal with their rural land rights freely, albeit within the general legislative constraints, and thereby assist in achieving the empowerment objective. The traditional rights would also allow farmers to determine the extent to which the social purpose of land should be taken into account in their dealings in land in accordance with the dual-purpose objective.

2. Do traditional property rights have the potential to achieve the official policy objectives?

A detailed analysis of the official policy objectives was undertaken in Chapter 3. The following table provides a summary of these policy objectives for the purposes of the discussion below. The first three policy objectives speak to issues reflected in the empowerment objective first discussed in Chapter 1; namely, increasing the scope of rights and the security of tenure and maintaining the centrality of family farming. The fourth policy objective calls for social reforms. It would grant farmers more autonomy to deal with the land in the way in which they considered appropriate, thereby speaking to issues reflected in the dual-purpose objective. The fifth objective identifies the need for specific reform to the system of land contract management rights itself.

Policy objective Specific arrangements (1) Increase the scope of rights • Permit assignment of land-use rights for value and encourage the circulation of rural land-use rights • Permit mortgages over rural land-use rights to allow farmers to raise finance • Reform the system of residential foundation rights • Establish a unified market between the city and the

6 See the discussion in Chapter 2, Part 5(f).

172

country for construction use rights

(2) Increase the security of tenure • Prohibit unlawful conversion of agricultural land for non-agricultural purposes • Prohibit unlawful termination of land contracts and resumption of land

(3) Encourage farming innovations • Encourage large-scale farming operations (including improving the efficiency • Encourage innovative forms of farming of farming operations) • Maintain the centrality of family farming

(4) Introduce social reforms • Strengthen social insurance in the countryside

(5) Reform the system of land • Recognise the Separation of Three Rights (i.e. land contract management rights ownership rights, contract rights and management rights) • Maintain collective ownership of land

As noted in Chapter 3, there are inherent conflicts and contradictions between the above policy objectives that may be difficult to reconcile. These are particularly acute as between, on the one hand, the calls to encourage large-scale farming and, on the other hand, the calls to maintain the centrality of family management. Although not expressly acknowledged by the State, these conflicts and contradictions create uncertainty as to the nature and extent of the policy objectives and whether the overarching focus is to reinforce the existing system or, instead, to introduce more fundamental reforms. That said, each of the policy objectives responds to the current challenges and each of them has been consistently supported by the various policy statements issued by the State over the past decade, most recently the report of the 19th National Congress of the Communist Party of China in October 2017. The policy objectives therefore serve as appropriate criteria for assessing the relevance and suitability of traditional property rights to reform in China today.

An examination of the traditional property rights reveals that they reflect certain structural factors that underpin the modern legal framework and therefore have the potential to build on those structural factors for the purposes of reform. For example, the use and management of land for the benefit of the family or household under the traditional system is reflected in the modern system of rural land contract management, under which rights are granted primarily to households (as distinct from individuals). This in turn reflects the relevance of the interests of the local community in determining how land should be managed. Although a key distinction between the traditional system and the modern system is that the latter has elevated the interests of the Collective and diminished the interests of the family, both systems share a common feature in terms of emphasising the interests of the group (whether defined by reference to the household or the local community) over the interests of the individual. In the modern system, this is reflected in the community-based nature of the rights,7 the pre-emptive rights that members of the rural collective

7 RLCL, Article 5.

173 economic organisation enjoy,8 the qualification requirements for assignees of land contract management rights9 and the provisions that reflect the social purpose of land.10

As discussed in Chapter 4, two aspects of the structural framework of the traditional forms of land tenure are particularly relevant to a consideration of reform options as they highlight the attributes that characterised the traditional forms of land tenure and the context in which they operated:

1. The right to assign – despite the customary restrictions on assignment under the traditional system governing private ownership of land, including the requirement for the family head to make decisions for the benefit of the family and the pre-emptive rights that were enjoyed by relatives and neighbours, the right to assign was generally considered to be an integral part of the relationship between an ‘owner’ and the land and therefore an essential attribute of a proprietary right.

2. Rural land performed both a productive purpose and a social purpose – rural land was traditionally valued more for its productive yield in an agricultural sense than for its exchange value as a marketable commodity. In addition, and relatedly, land served as a form of social insurance and therefore performed an important social purpose. Accordingly, the traditional forms of land tenure enabled a farming household to maintain a connection with land for social purposes while transferring the right to farm the land to others for productive purposes.

One of the principal reasons why the traditional property rights that are the subject of this thesis have attracted so much attention is that they offer forms of land tenure that accommodate both aspects above. First, perpetual tenancy rights constitute proprietary rights that derive from ownership rights and thereby enable collective ownership of land to be maintained. An important component of any reform to adopt traditional property rights would be to convert the Collective (or the State) into a passive owner of land and thereby reduce its interference in land-use and land dealings. Secondly, both perpetual tenancy rights and dian rights enable farmers to deal with their rights in a free and flexible manner, which facilitates the empowerment objective and responds to the policy objective of increasing the scope of rights and increasing the security of tenure that farmers enjoy. Thirdly, dian rights provide a basis on which farmers that enjoy perpetual tenancy rights may assign the right to use land for farming purposes while maintaining a connection with the land. This facilitates the dual-purpose objective and responds to the policy objective of recognising a separation of ownership rights, contract rights and management rights.

As such, this thesis argues that the traditional property rights respond to the official policy objectives of the State as the system moves away from what is essentially a contract-based framework towards a framework that grants stronger proprietary rights to farmers.

The critical question, however, is how rural land tenure should be designed to satisfy the official policy objectives. In line with the central focus of this thesis, this involves determining both the security of tenure that farmers should enjoy (i.e. both the term of the rights and the extent to which

8 RLCL, Article 33. 9 RLCL, Article 33(4). 10 Rural Land Contact Law, Articles 5 and 41. See also Article 154 of the PRL.

174 the rights are protected from expropriation and modification) and the scope of the rights that farmers may exercise (i.e. the nature and breadth of the rights, including their assignability and the ability to create derivative rights such as mortgage rights in favour of others).

3. If traditional property rights were adopted, what conceptual models could be considered?

Two reform models that would involve the adoption of the traditional property rights, while at the same time representing a multi-functional approach that would take the needs of farming households and the local community into account, are outlined below. As outlined in Chapters 5 and 6, these models would involve the adoption of perpetual tenancy rights to replace land contract management rights and residential foundation rights, and the recognition of the dian as a usufruct right that may be exercised by holders of perpetual tenancy rights. The key features of the two reform models are outlined in the following table.

Form of tenure Reform model Perpetual tenancy rights • Based on passive ownership by the Collective • Acquired through long-use (15 – 20 years) or payment of the residual market value to the Collective Owner • Regulated primarily by statute (general law and zoning requirements) rather than by contract • Not vulnerable to interference by the Collective except in limited circumstances • Freely assignable by the holder subject to the pre-emptive rights of close relatives and members of the local community (in that order) • Capable of accommodating usufruct rights including a mortgage, a dian and a proprietary lease along the lines of agricultural rights in Taiwan • Based on the codified version of perpetual tenancy rights instead of the customary version

Dian rights • Adopted as a usufruct right derived from perpetual tenancy rights • Subject to a maximum dian term of 15 – 20 years • Not vulnerable to termination by the dian-maker but subject to an obligation to pay compensation if the land is damaged • Freely assignable by the dian-holder, subject to any qualification requirements on the part of the assignee (e.g. farming experience) • Subject to a pre-emptive right on the part of the dian- holder to purchase the perpetual tenancy rights in the event that the dian-maker wished to sell its perpetual

175

tenancy rights • Regulated primarily by statute rather than by contract • Based on the codified version of dian rights instead of the customary version

A detailed consideration of each conceptual model appears below.

(a) Perpetual tenancy rights

At a conceptual level, the adoption of perpetual tenancy rights as the basis on which the Collective grants rural land-use rights to farmers would create a form of land tenure that would convert the Collective into a passive owner of land as discussed in Chapter 5, while strengthening the rights of farmers in line with the official policy objectives as outlined in Chapter 3. A similar approach could be adopted in respect of residential foundation rights by treating such rights as a form of perpetual tenancy rights.

The perpetual tenancy rights could be acquired either on the basis of long-use (instead of in return for the payment of rent) or in return for the payment of a sum of money by the land-user to the Collective Owner. The sum would represent the market value of the rights or the residual market value after the prior period of use had been taken into account. Under this approach, the holder of land-use rights would be considered to hold fully assignable perpetual tenancy rights after the relevant long-use period had passed or the relevant amount had been paid. This long-use period might be a period of 15 - 20 years, corresponding to the initial period for which land contract management rights were granted. A similar approach could be adopted in respect of residential foundation rights, except that the period could be shorter and commensurate with the capital investment that the owner had made in the house.

A key element of adopting perpetual tenancy rights would be to convert the Collective into a passive owner in terms of not intervening in the exercise of rights by the holder of the land-use rights except where the holder was in breach of the relevant requirements to use the land for agricultural purposes or where intervention became necessary to preserve the productive use and ongoing viability of the land.11 This could be achieved either by way of the imposition of restrictions in the grant of the land-use rights itself (e.g. restrictions on the use of land for non-agricultural purposes) or by way of general law and zoning requirements. Such arrangements have been adopted in other countries such as Australia, where perpetual crown leases over rural land are recognised in certain states and are governed primarily by legislation and not by contract.12 Also in line with the context

11 As reflected in agricultural rights in Taiwan, Article 850-6. 12 The perpetual crown lease in States of Australia such as New South Wales is a useful example of a statutory form of perpetual lease that was designed to preserve the use of land for agricultural purposes. It is also useful in terms of recognising the equity held by the lessees on the basis of long-use, which has resulted in the lessees being given the option of acquiring the full equity in the land and converting it into freehold title (i.e. full private ownership). The experience of the perpetual Crown lease in Australia is also instructive for China in terms of: (1) the similar origins of the perpetual crown lease as a grant of land for the purpose of cultivation and the imposition of restrictions on assignment; (2) the various conditions and obligations that attach to the

176 in which the traditional rights operated, there would be no prohibition on assigning the rights to parties who were not existing members of the local community, subject only to any pre-emptive rights that would apply by operation of law as discussed in Part 4 below.

Further, the holder of perpetual tenancy rights would be able to mortgage the rights and create usufruct rights in favour of third parties. The usufruct rights could include the right to create a dian over the perpetual tenancy rights. A dian would enable the holder of the land-use rights to deal with the rights in a flexible manner (including, where desirable, maintaining a connection between the family and its land), thereby helping to preserve the social purpose of land as a form of insurance and accommodate the dual-purpose objective.13

In addition, and as an alternative to a dian, the holders of perpetual tenancy rights could grant a proprietary lease along similar lines to agricultural rights in Taiwan [农育权], which would replace the contractual lease that is recognised under the current system. This would overcome concerns associated with the insecurity of a contractual lease as the rights would operate as proprietary rights and could be granted on a long-term basis.

The decision of the holder of perpetual tenancy rights to grant a dian or to grant agricultural rights would depend primarily on the payment arrangements. The grant of a dian would be appropriate where the holder of the perpetual tenancy rights wished to receive a lump sum representing the present or discounted value of the productive yield from the land over the relevant period. The grant of agricultural rights would be appropriate where the holder of the perpetual tenancy rights wished to receive regular rental payments. The dian-holder and the holder of agricultural rights would be able assign their rights except as otherwise provided by the contract.14

This thesis suggests that the statutory model of perpetual tenancy rights as previously adopted in Taiwan would be more appropriate than a customary model along the lines of the pre-codification version of perpetual tenancy rights discussed in Chapter 5. Through clarifying the rights and obligations between the parties instead of leaving the detailed arrangements for determination by custom or contract, the statutory model would help to achieve an appropriate balance between the rights of the parties and thereby introduce transactional certainty and uniformity.

It should be noted that although strengthening the property rights of farmers in a formal sense, the adoption of perpetual tenancy rights in legislation alone would not reduce the risk of abusive practices on the part of the Collective or the other challenges as outlined in Chapter 3. The ability of such a model to strengthen the property rights of farmers in a practical sense would depend on the Collective exercising its powers in a reasonable and appropriate manner and the strengthening of institutional protections, including the availability of remedies to land users in the event that the Collective exercised its powers inappropriately. Although the potential to strengthen institutional grant (e.g. the land must be used for agricultural purposes and must be maintained appropriately); and (3) the right of the State to forfeit (i.e. resume) the land for failure to comply with the conditions. 13 Thought could also be given to a requirement to convert a certain percentage of the dian sale proceeds into social insurance to ensure that the household that had created the dian had a social safety net. 14 Under the agricultural rights now recognised in Taiwan, the holder of agricultural rights may assign the rights to other persons or create a mortgage over the rights, except where the contract provides otherwise or there is a custom to the contrary (Article 850-3).

177 protections is beyond the scope of this thesis, the adoption of perpetual tenancy rights would remove the formal power of the Collective to interfere in the exercise of rights by farmers. The effectiveness of the model would also depend on the implementation of a reliable system of registration in respect of rural rights throughout China to support a market for dealings in the rights.

(b) Dian rights

As noted in Chapter 6, some writers have advocated that a dian be adopted as the conceptual basis for the grant of land-use rights by the Collective (of the State) to farmers.15 This thesis submits that it would be more coherent conceptually to adopt perpetual tenancy rights for this purpose and, instead, to reserve the dian as a usufruct derived from perpetual tenancy rights. This is because the transformation of land contract management rights into dian rights granted by the Collective in favour of the farmers would involve a degree of artificiality in view of ownership of land by the Collective and the inability of farmers to take ownership of the land at the end of the dian period. In addition, the right of redemption on the part of the Collective would detract from the perceived security of tenure on the part of farmers, whereas perpetual tenancy rights would be granted in perpetuity subject to limited circumstances in which the rights could be revoked.

