Urban-led rural reform

Land transfer is the third market door between urban and rural areas. Comparatively speaking, the first two doors-- agricultural and sideline products and rural labor market-- are the first to break through from the rural areas, "the world besieged the city", and then from the countryside to the city, forming the urban agricultural products and migrant labor market. Only the door of the land market is opened in reverse, with the emergence of urban land transactions, and then from near to far outward radiation, slowly synthesizing a land market connecting urban and rural areas. Is there anything particular about the difference in the "road map"? It means a lot to think about it. Unwittingly, China has changed from "1 billion people and 800 million farmers" to rapid industrialization, and started rapid urbanization because of giving more play to the market mechanism. Under the new background, the relative market value of urban land and space rises rapidly, which triggers a series of events, which equips both economic development and institutional change with a powerful new engine.

In fact, agricultural and sideline products have to go to the city, which has long shown the dominant position of cities and towns. If cities and towns are not very important economically, why do the agricultural and sideline products produced by 800 million farmers constitute the first bucket of gold for farmers to get rich only if they are sold to 200 million urban residents? By the same token, when farmers work for farmers, the market is too small and their income is not high. They do not have to go to the city to work hard before they write down a more and more meaningful number in the ledger of farmers' income. This means that the rural population is large, but from the perspective of economic strength, cities and towns have long been the economic engine.

The problem is that the urban-rural isolation system suppresses the engine function of the city. In the past many years, instead of using cities to lead rural areas, cities suppressed rural areas, resulting in overpopulation, insufficient food and clothing, low enthusiasm for supplying agricultural products, farmers' own income could not be increased, and there was no way to support the rapid progress of the country's industrialization. The early reform took the lead in breaking through the siege in rural areas, carried out along the route of releasing the potential of agricultural and sideline products and rural labor supply, relaxed controls, opened city gates, and developed market relations between urban and rural areas, and the national economy finally came to life.

Once the flow of elements is liberalized, the trend of agglomeration is unstoppable. This is also the first topic at the beginning of this series. Why the city? Why urbanization? The city is defined by density, the economic density of agglomeration stimulates the increase of population density, and the population density continues to improve the division of labor, efficiency and income because of the demand of aggregation. the spatial distribution of the national economy is in a state of aggregation, and the "urban engine", which does not seem to exist for many years, is finally showing its shape. Cities not only drive economic growth, but also the birthplace of spirit, culture, science, innovation and fashion.

The most important change in the economy is the sharp rise in the relative price of urban land-in fact, spatial location. In recent years, housing prices have become the first concern of the society, and many people are surprised that they do not understand. In fact, bricks and tiles plus installation buildings, there is nothing you do not understand, what is really difficult to understand is the land price. Talking about currency, hype, bubbles, or each has its own reasons, but from a personal point of view, the decisive factor is that the space for gathering popularity and wealth is seriously in short supply. There are really not so many "places" where there is a big China, looking around, east, south, west, east and west. Scarcity is precious, and the price of land in these places-without exception, cities, especially metropolises-is unstoppable.

The amendment to the Constitution in 1988 opened the legal channel for the marketization of urban land. It has been explained that at that time, no one deliberately only allowed the marketization of urban land, because the expression of the constitutional text is that "the right to the use of land can be transferred in accordance with the law", and there is no restriction that only urban land can be transferred. However, the Constitution says that the transfer should be carried out in accordance with the law, while in 1990, the stipulation of "transfer of the right to the use of urban state-owned land" was promulgated, and whether the transfer of rural collective land could be put on the shelf was put on the "negative list" 10 years later. in order to form the pattern that urban land is the first to enter the market legally.

To be fair, it is the urban land that can really afford the price. Understanding this is extremely important to understand the practice of opening the door to the land market between urban and rural areas. The truth is not esoteric, we might as well start with the concept of "assets"-all resources that can generate a steady stream of future income are assets. Land can constantly produce agricultural and sideline products, and it can also be used by people to grow buildings. Of course, it is also an asset. How are assets priced? Fisher's rule is "discounting future income". If a piece of land can earn 100 yuan a year in the future, assuming an interest rate of 10%, then we say that this piece of land is worth 1000 yuan-meaning that this piece of land is like a cash asset deposited in a bank, and since it can earn 100 yuan of interest every year, its asset value is thousands of yuan.

