Wandering China

An East/West pulse of China's fourth rise from down under.

50 million Chinese left homeless by developers [The Age]


Social divison: Looks like China’s leaders know where the work is cut out if they are to achieve more equitable wealth distribution and social equilibrium. Especially so if 60 million more farmers stand to lose land over the next two decades.

The problem is just going to get bigger as China becomes increasingly urbanised. Backtrack to 1982-86 just a little after opening up, we were looking at 37%. By the end of 2010, we were looking an urban population at almost 50% or 665 million. The target is 75% by 2030 (that’s a staggering 1 billion in urban areas) with 20,000 to 50,000 skyscrapers on the drawing board to support that push.

Arguably this reversal of its core revolutionary value may reveal – there is some way to go before the Chinese sensibilities of its socialist market economy learns how to manage the domestic socio-economic cons of engaging with the wider capitalist free market.

– – –

50 million Chinese left homeless by developers
Bloomberg
Source – The Age, published October 25, 2011

Bulldozers razed Li Liguang’s farmhouse four years ago after officials in the Chinese city of Loudi told him the land was needed for a 30,000-seat stadium.

What Li, 28, says they didn’t tell him is that he would be paid a fraction of what his plot was worth and get stuck living in a cinder-block home, looking on as officials do what he never could: Grow rich off his family’s land.

It’s a reversal of one of the core principles of the Communist Revolution. Mao Zedong won the hearts of the masses by redistributing land from rich landlords to penniless peasants. Now, powerful local officials are snatching it back, sometimes violently, to make way for luxury apartment blocks, malls and sports complexes in a debt-fueled building binge.

City governments rely on land sales for much of their revenue because they have few sources of income such as property taxes. They’re increasingly seeking to cash in on real estate prices that have risen 140 percent since 1998 by appropriating land and flipping it to developers for huge profits.

“The high price of land leads to local governments being predatory,” said Andy Xie, an independent economist based in Shanghai who was formerly Morgan Stanley’s chief Asia economist. “China’s land policy is really screwed up.”

The evictions are alarming the nation’s leaders, who have taken steps to tackle the problem and are concerned about social stability. Land disputes are the leading cause of surging unrest across China, according to an official study published in June. The number of so-called mass incidents — protests, riots, strikes and other disturbances — doubled in five years to almost 500 a day in 2010, according to Sun Liping, a sociology professor at Beijing’s Tsinghua University.

Final Insult

There’s more to come. Some 60 million farmers will be uprooted over the next two decades as the urbanization that propelled China to the world’s second-largest economy gathers pace, according to an estimate by the Chinese Academy of Social Sciences in Beijing. In many cases, officials take land they don’t use, an August report from the academy said.

That was the final insult for Li. The rice and bean plot his family farmed for generations still lies empty, weeds sprouting from the red earth. Villagers are convinced that the city has sold it to developers, even though they can’t point to any documentation to prove it.

“They flattened the land and still haven’t used it,” says Li, a wiry man with short-cropped hair, sitting inside the hut he built in a garbage-strewn alleyway across a main road from the stadium. “They sold it for I don’t know how many millions of yuan.”

Officials in Loudi, located in central China in Mao’s home province of Hunan, wouldn’t answer questions about whether plots in Li’s village were sold or what they will be used for.

50 Million Evicted

Li is among 50 million farmers who’ve lost their homes over the past three decades since Deng Xiaoping began breaking up Mao’s collectivized farms to make way for factories, roads and airports, according to numbers from the academy. Turning people like him into more economically active citizens is part of an urbanization policy that has swelled city dwellers to about 50 percent of the population, from 21 percent in 1982, according to official census data.

Termed “chaiqian” in Chinese, the demolition and relocation of communities has become increasingly controversial. Cities have been grabbing land to finance operations and pay back or restructure mushrooming debt that reached at least 10.7 trillion yuan ($1.68 trillion) by the end of 2010. Almost a quarter of that is backed by land, according to China’s National Audit Office.

The money paid for the building spree that was designed to maintain China’s economic growth in the wake of the global recession. Loans were obtained through more than 10,000 financing vehicles cities created to get around laws prohibiting them from borrowing, according to a central bank count.

