Tensions flare over government 'land grabs' in China By Damian Grammaticas

China correspondent Published duration 9 November 2013

media caption Damian Grammaticas: Countryside "one of the huge issues" confronting China's leaders

With a blast from its foghorn, a huge cargo ship nudges its way down the Huangpu River, past Shanghai's skyscrapers on one side and the old waterfront of the Bund on the other.

Since China opened its economy to the world 35 years ago, beginning the shift from a planned, Communist system to a free-market one, its ascent has been dizzying.

But its breakneck growth is slowing, the benefits from the changes China has already made are dissipating.

So China's new leaders under President Xi Jinping are meeting to consider what they have billed as new and "unprecedented" economic reforms.

Farms 'gobbled up'

"It's pretty hard to find any economic system that does not need reform," says Andy Rothman, China strategist at CLSA financial services in Shanghai and a long-time observer of China.

image caption Villagers in Guangji have clashed with police over government "land grabs"

"China probably needs it more than most as its still evolving into the early stages of a market-driven economy. I don't think you'll find a Chinese leader who does not think there's a lot more that we need to do."

Outside the cities, in the countryside, where almost half of China's population still lives, there is a clear need for reform.

The issue is land rights. Private ownership of land is still banned, but land values are soaring.

As China's urban areas are expanding they are gobbling up farms and fields.

It is causing conflicts between farmers and local governments.

You can see it happening on the edge of Kunming, the capital of Yunnan Province in south-western China.

Guangji village is surrounded by greenhouses where farmers grow lettuce and parsley, cabbage and flowers.

But, camped out on the edge of the village they guard access to the area.

They are trying to stop their land being grabbed by the local authorities.

Like all farmers in China, people in Guangji can only work the fields, they cannot buy and sell leases on land, or borrow money against it.

Local governments, however, can and do seize land, re-zoning it and selling it for development. It is their main source of income.

On Guangji's land they want to build a massive tourist development.

Pu Yongfang is one of those leading Guangji's resistance.

"Right now, economic growth and local government finances all depend on the money made from land sales," he says.

"Huge profits are involved. So they take our land, demolish our houses whatever the cost. It's happening everywhere in China."

The farmers have been offered 120,000 Renminbi ($20,000; £12,250) per acre but, he says, the authorities have sold land in nearby villages to developers for three times that.

'Illegal means'

Recently, van loads of riot police were sent to detain two local men. Residents say the police fired tear gas and pellets but were driven away, police vehicles were smashed up.

"What we are facing now is a government that is collaborating with big companies to rob us of our land by illegal means," says Mr Pu. "They've threatened us and tried to bribe us. What we want is law enforcement and human rights."

image caption Across large parts of rural China villagers are up in arms over what they say are government land grabs

image caption In Guangji village the problem is so acute that villagers have formed their own guard to ward off the police

image caption Sit-down protests against land grabs have also been staged by villagers who claim they have been beaten up by police

image caption In Guangji villagers say that police have resorted to tear gas and buckshot to disperse their protests

image caption Pu Yongfang is one of those leading Guangji's resistance - he says that the problems faced by villagers are the same all over China

And, crucially, what the villagers want are land rights.

"Yes, that's what must happen," Mr Pu says. "People must be allowed to buy and sell land or use it to get loans."

All around Guangji other villages are also in dispute with the local government.

As news spread that we were in the area, people hurried to find us, a crowd gathered, waving documents and photographs.

They all had the same complaint. Their land had been seized, they had been cheated they said, they now had no jobs, no farms, their meagre compensation was gone.

They all wanted President Xi to address land rights.

Wailing in despair

Zhang Gui Xian, who is 51, bursts into tears.

"The police came and beat us up. Our lives, our property, our security, everything is being threatened," she said.

image caption Zhang Gui Xian says that she is prepared to die in defence of her village

She clasps her hands as if in prayer, and rocks back and forth while wailing in despair.

"Ever since the new leadership took over last year we have been hoping the government will solve our problems. Now they're meeting in Beijing. We are counting on President Xi Jinping to save China. Otherwise China is doomed.

"If Xi Jinping ignores us, what can we do but rise up? If they kill one of us, another will step forward in their place."

'Telling lies'

Later, the Communist Party Secretary for Jincheng township, Yang Yingchun, told us no-one's rights were being violated.

image caption Officials say that protesting villagers do not fully understand the good intentions of the government

"A small number of people stirred the crowds by telling lies," he said, "only a few people are against this project."

He said he had no view on whether villagers should have more land rights, reform was a matter for China's leaders. But development will benefit the area.

"The Communist Party's ultimate goal is to serve the people whole-heartedly. Some villagers haven't fully understood this project, we are trying our best to get people to support it."

One reform that would have a major impact on farmers is the abolition of China's system of residence permits, called hukous, which prevent them resettling in the cities easily.

The permit gives them access to state benefits, but only where they are originally registered.

About 200 million rural migrants already work in the cities, on construction sites, in factories, restaurants and shops.

But their access to state healthcare, education and social insurance is limited.

They build the cities and make them work, but are treated as second-class citizens. However, change would be contentious. City residents fear a flood of poor migrants will take their jobs and overburden hospitals and schools.

Meanwhile, there are other major reforms needed in the cities. The state still controls the big banks and the financial system.

Funds flow easily to the big state corporations, while private businesses - which are the most dynamic part of the economy - need better access to bank loans or bonds, easier business approvals and a lighter tax burden.

But China's Communist leaders may be reluctant to loosen their grip. They have seen what happened in the financial crisis in the West. Despite all the talk of radical reform, they are naturally cautious.

"The banks need to behave like real banks. But when I talk to Party officials they say we have seen [what happened] in the United States and Europe and we're really nervous about giving too much power to bankers," says Andy Rothman of CLSA.

"So I think the state is going to keep controlling the significant institutions, they're just going to push them to operate more along market principles."

So China's transformation into a free-market economy is far from complete.

But now it is getting richer, reforming is getting harder.

The Communist Party's elites have become wealthy and powerful, they see no need for rapid change that could be destabilising.