The "New Socialist Countryside"

...is not really Socialist:

The Chinese government, faced with rising inequality and unrest in the countryside, formally announced major initiatives this week to expand health, education and welfare benefits for farmers but left unresolved the fundamental issue of whether they should be allowed to buy or sell their land.

In recent days President Hu Jintao and Prime Minister Wen Jiabao have given speeches about the "new socialist countryside" initiative, and the National People's Congress, the Communist Party-controlled legislature, is expected to make the rural program the centerpiece of a new five-year plan during its annual meeting next month.

The program, which emerged in broad form in October, includes

• free education for many rural students,
  
• increased subsidy payments for farmers,
  
• new government financing for medical care and
  
• further government investment in rural public works.

...Chen Xiwen, the top government adviser on rural issues....said the program did not include any immediate changes in rural land policy, an issue that many experts consider to be at the heart of the urban-rural inequality problem. Illegal land seizures have caused rising rural protests and violence in recent years as local officials have confiscated farmland and resold it to developers for fat profits. Farmers are often cheated and left with little compensation.

...Inequality has also widened in recent years, with rural residents each earning about $400 a year, less than a third of the incomes of their urban counterparts. But many researchers say the gap is actually far larger when health care and other social benefits provided to many urban residents are factored in.

Under the Chinese Constitution, farmland is collectively held by villages, so individual farmers, who hold leases, have limited control. Local governments have easily exploited the law to claim land for development projects.

Some experts say that government should be eliminated as a middleman in land sales and that farmers should be granted rights to negotiate and profit from selling land. In cities residents cannot own land, but they can own apartments, houses or commercial real estate that sit atop it. As a result, a real estate boom has helped city residents but largely bypassed the countryside.

Pointing into the indefinite future, Mr. Chen acknowledged that China would eventually need "to propose steadily reforming the land acquisition system itself." But he said any changes must happen slowly to protect the country's farming output.

Meanwhile, Mr. Chen said, farmers will be given more compensation after land confiscations. He suggested that urban social welfare benefits should be extended to peasants who were left landless.

He said China already had strict laws on land confiscations but conceded that the "implementation" of those laws had lagged. Indeed, violent protests by farmers trying to block local government land grabs recently erupted in Guangdong Province. At least four people were killed in the city of Dongzhou after the police fired on protesters.

Mr. Wen....added that defusing social unrest is only one incentive for China to improve the rural economy. China's economy, now built largely on foreign trade, depends on expanding its consumer market, and rural areas represent a drag on domestic demand. Even though roughly two-thirds of China's 1.3 billion people are rural residents, the countryside accounts for only a third of retail sales for consumer products in China.

"If you can invest in rural areas and increase the cash income of people," Mr. Wen said, "you can increase domestic demand. China must increase domestic demand and not just depend on foreign trade."

Here's more:

The net per-capita income of farmers in 2005 was $402.80, while the per-capita income of city dwellers was $1,292, according to government statistics. "What's more," Chen said, "the gap is widening."

...The Public Security Ministry estimated that about 87,000 riots and protests occurred during 2005, most of them in the countryside.

The unrest has arisen most frequently in response to land seizures by local governments to make way for industrial development on the edges of growing cities. To ease such transitions, the government plans to organize retraining and job programs for farmers left without their fields and to usher them into city-based health insurance systems, Chen said.

In addition, Chen said the government was studying how farmers could benefit in some way from the resale of their land. In a related move, the Land and Resources Department of Guangdong province, which has experienced a number of violent village protests, suggested recently that compensation for seized land should be paid directly to affected farmers, without going through local governments.

Villagers frequently have complained that promised compensation never reaches them because corrupt local officials pocket a large percentage of the money as it flows from the upper levels of government through provincial, county and township offices down to village committees.

Chen said the party had not yet envisioned a fundamental change in the constitutional provision that makes all land in China government property, with farmers accorded only a contract to use it for a given period. It is that provision that gives local governments power to seize farmland and transfer it to developers, often at a price several times the value of farmers' compensation.

"Compensation for seized land should be paid directly to affected farmers, without going through local governments." No kidding! I'm guessing they still won't be happy.