Market

Rentals constitute a voluntary, market mechanism for reassigning parts of the bundle of rights in agricultural land. They usually occur between households but also include rental of use rights by the village to individual households. Contracts can be either formal or informal and of fixed or indefinite length.

Non-market

The next three assignment mechanisms rely on authority rather than exchange. Land reallocations entail a redistribution of usufruct rights among households by the village (or small group). In the course of a reallocation, land previously allocated to households is taken back and redistributed among existing as well as any newly formed households, typically on the basis of household size. Households may either gain or lose land involuntarily in the course of the reallocation. The amount (area) of land they are allocated can also remain the same, while the plots they are allocated change. Villages may also use reallocations as an opportunity to reassign use rights to the village collective, which may then rent out the land.

Village-mediated transfers entail the redistribution of land-use rights from households to third parties through the village or small group as an intermediary. End-users are commonly agribusinesses but also include specialized farm households. Households typically sign contracts with the village, which in turn is a signee with the end-user. In some cases, higher levels of government may play a role in organizing the transfers. These transfers may not be completely voluntary on the part of the household and represent a second form of non-market assignment.

Land takings are a third form of non-market reassignment of property rights. They involve the expropriation of collective land by the state or, informally, the village, and thus the loss of endowment by households. A taking may be tied to new infrastructure investment, for example the building of roads, or conversion of land into non-agricultural uses such as residential or commercial real estate, or industrial parks. In the case of expropriation of farmland by the state, households are entitled by law to compensation based on the agricultural returns to land – not on the value of the land at its highest or best use. Local governments lease land thus acquired at either negotiated or competitive prices, allowing governments to capture the rent generated by selling land for higher-value use. Villages also engage in informal takings outside the regulatory purview of local government land bureaus.

Regime 1: non-market mechanism with household beneficiaries

The first period (1996–2000) in Jiangsu and the first (1996–2000) and second (2001–2005) periods in Shaanxi reflect a single property-rights regime: non-market mechanism with households as the primary beneficiary (Figures 1 and 2). The non-market mechanism that dominates is reallocations. Table 2 presents village-level data to show that between 1996 and 2011, 35 reallocations were carried out in total, with more than half occurring between 1996 and 2000. On average, villages carried out 1.5 reallocations, with only five of 24 sample villages reporting no reallocation at all. Reallocations, on average, entailed approximately 67 per cent of village land. The decision to reallocate was most commonly made by the local government (19/35) or the village (10/35), and the single most important reason for the decision was expiration of land contracts issued during the first round of land contracting and the initiation of the second round.

Table 3 provides data at the household level. Altogether, households reported 152 changes as a result of reallocations since 1996, usually tied to changes in household size. The number of affected households was slightly larger in Shaanxi than in Jiangsu. In half (75/150) of the cases for which we have complete information, households experienced an increase in the land they were allocated; in more than a third (54/150) of the cases, they reported a reduction, and in 21 cases, there was no change in the amount of land allocated, but the plots they were allocated changed. In this regime, both village-mediated transfers and land takings are relatively rare events.

Regime 1: hypothesized driving factors

The non-market household regime described above is most likely to occur when there are limited off-farm opportunities for household labour, cadres face pressure to meet agricultural output targets, legal restrictions on reallocations are weak, and there is little demand for land outside of agriculture (Table 4).

When households have limited off-farm opportunities, demand for farmland to generate income is higher. At the beginning of the household responsibility system, arable land per capita was roughly 1.5 mu, there were very few off-farm opportunities, and nearly every household wanted more land to farm. Estimates made on the basis of the National Bureau of Statistics’ (NBS) rural household survey for 1996 reveal that, in Shaanxi, wage income per capita was only 197 yuan, or 17 per cent of total household net income per capita. In Jiangsu, wage earnings were 1,191 yuan, or five times larger, but this represented only one-third of total household income per capita. James Kung and Shouying Liu link early reallocations with village decisions, consistent with household preferences, to accommodate changes in population (labour supply).Footnote ⁵ Limited off-farm opportunities and strong household demand for agricultural land likely shaped the non-market household regime found in Jiangsu in period 1 and in Shaanxi in periods 1 and 2.

Cadre pressure to fulfil central government grain quotas also shaped the non-market household regime. Quotas were officially eliminated only in 2003–2004, midway through period 2.Footnote ⁶ On the margin, village cadres may have reallocated land among households with an eye to facilitating grain quota fulfilment.Footnote ⁷ Moreover, local “use-it-or-lose-it” rules enforced by village cadres, in conjunction with generally high demand for agricultural land, likely reinforced household perceptions that land rights were insecure and so may have discouraged rentals among households. Resulting inefficiencies in land use among households may have provided village cadres with additional incentives to resort to non-market mechanisms to reallocate land.