Of course, when asset income is the future, it depends on expectations, and people's expectations always go wrong. This is also the trouble of asset pricing. But experience adds that any further trouble-the serious one is the financial crisis-is far better than a system that does not allow asset prices to allocate resources. Today, when we talk about the decisive role of the market in the allocation of resources, it is very important to let the asset pricing mechanism play a role.

Land can grow agricultural products and carry buildings, which are indispensable for human beings to improve their lives. The question is the allocation of resources-how much land is left to grow agricultural products and how much land is used to "plant buildings"? Planners-wearing more stylish masks today-claim that they really know the optimal configuration, but experience has shown that people know very little about it. Market allocation depends on the price mechanism. in the final analysis, it depends on the change of relative price to remind and induce actors to "allocate" resources.

According to a brief division, there are land for planting agricultural products, land for building houses in rural areas, and land for "planting buildings" in cities. Ask which kind of land the market price rises faster? The answer is the land where the city carries buildings. Why? The increase of agricultural demand is limited due to the influence of Engel's law. At the same time, technological progress and imports are easy to provide alternatives. The demand for building houses in rural areas was very strong in the early days, but after farmers could go out to work, the demand fell steadily. But the demand for "real estate" in cities, especially good ones that are very attractive, is booming and faces supply constraints. Taken together, it should be reliable to say that the relative price of urban land is rising faster than that of agricultural land and rural land. The secret behind it is still "agglomeration" and "density". In the final analysis, objective changes can be seen in subjective expectations.

Expectations can not be separated from the support of experience. Your own experience is irreplaceable, and the experience of others can help. In this regard, opening up plays an important role. For example, the system of transferable urban land use rights in mainland China-commonly known as "land lease"-is basically learned from Hong Kong. Why learn from Hong Kong? It is convenient to be close to each other, and the cost of the visit is low. The most important thing is that we can "see" the effect. People have leased land and opened up a way to raise money for urban infrastructure. Why can't the mainland also take a walk?.

Hong Kong people have seen urban land prices "take off" with the take-off of the economy, and they expect it to be extraordinary. A few years ago, when I was watching the land auction in Chengdu, I came across a case of "Land King". But see the representatives of mainland real estate enterprises raise their cards until their arms tremble and ask colleagues to help hold down their arms before they can make an offer! But the representative of Wharf does not change his face or shake his hand, so you can lift him up until he wins. I remember the land price at that auction was 88 million yuan per mu. Why are there so many generals from Hong Kong? Capital is abundant on the one hand, and more importantly, other people have experienced it in Hong Kong.

Other experience plus their own, together to support expectations, calculated today, is the current price of urban land. Because it is believed that the future income will rise greatly, so it is willing to have the opportunity to buy future income from the land seller. If you take this investment, build streets, build facilities and dig subways, you will have money. By throwing capital into the urban land, the ability of carrying economy to gather in population agglomeration has greatly increased, the expectation that "density" will produce higher income has come true, the urban engine has boomed, and "urbanization-driven economic growth" has made its grand debut.

It turns out that urban land price has nothing to do with soil fertility, only related to location. From a simple and static point of view, where the urban density is the highest, the expectation of future income is the highest, everyone is rushing to come, and competition will push the land price to the highest. As the density decreases, so does the land price. So the distribution of urban land price determines the road of land marketization, which is not "the countryside surrounds the city", but radiates and spreads from the city center. If we say that agricultural and sideline products and rural labor first freely enter the market in rural areas, and then arch open the city gate, until the emergence of an urban market, then the marketization of land generally starts from the metropolis and expands from the inside to the outside.

As a result, we also see changes in the driving force for reform. The rural reform, which began in the 1980s, came first, but there was a passion to change the city for a while. However, when a large number of migrant workers come to the cities, there is no big deal in the agricultural reform. In fact, there has been no progress for a long time. Not until the re-emergence of cities, from the metropolis, central cities and all relatively high land prices, from the inside to the outside, a little to open the door of the land market. The hidden truth in this is worth waiting for me to understand carefully.