Two-tier land tenure system and sustained economic growth in post-1978 rural China

The two-tier land tenure system has been widely blamed for the problems in land allocation and in land-specific investment observed in the postreform rural China. Greater privatization of property rights in land has been proposed to enable productive farmers to acquire more land, to promote land circulation, to improve farmers' access to credit, and to encourage farm investment. It is argued here that in the presence of multiple market distortions, land privatization is unlikely to provide a solution to the agricultural problems. Rather, an approach which refines the existing framework of the two-tier ownership system offers more promise. Copyright (C) 1996 Published by Elsevier Science Ltd