Crossing the river by feeling stones

The Economist points to the urban social reforms being tried out in Chongqing, latest in the "crossing the river by feeling the stones" approach to reforms in China. The province-sized municipality (on a par with Shanghai and Beijing), with 30 million people in its urban core and surrounding villages, is experimenting with an ambitious social reform agenda that seeks to balance economic growth and urbanization with social and political stability. The Chongqing model has three initiatives,

First, the government said it would build 40m square metres of housing in the decade to 2020 for rent to the urban poor, including rural migrants. To be eligible, tenants had to earn less than 1,500 yuan (now about $230) a month. It was a big undertaking: governments elsewhere in China are reluctant to spend money on housing migrant workers. Chongqing set the rent at about 60% of comparable private properties and allowed tenants to buy their homes after living in them for five years. Next, the government said it would give full urban status to 10m migrants, meaning they would get access to subsidised urban health care and education (typically, these services are available only in the place of one’s household registration, or hukou—usually the place of birth of one’s mother or father). Third, the government announced changes to the urban-planning system to allow land left behind by migrants to be traded for use in building new houses and offices. That was a breakthrough in a country that still officially disapproves of selling farmers’ property.

The reforms are unique in scale and coherence. By providing housing, they aim to attract migrants and thus expand the urban labour force. By offering migrants better access to public services they aim to make life in cities fairer and thus more stable. By introducing a land market, they hope that migrants will arrive with cash in hand. If the reforms work, they should have a range of benefits, from reducing the loss of farm land to eroding age-old urban prejudice against farmers and, vitally for the economy, fuelling urban consumption.

The most remarkable reform involves the idea of selling farm lands through a system of trading land-use rights, a strict taboo given the still entrenched belief in "collective" ownership of rural property (villagers are entitled to use a family plot for farming and another for housing),

As people move, they often leave houses in the countryside unoccupied. Chongqing’s reform allows land used for housing in faraway villages to be converted to use for farming, and a corresponding amount of farmland near towns to be used for urban expansion. The aim is to promote urbanisation, while slowing the rate at which Chongqing loses arable land... The reform was intended to be of particular benefit to farmers in remote areas, who would otherwise have no opportunity to benefit from land appropriations, which usually occur on city margins. Sometimes the compulsory acquisition of rural land for construction is carried out violently, with farmers receiving little or no compensation. Chongqing’s system aims to make this fairer. Farmers who want to sell their rights to their village land are given what is called a land ticket, or dipiao. Developers who want to build, say, a 10-hectare (25-acre) project on farmland, can buy 10-hectares’ worth of dipiao. They do not have to be tickets owned by farmers on that very plot. The farmers get to keep 85% of the sale price of the dipiao. Their village administrations get the rest. 

And like Deng's famous Southern tour of 1992 which endorsed the SEZ experiments, the Chongqing model too appears to be finding acceptance in Beijing,

In January the finance minister, Lou Jiwei, said other places could try out dipiao trading. President Xi also paid a visit to Chongqing that month. It was the first by a Chinese president since the municipality’s reforms began, and was widely interpreted as a sign of his endorsement of Chongqing’s efforts.