Institutional Innovation and Rural Land Reform in China

China has embarked on an important institutional experiment in the area of rural land reform. Responding to lagging rural incomes and the scarcity of developable urban land, the Central Government sanctioned the pilot implementation of a new type of tradeable development right. Referred to as 建设用地指标 (jian she yong di zhi biao) or “construction land quota” in the municipality of Chengdu, one of the pilot sites, the new instrument is used to trade development rights between rural and urban areas. Using a comparative analysis, we describe the essential features of the quota, comparing it to a similar program in Chongqing and to more conventional instruments like tradeable development rights. We argue that extant institutional models come up short in describing distinctive features of Chengdu’s quota program and develop the concept of the plenary good as a mode of description. The Chengdu case provides a lens with which to view the larger, national project of constructing a socialist market system. We end the report with a note on the distinctive nature of China’s institutional environment, evoking the idea of a Confucian ethos in describing what we refer to as a relational system.