Friday, January 9, 2009

Property Rights and the social costs of TransitionandDevelopmentinchina

Property Rights and the social costs of TransitionandDevelopmentinchina

Carl RiskinCarl Riskin (criskin@gmail.com), best known for his book, China’s Political Economy: The Quest for Development since 1949 (Oxford University Press, 1987), is with Queens College, City University of NewYork and Columbia University’s Weatherhead East Asian Institute.ThereisconsiderablefermentoverpropertyrightsinChinatoday.Thispaperbrieflyexploresimportantareasin which social unrest over property rights is currentlyunder way, beginning with a discussion of the generaldebate about this issue in China, and then moving on toconsidersuchrightsinagriculture,intellectualpropertyrights, and property rights in the environmental field.Theobjectiveistoindicatehowthepropertyrightsdebate overlaps the argument about social costs oftransition,includingwideningincomeinequality,environmentaldevastation,andsoon.The property rights régime in China was set in flux whenthe Party’s Third Plenum of the Eleventh Central Commit-tee unleashed the transition to a market economy in late1978. De-collectivisation of agriculture began immediately there-after. There have been few dull moments since, and propertyrights remain an area of contention today. The growing social costs of transition and development intersect in many respectswith the property rights question as broadly conceived and un-derstood (Stiglitz 2004). This paper briefly explores several of the important areas in which property rights ferment is currentlyunder way, beginning with a discussion of the general debateabout this issue in China, and then moving on to consider prop-erty rights in agriculture, intellectual property rights, and prop-erty rights in the environmental field. In all three areas, the ob-jective of this discussion is to indicate how the property rightsdebate overlaps the debate about social costs of transition, in-cluding widening income inequality, environmental devastation,and weakening of the public health system and other forms of social protection.DebateoverPropertyRightsinchinaChina has famously lacked well-defined and legally protectedprivate property rights. To some extent this lacuna is due to thegeneral weakness of the “rule of law”. Rights such as freedom of speech that exist on paper in the Chinese constitution or in par-ticular laws are readily ignored or violated by government offi-cials. Trials are often dominated by state (or local state) interestsand a truly independent judiciary has yet to develop. But the lack of firmly established property rights also follows in part from thelegal framework, itself, as well as from the state of play of institu-tional development outside the legal system. Property rights,after all, are comprised of many different kinds and degrees of control over property, including full ownership, a variety of rights of use, access, decision and/or disposal, as defined by laws,custom, contracts or internal organisational rules.1All of this has been changing in China along with economic growth and transi-tion to a market economy, the development of a middle class, theproliferation of ownership forms and the general enrichment ofsocial and cultural life.Famously also, however, China’s economy has forged ahead atrecord breaking tempo without having “solved” the propertyrights issue in the sense of establishing clear and unambiguous rights of private ownership of productive property. Nobody, forinstance, could quite identify the ownership régime of the “town-ship and village enterprises” (TVEs) that made up the highly
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china since 1978december 27, 2008EPWEconomic & Political Weekly38dynamic rural industrial sector in the 1980s and 1990s. WereTVEs collectively owned, or de facto private partnerships mas-querading as collective to avoid the political penalties that used to punish the private sector; or some kind of joint venturebetween collective and private parties? The “fuzzy” nature of their property rights status, classically discussed by Weitzmanand Xu (1993), did not seem to impede their economic dynamism,but rather enhanced it.A debate has occurred in the literature over the explanation forChina’s economic dynamism, especially in comparison with theexperience of the Eastern European and former Soviet Union(EEFSU) countries. On one side are many scholars who, knowingsomething about the country’s political economy and history,credit in part one or another aspect of China’s relatively gradua-list, experimentalist approach to reform and restructuring. Theseinclude Robert Ash, Fang Cai, Keith Griffin, Gary Jefferson, Aziz Khan, Larry Lau, Justin Lin, Barry Naughton, Peter Nolan, JeanOi, Tom Rawski, Andrew Walder, Weitzman and Xu, and others.A general insight that unites these disparate scholars and view-points is that successful market economies are always nested within a framework of institutions, including those that define,protect and limit the rights associated with property ownership;and that such an institutional environment inevitably requirestime to evolve. This view leads to an interest in the way such in-stitutions come about, their context-specific nature, and the waysin which countries and even localities may differ with respect tothe exact shape of such institutions.In addition to the TVEs, the