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Attempts to help China's rural residents monetize their land have hit complications

A MARTINEZ, HOST:

The sale of land and property has created huge wealth in China, but only in the cities. China's leaders are now trying to fix the resulting inequality. But as NPR's Emily Feng reports, efforts to give rural residents a chance at monetizing their land have hit complications.

EMILY FENG, BYLINE: When the Communist Party won control of China in the 1940s, most of the country was rural, and it was farmers who made up the party's political backbone. To this day, the county of Nanniwan, an arid Shaanxi province, is celebrated as a Communist success story of rural development.

YAO XIANREN: (Speaking Chinese).

FENG: This is Yao Xianren, a former party secretary of Nanniwan and a corn farmer. He moved here in the 1960s to help settle this once-barren land.

YAO: (Speaking Chinese).

FENG: He says when they all lived on communes, the land was so poor there was barely enough to eat. Now conditions are better. There are paved roads and modern tractors. Since then, the countryside has improved, but the cities have boomed.

Today, most Chinese people live in cities. And while Mr. Yao was farming his village, reforms unleashed a building boom in the 1990s and 2000s. Some three-fourths of private, urban wealth today comes from property. However, Mr. Yao has not been able to cash in on this property boom because rural land has a different set of rules. You're not allowed to build commercial buildings on it, and you can only really sell the land to the government.

YAO: (Speaking Chinese).

FENG: Mr. Yao explains that he sold his land to the state to build a road for about $20,000. And with state permission, he rents out his remaining farmland for just a few dollars a month. That's far less than what he would get if he sold directly to a developer.

So why is rural land in China controlled so tightly? It begins in the '80s, when the Communist Party divided up collectivized farms into individual family plots.

LOREN BRANDT: The incentives are powerful. It contributes to a huge growth in agriculture output. It's just absolutely fundamental to the beginning of the reforms.

FENG: That's Loren Brandt, a professor at the University of Toronto who has studied rural land policy extensively. But he explains these plots were given with strings attached.

BRANDT: Households have use rights. Households don't have ownership rights.

FENG: Meaning families do not own these plots. They're just allowed to use them for farming or to build a personal house on. But to this day, they cannot sell that land or even rent it out freely, as we just heard in Mr. Yao's case. And this is where local governments come in. They alone have the power to buy up rural land and sell it to property developers for a much higher price.

As more and more people migrated to the cities, more and more rural land was left empty and became available for them to sell. And these land sales are one of the biggest sources of municipal revenue because authorities are buying the rural land at super low agricultural rates and selling it at higher commercial prices.

BRANDT: And as a result, there was just a huge spread between the value of the land and its use in agriculture and between its use in urban development. And it was multiples - you know, 10 times, 15 times, 20 times.

FENG: This inequality was obvious. So in the early 2000s, some local governments tried to give rural residents a bigger cut of the property bonanza. Here's how they did this. It's a little complicated, but basically, China mandates that the country be able to feed itself. So for every square meter of land the cities gobble up, a square meter of arable land has to be created or set aside elsewhere.

One city, Chongqing, pioneered this idea called a dipiao or land ticket.

SHITONG QIAO: The idea is simple.

FENG: This is Shitong Qiao, a law professor at Duke University. He explains Chongqing buys up remote villages and turns them back into farmland.

QIAO: If you reclaim the land - you know, basically destroy the house and do some work, make it a - you know, to make it arable land, then you can sell this land ticket to a developer in the urban area.

FENG: The villager gets 85% of the sale, the government 15. The villager gets more money for their land, and the developer can go on building because they've created this new field, far away to balance it out.

That's what happened in a village named Partly Cloudy an hour outside Chongqing. One former resident, Mr. Li, describes why he decided to sell his house and his farm.

LI: (Speaking Chinese).

FENG: He says he thought the money would help him buy an apartment in the city and then he would get urban social benefits like a pension. Except Mr. Li is now part of a years-long lawsuit against Chongqing because he claims the government paid many villagers less than what they were promised.

LI: (Speaking Chinese).

FENG: He says he was supposed to get $6,000 for his house and $7,000 for his land. But in the end, he was only paid for his land. He says someone pocketed the difference. Like the 40 or so families in his position, Mr. Li wants to remain partially anonymous because village officials threatened him after he spoke to NPR. A city court ruled against him and other plaintiffs this fall.

Qiao, the Duke professor, says the dipiao system has loopholes that still allow rural land to be unfairly expropriated by governments. Farmers who sell their land also cannot negotiate for a market rate, and courts cannot help.

QIAO: But now under different name, land reclamation, the judges will say, oh, this is not land expropriation, so we don't know what to do. Don't come to us, right? Just talk to the government officials.

FENG: Which means villagers have no legal remedies. Today, where Partly Cloudy village once stood is now empty land.

(SOUNDBITE OF DOGS BARKING)

FENG: I find a few remaining villagers there who live in makeshift tents on their former property because their payouts were not enough to afford a city apartment or to rebuild their village houses. One of them, Mr. Chen, lives in a tarp treehouse surrounded by piles of dog feces.

CHEN: (Speaking Chinese).

FENG: He says he lives here even in the winter, surviving on his $150 a month social welfare payments. His predicament is a sign that China's rural citizens are still running up against their decades-old problem - how to sell their rural land at a fair price.

Emily Feng, NPR News, Chongqing, China.

(SOUNDBITE OF GOLD PANDA'S "I AM REAL PUNK") Transcript provided by NPR, Copyright NPR.

Emily Feng is NPR's Beijing correspondent.