The politics of land use conversion in china case study of a guangdong county 2

Chapter Two
Explaining Land Use Conversion
2
Explaining Land Use Conversion
Several hypotheses have been advanced in explaining the conversion of agricultural
land to non-agricultural use in China. Analyses that pinpoint large-scale processes of
urbanization and industrialization, institutional flaws in China’s land use regime, and
the political weakness of peasants are insightful in throwing light on land use change
from different perspectives.
1
However, while existing literature has shown that these
diverse factors account for land use conversion in one way or another, there has yet
to be a study that employs a coherent framework to systematically analyze the
interplay of the various determinants, including general and local-specific variables,
in influencing the patterns of land use conversion. An understanding of how problems
in China’s land management and peasants’ vulnerability are institutionalized is useful
but whether local state agents choose to exploit these institutional weaknesses is
dependent on norms and conditions at the collective level. Local-specific factors –
the fiscal situation and requirements, path of development or industrialization, and
the availability of land and other resources – affect local state agents’ decision and
action to supply agricultural land for conversion.
This brings us to another problem with most existing studies: the lack of sufficient
attention on the central actor in the process, i.e. local officials, and their incentives in
effecting land use change. Local state agents play a decisive role in land use
conversion. Although national policies are enacted by the central government, local
agents exercise considerable power and discretion in implementing them. They do
not necessarily act in the interest of the principal and may distort or selectively
implement central policy.
2
Furthermore, in the absence of upper-level guidance, local
1

Refer to the works cited under the next section.
2
For a general discussion of China’s policy implementation, see Kenneth G. Lieberthal and David M.
Lampton (eds.), Bureaucracy, Politics, and Decision Making in Post-Mao China (Berkeley: University of
Yew Chiew Ping
27
Chapter Two
Explaining Land Use Conversion
governments may also make and implement their own policy that contravenes central
policy. Local state agents’ motivations, therefore, serve as a useful point of departure
in understanding land use conversion. From this platform, regional variation in land
use patterns may be explained through the further analysis of how officials’
motivations interact with local-specific structural and institutional conditions.
The following sections explore existing literature for the variables that promote land
use conversion before articulating an approach to the problem that addresses the
micro-macro, agency-structure connection.
Alternative Explanations
The Demands of Urbanization
Scholars have analyzed statistics at the national and regional levels to propose that
the trends of urbanization and industrialization, drive the conversion of land to non-
agricultural use from the 1980s to the 1990s.
3
This study, however, proposes that the
concept of urbanization, broadly understood as the shift from rural-agricultural activity
to urban-industrial activity and measured by different indicators, has a more
ambiguous relationship with non-agricultural land use in China than what scholars
perceive.
First, some common indicators of urbanization, such as the size of the urban built-up
area and industrial land, are not appropriate for analyzing the causes of non-
agricultural land use. Lin, for one, suggests that “a city-centred urban sprawl at the

top and a dispersed rural-based industrialisation at the bottom appear to be the two
California Press, 1992); Melanie Manion, “Policy Implementation in the People’s Republic of China:
Authoritative Decisions versus Individual Interests,” The Journal of Asian Studies, Vol. 50, No. 2 (1991),
pp. 253-79.
3
See Lin and Ho, “China's Land Resources”; Ho and Lin, “Converting Land to Nonagricultural Use,” pp.
81-112; Lin, “Reproducing Spaces,” pp. 1827-55; Tan Minghong, Li Xiubin, Xie Hui, and Lu Changhe,
“Urban Land Expansion and Arable Land Loss in China: A Case Study of Beijing-Tianjin-Hebei Region,”
Land Use Policy, Vol. 22, No. 3 (2005), pp. 187-96.
Yew Chiew Ping
28
Chapter Two
Explaining Land Use Conversion
concurrent processes of urbanisation that have contributed to the recent expansion
of non-agricultural land use” in Guangzhou, Hefei and Wuxi.
4
However, it seems
tautological to suggest that industrialization, indicated by the area of industrial land
and development zones, caused the expansion in non-agricultural land use.
Similarly, the use of “urban built-up area” as an explanation for the increase in non-
agricultural land use is also flawed.
5

In another study, Ho and Lin have used a multivariate regression analysis to suggest
that non-agricultural land use in three coastal provinces – Shangdong, Jiangsu and
Guangdong – is positively related to population density (population divided by land
area), level of development (real GDP per capita) and urbanization (ratio of non-
agricultural population to total population). Results of the analysis show that “the
relative importance of land allocated to non-agricultural use are 75.1 percent for
population density, 17.8 percent for urbanization and 7.1 percent for per capita real