most famous example of a gradual-ist, experimental institutional arrangement in China is the “dualtrack system”, under which China in the 1980s permitted stateenterprises to sell at market prices output produced above theirplan quotas (which were sold to the state at lower fixed prices).Corruption predictably bloomed under the dual track system, butit also carried market incentives into the state sector, instilled entrepreneurial instincts there and accomplished a kind of defacto price reform. There are many other examples of the mixedand experimental nature of Chinese reform. Nolan and Wang(1999), arguing against the idea of a universal model of propertyrights that works under all circumstances, describe how the re-form of large state enterprises in China has been “developing newinstitutional forms that do not neatly fit into existing patterns”and conclude that “China is experimentally changing its institu-tions through a combination of central policy, local initiativeand interaction with international investment”. In agriculture,despite the dismantling of the collectives 20 years ago, the statehas retained a strong role. One of its objectives in doing so is tofurther a collection of social goals tied to agriculture, includingimproving regional balance, raising farmer incomes, promotingmodernisation and improving environmental outcomes, whichprivate small-scale agriculture by itself could not achieve. Thestate also remains the major provider of services to this sectorwhere many services have a public goods character (Waldron,Brown and Longworth 2006).On the other side of the debate are those who are impatientwith gradualism and experimentation and who contend that theincomplete formation of markets and private property has impeded China’s development, whatever the speed of growth.Wing Thye Woo and Jeffrey Sachs essentially argue that China’ssuccess is owed to a combination of surplus labour and whateverprivatisation was allowed to happen (Sachs and Woo 1997; Sachsand Woo 2003). They contend that China’s institutional experi-ments with dual-track pricing, fuzzy property rights in townshipand village enterprises, etc, were “the product of political constraints and not of economic optimisation, and hence werenon-viable beyond the short-run”. Of course, no one has everargued that China’s successful experimentation constituted “economic optimisation”. The claim rather is that it constituted aflexible and adaptable institutional environment in support of rapid economic growth. Moreover, the “short run” of viability hasnow lasted three decades, bringing to mind J M Keynes’ mostfamous quip.The stylised view of the property rights issue sees the inviola-bility of private property as a sine qua non of development. Thebenefits of such a secure régime pertain to the basic issue of effi-ciency, to the incentive to invest, innovate and take risks, and toequity considerations. The efficiency argument goes back at leastto the “Coase theorem”, in which clarity of property rights are aprecondition for efficient allocation, regardless of how legal property entitlements are initially distributed.2Ironically, this demonstration was for Coase “only a hypothetical norm of com-parison” that provided a baseline for his argument that trans-actions costs are in fact ubiquitous and do have a strong impacton economic institutions.The incentive argument rests on the importance of the secureexpectation that the profit of investment, innovation or risk-taking will be retained by the investor, innovator or risk taker. Of course, nowhere is this literally true. Income and output cannotbe entirely explained by the proximate acts that generate them.The public infrastructure, hard and soft, the public education ofworkers and customers, the safety of staff and workers fromcrime, etc, are all crucial to the results, and all such indirectresources must be paid for by means of taxes that intervenebetween productive effort or commitment of resources and thereward of income. Not only are the profits of private activity sub-ject to public incursion even in the highly conservative US, butprivate property itself is far from inviolable, as illustrated by the2005 Supreme Court decision, Kelo vs City of New London. This decision validated the expropriation of private property by a cityintent on turning it over to private development. The majorityopinion, written by Justice Stevens, stated that “[p]romoting eco-nomic development is a traditional and long accepted function of government” and that the Fifth Amendment’s requirement of a“public purpose” for condemning private property could be satis-fied by the creation of jobs in a depressed city. In her dissent,Justice O’Connor complained, “Now…nothing is to prevent theState from replacing any Motel 6 with a Ritz-Carlton, any homewith a shopping mall, or any farm with a factory”. JusticeO’Connor’s opinion could almost have been mistaken for a com-plaint about the ubiquitous “land grabs” from Chinese farmers bylocal governments intent on development. More about these below.The above example speaks directly to the equity issue. In China(as elsewhere), the strength of property right protection tends to
