International Institute of Social Studies, Working Paper No. 509, The Hague, Arsel, Murat and Anirban Dasgupta (2010)

The experience of structural transformation in China reveals that alteration of land-use patterns is not necessarily a unidirectional process of land shifting out of cultivation to other uses, rather a more complex process that can be heavily influenced by state policy.

The change of land-use patterns is one of the important components of structural transformation of economies. With economic development as in conventionally comprehended, industrialization and escalated urbanization causes the shift of land from under agriculture to other uses. This has significant implications for the agricultural sector in terms of output and productivity but also for the population dependent on land with regard to their employment and livelihoods. The classical literature on economic transformation and experiences of early developed countries point to rising agricultural productivity with economic advancement and the increasing conversion of land-based petty producers, including farmers, into an urban workforce.

The fast growth in China, primarily led by manufacturing exports, for more than a couple of decades now have caused considerable structural changes within the economy. Arsel and Dasgupta examines whether the changes in land-use and consequent alterations in livelihood pattern in China resembles the classical economic transformation models or whether they call for an entirely fresh understanding of structural shifts in land-use that occur with growth and development, particularly in rapidly transforming economies like China. The study qualitatively assesses three different land conversion processes in various geographical regions in China, the use of arable lands for industrial urbanization in coastal provinces, the Grain-for-Green (GfG) land set-aside programme for the conservation of forests in the Yangtze and Yellow river valley and the wasteland reclamation programme in Xinjiang in Northwestern China.

The authors point out that the classical literature on structural transformation misses out on the multiple dimensions of land-use changes due to the exclusive treatment of land resources as a factor solely in agricultural production. With rapid urbanization, a land constraint can emerge on non-agricultural economic growth also. Further, with ecological factors in growth and development gaining importance in recent times, newer dimensions of land being diverted for ecosystem services also come into play. The study of the three divergent processes of land conversion in China throws light on the increasingly complex nature of structural change in a newly emerging economy.

There has been a considerable shift of arable land to industries and for urban townships in the eastern coast of China during the entire period of reforms since 1978. The change in land-use occurred at a faster pace during the fast manufacturing growth that China experienced in the nineties and after. Between 1996 and 2003, the pace of land conversion was high with 5.4 million hectares of agricultural land being lost. Some other rough estimates put the number of families being displaced through this process at 2 million per year. Social unrest and livelihood problems were sought to be tackled by rehabilitation and compensation packages, which were sometime inadequate for the purpose. The coastal experience of land-use shift is more akin to the classical notion of land shifting from agriculture to industrial needs with economic growth, though such a process in China has mostly been mediated or facilitated by state policy and not entirely driven by markets. With only a part of the displaced population getting absorbed in the formal manufacturing sector workforce, large sections have joined the army of migrant labours, seeking informal employment.

The GfG programme, one of the largest land set-aside programmes to protect the environment, aims to convert 14.7 million hectares of farmland to forests between 1999 and 2010. The severe droughts in 1997 and the devastating floods in 1998 has served as the motivation of converting large parts of sloping lands in the Yangtze and Yellow river valleys to forests. Under this programme, the government gives incentives to farm households for the latter to act as stewards of the environment. Three kinds of incentives, namely, kind payments of grains to replace lost production, annual cash payments to help with the process of transition and free seedlings at the time of planting, are given as part of the conversion process.

While the nature of this programme is closer to the ‘payment for ecosystem services’ (PES) framework, it is entirely carried out with strong top-down intervention from the State (with less option for farmers to choose whether to participate or which plots to give under the programme) and not based on market as the PES model is usually envisaged to be. The sustainability of this programme, though, is questionable as experts expect the people to resume farming once the state incentives expire after the stipulated 5 or 8 years.

The wasteland reclamation programme studied in the arid regions in Xinjiang province embodies bringing additional land under agricultural use. Reclamation of wasteland in North-west China has a long history. Studies reveal that between 1979 and 1997, more than 11 million hectares of land has been added to the arable stock in the north-western provinces. The most recent edition of land reclamation in Xinjiang is driven by the political economy where there is a strong urge to establish stronger control in this underdeveloped border province, which otherwise is strategically important with rich reserves of minerals and gas.

Under the wasteland reclamation programme, there has been an increased settlement by the majority Han community, reducing the ethnic Uyghurs of the province into a minority. While there has been considerable tension over this demographic change in recent times, the economic side of the programme has entailed a significant relocation of workforce from other rural or urban sectors to the agricultural occupation.

In the wake of these divergent processes, the authors conclude that structural transformation in China has been accompanied by a multi-directional change in both land-use and evolving livelihood patterns. Also, these changes are strongly influenced by the vision of development held by the State and seldom occur as a spontaneous process through markets. The Chinese experience of land-use changes reveals that land is a heterogeneous entity rather than a homogeneous factor of mere agricultural production. This further implies that rapid economic development is not necessarily always accompanied by a transfer of agricultural land to industrial requirements.