GDP” together which explains 74 percent of the variations in non-agricultural land
use.
6
Likewise, Tan et al. suggest that GDP per capita and rural-urban migration
have contributed to urban land expansion in the Beijing, Tianjin and Hebei region.
7

Demographic changes cited above create greater demands for housing, roads and
other urban infrastructure to accommodate the needs of a larger population, which
ultimately encroaches upon rural or agricultural land. While this correlation between
demographic changes and non-agricultural land use seems straightforward, the
same cannot be said of the relationship between GDP levels and non-agricultural
land use. As with their explanation on how demographic changes lead to urban land
expansion, Tan et al.’s theory on how GDP growth has stimulated urban land
expansion also boils down to the demand for land. They suggest that growing
4
Lin, “Reproducing Spaces,” pp. 1847.
5
Ibid., pp. 1829; pp. 1845-47.
6
Ho and Lin, “Converting Land,” pp. 774.
7
Tan et al., “Urban Land Expansion.”
Yew Chiew Ping
29
Chapter Two
Explaining Land Use Conversion
affluence leads to greater demand for more living space per capita, in the emergence
of “high-class suburban residential areas in some large cities.”
8

This is a valid
argument but there is also another perspective – centring on the supply of, instead of
demand for, land – to interpret the relationship between GDP levels and non-
agricultural or urban land.
Some scholars have suggested that local governments manipulate land and its
supply in order to stimulate growth. Liu et al., for instance, observe that “In the
process of intensifying regional competition for investment, a ‘race to the bottom’ type
of game pushed local governments to offer low-cost land to attract industrial
investment in order to boost future GDP and revenue growth.”
9
In other words, land is
a means through which local governments draw investment, which in turn drives up
GDP levels.
10

Furthermore, the flourishing of extravagant but underutilized construction projects –
such as luxurious village bungalows, oversized shopping malls, massive squares,
stadiums and palatial government buildings – also does not arise out of a growing
population’s demand for more space.
11
Instead, these “white elephants,” which often
result in the wastage of land and other resources, are more reflective of the
governments’ indiscriminate supply of land to conjure up “projects to boost one’s
political achievements” (zhengji gongcheng). To perceive these image-engineering
projects as a government’s response to the demands of urbanization would have
8
Tan et al., “Urban Land Expansion,” pp. 191-92.
9
Liu et al., ´“Instrumental Land Use,” pp. 314.
10

This refers to the measurement of GDP by the expenditure method, which includes the components of
gross investment, government spending, consumption and net exports.
11
See Sima Long, “Toushi zhengji gongcheng” (“Surveying political achievement displays”), Zhongguo
jiancha (China Surveillance), No. 15 (2002), pp. 52; Zhou Wenshui, “‘Zhengji gongcheng’,” pp. 34-35;
Qu Jingyao and Qi Haishan, “Bierang ‘xingxiang gongcheng” qinshi xinnongcun” (Prevent ‘image
projects’ from corroding the New Village), Liaowang xinwen zhoukan (News Watch Weekly), March
(2006), pp. 46-47; Renmin luntan diaoyanzu, “Zhengji gongcheng bie zai nongcun raomin” (Do not let
political achievement projects perturb villagers), Renmin luntan (People's Forum), No. 191 (2007), pp.
12-13; Cartier, “‘Zone Fever’,” pp. 454-57.
Yew Chiew Ping
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Chapter Two
Explaining Land Use Conversion
missed the point. Rather, they represent the externalities of “urbanization”
engineered by local governments.
The preceding discussion suggests that although there is a correlation between the
non-agricultural land use and GDP level, the causal direction is equivocal. Besides,
because land converted to non-agricultural purposes has frequently resulted in the
misallocation or wastage of resources, it is doubtful if sustainable growth is attainable
through an expansionary land policy. As some experts point out,
Construction land affects investment, which in turn affects capital stock and
economic growth. The expansion of construction land in China from the end
of the 1990s led to a decreased quality of investments . . . [because] (i) the
excess growth of land supply has resulted in excess investments; (ii)
investments have been focused on construction instead of equipment; (iii)
investments have focused on external and expansionary construction; and
(iv) local governments have supplied land at low cost, reducing the resource
allocation efficiency of the land market.
12

