The anticommons problem in China’s landownership system and its reform

This is a law and economics study trying to analyze China’s current law and policy about landownership. During its fast industrialization and urbanization process, it is widely believed that China has been suffering from the inconsistency between the growing demands of assembled urban land and factually highly fragmented suburban and rural land. Based on this knowledge, the China government’s expropriation power is economically justified. The logic is that the traditional absolute property right or privatization conception should yield to the more realistic economic benefits, and China’s long-lasting economic miracle endorses this theory. However, this theory cannot explain the fact that China’s economic takeoff exactly synchronized with its landownership fragmentation process. Also, with stressing on its efficiency of saving “transaction cost” by avoiding costly bargaining between right holders and land assemblers, this theory selectively ignores the expropriation power’s externality, or the social costs. Gradually, these costs become less invisible. Even though, China still has to face the land fragmentation problem. When a functional alternative institution has not emerged, the government will not disarm itself. In this thesis, I try to promote an autonomous bargain institution to substitute the state’s direct economic interventions. Before this proposal, I analyzed that why the current expropriation institution could happen in China instead of other “similar” transitional countries, and also answered the question that why the same land distribution management promoted China’s economy but soon becomes an obstacle after less than 20 years