Similarly, as noted in the previous section, residential foundation rights could be treated as a form of perpetual tenancy rights, which could be assigned in favour of third parties and could be the subject of usufruct rights, including a dian and a mortgage. Such an approach would accommodate the policy objective of reforming the system of residential foundation rights by providing a basis on which such rights could be traded and dealt with as proprietary rights. Such an approach would require the prohibition on the sale of rural houses to urban residents to be abandoned. However, the interests of the local community could be protected through the recognition of pre-emptive rights as discussed in Part 4 below.

At a conceptual level, the adoption of the dian as a usufruct that could be granted by the holder of perpetual tenancy rights would create a form of tenure that would expand the scope of rights available to the holders of rural land rights. It would provide an alternative to an absolute assignment of rights and would enable a connection to be maintained between a household and its land, thus accommodating the concept of family ownership and the official policy of the Separation of Three Rights. As discussed in Chapter 3, this is directed towards enabling farmers to maintain residual rights in relation to land while facilitating the availability and use of land for large-scale farming.

At the same time as fulfilling the productive function of land by making land available to those who might be in the best position to farm the land and maximise the yield from the land, whether through large-scale farming or otherwise, the adoption of the dian should help to preserve land for cultivation. This is because if the land-use rights were able to be redeemed by the dian-maker at a certain point in the future for the original dian price (subject to the payment of any compensation to recognise the dian-holder’s investment in the land), the sole purpose of the dian and the sole motivation of the dian-holder would be to maximise the use of the land for agricultural purposes and the income that could be generated from cultivating the land, as distinct from acquiring and

15 See, for example, Li and Ni 2014.

178 developing the land for non-agricultural purposes (e.g. commercial development or speculative investment). As argued in Chapter 6, the dian would also incentivise the dian-holder to invest in the land to maximise its potential return during the dian period.

In line with the need to recognise assignment as an attribute of property rights, both the dian-maker and the dian-holder should be able to assign their rights to a third party, subject to any eligibility or qualification requirements on the part of the assignee of the dian-holder16 and any requirements to contribute to social insurance on the part of the dian-maker. The right to assign on the part of the dian-holder could be limited by contact.

In terms of fulfilling the social purpose of land, the benefit of a dian is that it would enable the dian- maker to postpone a decision about an absolute assignment of rights while, at the same time, receiving value for the rights for the duration of the dian period. At the end of the dian period, the dian-maker would have the right to redeem the rights in return for the payment of the original dian price. Alternatively, the dian-maker could make an absolute assignment to the dian-holder in return for a supplemental payment representing the residual market value. Similar to the position in Taiwan, there would be no express right for the dian-maker to terminate the dian. However, the legislation could make provision for compensation payable to the dian-maker, or an adjustment in the redemption price, in the event that the dian-holder had damaged the land or had not maintained the land in accordance with the dian contract or the legal requirements.

As with perpetual tenancy rights, this thesis suggests that the statutory model of the dian would be more appropriate than a customary model along the lines of the pre-codification version of perpetual tenancy rights discussed in Chapter 6. Through clarifying the rights and obligations between the parties instead of leaving the detailed arrangements for determination by custom or contract, the statutory model would help to achieve an appropriate balance between the rights of the parties and thereby introduce certainty and uniformity. Along similar lines to the model adopted in Taiwan, the balance would include the imposition of a maximum dian period for the dian-maker to redeem, failing which there would either be an absolute sale to the dian-holder if the contract made provision for this17 or, if the contract did not make provision for this, the dian-holder would acquire ownership if the dian-maker did not redeem within a certain period from the expiry of the dian period.18

As in the case of a lease, in order to prevent property from being tied up in a dian structure for an excessive length of time, it would be appropriate to prescribe a maximum dian period of 15 – 20 years along the lines of the 15-year period prescribed by the Civil Code of Taiwan. Further, as in the case of Taiwan (see Article 926), it should be possible for the dian-holder to acquire ownership of the perpetual tenancy rights by making one supplemental payment to the dian-maker. The dian- holder would also enjoy a pre-emptive right to purchase the perpetual tenancy rights of the dian-

16 Such requirements, which would include the requirement to have farming experience, could also apply to the creation of the dian in favour of the original dian-holder. 17 See Article 913 of the Taiwan Civil Code. 18 See Article 923 of the Taiwan Civil Code, under which the relevant period is two years. Note also Article 924, which provides for an absolute sale if the contract does not provide for a period and the dian-maker does not redeem after 30 years.

179 maker in the event that the latter wished to sell those rights.19 As noted in Chapter 6, there may be scope to recognise custom for certain purposes, such as to determine whether it is possible for the dian-holder to grant a sub-dian or lease of the property that is subject to the dian as provided under Article 915 of the Taiwan Civil Code.

Once again, the adoption of dian rights in legislation alone would not reduce the risk of exploitative practices on the part of the dian-holder as discussed in Chapter 6. The ability of such a model to protect the rights of the dian-maker would depend on the strengthening of institutional protections, including the availability of remedies to the dian-maker in the event that the dian-holder acted inappropriately (e.g. by damaging the land or by unreasonably investing in the land and thereby increasing the redemption price that the dian-maker would need to pay). The effectiveness of the model would also depend on the implementation of a reliable system of registration in respect of rural rights throughout China to support a market for dealings in the rights. The institutional protections and the reforms needed to implement a reliable system of registration are beyond the scope of this thesis.

4. Household ownership and rights of pre-emption

This thesis has shown how the concept of household ownership has been a significant structural factor in the design of land tenure in both an historical and modern context. A relevant question, therefore, is whether household ownership should be expressly recognised by written law and, if so, in what way and for what purpose. As discussed in Chapter 3, the legal status of the household is uncertain. Although Chapter 8 of the PRL suggests that land contract management rights are allocated to households as a type of joint co-ownership, the doctrinal basis for the authority of the household head is not clear. By comparison, the traditional concept of family ownership under custom (as outlined in Chapter 4) appeared to treat the family as the undivided owner of land with authority vested in the family head to deal with family property.20 Although the traditional position is likely to be sub-optimal in terms of vesting absolute authority in the family head, it was nonetheless clearer than the position under the current legal framework.

Given that land contract management rights are generally granted to the household, it is appropriate to recognise household ownership as joint co-ownership under Chapter 8 of the PRL. However, consideration could be given to clarifying the basis on which the household head has authority to deal with property on behalf of the other household members and permitting the members of the household to make alternative private arrangements between themselves. This would recognise the concept of household ownership whilst giving the members of a household autonomy to determine what arrangements would work best in their interests. Certain legislative measures could be adopted to protect vulnerable people such as women, many of whom are currently deprived of rights in respect of land when they engage in virilocal marriage as outlined in Chapter 3.21 These measures could include the requirement for all members of the household to consent to certain dealings, such as an assignment of the land-use rights to a third party.

19 See Article 919 of the Taiwan Civil Code. 20 See Chapter 4, Part 4(a). 21 See Chapter 3, Part 3(c).

180

In addition, consideration could be given to the legislative recognition of pre-emptive rights on the part of close relatives and the members of the local community, in that order, in land dealings. This would enable the system to maintain the community-based connection with the land and would also facilitate rural-urban migration whilst maximising the potential for large-scale farming in line with the official policy objectives, including the Separation of Three Rights.

5. Key findings and areas for further research

This thesis has examined the legal framework and rules governing traditional property rights as they existed in their historical context and their potential relevance and suitability to reform in China today. The analysis in this thesis supports the hypothesis that the legal and conceptual framework governing the traditional property rights offers insights into reform options that are relevant within the modern context. In particular, the analysis in this thesis has considered why traditional proprietary rights have attracted so much attention in the debate concerning reform to rural land rights in China and the extent to which traditional proprietary rights might either provide or inform possible solutions to the challenges of today. A critical question for reform that has run through the analysis in this thesis is how rural forms of land tenure should be designed at a conceptual level and how the rules should allocate rights and powers between the Collective as owner and farming households and regulate the management of rural land generally.

This thesis has explored the various ways in which the current legal framework does not achieve the policy aims that informed its design and how the rights currently enjoyed by farmers are weak and vulnerable to the control and interference of the Collective. In their current form, the rights essentially reflect a contractual relationship between the Collective and the farmers. The restrictions on the assignment of rights and other dealings by farmers are the most significant indicator of this and reflect a struggle for control over rural land that has characterised various periods throughout China’s long history, as outlined in Chapter 4. Under the present system, the rights of farmers are heavily circumscribed, largely in order to maintain the social purpose of land from the perspective of the State in terms of ensuring that farmers have a livelihood and that social stability and food self- sufficiency in rural China are maintained. The system, however, facilitates improper and abusive practices and has deprived farming families of agency to make decisions about their rights in respect of land. By circumscribing the proprietary rights of farmers in this way, the State compromises both the benefits that farmers can obtain from the use of land and the realisation of the policies that the State has formulated to achieve its social and economic goals.

This thesis has also explored the difficulties of achieving an appropriate balance between the social and productive purposes of land; namely, the need to treat land as an integral part of a household’s identity (and its livelihood) – which should remain in the possession of the household – and the need to treat land as a marketable commodity and, thereby, extract the greatest value from land and maximise its function in a modern market economy. Both of these findings support the relevance of traditional property rights as possible models for reform.

This thesis has contributed to the literature by examining the substance behind the calls to adopt or borrow from the experience of traditional property rights and how the traditional property rights operated in terms of the customary and codified versions. It has also contributed to the literature by synthesising the historical experience with the modern challenges, identifying the ways in which the

181 traditional property rights might meet the policy objectives and considering conceptual models for reform. As such, this thesis responds to calls for a greater understanding of the extent to which traditional norms are reflected in the modern system22 and their relevance for future reform. It also solves part of the puzzle identified by Ellickson; namely, why did the Chinese ‘seem to have so rarely cast aside a custom that was holding them back.’23 In this regard, the China story may offer some comparative lessons for other jurisdictions on the potential relevance of custom and traditional practices to land reform today.

The thesis has placed its focus on the legal framework and rules governing land tenure in rural China and the potential relevance and suitability of traditional property rights in terms of addressing various challenges and shortcomings in the modern regulation of rural land and meeting various policy objectives. These traditional property rights are just one piece of the larger jigsaw puzzle that makes up potential reform to the rural economy in China. In order to piece this jigsaw puzzle together, further research will be required in at least two areas. First, research is required into the various reform models that are the subject of current experimentation. As noted in Chapter 3, these include models that fit more-or-less within the existing legal framework, such as family farms where families engage in large-scale family on a more professional basis, and land shares where farmers contribute their rural land contract management rights as shares in rural farming cooperatives and enjoy dividends accordingly. They also include models that are more innovative and fall outside the existing legal framework, including land trusts where farmers entrust their rights to trust companies, which manage and deal with the rights for their benefit, and land tickets where farmers reclaim abandoned land for cultivation and apply to the government for land tickets, which enable them to use and sell the land through rural land transactions. Of particular relevance in this regard is the 2015 decision of the National People’s Congress Standing Committee permitting the adjustment, including suspension, of provisions governing the expropriation of rural land and the entry of rural construction land into the market and the administration of residential foundation land on a trial basis in certain regions until 31 December 2017.24 The results of the experimentation in this regard will need to be considered as part of the process of determining appropriate reform measures and alongside the conceptual models considered by this thesis. Secondly, further research will be required into the impact of reforms in broader areas such as housing, hukou registration, the social welfare system and legal institutions such as the courts.

For the government, various challenges will continue to be faced. The challenges include how to accommodate the need to increase the productivity and efficiency of agricultural land while, at the same time, maintaining various red-lines, including collective ownership and the minimum 1.8 billion mu of cultivation land. The challenges also include how to increase large-scale farming while maintaining, at least officially, the centrality of family farming. All these challenges give rise to contradictions – including political and ideological contradictions – that will need to be resolved if China is to achieve its objectives in this regard. Accordingly, any reforms to China’s system of rural

22 See Zelin 2004, 34: ‘Finally, we need to know the degree to which the contract culture of the late Qing and early Republic remains as the foundation for grassroots Chinese understandings of property and contract today.’ 23 Ellickson 2012, 15, as referred to in Chapter 1, Part 2(b). 24 2015 Decision concerning Authorising the State Council to Temporarily Adjust the Implementation of the Relevant Laws and Regulations in Thirty-Three Experimental Counties, Cities and Districts, including Daxing District of Beijing City.

182 land tenure will need to take account of reforms in other areas and the impact of social and economic developments. These developments include the changing demographics in rural China brought about by rural-urban migration patterns and the impact of this and other sociological factors on the relationship between rural households and agricultural land. Will the result be a decisive shift away from the traditional focus on the household as the unit of ownership and production in the countryside and towards the ‘urbanisation’ of rural China or, instead, a return to the social and economic arrangements that characterised the traditional system? The developments also include possible reforms to the taxation system to alleviate the excessive reliance by local governments on revenue from land development and possible reforms to China’s system of social security to reduce the reliance on land as a social welfare net for farmers.

This thesis concludes that traditional property rights should be considered in the mix of reform options and that, instead of representing obsolete institutions that should be relegated to the annals of history, the traditional rights may hold some of the keys to the successful reform of land tenure in rural China today.