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china since 1978Economic & Political WeeklyEPWdecember 27, 200839be related to class.3That is, in an increasingly unequal society,such rights tend to be most clearly defined and protected for theeconomic elite, who often have family ties to the political elite.China’s impressive legal development, which has rivalled its eco-nomic development in the speed with which new laws and regu-lations have been produced during the reform period, has espe-cially focused on the area of business law – and the institutions toimplement it – that needed to be created in order to shape an ena-bling environment for foreign direct investors. On the other end of the spectrum, peasants who try to cite environmental laws toprotect their lives, health and property against the toxic effluents of nearby chemical plants, like workers in export processingfactories whose conditions of work violate numerous aspects ofChina’s labour laws, find they have little or no real legal protection.A recent discussion in the pages of China Quarterly illustratesthe equity problem in enterprise privatisations (Chen 2006). Casestudies are presented of three former state factories in central China that underwent privatisation. In all three cases, the work-ers rose up against the changes as illegitimate, successfully inone case. The privatisations were not announced as such butwere disguised as other kinds of restructuring. As Chen writes:[p]rivatisation in China has been carried out in opaque ways, with lit-tle regard to the principles of fairness and justice. The government has never made it an official national policy and no national legislationexists to dictate the process. There are only a few government guide-lines, which are far from clear and whose enforcement is highly prob-lematic. Local authorities and SOE managers are granted considerablediscretionary power to decide how factory property is handled;workers, on the other hand, are totally excluded from the process.Not only has the government not made privatisation an official national policy, it has on numerous occasions condemned it.Jiang Zemin, speaking in 1995, for instance: “We...are absolutelynot going to practice privatisation. This is a big principle fromwhich we should never waver in the slightest degree” (quoted inChen, p 46). In one of the cases investigated by Chen, the factorywas taken over by a self-proclaimed state holding company,Fenghua, which promised to resume production (halted becauseof pollution), pay back wages and restore social insuranceprogrammes. This met with both local government and workerapproval. None of it happened, however. Instead, having acquired the factory, Fenghua announced that it would sell the site for real estate development and that workers below age 40 would be firedwith a one-time severance package. Moreover, it turned out thatFenghua was not a state holding company at all, but a privatecompany owned by the son of a big developer. Privatisation hadbeen carried out in the most opaque manner possible. Not only is inequity involved, but also firmer grounds for social instability:the absence of a clear and transparent policy regarding privatisa-tion has made it possible for affected workers to claim the highmoral ground in attacking it accurately as illegitimate, exploita-tive and contrary to official Chinese policy and their leaders’commitments.PropertyRightsinagricultureOne aspect of property rights has been particularly discussed inChina, and that is the landownership rights of farmers. As point-ed out above, most farmers have had leasehold rights that last for25-30 years. They cannot sell or buy land, but they can buy and sell the use of it. Moreover, despite leases land has sometimes been redistributed among villagers when demographic changesoccur, which has kept the per capita distribution of land highlyequal (more on this below). Studies of villagers’ reactions to this practice have found that it is not unpopular (Kung 2000). This isnot a simple issue. There are arguments to be made on both sides of it (People’s Daily Online 2008).On the side of strengthening private landownership rights is the growing tendency of local governments to confiscate farmers’land at nominal or greatly under-market prices in order to makeit available for industrialisation or development in an over-heated real estate market. China has been undergoing an epidemic of land seizures by local governments. An estimated 66 millionfarmers had their land expropriated up to mid-2004, many withgrossly inadequate compensation (Yu Jianrong, Oriental Outlook, 9 September 2004). Such landless farmers are often amongChina’s poorest (Asia Times Online, 9 March 2006). The processis described by Xiaolin Guo (2001):By law, the village collective has the right to use (jingying) and super-vise (guanli) the use of land, but it has no right to transfer land forcompensatory use. The state, on the other hand, “may, in accordancewith the law, expropriate land which is under collective ownership, if it is in the public interest”. In this assignment of property rights, land development proceeds in two steps: land expropriation (tudi zhengyong) by the government from villages, and land transaction(tudi churang) between the government and potential land users. Thelatter procedure only involves a transfer of the user’s right priced according to the market value. Land expropriation is, in a sense, aprocedure by which all rights formerly held by the village collectiveare relinquished to the local government.Although authorities have vowed to crack down on exploita-tion of arable land by