Before the mid-1990s, the formal legal framework governing rural land allowed reallocations to assign rights. In 1993, the State Council began to promote restrictions on the common practice of reallocating land. Such restrictions came into force gradually over time with the 1998 Land Management Law (LML) and 2002 Rural Land Contracting Law (RLCL).

Finally, in the sample counties and villages, demand for non-agricultural land was modest in the early periods.

Regime 2: non-market mechanism with state beneficiaries

The second period (2001–2005) in Jiangsu reflects the emergence of a new property-rights regime: non-market mechanism with state beneficiaries (Figures 1 and 2; Tables 2 and 3). Reallocations dropped off sharply in Jiangsu after 2000, with only three cases reported at the household level,Footnote ⁸ and transfers occurred only rarely in this regime. The non-market mechanism that dominates is takings.Footnote ⁹

Land takings occurred regularly in our Jiangsu sample of villages and households beginning in 2000, with only rare occurrences prior to 2000. Altogether, there have been 33 land takings reported at the village level since 1996, or an average of 1.4 per village (Table 2). One-third of the villages report no land takings, and so, conditional on having a land taking, the average is 2.1 takings per village. Three or more land takings occurred in 20 per cent of the villages. Land takings were nearly three times as likely to occur in Jiangsu than in Shaanxi. This difference in frequency also widened over time. An average taking involved 86 mu, in the course of which 109 households per village lost land. For villages experiencing takings, a total of 177 mu per village was taken, and 226 households lost land. This represents 20 per cent of total land in affected villages. Nearly 90 per cent of the lost land had been used for agriculture, with the rest largely residential. Almost 80 per cent of the land taken was reportedly used for “public” purposes such as roads and railways, and 20 per cent was used for commercial purposes.

Among our 192 sample households, 59 land takings were reported altogether: 6 in period 1, 23 in period 2, and 30 in period 3. Fully two-thirds (38/59) of the takings reported by households occurred in Jiangsu. On average, a household that lost land in the course of a taking experienced a reduction in its land endowment of 2.9 mu. The median amount of land that households lost, 1.1 mu, is more consistent with the village estimate, suggesting that a few outliers may explain the difference.

The survey shows that local government actors were important decision makers in land takings. A majority of the 33 land takings reported in the village survey were authorized by the county (29/33). This is consistent with reports that most of the takings were for public purposes such as the building of roads, widening of railroads, etc. The few reports of land takings authorized by the township or village are indicative of informal takings beyond the purview of the county land resources bureau.

The data allow us to further differentiate two key issues relating to compensation for land takings: who decided the compensation and the level of compensation. For the vast majority (29/33) of takings reported at the village level, we have information relating to compensation. First, with respect to decision making about compensation, the village decided key parameters in roughly half the cases (15/29) and higher-level authorities in the other half (14/29). Compensation was either in the form of a single payment or annual payments. Where a single payment was made, average compensation per mu rose over time, with the average compensation per mu exceeding 20,000 yuan by the end of the period.

In sum, land takings took off beginning in period 2 in Jiangsu. Affected villages lost roughly one-fifth of their (mainly agricultural) land. Most takings occurred at the direction of the local government, reportedly for public purposes, and compensation reflected the agricultural use-value of the land.

Regime 2: hypothesized driving factors

The non-market state regime is most likely to occur where off-farm opportunities for household labour are more readily available, cadres face pressure to meet a range of targets and unfunded mandates, legal restrictions on reallocation are beginning to take hold, and there is strong demand for land outside of agriculture (Table 4).

