As with most Chinese revolutions, this one will be won or lost in the battle over land. The dimensions of this phenomenon can be glimpsed in police data - occasionally revealed by well-connected scholars - that show the number of loosely defined "mass incidents" has doubled to more than 180,000 in the five years to 2010. Security sources have told me more than half of those incidents, including most of the increase, was generated by conflict over farmers and households defending their land. A team of scholars has now illuminated the texture and underlying logic of the problem. Their survey of 120 villages across six provinces shows some regions have withstood the vicious cycle. The successes were confined to a corner of Fujian Province, where retired cadres had been able to leverage their status and prestige to form "old people's groups" that could mediate conflict between citizens and the state. "The old people's association fostered and sustained, but also contained, collective action that eventually succeeded in disciplining corrupt local officials without triggering repression or a breakdown of social order," says a paper by William Hurst, of Northwestern University, and Chinese scholars who have chosen to keep a low profile to continue with their work.

But conflict, distrust and violence had taken hold elsewhere, where civil society groups have not survived. The further the party-state has pressed itself into the fabric of society, the less it has been able to control it. In these areas, despite the rise in domestic security spending, local officials have had to bring in outside groups to achieve objectives and enforce the peace. "In each of the other five provinces we studied, we found crime syndicates and underworld networks acting in a sort of symbiosis with local states," say the researchers in their paper, Reassessing Collective Petitioning in Rural China, which will be published in Comparative Politics. "Village cadres channelled development contracts, money or other resources to organised crime networks in return for a pledge to keep residents too intimidated to seek redress of grievances related to such issues as land requisition, fiscal extraction, and enforcement of the birth control policy.'' This model of outsourced violence has taken root in little over a decade. It grew hand-in-hand with the centralisation of political power and resources that took place from the mid-1990s. When resources were taken away from above, local officials pioneered new ways to extract them from below. Predictably, and most dangerously, the new breed of officially sanctioned thugs have come to demand a share of government power in return for the services they render. Li must now press his authority over hundreds of counties and thousands of townships that are sharing power, to varying degrees, with criminal gangs. How far up the system does the cancer grow? The cases of the fallen minister for railways, Liu Zhijun, and Gu Junshan, the deputy director of the Logistics Department of the People's Liberation Army, are instructive.

Li has been reaching out to independent and market-minded economists as he prepares a seven-point reform agenda to be endorsed at the Communist Party's key plenum meeting this year. Zhou Qiren, who was formerly a member of the monetary policy advisory board at the People's Bank of China, has been employed to provide advice on land reform. The Peking University is working through a program of protecting household property rights and reducing government influence. He readily acknowledges the challenges ahead but also corrects my terminology: "Mafia" should not be used to describe criminal syndicates that are created by the state itself. Zhou will not predict whether Li will succeed in pushing through reforms, taking China to a more stable and fulfilling future, but he makes a convincing case that he will try. "There's nowhere out, China has to do serious reforms," he says. "We've almost got to the end of the road."

John Garnaut is China correspondent.