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Further Releasing Resource Reallocation Effects between Urban and Rural Areas



By Ye Xingqing, DRC


The labor and land reallocation between urban and rural areas has played an important role in supporting China's sustained and high-speed economic growth for 30 years.

First, the effects are as follows. 1. The reallocation has provided low-cost labor to non-agricultural industries. 2. The land reallocation between urban and rural areas has accumulated funds for infrastructure construction, provided low-cost land for industrial projects, and lowered the transaction costs relating to land acquisition by industrialization and urbanization.

Second, the decline of resource reallocation effects between urban and rural areas is one of the major reasons for the decrease of economic growth. 1. Some institutional regulations on land, subsidies, and household registration have raised the cost for farmers to migrate to cities, which have made migrant farmers leave the city and find jobs in rural labor market, whereas employment in rural areas does not fare well. 2. The decrease of land reallocation effects has increased the land cost of various market entities due to decreased land acreage, and increased land price.

Third, we need to further release the resource reallocation effects between rural and urban areas and tap the potential by reform and innovation. 1. We need to help the eligible population to move away from agriculture and become urban residents through improving household registration system, employment training, and the separation of three rights including land ownership right, contract right and management right. 2. Many local governmens’ finance is supported by proceeds from the transfer of land-use rights, and this system needs to be fleshed out. We need to carry out reforms relating to rural land requisition, the marketization of rural collective land designated for business-related construction and the rural land used for private housing. By so doing we could increase farmers' income. Besides, we also need to control the fast increase of land use costs for industrialization and urbanization, While protecting the land owners' rights and interests, the government needs to intensify unified planning for land development to avoid the high transaction costs in the course of land transaction.


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