local governments for development of villas, golf courses, and race tracks, the process of land grabbing has continued with little abatement, especially in the coastal provinces of Zhejiang, Shandong, Jiangsu, Hebei and Guangdong. China’s laws evidently stop short of requiring fair compensa-tion when land is taken. The Land Administration Law requires that compensation to the former landholders be six to ten times the value of the land’s average annual output for the three yearspreceding the transaction. In the case studied by Guo (2001), thevillagers were paid between 9,000 and 10,500 yuan per mu.4Theland rights were then sold by the local government for 2,00,000yuan per mu.The land issue is crucial for the rural majority of Chinese.When the rural communes were dismantled in the early 1980s,their land was distributed to villagers on an equal per capitabasis. This egalitarianism was still evident two decades laterwhen the concentration ratio (or pseudo-Gini coefficient) for landdistribution was virtually zero, meaning that farmland was equally accessible to all income classes.5Khan and Riskin (2005)have found that farmland has been distributed extraordinarilyequally and remained so from 1988 through 2002 (see the tableon page 40).6These data indicate that in 2002, inequality amongdifferent income classes in access to land was essentially absent.This was a major factor in making income from family farming
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china since 1978december 27, 2008EPWEconomic & Political Weekly40the most equally distributed component of rural income, whichin turn limited the otherwise increasing inequality of rural in-come distribution. The maintenance of such a high degree ofequality of land access acted as a barrier to the development of aclass of landless poor, as happened in many other parts of thedeveloping world.But with rapid economic growth camesoaring land values, especially in and around coastal cities and this created anevery sharper contradiction between therising price of land, on the one hand, andthe security of land tenure of relativelypoor farmers, on the other. The same lack of secure private ownership rights overland that had protected the equality of its distribution now prevents farmers from benefiting from the risingeconomic value of their land. Equality of land access is nowthreatened as increasing numbers of farmers are alienated fromthe land (Kung and Liu 1997; Guo 2001; Ho 2001).The ability to engage in this kind of inequitable practice would be weakened if farmers’ control of their land were more secureand they were able to resist expropriation or negotiate fair prices for their land. There would also be a social benefit in the height-ened resistance to the alienation of farmland, whose social valueas such is greater than its market value. That is, the market priceof agricultural staples does not incorporate the social value of food security to a fifth of humankind. The argument here is notthat no land should be lost to agriculture, but that the trade-off should be made at prices that more closely reflect the true socialvalue of agriculture relative to, say, real estate speculation ortoxic chemical production.There is also an argument to be made that the mobility of China’s surplus rural labour force and the incentive to consoli-date land into larger and more efficient farms would be enhanced by farmers’ ability to sell their land at higher prices.The universality of access has not only been an impediment tothe development of a class of landless rural labourers, it has alsoprovided a working substitute for a non-existent rural social in-surance system. Migrant workers who lose their jobs can and doreturn home to survive on their land until the next job is found.Aged or injured farmers can get by in part by leasing out theirland. The disappearance of the equalising and social securityfeatures of China’s current land tenure arrangements, withoutprovision of alternatives, would be a step backward in terms of human development. Clearly that is happening as the inherited equality of landownership gives way before the soaring commer-cial value of land and the growing power of market incentives,and ever more farmers are deprived of their land.Policy to address the property rights issue concerning landshould take both aspects of this complicated issue into account.That is, greater protection of farmers’ property rights vis-a-vislocal governments is important, but so is protection of the role of land access as the rural population’s sole means of social securityand as a bulwark against the impoverishment that can stem fromlandlessness. In October 2008 the government moved to liberal-ise the market for farmland use (People’s Daily Online 2008) by permitting farmers to “subcontract, lease, exchange and swaptheir land-use rights, or join shareholding entities with theirfarmland”. The details of the change had not been revealed at thetime of submission of this article, including the degree to whichthe new approach will make possible the widespread loss of land by farmers before a true social safety netis available to substitute for the securitynow provided by access to land.However the liberalisation of land ten-ure proceeds, a role for the collectivecommunity is likely to persist. It is thecollective that has maintained equal land access over more than two decades and in which formal