Land Management: Institutional Flaws
Another often cited reason for the rise in non-agricultural land use is China’s flawed
land management system. In her study on development zones or kaifaqu, for
instance, Cartier suggests that “contradictory domestic political and economic
policies of land development, land management, and land conservation” have
promoted the proliferation of such zones.
13
This line of argument centring on inherent
flaws in land policies is echoed by Lichtenberg and Ding, who suggest that “the
existing institutional and policy structure create incentives for both insufficient
farmland retention and excessive farmland conversion, resulting in significant
inefficiencies in land use.”
14

12
Li Huizhong, Yin Feng and Li Jialun, “China’s Construction Land Expansion and Economic Growth: A
Capital-Output Ration Based Analysis,” China & World Economy, Vol. 16, No. 6 (2008), pp. 15.
13
Cartier, “‘Zone Fever’,” pp. 445.
14
Erik Lichtenberg and Ding Chengri, “Assessing Farmland Protection Policy in China,” Land Use
Policy, Vol. 25, No. 1 (2008), pp. 59.
Yew Chiew Ping
31
Chapter Two
Explaining Land Use Conversion
On top of these works, there is a legion of others that may not address land use
change directly but nonetheless provide insights on various land institutions that
contributed to land use conversion, namely land ownership, land acquisition and its
approval, and the land market.

15
These investigations, which point out inherent
problems and contradictions in China’s land system such as ambiguous
landownership rights, low rates of compensation for expropriated land, incomplete
land markets, incompetent enforcement of law against violations and so on, enhance
the understanding of how such flaws inadvertently provide openings for the relative
ease of converting land to non-agricultural use.
16

Yet in reality, perfectly-designed institutions are elusive: “Since people have limited
capacities to acquire and process information, uncertainty and asymmetric
information must exist, and these conditions represent unavoidable obstacles to
‘perfect’ institutional design.”
17
Attributing excessive land use conversion to inherent
deficiencies in land institutions does not explain why repeated reforms to land
institutions and the correction of flaws only manage to halt or slow down land use
change temporarily. On 20 May 1997, for instance, a moratorium on non-agricultural
construction taking up cultivated land was imposed and its one year duration was
subsequently extended in 1998 till the revision of the Land Administration Law was
complete.
18
However, not long after the tightening of control over the approval of land
use conversion, land requisition and others in the revised law, the area of arable land
used for construction began to rise again, soaring to 3.4 million mu in 2003 from 2.4
15
See, for instance, C. W. Kenneth Keng, “China's Land Disposition System,” Journal of Contemporary
China, Vol. 5, No. 13 (1996), pp. 325-45; Yeh and Wu, “The New Land Development Process,” pp.
330-53; Peter Ho, “Who Owns China's Land? Policies, Property Rights and Deliberate Institutional
Ambiguity,” China Quarterly, No. 166 (2001), pp. 394-421; Ding Chengri, “Policy and Praxis of Land

Acquisition in China,” Land Use Policy, Vol. 24, No. 1 (2007), pp. 1-13. For a review of other relevant
journal articles, see Zhang Sumei and Kenneth Pearlman, “China's Land Use Reforms: A Review of
Journal Literature,” Journal of Planning Literature, Vol. 19, No. 1 (2004), pp. 16-61.
16
Refer to Ding Chengri, “Land Policy Reform,” pp. 109-20; Ding Chengri, “Policy and Praxis,” pp. 1-13;
Cartier, “‘Zone Fever’”; Lin and Ho, “The State, Land System,” pp. 411-36; Peter Ho, “Who Owns
China's Land?,”pp. 394-421.
17
Erik G. Furubotn and Rudolf Richter, Institutions and Economic Theory: The Contribution of New
Institutional Economics (Ann Arbor: The University of Michigan Press, 1997), pp. 15.
18
Guojia tudi guanli ju and Guojia jihua weiyuanhui, document no. 6 (1997); “Guojia jiang jixu dongjie
feinong jianshe zhanyong gengdi” pp. 2; “1998: tudi guanli dashiji,” pp. 9.
Yew Chiew Ping
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Chapter Two
Explaining Land Use Conversion
million mu in 2000.
19
On 18 July 2003, the State Council issued a notice to suspend
the approval of all development zones, together with complementary measures to
remove illegal development zones.
20
Yet again, the arable land used for construction
increased unrelentingly after the moratorium was lifted, rising over 70 percent from
2.2 million mu in 2004 to 3.9 million mu in 2006.
21
Hence it appears that problems in
China’s land management system are not sufficient in accounting for land use
change.