**********************

183

Appendices

Appendix 1

Comparative Table of Legal Provisions (as referred to in the thesis)

Area Land Administration Rural Land Contract Law Property Rights Law Law (1986) (2002) (2007) Collective Articles 2 & 8 Article 2 Articles 58 & 59 ownership of rural land1 Exercise of Article 10 Article 12 Article 60 collective ownership rights Land contract Article 14 Article 3 Articles 124 - 134 management rights Land adjustment Article 14 Articles 27 and 28 Article 130

Consent required Article 15 Article 48 for issuance of land contract management rights to outsiders Use of collectively Article 43 Article 151 owned land for construction purposes Use of collectively Articles 62 and 63 Articles 149, 152 - 155 owned land for residential purposes Identity of the Article 10 Article 12 issuer of land contract management rights Protection of Article 31 Article 8 Article 43 and 63 cultivated land Resumption of Article 37 Articles 26 and 35 Article 131 land contract management rights Circulation of land Articles 10, 32 – 43, 49 Articles 128 and 129 contract

1 See also PRC Constitution, Articles 9 & 10.

184 management rights2 Mortgage of land- Article 49 Articles 133 and 180 use rights over collectively owned land

2 See also 2005 Administrative Measures for the Circulation of Rural Land Contract Management Rights.

185

Appendix 2

Table of Policy Objectives

Policy objective Policy document Increasing the scope of rights Permit assignment of land-use rights for 2006 Statement by Premier Wen Jiabao on the Three value and encourage circulation of rural Rural Issues property rights 2008 CCP Central Committee Decision on Certain Major Issues Concerning Promoting the Development of Rural Reforms 2013 Decision on Major Issues Concerning Comprehensively Deepening Reforms 2014 Opinion Concerning Guiding the Orderly Circulation of Rural Land Management Rights and Developing Appropriate Scale Operations 2016 Opinion on Measures Concerning Perfecting the Separation of Ownership Rights, Contract Rights and Management Rights in respect of Rural Land Permit mortgages over rural property 2008 CCP Central Committee Decision on Certain Major rights to allow farmers to raise finance Issues Concerning Promoting the Development of Rural Reforms 2013 Decision on Major Issues Concerning Comprehensively Deepening Reforms Reform the system of residential 2013 Decision on Major Issues Concerning foundation rights Comprehensively Deepening Reforms Establish a unified market between the 2008 CCP Central Committee Decision on Certain Major city and the country for construction Issues Concerning Promoting the Development of Rural use rights Reforms 2013 Decision on Major Issues Concerning Comprehensively Deepening Reforms Increasing the security of tenure Prohibit unlawful conversion of 2006 Statement by Premier Wen Jiabao on the Three agricultural land for non-agricultural Rural Issues purposes Prohibit unlawful termination of land 2008 CCP Central Committee Decision on Certain Major contracts and resumption of land Issues Concerning Promoting the Development of Rural Reforms 2012 CCP Central Committee and State Council Certain Opinions on Accelerating the Development of Modern Agriculture and Further Strengthening the Vitality of Rural Development 2013 Decision on Major Issues Concerning Comprehensively Deepening Reforms Encouraging farming innovations Encourage farming innovation (and 2008 CCP Central Committee Decision on Certain Major increase the efficiency of agricultural Issues Concerning Promoting the Development of Rural land)3 Reforms

3 As noted by Prosterman, Hanstad and Ping, ‘”Large-scale” farming in China involves consolidating China’s small labor-intensive farms into larger, mechanized farms, typically ranging from 2 to 20 hectares…policy

186

2013 Decision on Major Issues Concerning Comprehensively Deepening Reforms 2014 Opinion Concerning Guiding the Orderly Circulation of Rural Land Management Rights and Developing Appropriate Scale Operations 2016 Opinion on Measures Concerning Perfecting the Separation of Ownership Rights, Contract Rights and Management Rights in respect of Rural Land 2016 Certain Opinions Concerning Deepening and Promoting the Agricultural Supply Side Structural Reforms and Accelerating the New Momentum for Cultivating Rural Village Development

Encourage innovative forms of farming 2013 Decision on Major Issues Concerning Comprehensively Deepening Reforms 2014 Opinion Concerning Guiding the Orderly Circulation of Rural Land Management Rights and Developing Appropriate Scale Operations 2016 Opinion on Measures Concerning Perfecting the Separation of Ownership Rights, Contract Rights and Management Rights in respect of Rural Land 2016 Certain Opinions Concerning Deepening and Promoting the Agricultural Supply Side Structural Reforms and Accelerating the New Momentum for Cultivating Rural Village Development

Introducing social reforms Strengthen social insurance in the 2008 CCP Central Committee Decision countryside 2013 Decision on Major Issues Concerning Comprehensively Deepening Reforms 2016 Certain Opinions Concerning Deepening and Promoting the Agricultural Supply Side Structural Reforms and Accelerating the New Momentum for Cultivating Rural Village Development

Reforming the system of land contract management rights Recognise the Separation of Three 2008 CCP Central Committee Decision on Certain Major Rights (i.e. rural land ownership rights, Issues Concerning Promoting the Development of Rural contract rights and management rights), Reforms while maintaining Collective/public 2013 Decision on Major Issues Concerning ownership of land Comprehensively Deepening Reforms 2014 Opinion Concerning Guiding the Orderly Circulation of Rural Land Management Rights and Developing Appropriate Scale Operations 2016 Opinion on Measures Concerning Perfecting the Separation of Ownership Rights, Contract Rights and Management Rights in respect of Rural Land 2016 Certain Opinions Concerning Deepening and

makers and policy designers argue that large-scale farming will lead to greater productivity and production and increase farm income’: Prosterman et al 1998, 74.

187

Promoting the Agricultural Supply Side Structural Reforms and Accelerating the New Momentum for Cultivating Rural Village Development 2017 Xi Jinping Report at the 19th CCP National Congress 2018 CCP Central Committee and State Council Opinions on Implementing the Rural Vitalization Strategy

188

Appendix 3

Provisions in the Taiwan Civil Code dealing with perpetual tenancy rights (now repealed)

第四章永佃權

Chapter 4 Perpetual Tenancy Rights

第 842 條

稱永佃權者，謂支付佃租永久在他人土地上為耕作或牧畜之權。永佃權之設定，定有期限者，視為租賃，適用關於租賃之規定。

Article 842

Perpetual tenancy rights are the rights to cultivate and farm stock on another person’s land on a perpetual basis through the payment of rent. Where a term is stipulated when establishing perpetual tenancy rights, the arrangement will be treated as a lease and the provisions concerning leases will apply.4

第 843 條

永佃權人得將其權利讓與他人。

Article 843

The holder of perpetual tenancy rights may assign its rights to another person.5

第 844 條

永佃權人因不可抗力，致其收益減少或全無者，得請求減少或免除佃租。

Article 844

If an act of force majeure results in a decrease or complete loss of revenue on the part of the holder of perpetual tenancy rights, the holder may request that the rent be reduced or exempted.

第 845 條

永佃權人不得將土地出租於他人。

永佃權人違反前項之規定者，土地所有人得撤佃。

Article 845

The holder of perpetual tenancy rights may not lease the land to another person.

If the holder of perpetual tenancy rights breaches the above provision, the owner of the land may revoke the tenancy.6

4 Thus, an essential element of a perpetual tenancy as regulated by the Civil Code was its perpetual term. See Article 845 below for the prohibition on leasing. 5 The right to assign was the second essential element of a perpetual tenancy and underscored its proprietary nature. 6 The Civil Code prohibited the holder of perpetual tenancy rights from leasing the land (Article 845). Zhang 2013 explains that the reason for this was that the law was designed to support the policy of ‘thoroughly supporting the self-tilling farmer policy’ [自耕农之土地政策] and therefore ‘abolished the pernicious practice

189

第 846 條

永佃權人，積欠地租達二年之總額者，除另有習慣外，土地所有人得撤佃。

Article 846

If the holder of perpetual tenancy rights falls into arrears in the payment of rent in an amount totalling two years, except where custom provides otherwise, the owner of the land may terminate the tenancy.7

第 847 條

前二條之撤佃，應向永佃權人，以意思表示為之。

Article 847

Termination of a tenancy pursuant to the above two provisions requires an expression of intention.

第 848 條

第八百三十九條之規定，於永佃權準用之。

Article 848

The provisions of Article 839 apply by analogy to perpetual tenancy rights.8

第 849 條

永佃權人讓與其權利於第三人者，所有前永佃權人，對於土地所有人所欠之租額，由該第三人負償還之責。

Article 849

If the holder of perpetual tenancy rights assigns its rights to a third party, all rent amounts previously owing by the holder of the perpetual tenancy rights to the owner of the land will be a debt repayable by the third party.9

第 850 條

第七百七十四條至第七百九十八條之規定，於永佃權人間或永佃權人與土地所有人間準用之。 of exploiting tenant farmers’. Zhang notes that the main differences between perpetual tenancy rights and normal lease rights (which are purely contractual in nature) were the perpetual term of the rights and the ability to assign them. 7 The reference to ‘except where custom provides otherwise’ highlighted the persistence of custom and the influence of the concept of divided ownership (一田两主). 8 Article 839 concerns superficies (things attached to land belonging to another person, including buildings) and the rights of a superficiary: ‘When the superficies is extinguished, the superficiary is entitled to take its works back provided that the status quo ante of the land shall be restored. If the superficiary does not take its works back within a month after the superficies is extinguished, those works belong to the landowner, and if it obstructs the use of the land, the landowner is entitled to have the status quo ante restored. The superficiary shall inform the landowner before it takes its works back. If the landowner would like to purchase them at current market price, the superficiary cannot refuse to sell without a good cause’ [地上權消滅時，地上權人得取回其工作物。但應回復土地原狀。地上權人不於地上權消滅後一個月內取回其工作物者，工作物歸屬於土地所有人。其有礙於土地之利用者，土地所有人得請求回復原狀。地上權人取回其工作物前，應通知土地所有人。土地所有人願以時價購買者，地上權人非有正當理由，不得拒絕]. 9 On this basis, the debt or encumbrance ran with the land.

190

Article 850

The provisions in Articles 774 to 798 apply by analogy as between the holders of perpetual tenancy rights and as between the holder of perpetual tenancy rights and the owner of the land.10

10 These provisions dealt with the exercise of ownership rights in respect of the land and the rights of adjacent landowners.

191

Provisions in the Taiwan Civil Code governing agricultural rights

第 850-1 條稱農育權者，謂在他人土地為農作、森林、養殖、畜牧、種植竹木或保育之權。

農育權之期限，不得逾二十年；逾二十年者，縮短為二十年。但以造林、保育為目的或法令另有規定者，不在此限。

Article 850-1

Agricultural rights refer to the rights to engage in agriculture, forestry, aquatics, stock-growing, bamboo-growing or conservation on another person’s land.

The term of agricultural rights must not exceed 20 years.11 If the term exceeds 20 years, it will be reduced to 20 years. However, this limitation does not apply where the purposes are for forest plantations or conservation or as otherwise provided by laws and regulations.

第 850-2 條農育權未定有期限時，除以造林、保育為目的者外，當事人得隨時終止之。

前項終止，應於六個月前通知他方當事人。

第八百三十三條之一規定，於農育權以造林、保育為目的而未定有期限者準用之。

Article 850-2

Where no term is specified for agricultural rights, the parties may terminate the rights at any time, except rights that are granted for the purpose of forest plantations or conservation.

If the rights are terminated pursuant to the above provision, six months prior written notice must be given to the other party.

The provisions of Article 833-1 apply by analogy to agricultural rights that are granted for forest plantations and conservation purposes that do not have a specified term.12

第 850-3 條農育權人得將其權利讓與他人或設定抵押權。但契約另有約定或另有習慣者，不在此限。

前項約定，非經登記不得對抗第三人。

農育權與其農育工作物不得分離而為讓與或設定其他權利。

Article 850-3

The holder of agricultural rights may assign its rights to other persons or create a mortgage over the rights, except where the contract provides otherwise or there is a custom to the contrary.13

The previous provision will not bind third parties without registration.

11 Unlike perpetual tenancy rights, agricultural rights are not perpetual in nature. 12 Article 833-1 concerns superficies: ‘If the superficies without a definite duration has existed for more than twenty years, or the purpose of establishing the superficies no longer exists, the court may, upon the request of the parties, fix the duration or terminate the superficies after considering the purpose of establishing the superficies as well as the type, nature, and conditions of use of the building or work’ [地上權未定有期限者，存續期間逾二十年或地上權成立之目的已不存在時，法院得因當事人之請求，斟酌地上權成立之目的、建築物或工作物之種類、性質及利用狀況等情形，定其存續期間或終止其地上權]. 13 Assignability was carried over into the new provisions governing agricultural rights as an essential proprietary element, subject to registration in order to bind third parties.

192

The agricultural rights and the agriculture work structure must not be separately assigned or used to create other rights.

第 850-4 條農育權有支付地租之約定者，農育權人因不可抗力致收益減少或全無時，得請求減免其地租或變更原約定土地使用之目的。

前項情形，農育權人不能依原約定目的使用者，當事人得終止之。

前項關於土地所有人得行使終止權之規定，於農育權無支付地租之約定者，準用之。

Article 850-4

Where the agricultural rights are subject to a provision for the payment of rent and an act of force majeure results in a decrease or complete loss of revenue on the part of the holder of the agricultural rights, the holder may request that the rent be reduced or exempted or that the purpose of use of the land be changed.

In the above circumstances, if the holder of the agricultural rights is unable to use the land in accordance with the purpose originally provided, the parties may terminate the rights.

The previous provision concerning the right of the owner of the land to exercise termination rights also applies by analogy to a [contractual] provision concerning the failure to pay rent by the holder of the agricultural rights.14

第 850-5 條農育權人不得將土地或農育工作物出租於他人。但農育工作物之出租另有習慣者，從其習慣。

農育權人違反前項規定者，土地所有人得終止農育權。

Article 850-5

The holder of agricultural rights may not lease the land or the agriculture work structure to another person. However, in cases where the lease of the work structure is governed by custom, the custom shall be followed.

In the event that the holder of agricultural rights breaches the foregoing provision, the owner of the land may terminate the agricultural rights.15

第 850-6 條農育權人應依設定之目的及約定之方法，為土地之使用收益；未約定使用方法者，應依土地之性質為之，並均應保持其生產力或得永續利用。

農育權人違反前項規定，經土地所有人阻止而仍繼續為之者，土地所有人得終止農育權。農育權經設定抵押權者，並應同時將該阻止之事實通知抵押權人。

Article 850-6

The holder of agricultural rights must use and extract the benefit from the land in accordance with the purpose as agreed and the method as provided; where the method of use is not specified, it will be determined in accordance with the nature of the land and must in all cases preserve its productivity or its permanent ongoing use.

