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Unmaking China's Development: The Function and Credibility of Institutions Peter Ho Cambridge and New York: Cambridge University Press, 2017 xx + 316 pp. £75.00 ISBN 978-1-107-09410-9

Published online by Cambridge University Press:  09 September 2019

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Abstract

Type
Book Review
Copyright
Copyright © SOAS University of London 2019 

This well-researched and well-written book offers a provocative and yet remarkably insightful revisit of the institutions that govern land and property rights in China, focusing on their evolution and the role they have played in economic development. Framed within the literature of institutionalism, the analysis challenges the commonly held neo-liberal wisdom that formal and secure private property rights are the institutional foundation for development. Rather, as the author argues, informal, insecure and non-private property rights could serve crucial social functions under specific contexts and hence be broadly perceived by relevant actors as commonly accepted arrangements or as, using the concept developed in the book, credible institutions. For land and property-rights institutions in China, their credibility legitimizes and sustains the seemingly inefficient forms (i.e. public ownership, insecurity and informality) and, ultimately, contributes to the impressive economic development China has achieved in the past two decades.

The inevitably daunting challenge involved in handling a theoretical framework of such breadth and depth is how to operationalize it, a task that this author has handled impressively. Three theoretical propositions emerge from this effort. First, land and property-rights institutions in China defy external design by the central government; rather, they are the result of endogenous and unintended development driven by the interactions of both state and non-state actors. Second, these institutions rarely settle around a stable path of equilibrium; instead, they evolve through an ever-changing, ever-conflicting process. Third, the functions and credibility rather than the forms of these institutions play a more important role in shaping development outcomes.

Empirically, the book tests these propositions through analyses of several key aspects of the institutional structure of land and real estate in China, including the institutions governing rural farmland, various types of rural and urban housing, and other land resources (i.e. grassland, forest and mining land). Each empirical chapter meticulously traces the evolution of the institutions under discussion to demonstrate how interactions among different actors shaped institutional development, often resulting in significant deviation from the intentions of central policymakers. For example, despite repeated endeavours, the central government has never completed the project of land titling in the countryside, neither has it been able to effectively enforce the ban on informal housing in urban areas. The reason behind the policy failures, as the author argues, lies in the functions served by the existing, endogenously developed institutions – they provide social security for farmers in the case of the collective ownership of farmland, and affordable accommodation for the urban poor in the case of informal housing – or, in other words, their institutional credibility.

The book makes important contributions, both theoretically and empirically, to the existing literature on land, housing and property rights in China. Theoretically, it offers a novel perspective on institutional changes by demonstrating that the behaviour of many other state and non-state actors, rather than simply abiding by or disobeying rules designed by the central government, plays a key role in shaping the institutional structure. Another valuable theoretical contribution lies in the originally developed concept of institutional credibility, which provides a convincing explanation for the persistence of non-private and insecure land ownership and property rights institutions. Empirically, the analysis includes extremely rich and previously underexplored details regarding not only the institutions themselves but also the complex bargaining and political processes that have been constantly driving institutional changes. These details are rather significant additions because they provide important knowledge and insights about how institutions evolve in practice.

As with other great works that address profound and important issues, this book leaves several questions that deserve further scrutiny but also inspire future research. For one thing, the argument that institutional credibility explains economic development in China could benefit from further comparative analysis and evidence. For example, if one compares the more credible institution of intra-village land redistribution with the less credible institution of land expropriation by the state, it might be argued that the latter contributes more strongly to economic growth by dramatically easing industrial, infrastructural and real estate development. In other words, it could be the least credible part of land institutions in China that contributes most to development. Furthermore, the empirical analysis could also be extended to a systematic examination of how recent land property rights reforms, in particularly the ones adopted since Xi Jinping took power, have affected institutional credibility, conflict and economic development. For example, in the area of farmland, reforms significantly limited the scope of land redistribution within village collectives and established a stronger legal base for contracted land sublease and transfer. Do these institutional developments reduce institutional credibility and cause more land-related conflicts? If so, how do strengthened land-use rights and reduced institutional credibility affect development?

Ho's book sets an admirable example for theoretically sophisticated and empirically solid research on institutions and development more generally and on land and housing in China more specifically. Readers interested in these subjects will benefit greatly from its broad scope, comprehensive and rigorous theory-building, and well-managed analysis of some of the most complex institutions in contemporary China.