Instead of institutional flaws, therefore, this study proposes that selective
implementation or agency costs, incurred as the agent fails to act in the full interest of
the principal, is a more potent explanation. Some scholars have touched on the
principal-agent problem in their analysis of land institutions. For instance, Keng, in his
overview of China’s land disposition system, alludes to the discretionary power of
local state agents in implementing central policies. He observes that since local
economic development takes precedence among the concerns of local governments,
they may not conform to the orders and regulations imposed by their superiors.
22
Xu
also highlights the “contradictory roles” of governments that contribute to the loss of
agricultural land: “Whereas the governments have made a series of policy initiatives
to protect agricultural land, they have, however, been the most important players in
destabilizing the land base for agricultural production.”
23

Specifically, local officials’ discretion in supplying agricultural land for construction
within the limits imposed by central regulations is pivotal to explaining local variations
in the patterns of land use conversion. Through an investigation of the incentives and
disincentives that structure agents’ behaviour and how these interact with other
19
“Zhongguo guotu ziyuan gongbao,” 2001-2006
20
Guoban faming dian document no. 30 (2003).
21
“Zhongguo guotu ziyuan gongbao”; Guotuzifa document no. 45 (2003).
22
Keng, “China's Land Disposition System.”
23
Xu Wei, “The Changing Dynamics of Land-Use Change in Rural China: A Case Study of Yuhang,

Zhejiang Province,” Environment and Planning A, Vol. 36, No. 9 (2004), pp. 1595-615.
Yew Chiew Ping
33
Chapter Two
Explaining Land Use Conversion
macro-level factors beyond their control, this study shall analyze in greater depth the
problem of selective implementation with a focus on the supply of land by local
governments.
Political Weakness of Peasants
Yet other researchers begin their investigation at the village level where land is taken
away from its rightful owners. These studies illustrate the political weakness of
peasants vis-à-vis local officials, which accounts for the relative ease of the latter in
depriving the former of either land use rights through illegal transfers or ownership
rights through state requisition.
By delving into the root of the problem, case studies by Guo and Cai illustrate how
land expropriation is carried out by village cadres, township and county officials often
at the expense of villagers, leading to peasant resistance.
24
They observe that
income disparities among villagers, their degree of economic or social dependence
on village cadres, and the difficulty in organizing preventive ex ante action often
render peasant resistance futile.
25
Hsing, on the other hand, focuses on how the
township government acts as a broker between higher level governments and the
village.
26
Together, these studies reveal the ways in which institutional and
hierarchical structures, such as the one-level-down cadre management system, bind
together the interests of these lower level state actors, who often jointly exploit

villagers to maximize their self-interests.
The political weakness of peasants does not serve as a direct motivation for the
conversion of agricultural land to non-agricultural use. As with imperfect land
24
Guo Xiaolin, “Land Expropriation and Rural Conflicts in China,” China Quarterly, No. 166 (2001), pp.
422-39; Cai Yongshun, “Collective Ownership or Cadres’ Ownership? The Non-agricultural Use of
Farmland in China,” China Quarterly, No. 175 (2003), pp. 662-80.
25
Ibid.
26
Hsing You-tien, “Brokering Power and Property in China's Townships,” The Pacific Review, Vol. 19,
No. 1 (2006), pp. 103-24.
Yew Chiew Ping
34
Chapter Two
Explaining Land Use Conversion
institutions such as ambiguous land ownership rights and low compensation for
dispossessed peasants, the vulnerability of peasants ensures that land use change
can be carried out with relatively few obstructions. Yet the bargaining power of
peasants against local cadres also varies with local conditions, some of which are
mentioned in the preceding paragraph. Other local factors that may affect villagers’
capacity for contention and the outcome of contention are lineage or kinship ties, the
type of resistance such as lodging petitions, ousting village cadres or civil
disobedience.
27