14 The right to terminate as a result of the failure to pay rent does not arise automatically but is required to be agreed in the contract creating the agricultural rights. 15 Like perpetual tenancy rights, the prohibition on leasing carried over into the provisions governing agricultural rights, subject to an exception in the case of ‘custom’.

193

If the holder of agricultural rights breaches the previous provision and continues to do so after the owner of the land tries to prevent it, the owner of the land may terminate the agricultural rights. Where the agricultural rights are the subject of a mortgage, the owner of the land must concurrently notify the mortgagee of this fact.16

第 850-7 條農育權消滅時，農育權人得取回其土地上之出產物及農育工作物。

第八百三十九條規定，於前項情形準用之。

第一項之出產物未及收穫而土地所有人又不願以時價購買者，農育權人得請求延長農育權期間至出產物可收穫時為止，土地所有人不得拒絕。但延長之期限，不得逾六個月。

Article 850-7

Where the agricultural rights are extinguished, the holder of the agricultural rights may take back the produce of the land and the agricultural work structure.

The provisions of Article 839 apply by analogy to the previous situation.17

If the produce referred to in the first paragraph has not reached harvesting and the owner of the land is not willing to pay the market price for it, the holder of agricultural rights may request that the term of the agricultural rights be extended to the time when the produce can be harvested and the owner of the land must not refuse. However, the extended term must not exceed six months.

第 850-8 條農育權人得為增加土地生產力或使用便利之特別改良。

農育權人將前項特別改良事項及費用數額，以書面通知土地所有人，土地所有人於收受通知後不即為反對之表示者，農育權人於農育權消滅時，得請求土地所有人返還特別改良費用。但以其現存之增價額為限。

前項請求權，因二年間不行使而消滅。

Article 850-8

The holder of agricultural rights may undertake special improvements in order to increase the produce from the land or for the convenience of use.

If the holder of agricultural rights notifies the owner of the land in writing of the special improvements and the amount of the fees and the owner of the land does not express any opposition immediately after receiving the notification, the holder of agricultural rights may, when the agricultural rights are extinguished, request the owner of the land to return the improvement fees. However, this is limited to the current appreciation value.

The request right referred to in the previous provision is extinguished if it is not exercised within two years.

第 850-9 條第八百三十四條、第八百三十五條第一項、第二項、第八百三十五條之一至第八百三十六條之一、第八百三十六條之二第二項規定，於農育權準用之。

16 Article 850-6 introduces a new restriction that had previously not been included in the provisions governing perpetual tenancy rights concerning the scope of agricultural rights and the purpose for which they must be exercised. Of particularly significance is the requirement to preserve the productivity or permanent ongoing use of the land, reflecting the shift in emphasis towards land preservation and an increased awareness of environmental concerns. 17 See n 12 above.

194

Article 850-9

The following provisions apply by analogy to agricultural rights: Arts 834, 835(1) and (2), 835 -1 to 836-1 and 836-2(2).18

18 These provisions deal with issues relating to superficies.

195

Appendix 4

The evolution of the dian

Period Limits on term Outcome at end of Limits on Other characteristics dian term supplemental payments

Northern Qi (550 – Seven years for Return of land to dian- N/A Recognition of clear 557) wasteland; five years maker distinction between for cultivated fields dian sales and absolute sales

Song (960 – 1275) 30-year maximum Redemption N/A Pre-emptive right of limit relatives and then neighbours to enter into the dian transaction

Southern Song 30-year maximum Redemption only at N/A Pre-emptive right of (1127 – 1279) limit the end of the term – if dian-holder to the dian-maker failed purchase the land if to redeem, the dian- the dian-maker holder could sell to a wished to sell third party

Ming (1368 – 1644) No limits If dian-maker failed to One supplemental The dealing was a redeem at the end of payment dian by default if the the term, the dian- contract did not holder could obtain provide that it was an ownership or sell to a absolute sale third party. If the dian- maker did not wish to redeem, the dian- maker could sell to a third party.

Qing (1644 – 1912) No limit if the Multiple payments The contract was contract provided were permitted required to specify clearly that it was a whether it was a dian dian sale – if no sale or an absolute provision was made, sale there was a 30-year maximum limit for existing contracts entered into within 30 years prior to the law (in the case of older contracts where it was not provided that they would operate as a dian sale, the contract would be deemed to operate as an absolute sale and no supplemental payments were

196

permitted

Republican China 30-year maximum If dian term was One supplemental Restrictions imposed (1912 – 1949) term (Article 912) agreed, and subject to payment permitted to limit the freedom Article 913, if the dian- for the dian-holder of the parties to a maker did not redeem to purchase the dian sale and to within a period of 2 property during the prescribe the rights years after the expiry dian term (Article and obligations of of the dian term, the 926) the parties. Duties dian-holder imposed on the part immediately obtains of the dian-holder ownership of the (Article 916) and pre- property (Article 923); emptive right of the dian-holder to Where no dian term purchase the had been agreed, the property if the dian- dian-holder maker wishes to sell immediately acquires (Article 919). ownership if the dian- maker does not redeem within 30 years (Article 924)

197

Appendix 5 Table comparing the original text of the Taiwan Civil Code with the amendments in 2010 第三编物权第八章典权

Book 3 Proprietary Rights Chapter 8 Dian Rights

Original text 2010 Amendments

第 911 条第 911 條（典權之意義）

称典权者，谓支付典价，占有他人之不动产，稱典權者，謂支付典價在他人之不動產為使而为使用及收益之权。用、收益，於他人不回贖時，取得該不動產所有權之權。 A dian is the right to use and enjoy the benefits of the real property of another person by paying A dian is the right to use and enjoy the benefits the dian price. of the real property of another person by paying the dian price, where the ownership of such real property is acquired if the other person does not redeem.19

第 912 条 No change.

典权约定期限不得逾三十年，逾三十年者缩短为三十年。

The agreed period of the dian may not exceed thirty years. If the period exceeds thirty years, the period will be reduced to thirty years.

第 913 条第 913 條（絕賣之限制）

典权之约定期限不满十五年者，不得附有到期典權之約定期限不滿十五年者，不得附有到期不赎即作绝卖之条款。不贖即作絕賣之條款。

If the agreed period of a dian is less than fifteen 典權附有絕賣條款者，出典人於典期屆滿不以 years, it may not be agreed that an absolute sale 原典價回贖時，典權人即取得典物所有權。 will immediately occur if the property is not 絕賣條款非經登記，不得對抗第三人。 redeemed upon the expiry of the period. If the agreed period of a dian is less than fifteen years, it may not be agreed that an absolute sale will immediately occur if the property is not redeemed upon the expiry of the period.

If the dian right makes provision for an absolute sale, the dian-holder will immediately obtain ownership of the dian property if the property is not redeemed by the dian-maker by payment of the original price upon the expiry of the dian

19 This amendment was made to clarify that the dian-holder obtains ownership of the dian property if the dian- maker does not redeem.

198

period.

An absolute sale clause will not be effective against a third party unless it has been registered.20

第 914 条 Deleted.21

第七百七十四条至第八百条之规定，于典权人间或典权人与土地所有人间准用之。

The provisions of Articles 774 to 800 apply mutatis mutandis between dian-holders or between the dian-holder and the landowner.

第 915 条第 915 條（典物之轉典或出租）

典权存续中，典权人得将典物转典或出租于他典權存續中，典權人得將典物轉典或出租於他人。但契约另有订定或另有习惯者，依其约定人。但另有約定或另有習慣者，依其約定或習或习惯。慣。

典权定有期限者，其转典或租赁之期限，不得典權定有期限者，其轉典或租賃之期限，不得逾原典权之期限，未定期限者，其转典或租逾原典權之期限，未定期限者，其轉典或租赁，不得定有期限。賃，不得定有期限。

转典之典价，不得超过原典价。轉典之典價，不得超過原典價。

For the duration of the dian, the dian-holder may 土地及其土地上之建築物同屬一人所有，而為 sub-dian or lease the dian property to another 同一人設定典權者，典權人就該典物不得分離 person. If it is otherwise provided by agreement 而為轉典或就其典權分離而為處分。 or by customs, such agreement or custom shall apply. For the duration of the dian, the dian-holder may sub-dian or lease the dian property to another If the duration of the dian has been agreed, the person. If it is otherwise provided by agreement duration of the sub-dian or lease cannot exceed or by customs, such agreement or custom shall that of the original dian. In the absence of an apply. agreed duration, the sub-dian or lease shall not have a fixed duration. If the duration of the dian has been agreed, the duration of the sub-dian or lease cannot exceed The price for the sub-dian cannot exceed the that of the original dian. In the absence of an price of the original dian. agreed duration, the sub-dian or lease shall not have a fixed duration.

The price for the sub-dian cannot exceed the price of the original dian.

If the land and the buildings thereon belong to the same person, and a dian is created in favour

20 This amendment was made to clarify that if a dian contract contains an absolute sale provision, under which the dian-maker obtains ownership immediately upon the failure of the dian-maker to redeem the property at the original price upon expiry of the dian term, it will not be binding on third parties except when registered. 21 Articles 774 to 800 relate to the obligations of the land owner in respect of the land and were deleted from the provisions concerning agricultural rights.

199

of one person, the dian-holder shall not separately sub-dian or dispose of the dian property.

第 916 条 No change.

典权人对于典物因转典或出租所受之损害，负赔偿责任。

The dian-holder is liable to compensate for any damage to the dian property resulting from the sub-dian or lease.

第 917 条第 917 條（典權之讓與或抵押權之設定）

典权人得将典权让与他人。典權人得將典權讓與他人或設定抵押權。

前项受让人对于出典人取得与典权人同一之权典物為土地，典權人在其上有建築物者，其典利。權與建築物，不得分離而為讓與或其他處分。

The dian-holder may transfer the dian to another The dian-holder may transfer the dian to another person. person or create a mortgage.

In the case of the preceding paragraph, the If the dian property is land, and the dian-holder transferee acquires the same rights as the dian- has a building thereon, the dian and such holder against the dian-maker. building cannot be separately transferred or disposed of.22

第 917 條之 1（典物之使用收益）

典權人應依典物之性質為使用收益，並應保持其得永續利用。

典權人違反前項規定，經出典人阻止而仍繼續為之者，出典人得回贖其典物。典權經設定抵押權者，並應同時將該阻止之事實通知抵押權人。

The dian-holder shall use the dian property and enjoy the benefits therefrom according to the nature of the property subject to the dian, and shall maintain the sustainable use of the dian property.

If the dian-holder breaches the provision of the preceding paragraph and continues to be in breach after the dian-maker has objected, the dian-maker is entitled to redeem the property

22 This amendment was made to clarify that the dian-holder may assign and mortgage the dian rights and that if the dian property is land, the dian-holder may not deal separately with the land and the buildings.

200

subject to the dian. If a mortgage has been created over the dian rights, the mortgagee shall also be informed of such objection at the same time.

第 918 条第 918 條（典物之讓與）

出典人于典权设定后，得将典物之所有权，让出典人設定典權後，得將典物讓與他人。但典与他人。權不因此而受影響。

典权人对于前项受让人，仍有同一之权利。 After the dian-maker has created a dian, it may assign the dian property to another person. After the dian-maker has created a dian, it may However, the dian shall not be affected as a assign ownership of the dian property to another result. person.

The dian-holder is still entitled to the same rights as against the assignee specified in the preceding paragraph.

第 919 条第 919 條（典權人之留買權）

出典人将典物之所有权让与他人时，如典权人出典人將典物出賣於他人時，典權人有以相同声明提出同一之价额留买者，出典人非有正当條件留買之權。理由，不得拒绝。前項情形，出典人應以書面通知典權人。典權 Where the dian-maker assigns ownership of the 人於收受出賣通知後十日內不以書面表示依相 dian property to another person, if the dian- 同條件留買者，其留買權視為拋棄。 holder indicates that it will purchase at the same price, the dian-maker may not refuse without a 出典人違反前項通知之規定而將所有權移轉 proper reason. 者，其移轉不得對抗典權人。

Where the dian-maker sells the dian property to another person, the dian-holder has the pre- emptive right to purchase under the same terms and conditions.23

In the case of the preceding paragraph, the dian- maker shall notify the dian-holder in writing accordingly. If the dian-holder does not indicate an intention to purchase in writing under the same terms and conditions within ten days after receiving the sale notice, the pre-emptive right is deemed to be waived.

If the dian-maker breaches the notice provision in the preceding paragraph and assigns the ownership of the dian property, such assignment shall not be effective against the dian-holder.

23 This is the formalisation of the pre-emptive right. In line with the proprietary nature of this right, the amended provision provides that if the dian-maker assigns ownership in breach of this right, the assignment is not effective against the dian-holder.

201

第 920 条第 920 條（危險分擔~非常事變責任）

典权存续中，典物因不可抗力致全部或一部灭典權存續中，典物因不可抗力致全部或一部滅失者，就其灭失之部分，典权与回赎权，归消失者，就其滅失之部分，典權與回贖權，均歸灭。消滅。

前项情形，出典人就典物之余存部分，为回赎前項情形，出典人就典物之餘存部分，為回贖时，得由原典价中扣灭典物灭失部分灭失时之時，得由原典價扣除滅失部分之典價。其滅失价值之半数。但以扣尽原典价为限。部分之典價，依滅失時滅失部分之價值與滅失時典物之價值比例計算之。 If, during the continuance of the dian, the dian property has been wholly or partially destroyed If, during the continuance of the dian, the dian by force majeure, both the dian and the right of property has been wholly or partially destroyed redemption are extinguished in respect of the by force majeure, both the dian and the right of part destroyed. redemption are extinguished in respect of the part destroyed.