owner of farmland will continue to be vested. And it is the legalexpropriation of the collective’s ownership of the land by thelocal government that has been the first step toward deprivingthe farmers of its use.intellectualPropertyThe subject of intellectual property rights (IPR) and China’s manner of dealing with them has of course figured prominentlyas a bone of contention in US-China relations. Foreign, especiallyAmerican, complaints against the Chinese IPR protection régimeinclude “inadequate IPR laws on the books, inadequate and expensive enforcement of existing laws, lack of Chinese govern-ment cooperation and transparent administrative and judicial procedures, local protectionism, lack of IPR awareness and education among the general population, and lack of trainingand experience among judicial and administrative enforcementpersonnel” (Clarke 1999).The very concept of IPR and its protection is a relatively newone in China. The establishment of a legal and administrative IPRsystem began only around 1980 and a perusal of the latest officialWhite Paper on IPR protection (Government of China 2005) indi-cates the great progress that has occurred since then in establish-ing such a system. Of course, the opening up of China’s economyand the multiplication of temptations to engage in copyright and software piracy especially has progressed at least as quickly.However, the discussion of the issue vis-a-vis China has tended to focus on US complaints about China’s transgressions, based upon a global model of IPR protection that is under increasingcriticism on both theoretical and practical grounds. This discus-sion includes a conceptual debate about the appropriate nature ofIPR and extent of its protection and over the possible conflicts between it and development, efficiency, competition, publichealth and the public interest more broadly conceived. There has thus been debate over whether the TRIPS agreement (Agreementon Trade-Related Aspects of Intellectual Property Rights underthe World Trade Organisation) privileges powerful corporateinterests in the developed world over the interests of poor coun-tries and people, unfairly restricts competition and efficiency,and illegitimately extends IP rights into the realm of livingorganisms (Harvard University 2004).7Alternative methods of encouraging innovation and creativity have been proposed thatdo not contradict the public goods character of information.8Table:Distribution of Per capita Landholdings,Rural china198819952002“Concentration ratio”Unadjusted land 0.0210.001 -0.013 (-0.019)Adjusted land 0.063 0.051 0.018 (0.012)“Adjusted”landcountsanirrigatedacreasequivalenttotwoacresofun-irrigatedland.The“concentrationratio”isestimatedfromtheLorenzdistributionofpercapitaland,inwhichindividualsarerankedaccordingtoper capitaincome.Figuresinparenthesesfor2002areestimatesbasedonthesame 19provincesthatwereinthe1995sample(excludingXinjiangandGuangxi).For sources of the 1988 and 1995 estimates see Khan and Riskin (2001), p 108.
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china since 1978Economic & Political WeeklyEPWdecember 27, 200841These issues have not been prominent in the discussion aboutChina, perhaps because of the overwhelming interest of US busi-nesses in the patent/copyright protection problem, and because,for whatever reason, what is probably the single most prominentissue in the global debate has been largely absent, namely, thehigh cost patented pharmaceuticals for prevention or treatmentof epidemic diseases, especially HIV/AIDS. Although China has progressed from the days of denying the extent of the spread of HIV/AIDS there, the provision of anti-retrovirals (ARVs) is still severely limited and it appears that China has not takenadvantage of the opportunities legally available to it under TRIPSto produce and distribute the most effective ARVs.9The only hintin the White Paper of a critical attitude toward the global IPRprotection régime as it stands is the statement that “China has devoted great efforts to adjusting and improving internationalrules regarding IPR protection in order to let all countries of theworld share the fruits and benefits brought about by the progress of science and technology.” There is no doubt more going on inthis arena than is being publicly revealed.In short, it would be desirable to couch the discussion of IPRprotection in China in a broader and more comprehensive con-text than it has been given in a discussion dominated by thestrong point of view of US business interests.environmentandPropertyRightsThe 2008 winter Olympic games drew the world’s attention tothe extraordinary air pollution plaguing Beijing (along with othermajor cities), stark evidence that China’s rapid economic growthhas come at the expense of the natural environment. Not only areresource depletion and degradation monumental problems inmuch of the country, but the health consequences of pollution aretruly calamitous with tens of thousands of premature deathsannually ascribed to air pollution alone.10A very heavy social cost is being paid by the Chinese people inthe form of environmental destruction, resource depletion, loss of biodiversity and pollution. China has become the highestemitter of SO2in the world and the first or second highest emitterof greenhouse gases. A recent conservative estimate by the World Bank put the cost of air pollution in premature death and