Mr. Hu, tear down this wall
China's decision to let farmers trade land only points to a need to allow private property.
Chinese leader Hu Jintao came closer than ever this month to tearing down the great wall that guards a key vestige of communism – government ownership of all land. But he stopped short of embracing private property. The party decided only to allow China's 700 million to 900 million peasants to sell the rights to the land they till.
That's no small step for China – and the world – as rural land trading may now become a new financial rocket for the world's most populous nation and its third-largest economy.
The decision comes on the 30th anniversary of the radical changes begun by Deng Xiaoping to break up China's collective farms and allocate plots to peasants, who make up two-thirds of the population. Under that system, peasants were given 30-year leases on land still controlled by unelected party leaders in the village.
That limited shift to a market economy was vital to the Chinese economic boom. It provided the wealth to turn China into an export machine to the Wal-Marts of the world. It also led to the recycling of billions of dollars into the purchase of US debt.
American consumers have lived high on a Chinese hog for years with credit provided in part by China's excess dollars from exports. Now with the global credit crisis reaching China, its leaders are smart to reach for another capitalist reform to generate more wealth in the countryside.
Alas, that may not be their main motive. The party faces rising unpopularity as more peasants protest against local officials who confiscate farmland for development and self-enrichment. The decision to legalize land trades may really be a way to break the power and corruption of these village chieftains.
The decision also catches up with market reality. Millions of peasants already illegally sell land rights to seek work elsewhere.
As much as the Communist Party still imposes a socialist ideology, the message back from the common Chinese is one of popular demand for more freedom. The party knows that private ownership of property would become the bedrock for a strong democracy movement. And that would end the party's monopoly on power.
For all of China's wealth, the party is desperate to appease the restive rural masses. Half a million peasants still live on less than $2 a day. Rural folk make up 40 percent of labor but receive only about 11 percent of its wealth.
The new reform may consolidate the country's short supply of farmland and help boost agricultural production. That in turn may turn rural dwellers into better consumers and shift China away from its export-driven economic model.
But it could also lead to mass migration of peasants to cities. For a party that pretends to know how to run an economy, it may trade one current instability – rural protests – for urban unrest for political freedoms. The party will probably implement this reform with care.
But economic liberty can't be doled out like dim sum at a reception. It is a fundamental right.
Mao was wrong to base China's future on the party's control of land. People's hopes for a better life lie first in their own initiative, such as how to use the land they own. Mr. Hu must finally break down the wall to that better future.