Off-farm labour emerges as an important factor in period 2 in Jiangsu. By 2003, in the middle of period 2, only about one-third of the Jiangsu labour force was still employed in the primary sector compared to more than half in Shaanxi. The average off-farm wage income of rural households in Jiangsu was 2,189 yuan, more than half of total household income. By comparison, average wage income in Shaanxi was only 616 yuan, 37 per cent of total income as of 2003.Footnote ¹⁰ These indicators reflect the changing dynamics of off-farm employment opportunities and may help explain the sharper drop in reallocations in Jiangsu with declining household demand for land compared to Shaanxi in period 2. Moreover, before the abolition of the agriculture tax and prior to the introduction of agricultural subsidies paid to households in 2004, the “farmers’ burden” made agriculture less profitable and often resulted in abandoned (paohuang 抛荒) land in Jiangsu.Footnote ¹¹

The non-market state regime that emerges in Jiangsu also reflects sources of growing demand for non-agricultural land, including takings for both public and industrial/commercial purposes. We begin by simply highlighting the existence of demand for land for non-agricultural uses, which has grown with rapid urbanization, industrial expansion and China's huge investments in infrastructure, notably, highways. In Jiangsu, completed kilometres of highway increased 145 per cent between 1996 and 2003, compared to only 24 per cent in Shaanxi.Footnote ¹² Industrial and commercial construction increased as well. By 2003, in the middle of this period, Jiangsu was 47 per cent urban. The comparable figure for Shaanxi was 33 per cent. Thus, economic factors, particularly demand for land in a range of non-agricultural uses, were important drivers of the non-market state property-rights regime.

A related political factor in Jiangsu, the assignment of land conveyance fees (tudi churang jin 土地出让金) to the fiscal accounts of local governments beginning in 1998, reinforced economic incentives to convert land from agricultural to non-agricultural uses. This policy followed the implementation of fiscal reforms that reduced the local government's share of revenue from income and other taxes. Land conveyance fees by the end of the period (2005) reached 100 billion yuan in Jiangsu.Footnote ¹³ Unfunded mandates for local officials reinforced these incentives. Local governments also manipulated land conversions to meet other targets, including attracting investment.Footnote ¹⁴ Together, these political factors heightened incentives for local governments to engage in land takings.

In the legal domain, the framework governing land takings gave the state a monopoly over the conversion of rural to urban land. Moreover, the 1998 LML defined compensation levels paid to rural households in terms of agricultural-use value – not market value – creating rents for state officials to capture from land transactions.Footnote ¹⁵ This legal framework for land takings is laid out in Articles 47–55 of the LML, which shaped the emergence of the state-centred property-rights regime in Jiangsu in period 2. Given contemporary legal institutions, it was difficult for households to challenge the legality of even unsanctioned or under-compensated state land takings.

At the same time in the agricultural sector, “30 years, no change” – the legal principle that farm households should control plots allocated to them in the second round of land contracting for the next 30 years – became more widely accepted after the passage of the LML in 1998 and RLCL in 2002, early in period 2. Surveying farm households, Roy Prosterman et al. report that the “30-year no-readjustment policy” was known by 90 per cent of those surveyed.Footnote ¹⁶ In our survey, the figure is 83 per cent. Klaus Deininger and Songqing Jin address legal knowledge on the part of village cadres and show that “reallocation is significantly less likely in settings where village leaders are well aware of the content of the RLCL.”Footnote ¹⁷ These findings suggest that the passage of the LML and RLCL, in conjunction with declining household demand for land, reduced the likelihood of reallocations.

Regime 3: non-market mechanisms with state and village beneficiaries

The third period (2006–2011) in the Jiangsu region reflects the emergence of a more complex property-rights regime relying on non-market mechanisms with both state and village beneficiaries (Figures 1 and 2; Tables 2 and 3). State land takings that reduced collective land endowments continued apace. Most takings occurred in 2010. In addition, village cadres became more active players in the management of any remaining collective land through village-mediated land transfers.Footnote ¹⁸

Village-mediated land transfers emerged in period 3 as a fairly new phenomenon, with 19 of the 26 reported by our sample of villages occurring after 2005. Furthermore, such transfers were much more prominent in Jiangsu than in Shaanxi. At the household level, respondents reported that since 1995 they had given up their use rights to land through village-mediated transfers on 59 occasions. Out of these, 54 occurred after 2005 and mostly in Jiangsu (47/54); a majority of these transfers (40/54) occurred in a single year, 2011. On average, a land transfer involved 2.8 mu.

In a majority of the cases, the transfers were organized by either the village or small group, followed by a smaller number of cases (12/66) in which higher levels of government played an organizing role. The use rights were typically transferred to the village, which in turn signed contracts with the third party. In 57 out of the 66 cases, the land was used for agricultural purposes, but it was used for non-agricultural, commercial or other purposes in the remaining nine cases.Footnote ¹⁹ Formal contracts were inked in more than 90 per cent of the transfers since 2005. Payments to households were typically on an annual basis, with lump-sum payments made in only a few cases. For those contracts in which payments were annual, the mean (median) payment was 1,469 (695) yuan. There are a number of large outliers, and the median is more reflective of the compensation. What we do not know is how much compensation the village or small group may have received as part of the transfer to the end-user.