In the case of the preceding paragraph, if the dian-maker redeems the part remaining, the price of the destroyed part may be deducted from the original price received for the dian the price for the dian of the destroyed part.

The dian price for the destroyed part is calculated based on the proportion that the value of the part destroyed at the time of such destruction bears to the value that the dian property had at the time of such destruction.

第 921 条第 921 條（典權人之重建修繕權）

典权存续中，典物因不可抗力致全部或一部灭典權存續中，典物因不可抗力致全部或一部滅失者，典权人，除经出典人同意外，仅得于灭失者，除經出典人同意外，典權人僅得於滅失失时灭失部分之价值限度内为重建或修缮。時滅失部分之價值限度內為重建或修繕。原典權對於重建之物，視為繼續存在。 If, during the continuance of the dian, the dian property is wholly or partially destroyed by force If, during the continuance of the dian, the dian majeure, the dian-holder may reconstruct or property is wholly or partially destroyed by force repair the dian property to the extent of the majeure, the dian-holder may reconstruct or value which the part destroyed had at the time of repair the dian property to the extent of the such destruction, unless otherwise agreed by the value which the part destroyed had at the time of dian-maker. such destruction, unless otherwise agreed by the dian-maker. The original dian is deemed to continue to exist in respect of the reconstructed property.

第 922 条 No change.

典权存续中，因典权人之过失，致典物全部或一部灭失者，典权人于典价额限度内，负其责任。但因故意或重大过失，致灭失者，除将典

202

价抵偿损害外，如有不足，仍应赔偿。

If, during the continuance of the dian, the dian property is wholly or partially destroyed due to the dian-holder's fault, he is liable for such destruction to the extent of the amount of the price given for the dian. However, if the destruction is caused by the dian-maker’s intentional actions or gross negligence, he shall compensate for any further damage over and above that covered by the price given for the dian.

第 922 條之 1（重建之物原典權）

因典物滅失受賠償而重建者，原典權對於重建之物，視為繼續存在。

Where the dian property is reconstructed through compensation for damage, the original dian shall be deemed to continue to exist in respect of the reconstructed property.

第 923 条 No change.

典权定有期限者，于期限届满后，出典人得以原典价回赎典物。

出典人于典期届满后，经过二年，不以原典价回赎者，典权人即取得典物所有权。

If a period has been agreed for the dian, the dian- maker may redeem the dian property at the original price received for the dian upon the expiry of such period.

If the dian-maker does not redeem the property subject to the dian at the original price received for the dian within two years from the expiry of the dian period, the dian-holder immediately acquires the ownership of the dian property.

第 924 条 No change.

典权未定期限者，出典人得随时以原典价回赎典物。但自出典后经过三十年不回赎者，典权人即取得典物所有权。

If no period has been agreed for the dian, the dian-maker may redeem the dian property at any time at the original price received for the dian.

203

However, if it is not redeemed within thirty years from the creation of the dian, the dian-holder immediately acquires the ownership of the dian property.

第 924 條之 1（轉典之典物回贖）

經轉典之典物，出典人向典權人為回贖之意思表示時，典權人不於相當期間向轉典權人回贖並塗銷轉典權登記者，出典人得於原典價範圍內，以最後轉典價逕向最後轉典權人回贖典物。

前項情形，轉典價低於原典價者，典權人或轉典權人得向出典人請求原典價與轉典價間之差額。出典人並得為各該請求權人提存其差額。

前二項規定，於下列情形亦適用之：

一、典權人預示拒絕塗銷轉典權登記。

二、典權人行蹤不明或有其他情形致出典人不能為回贖之意思表示。

Where the dian property has been made subject to a sub-dian and the dian-maker expresses the intention to redeem the property to the dian- holder, if the dian-holder does not redeem from the sub-dian-holder and cancel the registration of the dian within a reasonable period, the dian- maker is entitled to redeem the dian property from the last sub-dian holder at the price of the last sub-dian up to the price of the original dian.

In the case of the preceding paragraph, if the price for the sub-dian is lower than the price for the original dian, the dian-holder or a sub-dian- holder is entitled to claim the difference between the price of the original dian and the price of the sub-dian. The dian-maker can also place in escrow the difference in amount for every person who is entitled to claim.

The provision of the preceding two paragraphs shall also apply to the following circumstances:

1. The dian-holder has previously declared that he refuses to cancel the registration of the dian.

2. The dian-maker cannot express an intention to redeem because the whereabouts of the dian- holder are unknown or there are other circumstances.

204

第 924 條之 2（典權存續之租賃關係）

土地及其土地上之建築物同屬一人所有，而僅以土地設定典權者，典權人與建築物所有人間，推定在典權或建築物存續中，有租賃關係存在；其僅以建築物設定典權者，典權人與土地所有人間，推定在典權存續中，有租賃關係存在；其分別設定典權者，典權人相互間，推定在典權均存續中，有租賃關係存在。

前項情形，其租金數額當事人不能協議時，得請求法院以判決定之。

依第一項設定典權者，於典權人依第九百十三條第二項、第九百二十三條第二項、第九百二十四條規定取得典物所有權，致土地與建築物各異其所有人時，準用第八百三十八條之一規定。

Where the land and the building thereon are owned by the same person, and the dian is only created over the land, a lease relationship is presumed to exist between the dian-holder and the owner of the building during the continuation of the dian or the building. If the dian is only created over the building, a lease relationship is presumed to exist between the dian-holder and the landowner during the continuation of the dian. If the dian is created over the land and the building successively, a lease relationship is presumed to exist between the dian-holders within the duration of both dians.

In the case of the preceding paragraph, if the sum of the rental cannot be agreed by the parties, they may apply to a court for a judgment to determine it.

Where the dian is created according to the first paragraph, and the dian-holder acquires the ownership of the dian property according to the provisions of the second paragraph of Article 913, the second paragraph of Article 923 and Article 924 results in the land and the building being owned by different person, the provision of Article 838-1 shall apply.

第 925 条第 925 條（回贖之時期與通知）

出典人之回赎，如典物为耕作地者，应于收益

205

季节后次期作业开始前为之。如为其它不动产出典人之回贖，應於六個月前通知典權人。者，应于六个月前，先行通知典权人。 Redemption by the dian-maker shall be notified Where the dian property is land for cultivation, to the dian-holder six months in advance.24 redemption by the dian-maker shall take place after the harvest season and before work for the next season commences. In the case of other immovable property, redemption shall be notified to the dian-holder six months in advance.

第 926 条 No change.

出典人于典权存续中，表示让与其典物之所有权于典权人者，典权人得按时价找贴，取得典物所有权。

前项找贴，以一次为限。

If, during the continuance of the dian, the dian- maker expresses an intention to transfer to the dian-holder the ownership of the dian property, the dian-holder may acquire such ownership by paying the difference between the current value of the dian property and the price given for such dian.

The payment of the difference specified in the preceding paragraph shall be made once only.25

第 927 条第 927 條（有益費用之求償權）

典权人因支付有益费用，使典物价值增加，或典權人因支付有益費用，使典物價值增加，或依第九百二十一条之规定，重建或修缮者，于依第九百二十一條規定，重建或修繕者，於典典物回赎时，得于现存利益之限度内，请求偿物回贖時，得於現存利益之限度內，請求償还。還。

If beneficial expenses have been incurred by the 第八百三十九條規定，於典物回贖時準用之。 dian-holder, whereby the value of the dian property is increased or where reconstruction or 典物為土地，出典人同意典權人在其上營造建 repairs have been made in accordance with the 築物者，除另有約定外，於典物回贖時，應按 provisions of Article 921, the dian-holder may 該建築物之時價補償之。出典人不願補償者， claim reimbursement to the extent of the 於回贖時視為已有地上權之設定。 benefits existing at the time of the redemption of 出典人願依前項規定為補償而就時價不能協議 the property. 時，得聲請法院裁定之；其不願依裁定之時價補償者，於回贖時亦視為已有地上權之設定。

前二項視為已有地上權設定之情形，其地租、

24 The effect of this amendment is to apply the requirement of six months’ advance notice to all dian arrangements. 25 This provision was made to prevent multiple supplemental payments.

206

期間及範圍，當事人不能協議時，得請求法院以判決定之。

If beneficial expenses have been incurred by the dian-holder, whereby the value of the dian property is increased or where reconstruction or repairs have been made in accordance with the provisions of Article 921, the dian-holder may claim reimbursement to the extent of the benefits existing at the time of the redemption of the property.

The provision of Article 839 shall apply mutatis mutandis to the redemption of the property.

If the dian property is land, and the dian-maker agrees that the dian-holder may construct buildings on it, the dian-maker shall reimburse the dian-holder according to the current market price of such building at the time of the redemption of the property, except where there is agreement to the contrary. If the dian-maker refuses to reimburse, a superficies is deemed to be created at the time of the redemption.

If the dian-maker is willing to reimburse according to the preceding paragraph, but the parties cannot agree upon the current market price, the parties can apply to a court to determine the price. If the dian-maker refuses to reimburse according to the price decided by the court, a superficies is also deemed to be created at the time of the redemption.

In the circumstance that a superficies is deemed to be created as specified in the preceding two paragraphs, if the parties cannot agree upon the rental, duration and scope, the parties can apply to a court to determine it.

207

Bibliography

Books and Book Chapters (English)

Stéphanie Balme, ‘Ordinary Justice and Popular Constitutionalism in China’ in Stéphanie Balme and Michael W. Dowdle, Building Consitutionalism in China (Palgrave Macmillan, 2009), 186 (Balme 2009)

David J. Bederman, Custom as a Source of Law (Cambridge University Press, 2010) (Bederman 2010)

Kathryn Bernhardt and Philip Huang (ed), Civil Law in Qing and Republican China (Stanford University Press, 1994)

Sarah Biddulph, The Stability Imperative (UBS Press, 2015) (Biddulph 2015)

Pearl Buck, The Good Earth (John Day, 1931) (Buck 1931)

Thomas Buoye, Manslaughter, Markets, and Moral Economy: Violent Disputes over Property Rights in Eighteenth-Century China (Cambridge University Press, 2000) (Buoye 2000)

Thomas Buoye, “Litigation, Legitimacy, and Lethal Violence: Why County Courts Failed to Prevent Violent Disputes over Property in Eighteenth-Century China’ in Madeleine Zelin, Jonathan K. Ocko and Robert Gardella (ed), Contract and Property in Early Modern China (2004) 94 (Buoye 2004)

David C. Buxbaum (ed), Chinese family law and social change in historical and comparative perspective (University of Washington Press, 1978) (Buxbaum 1978)

Benjamin Cardozo, The Nature of the Judicial Process (New Haven, 1921) (Cardozo 1921)

Myron L. Cohen, House united, house divided: the Chinese family in Taiwan (New York: Columbia University Press, 1976) (Cohen 1976)

Myron L. Cohen, ‘Writs of Passage in Late Imperial China: The Documentation of Practical Understandings’ in Madeleine Zelin, Jonathan K. Ocko and Robert Gardella (ed), Contract and Property in Early Modern China (2004) 37 (Cohen 2004)

Hernando de Soto, The Mystery of Capital: Why capitalism triumphs in the West and fails everywhere else (New York: Basic Books, 2003) (de Soto 2003)

Robert C. Ellickson, Order Without Law: How Neighbors Settle Disputes (1991) (Ellickson 1991)

Mark Elvin, The pattern of the Chinese past (London: Eyre Methuen, 1973) (Elvin 1973)

Hsiao-Tung Fei, Peasant Life in China – A Field Study of Country Life in the Yangtze Valley (Kegan Paul, Trench, Trubner & Co., Ltd., 1947) (Fei 1947)

Shaoting Feng, ‘Supplemental Payments in Urban Property Contracts in Mid to Law Qing Shanghai’ in Madeleine Zelin, Jonathan K. Ocko and Robert Gardella (ed), Contract and Property in Early Modern China (2004) 209 (Feng 2004)

Maurice Freedman, Lineage Organization in Southeastern China (Athlone Press, 1958) (Freedman 1958)

Maurice Freedman, The study of Chinese society: essays by Maurice Freedman; selected and introduced by G. William Skinner (Stanford University Press, 1979) (Freedman 1979)

208

Hualing Fu and John Gillespie (ed), Resolving Land Disputes in East Asia – Exploring the Limits of Law (Cambridge University Press, 2014) (Fu and Gillespie 2014)

B. Ter Haar, Adat Law in Indonesia (1948) (Haar 1948)

William Hinton, The Great Reversal: The Privatization of China, 1978 – 1989 (Monthly Review Press, 1990) (Hinton 1990)

Oliver W. Holmes, The Common Law (Boston, 1881, repr Toronto, 1991) (Holmes 1881)

Philip C. Huang, Code, Custom, and Legal Practice in China: The Qing and the Republic Compared (Stanford University Press, 2001) (Huang 2001)

William S.H. Hung, Outlines of Modern Chinese Law (self-published, 1934) (Hung 1934)

G. Jamieson, Chinese Family and Commercial Law (Vetch and Lee, 1970) (Jamieson 1970)

Thomas R. Jernigan, China's business methods and policy (Shanghai: Kelly & Walsh, limited, 1904) (Jernigan 1904)

Junjian Jing, ‘Qing Civil Economic Legislation’ in Kathryn Bernhardt and Philip Huang (ed), Civil Law in Qing and Republican China (1994) (Jing 1994)

Frederic William Maitland, The Forms of Action at Common Law (Cambridge, 1909, repr. Cambridge, 1997) (Maitland 1997)

Jonathan Ocko, ‘The Missing Metaphor – Applying Western Legal Scholarship to the Study of Contract and Property in Early Modern China’ in Madeleine Zelin, Jonathan K. Ocko and Robert Gardella (ed), Contract and Property in Early Modern China (2004) 178 (Ocko 2004)

