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The Hukou and Land Tenure Systems as Two Middle Income Traps¡ªThe Case of Modern China

Author

Listed:
  • Guanzhong James Wen

    (Department of Economics, Trinity College, Hartford, CT 06106, USA)

  • Jinwu Xiong

    (Center for Market and Society, and School of Social Sciences, Tsinghua University, Beijing 100084, China)

Abstract

China¡¯s prevailing hukou (household registration) system and land tenure system seem to be very different in their applications. In fact, they both function to deny the exit right of rural residents from a rural community. Under these systems, rural residents are not allowed to freely exit from collectives if they do not want to lose their entitlements, such as their rights to using collectively owned land and their land-based properties. Farmers are neither allowed to sell their houses to outsiders, nor allowed to sell to outsiders their rights to contracting a piece of land from the collective where their households are registered. For migrant workers from rural areas, it is extremely difficult for them to obtain an urban hukou with all its associated entitlements at an urban locality where they currently work and live. The combined effect of the two systems leads to serious distortions in labor and land markets, resulting in discrimination against migrant workers, sprawling yet exclusive urbanization, housing bubbles, and depressed domestic demand. These distortions further entrench the existing and much widened urban/rural divide. Unless these two systems are thoroughly reformed, the rural residents in Chinese mainland will be trapped in their comparatively much lower income and remain unable to share the gains from the agglomeration effects of urbanization.

Suggested Citation

  • Guanzhong James Wen & Jinwu Xiong, 2014. "The Hukou and Land Tenure Systems as Two Middle Income Traps¡ªThe Case of Modern China," Frontiers of Economics in China-Selected Publications from Chinese Universities, Higher Education Press, vol. 9(3), pages 438-459, September.
    • Handle: RePEc:fec:journl:v:9:y:2014:i:3:p:438-459
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    File URL: http://journal.hep.com.cn/fec/EN/10.3868/s060-003-014-0021-1
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    Citations

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    Cited by:

    1. Glawe, Linda & Wagner, Helmut, 2020. "China in the middle-income trap?," China Economic Review, Elsevier, vol. 60(C).
    2. Deininger, Klaus & Jin, Songqing & Liu, Shouying & Xia, Fang, 2020. "Property rights reform to support China’s rural - urban integration: household-level evidence from the Chengdu experiment," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 64(1), January.
    3. Akbas, Yusuf Ekrem & Sancar, Canan, 2021. "The impact of export dynamics on trade balance in emerging and developed countries: An evaluation with middle income trap perspective," International Review of Economics & Finance, Elsevier, vol. 76(C), pages 357-375.
    4. Lili Chen & Hongsheng Chen & Chaohui Zou & Ye Liu, 2021. "The Impact of Farmland Transfer on Rural Households’ Income Structure in the Context of Household Differentiation: A Case Study of Heilongjiang Province, China," Land, MDPI, vol. 10(4), pages 1-20, April.

    More about this item

    Keywords

    Hukou; land tenure system; middle income trap; monopsony; monopoly;
    All these keywords.

    JEL classification:

    • O5 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies
    • P3 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions
    • Q15 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Land Ownership and Tenure; Land Reform; Land Use; Irrigation; Agriculture and Environment
    • J7 - Labor and Demographic Economics - - Labor Discrimination
    • D3 - Microeconomics - - Distribution

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