Research On The Invisible Market In China’s Land Resource Allocation

The only shortcut of cashing the fortune of land, the mother of fortune, is to alter its purpose or ownership. In the process of land resource allocation in China, with the combined effects of continuously improved land governance structure, property system and the inadequately normative land control by the government, the parties concerned are induced to practice opportunism in the chase of differential earnings from land by taking a shortcut without authorization to cash the fortune of land. Thus, the invisible land market characterized by disorder, distorted price mechanism and abnormal development is spontaneously created all around the country, which becomes one of the current social focuses and difficulties.The invisible land market, by definition, means the combined total of land exchange relationship established by the interested parties who bypass the present land laws and regulations in the flow of the land property right functions under China’s special land property right system. The aforementioned market also often refers to the land exchange market created by the parties concerned who are driven by interests to alter the original land use purpose or type without authorization and characterized by invisibility, spontaneity, unauthorization by the state, flowability of the property functions, and interest-driven orientation. In China’s land resource allocation, the invisible market falls into the following basic types:market of the contractual rights of agricultural land, market of the rural collective construction land, market of the state-allocated land, market of the paid state-owned land.Under the framework of New Institutional Economics and with the approach to improving resource allocation efficiency, the thesis systematically examines the governance structure efficiency and institutional environment efficiency in China’s land resource marketization allocation, finding that the once efficient institutional arrangements or designs by contract have been becoming the sources of meaningless loss, among which the invisible land market is a hidden one. A further study indicates that the emergence of the invisible market in the land market governance structure responds to the dual monopoly, the emergence of the invisible market in the changing land market institution responds to the inherent prescription and the emergence of the invisible market of urban and rural construction land responds to the government failure in land control.There is inevitability for the existence of the invisible market in China’s land resource allocation. Its existence not only produces negative effect on the visible land market at micro, intermediate and macro levels, but also to some extent reflects the inherent demand of market economy and then becomes an impetus for creation or innovation of the land system. Therefore, in choosing the path to the visualization of China’s invisible land market, the government should not only strengthen the administration of land by cracking down on the rigidly administrated invisible land market or even resolutely banning it, but also guide the flexibly administrated invisible land market to a correct path of land system’s reform and innovation. Thus, the visualization of China’s invisible land market should be progressed according to levels, categories and phases:first, optimize the land institution environment by reforming and innovating the land property rights to return rights and endow functions; second, optimize the land governance structure by breaking government monopoly and promoting the reform of the institution of land acquisition; third, optimize the land administrative system of government by regulating governmental behaviors and promoting the reform of administrative system. The urgent matter in present is to progress the work of confirming land property rights, registering the rights and conferring the certificates, which is the first step in the efficiency choice for the visualization of China’s invisible land market.By dynamically constructing seamless models of property system changes, the research finds that the property system efficiency in China’s land resource marketization allocation is demonstrated graphically as an inverted U-shaped curve, increasing and then decreasing at the same locus while demonstrated to be discontinuously improved at the different loci, and the change cycle of the efficient seamless property system follows the law of attenuation. In the transitional period of China’s economic society, no change of property system can be terminated once and for all, and the change of efficient property system will rely more on the change of property system. In the governance structure of government’s dual monopoly, the current land property right structure composed of obscured ownership and relatively independent tenure has long been caught in inefficiency of path lock-in, and it calls for the occurrence of a new round of change of land property right system.