In one case, village cadres, led by the village Party secretary, mobilized 220 households (about a quarter of all villagers) to transfer nearly 900 mu of land to the village for the duration of the 30-year land contract through the year 2026 in order to establish a village-run tea plantation.Footnote ²⁰ (Similar tea plantations in the same region were also developed through village-mediated transfers and were operated by agribusiness investors from Taiwan.) According to the Party secretary, transfers back to the village were voluntary (liuzhuan gei jiti zhong cha nonghu meiyou bu yuanyi de qingkuang 流转给集体种茶农户没有不愿意的情况), since most labour in the village was engaged in either local or non-local off-farm employment. The village contracted back villagers’ land and made annual payments to participating villagers of 400 yuan per mu for paddy land and more than 300 yuan per mu for dry land. The village itself became a residual claimant in the operation of the tea plantation.

It is noteworthy that in nearly half of the most recent transfers reported in the pilot survey, payments to households were in arrears. So, although decisions about land transfers were reported to have been participatory, with terms agreeable to villagers, payment arrears point to potentially important problems in the transfers. Households may not have been able to exit these contractual agreements, effectively resulting in loss of households’ land endowments. The village itself became a dominant player in the property-rights regime.

Regime 3: hypothesized driving factors

The non-market state and village regime is likely to occur where off-farm opportunities for household labour are the major source of household income and employment, cadres face pressure to promote scale agriculture, legal restrictions on reallocations are well established, and there is strong demand for land outside of agriculture (Table 4).

In the economic domain, as off-farm opportunities increase, household demand for farmland continued to fall off; this happened more quickly and completely in Jiangsu than in Shaanxi. In the pilot study, village cadres reported the number of households engaged exclusively in agriculture and the number engaged in off-farm activity at the end of period 3. In the Jiangsu sample, as of 2011, the share of households working exclusively in agriculture was only 15 per cent; it was two and a half times higher in Shaanxi (37 per cent). Conversely, the share of households working in non-agriculture, either exclusively or in both agriculture and non-agriculture, was 85 per cent in Jiangsu and 63 per cent Shaanxi. Where off-farm opportunities were plentiful, and household demand for land was low, cadres responded through village-mediated transfers.

In principle, land rentals could have helped to eliminate imbalances and contributed organically to consolidation of farm size and a shift to higher-value uses in agriculture. Both consolidation and higher-value crops entail investments in the land predicated on secure property rights from the perspective of the renter. However, “use-it-or-lose-it” norms imposed by cadres, or concerns of possible predation by village or township officials that would put these investments at risk, likely undermined the expansion in the role of the market and supported village-mediated transfers as the solution to keeping arable land in cultivation.

Political factors, as reflected in a range of targets imposed on local cadres, also contributed to the emergence of the new property-rights regime in Jiangsu in period 3. One such factor was food security. The importance of land to food security gained renewed attention when grain output fell between 1998 and 2004 as a result of the declining returns to grain production. One response by the Ministry of Agriculture was to promote land concentration and large-scale farming. Some sub-national governments responded to central government signals by setting specific targets for consolidating land through village-mediated land transfers.Footnote ²¹ Transfers were not completely voluntary, and households could not exit from land-transfer contracts.Footnote ²² Qian Forrest Zhang, Qingguo Ma and Xu Xu argue that village authorities used transfers (what they refer to as reverse renting and subcontracting) “to dispossess farmers of their contracted land without their consent, using coercive means when necessary and then sub-contract[ing] the land for higher returns, often for non-agricultural use, while pocketing benefits for themselves in the process.”Footnote ²³ Administrative targets appear to be associated with non-market mechanisms (here, transfers) to assign land rights.

Similarly, informal takings – i.e. those under the regulatory radar – may have been a response to restrictive quotas on rural-to-urban land conversion. The trend of declining grain production led the central leadership in 2008 to declare a “red line,” mandating that a minimum of 1.8 billion mu (120 million hectares) of arable land be maintained. The centre sought to limit land conversions by more tightly regulating land. The Ministry of Land Resources established a “national blueprint,” dividing land into distinct categories in which urbanization was prioritized, encouraged, limited or forbidden.Footnote ²⁴ Formally, local governments faced restrictive quotas for conversion of arable land to construction land. They also faced new minimum household compensation levels, which gradually increased over time but which remained below market values.