Anne Osborne, ‘Property, Taxes, and State Protection of Rights’ in Madeleine Zelin, Jonathan K. Ocko and Robert Gardella (ed), Contract and Property in Early Modern China (2004) 120 (Osborne 2004)

Kenneth Pomeranz, The Greater Divergence: China, Europe, and the Making of the Modern World Economy (2000) (Pomeranz 2000)

Shuzo Shiga, ‘Family Property and the Law of Inheritance in Traditional China’ in David C. Buxbaum (ed), Chinese family law and social change in historical and comparative perspective (1978) (Shiga 1978)

R.H. Tawney, Land and Labour in China (London, Allen & Unwin, 1932) (Tawney 1932)

B. Ter Haar, Adat Law in Indonesia (Institute of Pacific Relations, 1948) (Haar 1948)

David Wakefield, Fenjia – Household Division and Inheritance in Qing and Republican China (Honolulu: University of Hawai’i Press, 1998) (Wakefield 1998)

Martin C. Yang, A Chinese Village: Taitou, Shantung Province (New York: Columbia University Press, 1945) (Yang 1945)

Madeleine Zelin, Jonathan K. Ocko, and Robert Gardella (eds), Contract and property in early modern China (Stanford, Calif.: Stanford University Press, 2004) (Zelin et al 2004)

Madeleine Zelin, ‘A Critique of Rights of Property in Prewar China’ in Madeleine Zelin, Jonathan K. Ocko and Robert Gardella (ed), Contract and Property in Early Modern China (2004) 17 (Zelin 2004)

209

Madeleine Zelin, Jonathan Ocko and Robert Gardella, ‘Introduction’ in Madeleine Zelin, Jonathan K. Ocko and Robert Gardella (ed), Contract and Property in Early Modern China (2004) (Zelin, Ocko and Gardella 2004)

Theses and Unpublished Papers (English)

Chen Yu (PhD Candidate), ‘Land, Title Deed, and Urban Transformation: Foreigners’ Acquisition of Real Property in Xiamen (1841~1945)’, available at http://mumford.albany.edu/chinanet/shanghai2005/chenyu_ch.doc (Chen 2005)

Articles (English)

Robert Brenner and Christopher Isett, ‘England’s divergence From China’s Yangzi Delta: property relations, microeconomics and patterns of development’ (2002) 61 The Journal of Asian Studies 609 (Brenner and Isett 2002) Myron L. Cohen, ‘Cultural and Political Inventions in Modern China: The Case of the Chinese “Peasant”’ (1993) 122 China in Transformation 151 (Cohen 1993) K. Deininger & S. Jin, ‘Securing property rights in transition: Lessons from implementation of China's rural land contracting law’ (2009) 70 Journal of Economic Behavior and Organization 22–38 (Deininger and Jin 2009) Maëlys De La Rupelle, Quheng Deng, Shi Li and Thomas Vendryes, ‘Land Rights and Rural-Urban Migration in China’ (2008) 2 China Perspectives 25 (De La Rupelle et al 2008) Harold Demsetz, ‘Towards a theory of property rights’ (1967) 57(2) The American Economic Review 347-359 (Demsetz 1967) Harold Demsetz, ‘Towards a Theory of Property Rights II: The Competition Between Private and Collective Ownership’ (2002) 31 Journal of Legal Studies 53 (Demsetz 2002) Robert C. Ellickson, ‘The Market for Social Norms’ (2001) 3 American Law & Economic Review 1-49 (Ellickson 2001) Robert C. Ellickson, ‘Unpacking the Household: Informal Property Rights Around the Hearth’ (2006), 116 Yale Law Journal 226 (Ellickson 2006) Robert C. Ellickson, ‘The Costs of Complex Land Titles: Two Examples from China’ (2012), Faculty Scholarship Series (Paper 3604), 14 (Ellickson 2012) Laura R. Ford, ‘Max Weber on Property: An Effort in Interpretive Understanding’ (2010) Cornell Law School Graduate Student Papers (27 September 2010) as published in Volume 6, Socio-Legal Review (2010) (Ford 2010) Zhufu Fu (1981), "The economic history of China: Some special problems", Modern China 7 (1): 3–30 (Fu 1981) Robert W. Gordon, ‘Holmes Common Law as Legal and Social Science’ (1982) 10 Hostra Law Review 719, 732 (Gordon 1982) Robert W. Gordon, ‘Critical Legal Histories’ (1984) 36 Stanford Law Review 57 (Gordon 1984) Peter Ho, ‘The “Credibility Thesis” and its Application to Property Rights: (In)Secure Land Tenure, Conflict and Social Welfare in China’ (2014) 40 Land Use Policy 13 (Ho 2014)

210

David Ibbetson, ‘The Challenges of Comparative Legal History’ (2012) 1(1) Comparative Legal History 1 (Ibbetson 2012) Kentaro Matsubara, ‘Land Registration and Local Society in Qing China: Taxation and Property Rights in Mid-nineteenth Century Guangdong’ (2011) 8 International Journal of Asian Studies 163 (Matsubara 2011) James Kung and Shouying Liu, ‘Farmer’s Preferences Regarding Ownership and Land Tenure in Post- Mao China: Unexpected Evidence from Eight Counties’ (1997) 38 The China Journal 33 (Kung and Liu 1997) Edward Kroker, ‘The Concept of Property in Chinese Customary Law’ (1959) 7 The Transactions of the Asiatic Society of Japan 123 (Kroker 1959) Xianlei Ma, Nico Heerink, Shuyi Feng, Xiaoping Shi, ‘Farmland Tenure in China Comparing Legal, Actual and Perceived Security’ (2014) 42 Land Use Policy 293 (Ma et al 2014) Xianlei Ma, Nico Heerink, Ekko van Ierland, Xiaoping Shi, ‘Land tenure insecurity and rural-urban migration in rural China’ (2016) 95 Papers in Regional Science 383 (Ma et al 2016) Xianlei Ma, Nico Heerink, Shuyi Feng, Xiaoping Shi, ‘Land tenure security and technical efficiency: new insights from a case study in Northwest China’ (2017) 22 Environment and Development Economics 305-327 (Ma et al 2017) Katrina Mullan, Pauline Grosjean, Andreas Kontoleon, ‘Land Tenure Arrangements and Rural – Urban Migration in China’ (2011) 39 World Development 123 (Mullan et al 2011) Henry McAleavy, ‘Certain Aspects of Chinese Customary Law in Light of Japanese Scholarship’, (1955) 17 Bulletin of the School of Oriental and African Studies 535-47 (McAleavy 1955) Henry McAleavy, ‘Dien in China and Vietnam’ (1958) 17 Journal of Asian Studies 403 (McAleavy 1958) Michael J. E. Palmer, ‘The Surface-Subsoil Form of Divided Ownership in Late Imperial China: Some Examples from the New Territories of Hong Kong’ (1987) 21 Modern Asian Studies 1 (Palmer 1987) Eva Pils, ‘Land Disputes, Rights Assertion, and Social Unrest in China: A Case from Sichuan’ (2005) 19 Columbia Journal of Asian Law 235 (Pils 2005) Eva Pils, ‘Resisting Dignity Takings in China’ (2016) 41(3) Law & Social Enquiry 888-916 (Pils 2016a) Eva Pils, ‘Assessing evictions and expropriations in China: Efficiency, credibility and rights’ (2016) 58 Land Use Policy 437-444 (Pils 2016b) Kenneth Pomeranz, ‘Land markets in late imperial and republican China’ (2008) 23(1) Continuity and Change 101 (Pomeranz 2008) Roy Prosterman, Tim Hanstad and Li Ping, ‘Large-Scale Farming in China: An Appropriate Policy?’ (1998) 28 Journal of Contemporary Asia 74 (Prosterman et al 1998) Shitong Qiao, ‘The Politics of Chinese Land: Partial Reform, Vested Interests and Small Property’ (2016) 29(1) Columbia Journal of Asian Law 70-113 (Qiao 2016) Shitong Qiao and Frank Upham, ‘The Evolution of Relational Property Rights: A Case of Chinese Rural Land Reform’ (2015) 100 Iowa Law Review 2479 (Qiao and Upham 2015) David Rabban, ‘The Historiography of The Common Law’ (2003) 28 Law & Social Inquiry 1161 (Rabban 2003) Fangping Rao, Max Spoor, Xianlei Ma, Xiaoping Shi, ‘Perceived land tenure security in rural Xinjiang, China: The role of official land documents and trust’ (2017), http://dx.doi.org/10.1016/j.chieco.2017.03.009 (Rao et al 2017) Jonathan Rose, ‘Studying the Past: the Nature and Development of Legal History as an Academic Discipline’ (2010) Journal of Legal History 101 (Rose 2010)

211

Sally Sargeson ‘Why women own less, and why it matters in rural China’s urban transformation’ (2012) 4 China Perspectives 35-42 (Sargeson 2012) Sally Sargeson, ‘Violence as development: land expropriation and China’s urbanization’ (2013) 40(6) Journal of Peasant Studies 1063-1085 (Sargeson 2013) H.F. Schurmann, ‘Traditional Property Concepts in China’ (1956) 15(4) The Far Eastern Quarterly 507- 516 (Schurmann 1956) Thomas Vendryes, ‘Land Rights in Rural China Since 1978: Reforms, Successes, and Shortcomings’ (2010) 4 China Perspective 87 (Vendryes 2010) Thomas Vendryes, ‘Peasants Against Private Property Rights: A Review of the Literature’ (2014) 28(5) Journal of Economic Surveys 971- 995 (Vendryes 2014) H. Wang, J. Tong, F. Su, G. Wei, & R Tao, ‘To reallocate or not: Reconsidering the dilemma in China's agricultural land tenure policy’ (2011) Land Use Policy 28 (Wang et al 2011) Hui Wang, Jeffrey Riedinger, Songqing Jin, ‘Land documents, tenure security and land rental development: Panel evidence from China’ (2015) 36 China Economic Review 220-235 (Wang et al 2015) Samson Yuen, ‘China's New Rural Land Reform Assessment and Prospects’ (2014) 1 China Perspective 61 (Yuen 2014) Madeleine Zelin, ‘The Rights of Tenants in Mid-Qing Sichuan: A Study of Land-Related Lawsuits in the Baxian Archives’ (1986) 45 Journal of Asian Studies 499 (Zelin 1986) Taisu Zhang, ‘Property Rights in Land, Agricultural Capitalism, and the Relative Decline of Pre- Industrial China’ (2011) 13 San Diego International Law Journal 129 (Zhang 2011) Yongjun Zhao, ‘China's Land Tenure Reform: Time for a New Direction?’ (2011) 11 The China Review 125 (Zhao 2011) Keliang Zhu, Roy Prosterman, Jianping Ye, Ping Li and Jeffrey Riediner, ‘The Rural Land Question in China: Analysis and Recommendations Based on a Seventeen-Province Survey’ (2006) 38(4) Journal of International Law and Politics 762 (Zhu et al 2006)

Books and Book Chapters (Chinese)

崔建远（主编），申卫星（副主编）Cui Jianyuan and Shen Weixing (eds), 我国物权立法难点问题研究 [Research on Difficult Issues in the Enactment of China’s Property Rights Law] (清华大学出版社，2005) [Tsinghua University Press, 2005] (Cui and Shen et al 2005) 国务院法制办公室（编） [Legal Affairs Office of the State Council (ed)], 中华人民共和国物权法：实用版 [The People’s Republic of China Property Rights Law: Practical Edition] （中国法制出版社, 2007）[China Legal Publishing House, 2007] (Legal Affairs Office 2007)

胡康生[Hu Kangsheng], ‘物权法的基本原则及其主要内容’ [The Basic Principles and Major Contents of the Property Rights Law’] in 王胜明（主编）[Wang Shengming (ed)]中华人民共和国物权法解释 [People’s Republic of China Property Rights Law Commentary] （中国法制出版社， 2007）[China Legal Publishing House, 2007] (Hu 2007)

孔庆明，胡留元，孙季平 [Kong Qinming, Hu Liuyuan and Sun Jiping (eds)], 中国民法史 [Chinese Civil Law History] (吉林人民出版社, 1996) [Jilin People’s Publishing House, 1996] (Kong et al 1996)

212

梁慧星 [Liang Huixing]，中国物权法草案建议稿 [China’s Property Rights Law Suggestion Draft] （社会科学文献出版社， 2000）[Social Sciences Academic Press, 2000] (Liang 2000)

梁治平[Liang Zhiping], 清代习惯法:社会于国家[Customary Law during the Qing Dynasty: Society and State] (中国政法大学出版社， 1999) [Chinese University of Political Science and Law Press, 1999] (Liang 1999)

前南京国民政府司法行政部（编） [Former Nanjing National Government Legal and Administrative Department (ed)], 民事习惯调查报告录 [Collection of Reports of Custom Surveys on Civil Matters] (中国政法大学出版社， 1998) [China University of Political Science and Law Press, 1998] (Collection of Reports of Custom Surveys on Civil Matters 1998)

王利明（主编）[Wang Liming (ed)], 中国民法案例与学理研究：物权编 [Case Studies in China’s Civil Law] （法律出版社, 1998）[Law Press China, 1998) (Wang et al 1998)

王泰升[Wang Tay-sheng], 臺灣法律現代化歷程: 從「內地延長」到「自主繼受」 [The Process of Legal Modernisation in Taiwan: From “The Extension of Mainland” to “Independent Reception”] 臺北 : 中央研究院臺灣史研究所, 2015 [Taipei Central Research Academy Taiwan History Research Institute, 2015] (Wang 2015)

谢在全 [Xie Zaiquan], 民法物权论 [Analysis of Property Rights in Civil Law] 上册 [Vol. 1] (中国政法大学出版社, 1999 年) [China University of Political Science and Law Publishing House, 1999] (Xie 1999)

徐道隣 [Xu Daolin], 中国法制史论集 [Collection of Papers on Chinese Legal History] (志文出版社, 1975 [Jhihwen Publishing House, 1975] (Xu 1975)

