Farmland Conversion Mechanism In Transitional China

An economic reform turing China from a center controlled economy to a market oriented economy was carried out since 1978. The nation gradually released direct control over resource allocation in cities and the rural area. China benefited much from the reform and opening-up policy, industrialization and urbanization level has progessed remarkably with fast economic development. Meanwhile, rapid farmland coversion has turned lots of high quality agricultural lands into construction lands for residential, industrial and other non-agricultural uses. Food security of the nation and poverty of peasants who last lands in rapid farmland coversion has become a threat of China's sustainable development and attention-getting fair.To hold down the fast trend of farmland loss, a series of policies have been put forward by the state, such as the enactment of Land Administration Law and General Land Use Planning, supervising on local industrial park and land market. Unfortunately, there were some essential limitations in these land administration policies, such as the prejudice in objevtives, dissimilation of benefit groups, less cooperation between different policies, which have led to disappointing results. The causation of land administration policy failure was those policies have not established any effective mechanism on micro or macro level to correct the rational behaviors for the private but unreasonable activities for the public which based on land property rights and institutions in transitional China. Ignorance of the economic mechanism behind farmland conversion, which includes land allocation behavior of micro unities in micro level and effect of economic development on land use in macro level, Contributed much to China's land administration policy failure.This thesis starts with a general model of farmland coversion, which describes how economic units choose the efficient time and manner of farmland conversion under an ideal circumstance in which transaction cost equals zero and farmlands are owned by privates, That model provides a frame of reference for the efficiency measurement of farmland conversion in transitional China. Combined with the introduction of land property rightsand institutions in China, such as rural lands ownership and Household Responsibility System (HRS), institution of land expropriation and urban land use, the thesis points out that fuzziness of land property rights, asymmetry of economic incentive and restriction would lead to inefficiency in land resource allocation.Farmland conversion is the responses of farmland owners or other users to changes in exogenous economic environment. From the angle of supplier, the behaviors of local governments and rural collectives in farmland conversion are studied. As governmental organizations are different from normal economic units, revenues from land price and other factors and components of cost for local government are analysised as well as how local governments, change their behavior in defferent type of farmland conversion with the variation of revenue and cost in industrial land market and commercial or residential land market. Recurring to the methodology of case study, a positive study of local governmental behavior in farmland conversion is accomplished, in which the land pricing strategy and land use regulation behavior of the government in Kunshan, a county located in the south of Jiangsu Province (Sunan Area) are analysed. As for rural collectives which are the nominal owner of farmlands, they only passively participate in farmland conversion under most situations because of fuzziness of land ownership and deformity of land property rights. Market and government both carry weight on the behavior of rural collectives in farmland conversion, however the former always brings favorable influence and the latter often brings unfavorable influence on the efficiency of land resource allocation.Enterprises, including factories and land agents, are the first users of land and carry out essential effect on the efficiency of land resource allocation. From the angle of consumer, the effects of economic transition on land use efficiency of enterprises are analysed on the basis of resource allocation model for micro units. The favoralble influence of the decreasing ratio of state owned enterprises and unfavorable influence of land price system under the intervention of government on farmland conversion are studied. Technical efficiency measurement methodologies, such as Data Envelopment Analysis (DEA) and Stochastic Frontier (SF), are used to evaluate the technical efficieny and land productivity of enterprises which produce chemical or machinery products in Kunshan County and the relationship between ownership of enterprise and land use efficiency is positively tested.The emergence and development of land market is an important factor for farmlandconversion in transitional China. On the basis of analysis about the behavior of land supplier and consumer, the form and character of competition between different, areas and between different conomic units in the same area are studie, the structure of land market during transitional periods is pointe out. Data about state owned land supply since 1992 and price information about thirty Core cities and Jiangsu province since 2000 to 2005 are employed to test the structure character of land.market in transitional China.Turning from micro level to macro level, the relationship between economic development and farmland conversion is studied. Farmland conversion is the result of Changes in exogenous factors which change relative advantage for agricultural and non-agricultural uses. On the basis of location choosing theories, the quantity and spatial characters of China's farmland conversion duing industrialization and urbanization progress are sketched. Theoretic relationship between economic development and farmland conversion is analyzed, and effects of population growth, adjustment of economic structure, capital accumulation, technical progress and institution transition on farmland conversion are studied one by one. The conomic and land data are employed to make a positive test for the macro mechanism of farmland conversion.Through theoretic analysis and positive test, the thesis comes to conclusions as follows:(1) The micro-mechanism of farmland conversion is unfavorable for efficient land resource allocation because that present land property rights and institutions suffered from fuzziness in land ownership, deformity of land property rights, asymmetry of economic incentive and restriction.(2) The main causation of inefficient farmland conversion is that local governments' behaviors are less restricted and rural collevtives lack incentives to upgrade land use efficiency. The key to improve land resource allocation efficiency is standardizing local governments's behavior and protecting the peasant's land property rights effectively.(3) The direct causation of inefficient farmland conversion is that land consumers., such as normal industrial factories and other administrative units lack incentive to save land resource under land price distoration. The retreat of state owned enterprises and governmental administrative intervention on land market and price system should draw up the efficiency of farmland conversion in the long run.(4) Urban land market in transational China is characterized by a dural track system. In commercial and residential land market, governmental monopoly might lead to the problem of land supply shortage which would add living cost to local resident. In industrial land market, disordered competition among different local governments and rural collevtives often leads to excessive farm land conversion and extensive use of land.Basd on above conlusions, the thesis puts forward some suggestions for the construction of public land policy system to amend farmland conversion economic mechanism and improve land allocation efficiency in transitional China, which include the formulating of farmland development rights, standardizing governmental behaviors through Green GDP Assess and Land Fund, legally permiting rural collectivesparticipate in farmland conversion under regulation of land use planning and tax system, improving and insuring the priority of land market system in land resource allocation, deepening enterprise reform and stimulating reuse of stock urban land through land price and tax tools.