morbidity at 3.8% of GDP. Over half the water in the sevenmain rivers of China is deemed unfit for human consumption.The cost of groundwater depletion and use of polluted water byindustry are estimated at 1% of GDP, and this excludes the cost tohuman health.The severity of the air and water problems has diminished theattention paid to other serious environmental concerns, such as loss of biodiversity and desertification. China is blessed with ex-ceptionally rich biodiversity, but this is being compromised by afrightening rate of disappearance of species. The Swiss-based World Conservation Union has listed almost 800 species as beingunder threat in China. Desertification is an economic problembut also a social one, as its progress destroys soil fertility and thus the livelihoods of Chinese farmers and herders. A govern-ment survey conducted in the 1990s showed that the total area of land-turned-desert had reached about 1.7 million square kilometres, or 17.6% of the country’s territory. Historical deforestation, intensive cultivation that exposes soil to erosion,and the blunders of the collective era when millions of acres of grasslands and hillsides were inappropriately ploughed for culti-vation, have all contributed to this disaster in the making. In acountry already short of arable land, conservation of land is amajor imperative. Environmental degradation had begun in China under privateownership in the decades and centuries before the mid-1950s,continued and grew worse under state and collective ownershipfrom then until roughly 1980, and continues to worsen under thechanging mixed ownership array of the past quarter century. Noownership system is by itself sufficient to end such degradation.But property rights questions are inevitably involved. Sometimes the problem has been lack of better-defined private property. Forinstance, the initial de-collectivisation of pastoral lands in theearly 1980s privatised the animals but not the grazing land,which produced a classic “tragedy of the commons” experienceuntil the land, too, was divided among households. Even then,difficult and expensive problems of monitoring and enforcementemerged. A similar problem arose regarding deforestation afterthe land reform of the early 1980s, which dismantled collectivecontrol of tree cutting and made trees fair game for farmers lack-ing fuel and building materials.This huge external cost of environmental degradation and re-source depletion represents in its classic form the kind of marketfailure that opens space for public policy, including the craftingof a property rights approach that is fully responsive to the needs of public health and environmental conservation. The fact thatthese problems loom so large in contemporary China11implies that the space for public policy is quite substantial there. It en-compasses, for instance, the many cases in which villagers havepublicly protested the establishment of local chemical factories whose effluents have poisoned their water supply, sickened themand destroyed their land. My impression is that both private and collective factories have been involved, and perhaps even local state factories. The basic issue here is the imposition of appro-priate restrictions on the nature of whatever kinds of propertyrights might be present.The growing popularity in China of the use of market-based incentives (such as use of tradable pollution permits) to controlpollution also has property rights implications. The right to pol-lute, and restrictions put on it by law or regulation, are parts of adefined property rights régime, whose structure should favourresource conservation and a reduction in pollution. One way toproceed is for government to set a maximum pollution target be-low existing levels, distribute to enterprises only enough pollu-tion permits to reach this target, and leave it to the market toallocate the permits among enterprises. The property owner’s injunction under this scheme is: thou shall not pollute without apermit! Under optimum conditions, this approach would mini-mise the cost of achieving the desired reduction in pollution.However, there is a question whether the institutional conditionsneeded to make effective use of this method – including anunderstanding of basic market principles among environmental officials, the existence of strong information databases and effec-tive monitoring capabilities – exist in China as yet (UNDP Beijing
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china since 1978december 27, 2008EPWEconomic & Political Weekly422002). Alternatively, a different property rights regimen, limited by “command and control” methods, such as those widely used inEurope and the US (e g, outlawing of toxic dumping, mandated installation of catalytic converters on cars and scrubbers insmokestacks) might be more effective because it is easier to en-force and monitor. The sanction here is different in degree, not inkind: thou shall not pollute (with no exception for permits)! Theproperty rights aspect of environmental policy is thus an impor-tant component of both the property rights and the environmentdiscussions in China.conclusionsChina’s current leaders, upon coming to power in 2002, put for-ward a new development paradigm calling for building a “Har-monious Society” with more balanced development across re-gions and sectors. The paradigm, laid out in detail in the 11thFive-Year Plan (2006-2010) stressed sustainable growth, “puttingpeople first”, and making development pro-poor and pro-rural.