Arguments and Framework
The core of this study revolves around institutional arrangements that underpin land
use conversion in China. Institutions, defined as “the formal or informal procedures,
routines, norms and conventions embedded in the organizational structure of the

polity or the political economy,” are integral to this analysis.
28
However, it is also
recognized that institutions are not the sole cause of outcome. Instead, they “act as
filters that selectively favour particular interpretations either of the goals toward which
political actors strive or of the best means to achieve these ends.”
29
The operation of institutions, moreover, is not immune to social relationships. Power
relations – between the central state and local governments, between domineering
local officials versus politically weak peasants – underlie this investigation on why
and how much land is supplied for conversion to non-agricultural uses. In its analysis
27
Refer to the literature on peasant resistance such as Cai Yongshun, “Managed Participation in
China.” Political Science Quarterly, Vol. 119, No. 3 (2004), pp. 425-51; Kevin J. O'Brien and Li Lianjiang,
Rightful Resistance in Rural China (New York: Cambridge University Press, 2006); Zhou Xuegang,
"Unorganized Interests and Collective Action in Communist China." American Sociological Review, Vol.
58, No. 1 (1993), pp. 54-73; Li Lianjiang and Kevin J. O'Brien, "Villagers and Popular Resistance in
Contemporary China." Modern China, Vo. 22, No. 1 (1996), pp. 28-61; Lucien Bianco, “Peasant
Resistance in the PRC” in Peasants without the Party: Grass-roots Movement in Twentieth-Century
China (Armonk, NY: M. E. Sharpe, 2001).
28
Peter A. Hall and Rosemary C. R. Taylor, “Political Science and the Three New Institutionalisms,”
Political Studies, Vol. 44, No. 5 (1996), pp. 938.
29
Ellen M. Immergut, “The Theoretical Core of the New Institutionalism,” Politics & Society, Vol. 26, No.
1 (1998), pp. 20.
Yew Chiew Ping
35
Chapter Two
Explaining Land Use Conversion

of institutions, the study also foregrounds the dynamism of power struggles between
the central and local governments as the former continually seeks to assert its
dominance over the latter in land processes while the latter devise strategies to
evade central control, often under the guise of compliance.
Institutions are, therefore, “ligatures fastening sites, relationships, and large-scale
processes to each other.”
30
They serve as mediations between the microfoundations
of agency and the macro-environment. At the same time, intermediate-level
institutions themselves are also embedded in a larger milieu with political, economic
and social conditions that are beyond individual control. This study thus incorporates
macro-level contextual factors into the rational choice model in its analysis of factors
that contribute to disparities in regional trends of land use conversion.
A Model of the Determinants of Land Use Conversion
Drawing from the hypotheses outlined in the foregoing literature and other relevant
studies, a model of the determinants of land use change may be derived. The extent
to which agricultural land is converted for non-agricultural purposes is determined by
an array of structural, institutional and agential factors described below:
1) Fiscal resources: The government’s overall fiscal situation affects its capacity in
effecting land use change as well as the extent to which it needs to turn to land use
change for revenue. Before leasing land for industrial or commercial purposes, the
government has to finance the developing of raw land, incurring expenses in the
levelling of land and the provision of basic infrastructure like electricity, water, roads
and others. According to Chiu et al., the ability to provide infrastructure is one reason
why land may not be readily supplied by governments. Infrastructure provision relies
30
Ira Katznelson, “Structure and Configuration in Comparative Politics” in Mark Irving Lichbach and Alan
S. Zuckerman (eds.), Comparative Politics: Rationality, Culture, and Structure (Cambridge, UK:
Cambridge University Press, 1997), pp. 103.
Yew Chiew Ping

36
Chapter Two
Explaining Land Use Conversion
on the government’s capacity to finance its investment with very long term payouts,
and this difficulty is compounded by the limited capacity of raising revenue directly
from the services provided.
31
In China, the vast majority of spending on urban capital
construction is the responsibility of sub-provincial governments. Local infrastructure
investment is financed from general resources in the local budget as well as from
extrabudgetary or off-budget funds.
32

On one hand, it may be surmised that the lesser the revenue at the government’s
disposal, the less able it is in supplying land for construction. On the other, however,
lesser revenue also implies a greater need for the government to tap on undeveloped
land resources for income. Improvements in public infrastructure bring about an
appreciation in land price. Part of the profits from the conveyance of land use rights
through auction, tender and other channels are reinvested on enhancing urban
facilities to further drive up land prices.
33
The remaining revenue may also be used to
defray other government expenditures. On the whole, therefore, it may be proposed
that a shortage of funds will not deter the government from supplying land for
conversion as long as it is able to recoup initial land development expenses and
generate additional revenue from rising land prices.
The local government’s overall fiscal situation is, in turn, dependent on the revenue-
sharing arrangements with upper level governments, which determine the
expenditure responsibilities of the former and the revenue sources accessible to local
governments.