Strict administrative limits on land conversions, while they may have slowed the pace of formal state land takings, may also have led to more informal or illegal conversions, in some cases occurring under the guise of transfers. An example from a village where we conducted in-depth interviews is illustrative. In 2010, village leaders signed a contract with a film production company to rent 350 mu of land for the construction of movie sets. None of the land, which came from multiple small groups in the village, had been approved for non-agricultural use, but an application to the land management bureau for the legal conversion of only 13 mu (of the 350 mu) was in process. Limits on official land conversion made it difficult for projects to be included in the land planning process of higher-level governments. Instead, village leaders transferred land back from villagers and rented it to the film company. Local residents reported payments of 600–800 yuan per mu (depending on the quality of the land for farming) in annual rental payments from the village. The village received about half of its 1.2 million yuan in village annual fiscal revenue from renting out assets (primarily land) to the film company and other end-users. Here, the village was a dominant player receiving financial benefits from the informal conversion of land to non-agricultural uses.

Further policy changes, particularly the rural tax-for-fee reform, including the elimination of both township levies (tongchou 统筹) and village-retained fees (ti liu 提留), and the subsequent abolition of the agriculture tax directly affected administrations at the lowest level of the party-state hierarchy, especially townships and villages. Despite the increase in inter-governmental fiscal transfers to townships, these transfers did not fully offset the decline in revenue experienced by local governments. In this context, townships were likely to be complicit in formal and informal land takings by both higher-level governments and subordinate villages as a means of generating revenue. Land has taken on new value for rural collectives as well. With the loss in fiscal revenue, land in both agricultural and non-agricultural uses has become increasingly valuable to villages and small groups as a source of local revenue. Loren Brandt and Linxiu Zhang identify an increase in revenue derived from rentals and sales of village land.Footnote ²⁵ Lanchih Po describes how village collectives organize new corporate forms to informally convert rural land to non-agricultural uses.Footnote ²⁶ Informal takings allow collectives and their members to capture the gains from shifting land to higher-value uses, substituting for losses in fiscal revenue. The quest for local revenue sources remained an important driver of not only village-mediated transfers but also formal state land takings that continued throughout period 3. Province-wide figures show that land conveyance fees assigned to local government reached 632 billion yuan in Jiangsu in 2011. For the same year in Shaanxi, they totalled only 24 billion yuan.Footnote ²⁷ Fiscal pressures, along with targets for land consolidation and restrictive quotas on the conversion of arable land, interact with high demand for non-agricultural land to increase land takings, both formal and informal.

In the legal domain, formal land law appears to support rentals on the part of individual households. According to the RLCL, farm households have the right to transfer (zhuanbao 转包), lease (chuzu 出租), exchange (huhuan 互换), or permanently transfer (zhuanrang 转让) their land within the agricultural sector (Article 32) and to receive compensation for the exchange of these rights (Articles 32 and 36). The RLCL, along with related policy initiatives, makes exchanges more acceptable at the same time as reallocations are formally discouraged. With the law's emphasis on rights to transact land within the agricultural sector, some farm households may be able to capture returns from their investments in land. However, formal household land rights are weakly implemented. In interviews, village cadres in Jiangsu describe “preventing uncultivated land” as an explicit evaluation target. Cadres strived to meet that target by “taking back” land from households that did not actively farm. In interviews conducted in 2011, Jiangsu villagers reported that they were not allowed to fallow their land (bu yunxu paohuang 不允许抛荒) and that they could not rent their land to outsiders (tudi liuzhuan xieyi bixu tongguo jiti buneng he wai ren sixia qian xieyi 土地流转协议必须通过集体不能和外人私下签协议) – despite the fact that both are implicitly or explicitly permitted by the 2002 RLCL.Footnote ²⁸ These limitations on household land rights likely limit the extent of land rental markets in these communities, and transfers appear to be a village-led alternative.

Regime 4: mixed property-rights regime

The third period (2006–2011) in the Shaanxi region saw the emergence of a fully mixed property-rights regime. What is most notable about Shaanxi compared to Jiangsu in period 3 is the importance of market mechanisms in tandem with non-market mechanisms (Figure 2, Table 3). Specifically, land rentals among households constitute an alternative, market mechanism for reassigning parts of the bundle of rights in agricultural land.

