Profiting from China’s property boom

Cranes, empty apartment blocks, half-built high rises – driving from Shenzhen, the city where China’s economic boom started in 1978, to the village of Wukan, I watched the biggest property bubble in the world glide by.

Land prices have tripled in the last 15 years, fuelled by speculation. Surely it cannot last.
But while it does, Communist Party officials are making sure that they benefit. Land ownership is a complex issue in China. Landlords were one of Mao Tse Tung’s reviled classes along with the bourgeoisie and “capitalist roaders”.

In the late 1950s, land was seized and farmers forced to till it collectively – one reason for the starvation of some 30 million Chinese that marked the Great Leap Forward. When Deng Xiao Ping started his economic reforms, land was redivided amongst villagers, and farmers were able to cultivate individually again.

Rigged elections

Since the manufacturing boom of the 1980s, selling or leasing land to new factories has often been more profitable, but farmers had neither the understanding nor the skills to know how to get the best deal. Nor did they always have the right papers. It was easy for local Communist Party leaders to take the profits and give just a little to the people they were meant to serve. The bigger the property bubble, the greedier they got.

That, it seems, is what happened in Wukan, the village which achieved world-wide fame last year when its people protested and kicked out their leaders. Rigged local elections had kept the same village leaders in office for decades – they sold off land with the connivance of higher township and other party officials and became rich. The villagers realised they were being cheated.

Normally such protests are violently suppressed, but the Guangdong Provincial Party Chef, Wang Yang, who has a reputation as something of a reformer, decided it would be better to let the villagers freely choose their own leaders. So the “Wukan” model was born – an example of how to contain rather than crush conflict.

When I visited Wukan, I expected people to tell me that local democracy had not solved all their problems, but I was surprised to hear how little interest they had in their hard-won freedom.

“We farmers only care about our own interests,” said Hong Ruiqing, a hairdresser whose parents’ land was taken. “Experts and media friends told us it was the right thing to do to demand democracy. They gave us legal knowledge.”

More protests?

The new leadership, elected in March, is honest, but that’s not enough. Zhuang Liehong, one of the new officials, resigned in despair after he realised that the developers who had bought the land were not about to give it back, and the old corrupt leadership still had protection from more senior people in the party. Some frustrated villagers are now talking about protesting  again.

“I was involved in the election in order to get the land back for Wukan,” said Mr Zhuang. “I feel guilty because cannot keep my promise to the villagers. The government of the township and of the city do not work with us.”

As China’s new leadership is unveiled tomorrow it’s worth reflecting on what has happened in Wukan. Outsiders often see democracy as the best way to curb corruption, but the villagers I met wanted the party to solve their problems from the top down. The village deputy leader, Yang Semao, a former protest leader, is struggling.

“Considering the situation of China, at this stage where people are not very well educated and many are unaware of laws and illiterate, real democracy may not be a good thing,” he mused when I met him in his office. “A certain degree of dictatorship, as long as the dictators care about the people, may not be so a bad.”

So much for the “Wukan model”, which many hoped would lead the way from the bottom up in bringing political reform to China. The villagers are learning that they real change won’t happen unless wider structures reform. Yang Semao dares to look at the bigger picture.

“There’s a contradiction between one party rule and real democracy,” he said.

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