Low Compensation

Cities may have to accelerate land sales as they struggle to repay the debt, said Victor Shih, a professor at Northwestern University in Evanston, Illinois, who studies China’s local- government finances. There’s also an incentive for officials to keep payments to farmers as low as possible, he said.

“Without suppressing land compensation, local governments can’t make the margins to pay back the banks,” Shih said. “In essence, they are the engines of inequality in China. Land development is the redistribution of income from average households to rich households.”

Loudi is one of 186 local authorities from Guangxi on the Vietnamese frontier in the south to Heilongjiang on the Russian border in the north that issued bonds or short-term notes through financing vehicles in the first nine months of this year. Some 105 of them said they engage in “chaiqian,” according to their prospectuses.

Family of Nine

Li’s family of nine — including his wife, first child, parents and brother’s family — had lived in a 400-square-meter two-story farmhouse on almost a half-acre of land. He said he didn’t worry about feeding them, and he was able to pay for extras by selling his vegetables a couple times a month in the city and doing odd jobs.

“It was a reliable income,” said Li. “Before we had food to eat. Now if I don’t work as a laborer, we don’t have anything.”

Then came the evictions. The sports bureau took about 47 acres of land in Dawu and another village, issuing notices — and verbal threats — in 2006 saying it was needed for the stadium.

“They told us that if we didn’t move, they would send a lot of people to destroy our house,” Li said. “If you didn’t agree they would detain you.”

Villagers were initially relocated to the alleyway where they built shanties with tarp and corrugated-tin roofs. The only bright notes are the red scrolls bearing the Chinese characters for good fortune that adorn some front doors.

From the lane, Li can see the stadium gleaming at one end and new luxury high-rise buildings to the other.

Temporary Home

Li’s shelter was supposed to be a temporary home while he builds a house on the 70-square-meter (754 sq. ft) plot the city gave him about 100 meters further south. He said his family of nine received 280,000 yuan in compensation, not enough to finish construction of their new home. Unable to get bank loans, he borrowed 100,000 yuan from family and friends.

That still wasn’t enough, putting Li in a Catch 22: without a loan he can’t finish his house, and without a house he has no collateral for a loan.

Most of Li’s income is spent on groceries, he said. Food inflation in China was running at 13.4 percent in September.

“The renminbi is appreciating everywhere in the world, but in China it’s depreciating,” Li said one late August evening, smoking a White Sand cigarette and sipping bootleg liquor in a restaurant overlooking paddy fields.

The compensation that Dawu villagers say they received works out at about 6 percent of what the city was selling land for in 2008, a year after they were evicted. Dawu natives said they received 38,000 yuan per mu, a Chinese measure of land that is about one-sixth of an acre. That’s less than half the average of 85,420 yuan the Loudi city government says it paid, according to a notice on the website of its land resources bureau.

The land is worth many times even the higher figure. Loudi city in 2008 sold its land to developers for 600,000 yuan per mu, according to the bond prospectus. A similar plot to Li’s near the stadium sold in March for 1.2 million yuan per mu, according to the website of the city’s State Land Resources Bureau.

It would take Li 92 years to earn enough to buy back his still-vacant plot at that price based on his present wage rate as a day labourer.

Daily Struggle

Li’s focus is on the daily struggle to feed his family and finish his new home. He wishes officials would start building on his land, giving him the chance to pick up some work. Ultimately, he hopes to use the home as collateral to borrow money to buy a digger so he can earn more money at construction sites.

In his hut, where the only decoration is a vase of yellow plastic flowers and a 2009 calendar celebrating the 60th anniversary of the Communist state, he laments the loss of his old, simpler way of life.

“Our house was not like this before,” he said. “Five years ago I had my own house, and everything surrounding it was mine.”

Bloomberg

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Filed under: Beijing Consensus, Bloomberg, Chinese Model, Corruption, Culture, Domestic Growth, Economics, Government & Policy, Infrastructure, Lifestyle, Mapping Feelings, Migrant Workers, Migration (Internal), Modernisation, National Medium- and Long- term Talent Development Plan, Nationalism, People, Politics, Population, Public Diplomacy, Reform, Social, The Age, The Chinese Identity, The construction of Chinese and Non-Chinese identities

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