31
Chiu R., B. Turner and C. Whitehead, “Land Use Regulation: Transferring Lessons from Developed
Countries,” World Bank Fourth Urban Research Symposium: Urban Land Use and Land Markets, May
14-16 2007, The World Bank,
accessed 8 March 2009.
32
Su Ming and Zhao Quanhou, “The Fiscal Framework and Urban Infrastructure Finance in China,”
World Bank Policy Research Working Paper 4051 (2006), The World Bank, ,
date accessed 12 February 2008, pp. 36-38.
33
Peterson, “Land Leasing and Land Sale,” pp. 3
Yew Chiew Ping
37
Chapter Two
Explaining Land Use Conversion
2) Land resources: Although construction land is not a static asset and can be
created by taking over agricultural land, the government is nonetheless constrained
by the physical characteristics of the land resources that it may exploit. As mentioned
in Chapter One, for instance, the east coast of China has large areas of arable land
as well as construction land, which means that there is a limited supply of remaining
land that can be used for construction. Sihui, as we shall see later, is constrained by
the vast expanses of mountainous and hilly terrain in its territory since it is costly and
hence not very feasible to develop land in the mountains to make it accessible to
potential users.
Both fiscal and land resources affect the government’s relative bargaining power vis-
à-vis land users and collective landowners, which “increases when it does not
depend on resources – economic, political, and otherwise – that are controlled by
individuals and groups in society.”
34
3) Local officials’ goals and preferences: The conversion of agricultural land is, first

and foremost, a means for local officials to fulfil developmental targets and meet
fiscal demands important for their career advancement.
Local officials strive to maximize their self-interests subject to the constraints of the
institutional environment, which supplies the necessary contextual information to
determine what exactly these political actors aim to maximize and why certain goals
preside over others.
35
Within the parameters of the cadre target responsibility system,
the central-local revenue-sharing system and land institutions, the maximization of
34
José Antonio Cheibub, “Political Regimes and the Extractive Capacity of Governments: Taxation in
Democracies and Dictatorships,” World Politics, Vol. 50, No. 3 (1998), pp. 361.
35
Margaret Levi, “A Model, a Method, and a Map: Rational Choice in Comparative and Historical
Analysis” in Mark Irving Lichbach and Alan S. Zuckerman (eds.), Comparative Politics: Rationality,
Culture, and Structure (Cambridge, UK: Cambridge University Press, 1997), pp. 25. See Kathleen
Thelen, “Historical Institutionalism in Comparative Politics,” Annual Review of Political Science, Vol. 2
(1999), pp. 375-76, on how rational choice analysts and historical institutionalists do not differ too much
on how they contextualize preferences.
Yew Chiew Ping
38
Chapter Two
Explaining Land Use Conversion
“self-interests” is operationalized as the maximization of careers. It is further
assumed that in the pursuit of utility maximization, the individual is not omniscient
and thus exercises “bounded rationality” under the condition of incomplete
information.
At the local level, the political and fiscal motives for converting land to urban uses
vary in their causal impact. Local state variations, including the government’s fiscal
situation, path of industrialization, history of governance, land resources, interact with

officials’ cost-benefit calculations to determine local patterns of land use change.
36
While officials seek to maximize their careers in the institutional arena, the strategy
they adopt, their means of doing so, and the resources accessible to them fluctuate
with other macro-level considerations.
Instrumental land use may or may not payoff for officials seeking career
advancement, especially if they resort to illegal land use conversion or if land
expropriation sparks off peasants’ resistance. Hence career maximization through
the manipulation of land resources varies with the official’s discount rate, defined
here as the risk of being removed from office.
37
The higher the discount rate, the
higher the risk of being removed from office, and the less likely one shall resort to
illegal land use conversion to maximize one’s career. Having said this, violating land
regulations rarely jeopardizes one’s career in China. Most offenders escaped
punishment and some were even promoted. Besides, those punished were mainly
officials below the county-level.
38