Through the survey, we obtained household-level information for 2011 on all current arrangements involving either the contracting in or contracting out of land. The majority of agricultural land farmed by households in our survey was obtained through the allocation of collective land from the village or small group to the household; however, land contracted in either from the village or from other households represents nearly one-sixth of agricultural land farmed in the sample. Shaanxi and Jiangsu present contrasting patterns: in Shaanxi, agricultural land contracted in by households either from the village and from other households represents 4.5 and 13.1 per cent, respectively, or 17.6 per cent of total agricultural land under household management. Households also contracted from the village more than 20 per cent of the total forestry land. On the other hand, in our Jiangsu sample there was no contracting in of land from the village, and the percentage of all land contracted in from other households was a meagre 1.9 per cent.

Altogether, there were 48 contracts in 2011 to rent in land, involving 30 households (15 per cent of all households) in the sample. As suggested by the estimates reported above, this activity is much more prominent in Shaanxi and accounts for the majority of contracts (40/48) and households (26/30). This works out to be slightly less than 30 per cent of all households sampled in Shaanxi, but only 4 per cent in Jiangsu (and most rentals in Jiangsu took place in one village). The average amount of land covered by these contracts is 8.5 mu, with the amount four times larger in Shaanxi than in Jiangsu (10 mu versus 2.2 mu.) Most of these cases involved renting land from other households. In Shaanxi, 26 per cent of these contracts were with parties who were neither relatives nor acquaintances; in Jiangsu, the comparable figure is zero, suggesting limitations on market-based exchange. In slightly more than a third of the contracts, households contracted in additional land from either the village or small group. This was observed exclusively in two counties in Shaanxi and not at all in Jiangsu.

In the full sample, there were fewer instances of renting out land than renting in land (39 contracts to rent out land versus 48 contracts to rent in land), with 30 households renting out land, and some reporting multiple rental contracts. The cases are fairly evenly divided between the two provinces. The average amount of land covered by the contract was only 1.6 mu, much smaller than the average size of the land rented in. The average amount of land under contract was larger in Shaanxi than in Jiangsu (2.2 mu versus 1.0 mu). In all three sample counties in Shaanxi, households typically rented out to other households. In Shaanxi, the number of households involved in renting in was greater than the number involved with renting out; this situation may have occurred when entire families left the village but retained their land and hukou. In Jiangsu, renting out included both renting out to other households and renting out to the village. The latter case is concentrated in a single sample county and most likely captures a phenomenon similar to village-mediated transfers.Footnote ²⁹

The property-rights regime in Shaanxi in period 3 was the most complex. Land reallocations, while less common than in period 1, continued to occur at much higher levels than in Jiangsu, with 23 reallocations reported by households in Shaanxi and only one in Jiangsu. Takings increased slightly in Shaanxi, with sample households reporting 13 instances of land takings. Transfers appeared in the reports of sampled households in Shaanxi for the first time in period 3.

Regime 4: hypothesized driving forces

The fully mixed regime is most likely to occur where off-farm opportunities for household labour are more readily available, cadres face pressure to meet a range of targets and unfunded mandates, legal restrictions on reallocation are beginning to take hold, and there is some demand for land outside of agriculture (Table 4).

Off-farm labour markets influence household demand for agricultural land. Recent studies suggest that off-farm labour opportunities are correlated with the renting out of land by households.Footnote ³⁰ Zhang, Ma and Xu similarly relate renting out to non-local, or migratory, off-farm employment.Footnote ³¹ In sample counties where land rentals among households were common, they served to balance local demand and supply of agricultural land among households, possibly reducing popular pressure for reallocations and thus the desire of cadres to carry them out. This effect may be tempered by political and legal factors that also come into play.

Legally, the continued role for reallocations may be surprising in light of the LML and RLCL; however, reallocations may accord with the letter of the law to the extent that they find support among two-thirds of households within a village (RLCL, Article 27).

Politically, continued reallocations may serve several functions: increasingly, they benefit collectives, enabling them to set aside land for revenue generation; they may benefit influential local households with unmet demand for land without the costs of participating in the rental market; and they spread out the costs and possible rewards among households in villages affected by land takings. Village-mediated transfers in Shaanxi in this period likely reflect the same dynamics found in Jiangsu, namely, political pressure on cadres to promote scale agriculture and to take advantage of opportunities to generate revenue for village cadres from a wider range of uses for collective land.

The fully mixed regime also reflects growing demand for land in non-agricultural uses such as expanding public infrastructure. In 2009, in the middle of period 3, highways increased 188 per cent in Shaanxi compared to 2003, the mid-point in period 2. This is consistent with the increase in takings, which were largely for public purposes.