杨国桢 [Yang Guozhen], 明清土地契约文书研究 [Research on Land Contracts and Documents of the Ming and Qing] (人民出版社, 1988) (People’s Publishing House, 1988) (Yang 1988)

张晋藩（主编）[Zhang Jinfan (ed)], 中国法制史 [Chinese Legal History] (群众出版社, 1994) [Qunzhong Publishing House, 1994] (Zhang et al 1994)

Articles (Chinese) 白松 [Bai Song], 《典权保留论》 [On the Retention of Dian Rights] (2008) 5 法制与社会 [Legal System and Society] 266 (Bai 2008) 蔡继明, 方草 [Cai Jiming, Fang Cao], 《对农地制度改革方案的比较分析》 [Comparison of Different Plans for Rural Land Reform] (2005) 4 社会科学研究 [Social Science Research] 28 (Cai and Fang 2005) 陈静忠 [Chen Jingzhong], 《关于典权制度承继与制度构建的思考》[Reflections on the Adoption and Construction of the System of Dian Rights] (2007) 湖北社会科学 [Hubei Social Science] 153 (Chen 2007) 褚霞霞 [Chu Xiaxia], 《论我国现行农地制度的弊端及再改革的方向》 [The Shortcomings of China’s Current Rural Land System and Directions for Reform] (2008) 1 农村经济与科技 Rural Economy and Science-Technology 62 (Chu 2008)

213

段东生, 张洋 [Duan Dongsheng, Zhang Yang], 《农地改革策略的比较研究》[Comparative Research on the Strategies of Rural Land Reform] (2010) 19 知识经济 Knowledge Economy 58 (Duan and Zhang 2010) 房绍坤，吕忠民 [Fang Shaokun and Lu Zhongmin], 《典权基本问题研究》[Research on Basic Issues Concerning Dian Rights] (1993) 5 法学研究 [Legal Science Research] 31 (Fang and Lu 1993) 黄宗智 [Philip C.C. Huang], 《中国历史的典权》[Dian Rights in Chinese History] (2005) 1 清华法律评论 [Tsinghua Law Review] 1 (Huang 2005) 贾婷婷, 张乃文[Jia Tingting and Zhang Naiwen], 《典权保留之探析》[Exploring and Analysing the Retention of Dian Rights] (2010) 科教导刊(中旬刊) [The Guide of Science & Education] 113 (Jia and Zhang 2010) 江海波 [Jiang Haibo], 《中国古代土地“活卖”关系之考释》 [Examination and Explanation of the Relationships in China’s Ancient ‘Live Sale’ of Land] (2004) 17(6) 武汉理工大学学报(社会科学版) [Wuhan University of Technology (Social Science Edition) 774 (Jiang 2004) 李憣 [Li Fan], 《典权制度的对价构造》 [On the Structure of the Consideration of Pawning Right] (2008) 3 菏泽学院学报 [Journal of Heze University] 84 (Li 2008) 李国娟, 沈晓梅 [Li Guojuan, Shen Xiaomei], 《国家永佃制：我国农村土地产权制度改革的方向》 [National Yongdian System: Direction of China’s Rural Land Property Right Reform] (2011) 2 燕山大学学报(哲学社会科学版) Journal of Yanshan University (Philosophy and Social Science Edition) 87 (Li and Shen 2011) 李敏 [Li Min], 《农地制度改革的一种选择—新型永佃权制的思考》 [An Option for Rural Land Reform – Thoughts on a new Yongdian System] (2007) 8 改革与战略 Reformation & Strategy 22 (Li 2007) 李鸣 [Li Ming], 《明代土地租佃的法律调整》 [Adjustment in Land Tenancy Law in Ming Dynasty] (2002) 5 现代法学 Modern Law Science 83 (Li 2002) 黎婉婧 [Li Wanjing], 《以文化视角谈典权存在之必要性》 [Necessity of the Dian Right from a Cultural Perspective] (2013) 1 经营管理者 Manager’ Journal 272 (Li 2013) 李文政 [Li Wenzheng], 《“永佃理论”与农村土地制度改革》 [“Yongdian Theory” and Rural Land Reform] (2008) 4 中国海洋大学学报(社会科学版) Journal of Ocean University of China (Social Sciences) 94 (Li Wenzheng 2008) 李显东[Li Xiandong], 《当今中国语境下的典权制度》[The Dian System in the Contemporary Chinese Context] 2015(9) 人民法治 [People’s Legal System] 30 (Li 2015a) 李显冬，孔德峰 [Li Xiandong and Kong Defeng], 《震后房屋修缮重建的法律问题与对策》 [Legal Issues and Strategies for the Repair and Reconstruction of Housing after the Earthquake] (2008) 4 国家行政学院报 [National Administration Institute Journal] 30 (Li and Kong 2008) 李显冬, 蔡晓仪 [Li Xiandong, Cai Xiaoyi], 《典权制度的扬弃—以小产权房的清理为契机》 [Sublation of the Dian System – Using "Small Property Right House" as an Opportunity] (2012) 4 中共青岛市委党校青岛行政学院学报 Journal of the Party School of C.P.C. Qingdao Municipal Committee and Qingdao Administrative Institute 108 (Li and Cai 2012) 李显冬, 倪淑颖 [Li Xiandong, Ni Shuying], 《典权在农村土地经营权流转中的扬弃—民法典编撰过程中“典权要入典”》 [Sublation of the Dian Right in the Transfer of Trading Rights on Rural Land – Adopting the Dian Right in China’s Civil Code] (2014) 10 国土资源情报 Land and Resources Information 25 (Li and Ni 2014)

214

李显冬, 倪淑颖 [Li Xiandong and Ni Shuying] 《典权与中国农村土地流转》 [Dian Rights and the Circulation of Rural Land in China] (2016)(9) 中国国土资源经济 [Natural Resource Economics of China] 19 (Li and Ni 2016) 李显冬, 申艳红[Li Xiandong, Shen Yanhong], 《试论典权在保障房产权中的应用》 [A Test Analysis of the Applicability of Dian Rights to Guaranteed Housing Rights] 2015(1) 中共青岛市委党校青岛行政学院学报[Journal of the Party School of CPC Qingdao Municipal Committee] 63 (Li and Shen 2015) 李翔, 王雨霏 [Li Xiang, Wang Yufei], 《对在现行农地制度下实行国有永佃制的思考》 [Analysis on the Implementation of State-owned Yongdian System in the Current Rural Land System] (2011) 1 山西农业大学学报(社会科学版) Journal of Shanxi Agricultural University (Social Science Edition) 40 (Li and Wang 2011) 李伟伟；韩清怀 [Li Weiwei and Han Qinghuai] 《落实农地“三权分置”应注重权利结构设计与现实运行考察》 [The Implementation of the “Separation of Three Rights” Must Pay Attention to the Design of the Structure of Rights and Observations of the Practical Operation] 中国经济时报 [China Economic Times], 23 February 2017 (Li and Han 2017) 梁发芾 [Liang Fafu], 《农地“三权分离”》 [Severance and Change of Agricultural Land Rights] (2014) 7 新理财(政府理财) Government Finance 32 (Liang 2014) 林辉煌 [Lin Huihuang], 《典权习惯与民族精神》[The Custom of Dian Rights and the National Spirit] (2008) 2 财经政法资讯 [Report on Finance, Economics, Politics and Law] 31 (Lin 2008) 刘成玉 [Liu Chengyu], 《中国土地产权制度特征及其效率分析》 [Features of China’s Land Property Right and its Efficiency Analysis] (2013) 5 华东经济管理 East China Economic Management 134 (Liu 2013) 刘艳明 [Liu Yanming], 《典权对农村土地流转的制度价值探讨》 [The Value of the Dian Right to Rural Land Transfer] (2012) 9 经济研究导刊 Economic Research Guide 27 (Liu 2012) 罗莉娅 [Luo Liya], 《浅析明清时期的田面权》 [Analysis of Surface-soil Rights in Ming and Qing Dynasties] (2010) 31 经济研究导刊 Economic Research Guide 256 (Luo 2010) 马嘉军 [Ma Jiajun], 《农村土地改革研究》 [Research on Rural Land Reform] (2010) 17 黑龙江科技信息 Heilongjiang Science and Technology Information 101 (Ma 2010) 马新彦 [Ma Xinyan], 《典权制度弊端的法理思考》[Reflections on the Legal Theory behind the Corrupt Practices of the System of Dian Rights] (1998) 法制与社会发展 [Legal System and the Development of Society] 18 (Ma 1998) 莫燕子，何国萍 [Mo Yanzi and He Guoping], 《典权与我国农村土地流传的契合》 [Agreement between Pawning and Rural Land Circulation] (2010) 12（3）安徽理工大学学报（社会科学版） [Journal of Anhui University of Science and Technology (Social Science)] 31 (Mo and He 2010) 眭鸿明, 解维克, 丁璐 [Mu Hongming, Xie Weike, Ding Lu], 《回归习惯法视野的典权制度与物权法定》[Returning to the Dian Right under Customary Law and the Principle of Property Rights Rights are Prescribed by the Law] (2010) 12 理论月刊 [Theory Monthly] 112 (Mu et al 2010) 聂鑫 [Nie Xin], 《传统中国的土地产权分立制度探析》 [Study on the Separation of the Land Rights in Traditional China] (2009) 9 浙江社会科学 [Zhejiang Social Sciences] 83 (Nie 2009) 彭倩倩 [Peng Qianqian], 《典权不能承受之重—以中国城市化进程中的农地流转问题为中心》 [On What the Dian Right Cannot Bear] (2013) 2 安徽警官职业学院学报 [Journal of Anhui Vocational College of Police Officers] 15 (Peng 2013)

215

谭文涛[Qian Wentao], 《当前农地改革评析及建议》[Analysis and Suggestions in respect of Current Rural Land Reform] 2016(6) 魅力中国 [Charming China] 147 (Qian 2016) 申卫星 [Shen Weixing], 《物权法定与意思自治》[Numerus Clausus and Party Autonomy] (2013) 5 法制与社会发展 [Law and Social Development] 134 (Shen 2013) 申卫星 [Shen Weixing], 《物权法定之法源论》[A Discussion of the Legal Origin of the numerus clausus principle] (2015) 9 人民法治 [People Rule of Law] 29 (Shen 2015) 盛洪 [Sheng Hong], 《永佃制的经济性质》 [Economic Nature of the Yongdian System] (2014) 4 制度经济学研究 [Research of Institutional Economics] 1 (Sheng 2014) 石诚 [Shi Cheng], 《传统典权制度的法律分析以及重构》 [Legal Analysis of the Traditional Dian Right and its Restructuring] (2009) 2 法制与社会 [Legal System and Society] 72 (Shi 2009) 隋彭生 [Sui Pengsheng], 《论作为用益债权的典权—兼论确立附有不动产留置权的典权》 [Dian Right as a Usufructuary Claim – Also on the Establishment of the Dian Right with a Right to Retain Real Property] (2011) 9 政治与法律 [Political Science and Law] 108 (Sui 2011) 孙冬花[Sun Donghua], 《典权制度的中国特色和现代继受》[The Chinese Characteristics and Modern Reception of the System of Dian Rights] (2006) 8 法制与社会 [Legal System and Society] 58 (Sun 2006) 孙双秀, 王金贵 [Sun Shuangxiu, Wang Jingui], 《试论我国农村宅基地使用权的流转》 [Transfer of Use Rights of China’s Rural Homestead] (2012) 3 学理论 Theory Research 142 (Sun and Wang 2012) 吴凡文, 王小芳 [Wu Fanwen and Wang Xiaofang] 《农村土地承包经营权与永佃权比较研究— —兼论次级农村土地承包经营权之确立》 [A Comparative Analysis of Rural Land Contract Management Rights and Perpetual Tenancy Rights – A Discussion of the Establishment of Secondary Rural Land Contract Management Rights] (2015)(3) 贵州财经大学学报 [Journal of Guizhou University of Finance and Economics] 100 (Wu and Wang 2015) 吴秉坤 [Wu Bingkun], 《典制的完整形态—清至民国徽州典契研究》 [Optimal Form of Dian System – Research on Dian Documents from Qing Dynasty to Minguo] (2011) 32 淮北师范大学学报(哲学社会科学版) Journal of Huaibei Normal University (Philosophy and Social Sciences) 50 (Wu 2011) 徐洁 [Xu Jie], 《典权存废之我见》[My Opinion on Retaining or Discarding Dian Rights] (2007) 4 法学 [Legal Science] 112 (Xu 2007) 徐丽叶 [Xu Yeli], 《清代典权制度略论》 [Discussion of Dian Rights in Qing Dynasty] (2009) 6 法制与社会 Legal System and Society 360 (Xu 2009) 样立新 [Yang Lixin], 《物权法定原则缓和与非法定物权》 [Mitigating the Principle that Property Rights be Determined by Law and Property Rights that are Not Determined by Law] (2007) 22(1) 法学论坛 [Legal Forum] 11 (Yang 2007) 杨沂, 马小勇 [Yang Yi, Ma Xiaoyong], 《农村土地制度的深层矛盾与改革设想—以陕西为例分析》 [Fundamental Conflicts of Rural Land System and Suggestions for Reform – Using Shanxi as an Example] (2008) 1 西北农林科技大学学报(社会科学版) Journal of Northwest A&F University (Social Science Edition) 5 (Yang and Ma 2008) 杨悦琳, 丁蒙 [Yang Yuelin, Ding Meng], 《浅谈利用典权破解小产权房的权属和转让问题》 [Using the Dian Right to Tackle the Problems of Ownership of Rights and Transfer of “Small Property Right House”] (2011) 3 现代物业(上旬刊) [Modern Property Management] 104 (Yang and Ding 2011)