36
Structure and agents are mutually constitutive. In the words of March and Olsen, “Human actions,
social contexts, and institutions work upon each other in complicated ways, and these complex,
interactive processes of action and the formation of meaning are important to political life.” James G.
March and Johan P. Olsen, “Organization Factors in Political Life,” The American Political Science
Review, Vol. 78, No. 3 (1984), pp. 742.
37
Cheibub, “Political Regimes,” pp. 360.
38
Liu Zhengshan, “‘Lunxian yu zhenjiu’” (“Land ‘occupation’ and redemption”), Zhongguo tudi (China
Land), No. 3 (2004), pp. 5; Yu Zeyuan, “Zhongguo jianchabu.” See also “Tudi weifa dafu shangsheng

zhengjie hezai?” (“Where lies the crux of the large increase in illegal land deals?”), Guotu ziyuan (Land
and Resources), No. 4 (2007), pp. 63; “Xinhuashe: tudi weifa xingze zhuijiu fengxian zhiyou 0.1%”
(“Xinhua news: the pursuit of criminal responsibility for iilegal land deals is just 0.1%), Nongcun nongye
Yew Chiew Ping
39
Chapter Two
Explaining Land Use Conversion
4) Institutional context: As socially-embedded individuals, officials’ objectives are
influenced by their institutional context as well as broader environmental conditions.
As suggested earlier, the driving forces of land use conversion emanate from the
cadre target responsibility system and the central-local fiscal system.
The way the cadre target responsibility system is structured is a manifestation of the
importance of economic achievements to the ruling regime as a justification for its
political legitimacy. This top-down emphasis on economic growth is built into the
cadre appraisal system to foster cadres’ development-oriented behaviour.
Post-1994 central-local revenue-sharing arrangements, designed to increase the
central share of revenue, place increasing strain on local coffers.
39
The pressure to
produce economic results on a tightening budget compels local governments to
exploit land resources under their jurisdiction. Leasing land for industrial and
commercial purposes generates extra-budgetary revenue from the conveyance and
transfer of land use rights, miscellaneous fees plus tax revenue such as the business
tax and value-added tax.
40
The revenue raised may also be diverted to fund large-
scale urban infrastructure development, salient symbols of modernization.
41

The institutional context within which officials operate also consists of institutions

other than the aforementioned. Flaws in China’s land management system provide
openings for opportunistic officials to exploit and even participate in illegal land deals.
The inefficacy of grassroots self-governance in empowering villagers also
nongmin (Village, Agriculture and Farmers), No. 7 (2007), pp. 13.
39
Ping Xinqiao, “The Evolution of Chinese Fiscal Decentralization and the Impacts of Tax Reform in
1994,” Hitotsubashi Journal of Economics, Vol. 41, No. 2 (2000), pp. 187-90.
40
Wong and Zhao, for instance, point out that fiscal decentralization means local state agents have to
be self-reliant in managing their coffers and the huge profits accompanying land apportionment allow
them to be so. Wong K. K. and Zhao X. B., “The Influence of Bureaucratic Behavior on Land
Apportionment in China: The Informal Process,” Environment and Planning C: Government and Policy,
No. 17 (1999), pp. 122-23. Also refer to Liu et al., “Instrumental Land Use,” pp. 321-28.
41
Liu et al., “Instrumental Land Use,” pp. 321; Xie Jianchao and Gong Chengyu, “Weifa kaifashang he
guanyuan weihe wusuo guji” (“Why unlawful developers and officials are fearless”), Zhongguo jingji
shibao (China Economic Daily), 11 April 2007, pp. 016; Su Ming and Zhao Quanhou, “The Fiscal
Framework.”
Yew Chiew Ping
40
Chapter Two
Explaining Land Use Conversion
emboldened local officials who may dispossess peasants of their land with relative
ease.
5) Macro-processes: While local governments manipulate land resources under their
jurisdiction to spur urbanization that may not be predicated on demographic changes,
they also have to supply land to accommodate the demands arising from such
changes. Large-scale processes such as urbanization and industrialization are often
triggered by government policies. Political and economic reforms since the late
1970s, for instance, unleashed pent-up demand for roads, housing, and other

infrastructure that led to the widespread conversion of agricultural land for
construction purposes. At the provincial level, industrial restructuring planned by the
Guangdong provincial government since the late 1990s has created a greater
demand for non-agricultural land in the less developed regions within the province. In
competing to attract relocating industries, governments in Sihui and other counties on
the fringe of the Pearl River Delta leased construction land to industries at low prices,
waived administrative fees and offered tax returns for enterprises.
42
Having established the factors that determine land use conversion, the next chapter
shall begin by examining central-local fiscal arrangements in the post-1994 context
and the ways in which land revenues contribute to local finances.
42
Refer to Chapter Five and Six for details.
Yew Chiew Ping
41