The Role of Property Rights in China’s Rural Reforms and Development: A Review of Facts and Issues

Property rights affect economic efficiency via their effect on incentives. As such they played a critical role in China’s rural reforms in the early 1980s, when decollectivization occurred and production incentives were invigorated. While property rights reform remains incomplete, the issue of overriding importance today is whether farmers are able to obtain off-farm employment and income opportunities. Available evidence suggests that both the process of “surplus” rural labor transfer and farm investment behavior have not been severely hampered by the attenuation of transfer right. This suggests that the “deepening” of property rights reform, which may be socially divisive at this stage of the development process, can wait until greater proportions of the rural population have become less dependent on agriculture for livelihood.