“The main thrust of the [Harmonious Society Program] is redis-tribution and rebalancing of the economy, aimed at reversingsome of the inequalities that have emerged, addressing social grievances and relieving tensions” (Wong 2007). China has in-deed taken steps in this direction, constructing a rudimentarysocial safety net in the cities, abolishing the agricultural tax in2006, and setting a goal of providing universal health coverageto Chinese citizens by 2020. A new rural cooperative medical sys-tem was begun in 2003; as of September 2007, about 730 millionfarmers had joined, although the system is still under-funded.Many, if not most, of these policies entail property rights repercussions, explicit or implicit. They propose to reshape tax and public expenditure profiles, establish social rights and res-ponsibilities and promise some reshaping of the distribution of income and wealth. These are necessary conceptual steps on the way to a more progressive brand of development. Whether these steps will continue and be fully realised remains to be seen. Moreover, problems in the area of social policy inevitably raise the question of political reform. The effective and equitable reshaping of property rights would seem to require a political system that engages broad democratic forces in the business of policymaking.Notes1 See Royal Swedish Academy of Sciences (1991);also Oi and Walder (1999).2 “Coase showed that every given distribution of property rights among individuals tends to be re-allocated through contracts if it is to the mutualadvantage of the parties and not prevented bytransaction costs, and that institutional arrange-ments other than contracts emerge if they implylower transaction costs” (Royal Swedish Academy1991).3 In Kelos vs City of New London, the National Asso-ciation for the Advancement of Coloured People(NAACP) and Justice Clarence Thomas shared arare moment of agreement in arguing that urbanrenewal in the US has often victimised the poor,minorities and the elderly. See Charles Lane,“Justices Affirm Property Seizures”, WashingtonPost, 24 June 2005.4 A mu is one-sixth of an acre.5 See Khan and Riskin (2005). The pseudo-Gini orconcentration ratio measures the distribution of asource of income or, in this case, an asset over all income earners.6 The numbers in the table are “concentration ra-tios” or “pseudo-Ginis”, which express the distri-bution of land over all rural income recipients (not just landholders). A value of zero means thatall income classes have equal access to land. Anegative value (as in 2002 for “unadjusted land”)signifies that lower income people actually held more land than higher income ones. The explana-tion for this particular case probably lies in thefact that farms in the poorer upland and north-west regions tend to be larger than in richer, morefertile areas.7 Stiglitz (2004, 2006, 2006a).8 See the collection of papers of the Task Force onIntellectual Property of the Initiative for PolicyDialogue at Columbia University, available athttp://www0.gsb.columbia.edu/ipd/programs/item.cfm?prid=128&iyid=5&itid=777&list=papers.9 See World Health Organisation (2002) a reportoutlining in very basic and general terms the vari-ous options available to the government for provi-sion of cost-controlled ARVs. The valuable ChinaAIDS News information service reports that“WHO ‘essential drug’ ARVs [are] not available inChina” and that, although China has the rightunder the WTO TRIPS agreement to overridepatents on first-line treatments by issuing compul-sory licences, it has not done so. See China AIDSInfo (2008).10 The World Bank has estimated that outdoor airpollution is responsible for some 178,000 prema-ture deaths per year and indoor pollution fromparticulates associated with coal combustioncauses at least 111,000 premature deaths per year.See World Bank (1997).11 See World Bank (1997); UNDP Beijing (2002);Smil (1993, 2004).ReferencesChen, F (2006): “Privatisation and Its Discontents inChinese Factories”, China Quarterly (185).China AIDS Info (2008): “China-Arv Access FactSheet”, from http://www.china-aids.org/english/factsheet-ARV.htm.Clarke, D (1999): “Private Enforcement of Intellectual Property Rights in China”, NBR Analysis, 10(2).Government of China, SCIO (2005): White Paper onIPR Protection.Guo, X (2001): “Land Expropriation and Rural Con-flicts in China”, China Quarterly, 166: 422-39.Ho, P (2001): “Who Owns China’s Land? Policies,Property Rights and Deliberate Institutional Ambiguity”, China Quarterly, 166: 394-421.Khan, A R and C Riskin (2001): Inequality and Povertyin China in the Age of Globalisation (Oxford and New York: Oxford University Press).– (2005): “China’s Household Income and Its Distri-bution, 1995 and 2002”, China Quarterly, June.Kung, J K (2000): “Common Property Rights and LandReallocations in Rural China: Evidence from aVillage Survey”, World Development, 28(4).Kung, J K and S Liu (1997): “Farmers’ Preferences Regarding Ownership and Land Tenure in Post-Mao China: Unexpected Evidence from EightCounties”, The China Journal, (38).Nolan, P and X Wang (1999): “Beyond Privatisation:Institutional Innovation and Growth in China’s Large State-owned Enterprises”, World Develop-ment, 27(1).Oi, Jean and Andrew Walder, ed. 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