Land Development Right and Collective Ownership

Abstract

Urban-rural hook-up policy, a popular land use policy for Chinese local governments, allows urban development at the same size as peasants’ house sites that are converted back into farmland. It is often regarded as a form of transfer of development rights (TDR). Based on detailed analysis of local governments, villages and peasants, it is found that local government is the de facto owner of development rights and the only winner in urban-rural hook up, which is basically a game between local government and the central government. The urban-rural hook-up policy strengthens the collective ownership by weakening peasants’ private land use rights. Overall, the urban-rural hook-up policy is an efficient approach to the externality problem caused by farmland protection policy, but it is problematic from a broader perspective, especially the property rights perspective.