China’s economic development and solving of many social and economic problems over the past three decades was closely related to its use of land. Solving the numerous challenges confronting China today also to a certain extent depends on whether land could be put to efficient use. Land has become a key factor in China’s economic development, and “land as king” has become a striking feature of China’s social and economic landscape.
Economic development relies on certain basic factors including land, labor, capital and technology. In the initial stage of industrialization, capital and technology were scarce while land and labor were relatively abundant. China achieved great economic success over the past three decades by leveraging the advantages of low-cost land and labor, opening up to the world, and granting preferential policies to attract foreign capital and technology. This model of development is based on two conveniences that other countries cannot duplicate: an extremely hardworking labor force with a loose labor law, and a public land system with weak protection for real land-use rights holders. Without the availability of low-cost land, it would have been impossible for China to have attracted so much foreign capital, and China could not have managed to construct the best infrastructure among developing countries in such a short period of time.
As land becomes an increasingly scarce and expensive resource in China, the existence of wasteful and ill-planned use of land calls for systematic reform and policy optimization in the following areas:
First, a reasonable system should be in place to define and protect land-use rights. Steps must be taken to avoid inefficient and unreasonable use of public land that results from administrative monopoly and lack of ownership protection.
Second, the price of land must be allowed to reflect its true cost and scarcity. In China, most urban land parcels are granted to public institutions and enterprises at minimum or no cost. Such artificially deflated land prices reduce the availability of land for residential purposes and distort home prices far beyond people’s ability to afford them.
Third, because many land-related issues are ultimately caused by inadequacy of efficient planning, the portfolio of land uses should be properly balanced through scientific planning.
Fourth, land administration regulations must be updated in a timely manner to keep pace with the rapid progress of industrial development. Wasteful use of land is an indication of a mismatch between administrative regulations and industrial development. As the most vibrant and revolutionary activity in history, industrial development is constantly changing the economic nature and supply-demand situation of all resources, including land.
In summation, technological advancement can transform resources whose value was previously unrecognized, such as land and water, into wealth-generating assets. In light of the increasing scarcity of natural resources in China, proper systems and mechanisms must be in place to ensure their conservation and efficient utilization.
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