216

袁震 [Yuan Zhen] 《论农村土地承包经营权的相当所有权属性》 [A Discussion of The Qualified Ownership Nature of Rural Land Contract Management Rights] (2016) (5) 河南大学学报（社会科学版）[Journal of Henan University (Social Science)] 10 (Yuan 2016) 张放, 王帅 [Zhang Fang, Wang Shuai], 《试论典权制度保存之必要》 [The Necessity of Retaining the Dian System] (2010) 4 法制与社会 Legal System and Society 52 (Zhang and Wang 2010) 张慧, 田光 [Zhang Hui, Tian Guang], 《农地产权制度创新思路》 [Innovative Thinking on Farming Land Property Rights] (2009) 9 现代商贸工业 Modern Business Trade Industry 226 (Zhang and Tian 2009) 张丽 [Zhang Li], 《永佃权与农村土地承包经营权比较研究》 [Comparative Research on Contracted Trading Rights on Rural Land and the Yongdian Right] (2014) 5 法制与社会 Legal System and Society 216 (Zhang Li 2014a) 张丽 [Zhang Li], 《以永佃权视角完善农村土地承包经营权》 [Optimising Contracted Trading Rights on Rural Land using the Yongdian Right] (2014) 5 东方企业文化 Oriental Enterprise Culture 213 (Zhang Li 2014b) 张鹏, 张安录, 王金瓯 [Zhang Peng, Zhang Anlu, Wang Jinou], 《永佃制—新农村建设背景下农地制度的改革方向》 [Yongdian System – Direction of Rural Land Reform under the Background of New Development in Rural Area] (2007) 3 湖北社会科学 Hubei Social Sciences 62 (Zhang et al 2007) 张翔 [Zhang Xiang], 《论典制习惯及其在成文民法上的重构》 [On the Custom of the Dian System and Its Reconstruction in Written Civil Law] (2008) 1 法律科学（西北政法大学学报） [Legal Science (the Journal of Northwest University of Politics and Law)] 95 (Zhang 2008) 张新宝 [Zhang Xinbao], 《典权废除论》 [On the Abolishment of the System of “Dian”] (2005) 5 法学杂志 [Legal Science Magazine] 6 (Zhang 2005) 赵晓力 [Zhao Xiaoli], 《中国近代农村土地交易中的契约，习惯与国家法》[Contracts, Customs and National Law in Modern Land Transactions in China’s Villages] (1998) 1(2) 北大法律评论 [Peking University Law Review] 427 (Zhao 1998) 朱秋霞 [Zhu Qiuxia], 《农有永佃：土地非农利用制度改革方案刍议》[Rural Perpetual Tenancy: My View on Reform Proposals for a Land Non-Agricultural System] (2007) 11 现代经济探讨 [Modern Economic Research] 73 (Zhu 2007) 朱佑法 [Zhu Youfa], 《试析典权废除的必然性》 [Testing and Analysing the Inevitability of Abolishing Dian Rights] (2008) 12 内蒙古电大学刊 [Journal of Inner Mongolia Radio & TV University] 43 (Zhu 2008) 左平良, 李平龙 [Zuo Pingliang, Li Pinglong], 《我国永佃权流转的历史考察》 [Historical Research of China’s Transfer of Yongdian Rights] (2007) 1 湖南行政学院学报(双月刊) Journal Of Hunan Administration Institute 75 (Zuo and Li 2007) 左平良 [Zuo Pingliang], 《我国永佃权融资制度的历史考察及其当代启示》 [Study of the History of the Use of the Yongdian Right and a Means of Finance and its Enlightenment] (2010) 4 法商研究 [Studies in Law and Business] (Zuo 2010)

Newspapers and internet articles 白呈明 [Bai Chengming], 《“农户”内部法律关系解析》[An Analysis of the Internal Legal Relationships in “Households”] (2003), available at http://illss.gdufs.edu.cn/info/1024/2028.htm (Bai 2003)

217

陈文元[Chen Wenyuan], 《农村土地承包法第二十六条亟待修正》[Article 26 of the Rural Land Contract Law Awaits Revision] (2014),法律网[Law Web], available at http://www.66law.cn/domainblog/71813.aspx (Chen 2014) Food and Agricultural Organization of the United Nations, Land Tenure and Rural Development (FAO Land Tenure Studies 3, FAO’s Land Tenure Service of the Rural Development Division, 2002), 7 (para 3.1), available at ftp://ftp.fao.org/docrep/fao/005/y4307E/y4307E00.pdf (FAO 2002) Bingqin Li, ‘China’s hukou reform a small step in the right direction’, 13 January 2015, available at http://www.eastasiaforum.org/2015/01/13/chinas-hukou-reform-a-small-step-in-the-right- direction/ (Bingqin Li 2015) 吴兴国 [Wu Xingguo] 《集体组织成员资格的取得及成员权的行使 (2005) 》[The Obtaining of Membership Qualifications in the Collective Organisation and the Exercise of Membership Rights], available at http://theory.people.com.cn/GB/40557/49139/49143/3538671.html# (Wu 2005) 闫鹏 [Yan Peng], 《农村土地流转存在的问题》[The Problems Facing Rural Land Circulation]全国土地流转信息平台 2014-08-01 [National Land Circulation Information Platform, 1 August 2014], available at http://www.tuyinet.com/tdzc/2454.jhtml (Yan 2014) 張弘毅 [Zhang Hongyi] 《試析從永佃權到農育權》 [Exploring the Journey from Perpetual Tenancy Rights to Agricultural Rights] (2013), available at http://big.hi138.com/falv/faxuelilun/201304/438949.asp#.WR52hE1MrIU (Zhang 2013) 張清勇 [Zhang Qingyong], 《台灣地區的第三階段農地改革》 [the third stage of agricultural reform in Taiwan] (2013) available at http://big5.qstheory.cn/gate/big5/www.qstheory.cn/zl/bkjx/201310/t20131009_277260.htm (Zhang Qingyong 2013) 周其仁 [Zhou Qi’ren], 《同地同权的宪法依据》 [The Constitutional Basis for ‘Same Land Same Rights’] (26 May 2014) 经济观察网 [The Economic Observer web], available at http://www.eeo.com.cn/2014/0526/261058.shtml (Zhou 2014) Roundtable discussion between professors on the Decision on Major Issues Concerning Comprehensively Deepening Reforms adopted at the Third Plenary Session of the 18th CCPCC on 12 November 2013 as reported on 23 November 2013, http://lawprofessors.typepad.com/files/131112-third-plenum-decision---official-english- translation.pdf (Roundtable Discussion 2013)

Laws, regulations and judicial interpretations – Mainland China 中华人民共和国民法通则（1986 年 4 月 12 日第六届全国人民代表大会第四次会议通过 1986 年 4 月 12 日中华人民共和国主席令第三十七号公布自 1987 年 1 月 1 日起施行）[General Principles of Civil Law of the People’s Republic of China, 12 April 1986]

中华人民共和国民法总则 (2017 年 3 月 15 日第十二届全国人民代表大会第五次会议通过) [Civil Code of the People’s Republic of China, 15 March 2017]

中华人民共和国农村土地承包法 [Rural Land Contract Law of the People’s Republic of China] (People’s Republic of China) Standing Committee of the National People's Congress, 29 August 2002 (RLCL)

218

中华人民共和国土地管理法 [Land Administration Law of the People’s Republic of China] (People’s Republic of China) Standing Committee of the National People’s Congress, 29 December 1988, amended on 29 August 1998 and 28 August 2004 (LAL)

广东省人民政府令（第 100 号）, 《广东省集体建设用地使用权流转管理办法》已经 2005 年 5 月 17 日广东省人民政府第十届六十六次常务会议通过，现予发布，自 2005 年 10 月 1 日起施行》 [2005 Administrative Measures of Guangdong Province for the Circulation of the Right to the Use of Collectively-owned Land for Construction Purposes]

中华人民共和国物权法 (2007 年 3 月 16 日第十届全国人民代表大会第五次会议通过） [Property Rights Law of the People’s Republic of China, 16 March 2007] (PRL)

《全国人民代表大会常务委员会关于授权国务院在北京市大兴区等三十三个试点县（市、区）行政区域暂时调整实施有关法律规定的决定（2015 年 2 月 27 日第十二届全国人民代表大会常务委员会第十三次会议通过》 [National People’s Congress Standing Committee issued a decision on 27 February 2015 entitled ‘Decision concerning Authorising the State Council to Temporarily Adjust the Implementation of the Relevant Laws and Regulations in Thirty-Three Experimental Counties, Cities and Districts, including Daxing District of Beijing City’], available at http://www.npc.gov.cn/npc/xinwen/2015-02/28/content_1906228.htm (2015 Decision)

最高人民法院《关于贯彻执行〈中华人民共和国民法通则〉若干问题的意见（试行）》 [Supreme People’s Court Opinions on Several Issues concerning the Implementation of the General Principles of the Civil Law of the People's Republic of China], issued on April 2, 1988 (Supreme People’s Court 1988)

Legislation – Taiwan

The Civil Code of Taiwan, available at http://www.ls.fju.edu.tw/doc/vocabulary/%E9%99%84%E4%BB%B6%E4%B8%80%20%20%20%E6% B0%91%E6%B3%95.pdf

Official Documents and Speeches

温家宝在中央农村工作会议上的讲话摘要, 关于当前农业和农村工作的几个问题 (2005 年 12 月 29 日）[Summary of Wen Jiabao Speech at the CCP Central Committee Rural Work Meeting Concerning Certain Problems with Modern Agriculture and Village Work, 29 December 2005], available at http://www.gov.cn/ztzl/2006-02/18/content_203731.htm (Wen 2005)

中共中央关于推进农村改革发展若干重大问题的决定, （2008 年 10 月 12 日中国共产党第十七届中央委员会第三次全体会议通过） [CCP Central Committee Decision on Certain Major Issues Concerning Promoting the Development of Rural Reforms, 12 October 2008], available at http://cpc.people.com.cn/GB/64093/64094/8194418.html (2008 Decision)

219

中共中央国务院关于加大统筹城乡发展力度进一步夯实农业农村发展基础的若干意见 [CCP Central Committee and State Council Certain Opinions on Strengthening and Making Overall Arrangements for the Development Efforts in the Cities and Countryside and Further Laying a Foundation for Agricultural and Rural Development], available at http://www.moa.gov.cn/ztzl/yhwj2015/wjhg_1/201301/t20130129_3209962.htm (2010 Document)

中共中央国务院关于加快发展现代农业进一步增强农村发展活力的若干意见 [CCP Central Committee and State Council Certain Opinions on Accelerating the Development of Modern Agriculture and Further Strengthening the Vitality of Rural Development], available at http://www.moa.gov.cn/ztzl/2016zyyhwj/hgyhwj/201401/t20140120_3742607.htm (2013 Document)

中共中央关于全面深化改革若干重大问题的决定[CCP Central Committee Decision on Major Issues Concerning Comprehensively Deepening Reforms], available at http://www.china.org.cn/china/third_plenary_session/2013-11/16/content_30620736.htm (2013 Decision)

中共中央国务院关于加快发展现代农业进一步增强农村发展活力的若干意见 (2012 年 12 月 31 日) [2012 CCP Central Committee and State Council Certain Opinions on Accelerating the Development of Modern Agriculture and Further Strengthening the Vitality of Rural Development], available at http://www.gov.cn/jrzg/2013-01/31/content_2324293.htm (2012 Opinion)

中共中央办公厅国务院办公厅印发《关于引导农村土地经营权有序流转发展农业适度规模经营的意见》 [General Office of the CCP Central Committee and the General Office of the State Council Opinions Concerning Guiding the Orderly Circulation of Rural Land Management Rights and Developing Appropriate Scale Operations], available at http://www.moa.gov.cn/zwllm/zcfg/qnhnzc/201411/t20141121_4246421.htm (2014 Opinion)

中共中央办公厅国务院办公厅印发《关于完善农村土地所有权承包权经营权分置办法的意见》 [General Office of the CCP Central Committee and the General Office of the State Council Opinion on Measures Concerning Perfecting the Separation of Ownership Rights, Contract Rights and Management Rights in respect of Rural Land, 30 October 2016], available at http://news.xinhuanet.com/fortune/2016-10/30/c_1119815168.htm (2016 Opinion)

中共中央国务院. 关于深入推进农业供给侧结构性改革. 加快培育农业农村发展新动能的若干意见. （2016 年 12 月 31 日） [CCP Central Committee and State Council Certain Opinions Concerning Deepening and Promoting the Agricultural Supply Side Structural Reforms and Accelerating the New Momentum for Cultivating Rural Village Development], available at http://www.moa.gov.cn/ztzl/2016zyyhwj/hgyhwj/201401/t20140120_3742607.htm

习近平在中国共产党第十九次全国代表大会上的报告（2017 年 10 月 18 日）[Xi Jinping Report at the 19th CPC National Congress, 18 October 2017], available at http://www.china.org.cn/chinese/2017-11/06/content_41852215.htm

中共中央国务院关于实施乡村振兴战略的意见（2018 年 1 月 2 日）[CCP Central Committee and State Council Opinions on Implementing the Rural Vitalization Strategy, 2 January 2018], available at http://www.farmer.com.cn/zt2018/1hao/tt/201802/t20180204_1354953_8.htm (2018 Opinion)

220

Minerva Access is the Institutional Repository of The University of Melbourne

Author/s: Godwin, Andrew John

Title: Traditional forms of land tenure in rural China and models for reform

Date: 2018

Persistent Link: http://hdl.handle.net/11343/221169

File Description: Traditional forms of land tenure in rural China and models for reform

Terms and Conditions: Terms and Conditions: Copyright in works deposited in Minerva Access is retained by the copyright owner. The work may not be altered without permission from the copyright owner. Readers may only download, print and save electronic copies of whole works for their own personal non-commercial use. Any use that exceeds these limits requires permission from the copyright owner. Attribution is essential when quoting or paraphrasing from these works.