Dalian, a city of a little more than six million people on the tip of the Liaodong peninsula in Liaoning province, is most frequently mentioned outside China for one of two reasons. First, as the host of the “Summer Davos,” Dalian has a reputation as one of China's cleanest and most beautiful cities. Dalian is also noted for its connection to one of China's most recognizable and notorious contemporary politicians: Bo Xilai. Before Bo attracted global attention for “smashing” corruption and singing Red songs as part of his populist reform campaign in Chongqing, and notoriety for the murder scandal that felled him in 2012, he served in the city of Dalian from 1984 through 2000 in various positions, and ultimately as mayor. However, Bo's populist turn in Chongqing was not at all predictable in terms of his tenure in Dalian, during which he presided over the city's opening to foreign direct investment (FDI) and its transformation from a socialist industrial base to an area for global corporate outsourcing.

Dalian's two reputations are, to be sure, deeply intertwined. Under Bo's leadership, the city initiated a massive transformation of the urban built environment and undertook a substantial public relations campaign to highlight its success in urban planning and economic reforms. Dalian's rise, both economically and publicly, coincided with Bo's political rise such that we cannot disentangle the effect of one from the other. The same is true of the mutual dependence of the city's economic trajectory and its pursuit of land and real estate development. As Dalian grew out of the rust belt into a global capital hub, the local government monopolized property rights and deployed land development as a tool for government financing, a model that almost all Chinese cities would replicate in the 2000s. This chapter narrates Dalian's economic growth and physical transformation, illustrating how its statist property-rights regime emerged as a result of the sequencing of global opening and economic reforms.

The Argument in Brief

The integral relationship between economic strategies and property-rights practices experienced throughout China is on particular display in Dalian. Dalian's reform era economic performance was made possible by a dramatic reorganization of its political economy from a state socialist heavy industry base to a global capital hub. This reorganization, itself possible because of Dalian's preferential status and therefore early access to global capital, generated a shift in local political alliances.

If “all politics is local,” then most of Chinese politics is about land. By the mid-2000s, as a result of the dual dependence on land revenue as a key source of finance and on the real estate sector for economic growth, the pursuit of land control and development became the primary activity undertaken by local (city and county) governments in China. The ratio of land leasing and property – or land-related taxes to local government budgetary revenues – grew from 25 percent in 2000 to more than 90 percent in 2010. Real estate investment – funds invested in the development of land and property – grew from 2 percent of GDP in 1992 to 13 percent in 2011.

The extent of China's political and economic dependence on land and real estate was likely surprising even to the land-reform architects who made them possible. Zhao Ziyang, premier from 1980 to 1987 and general secretary of the Chinese Communist Party (CCP) from 1987 until his purge during the Tiananmen protests in 1989, writes in his memoir: “It was perhaps 1985 or 1986 when I talked to Huo Yingdong [a Hong Kong tycoon, better known as Henry Fok] and mentioned that we didn't have funds for urban development. He asked me, ‘If you have land, how can you not have money?' I thought this was a strange comment. Having land was one issue; a lack of funds was another. What did the two have to do with one another?” Zhao goes on to describe how, presumably after he made the connection between landownership and capital accumulation, he presided over the initial experiments to separate ownership and use rights of land, and leasing the latter in return for capita – essentially, commodifying urban land.

This discovery of the “exchange value” of land – its ability to serve as a means of capital accumulation independent of its productive or use value – has resulted in a dramatic reorganization of intergovernmental and political economic relations in China during the last three decades. This chapter narrates the CCP's relationship to land, tracing how land evolved from a national resource to be distributed in the service of socialist production and consumption to a form of capital to an instrument of fiscal and financial policy.

Some have suggested that the entire process of economic reform in China can be viewed as a reassignment of property rights. Property rights – over firms, firm assets, land, and so forth – have changed hands between central and local levels of the state, among different intrastate agencies, and between the state and various elements of the private sector. The speed and direction of this process have been dynamic, tortuous, and politically contingent rather than proceeding steadily from plan to market or toward private-property rights. Decisions about who controls land and property have been at the center of political contests for power and for recognition, in which a variety of players both inside and outside the Chinese state have staked claims. The chapters in this book have examined this “reassignment of property rights” at the national and subnational levels. Doing so has revealed a process of political bargaining over land control that contains theoretical lessons about the nature of property-rights change and empirical lessons about the role of land and property in Chinese capitalism. In this concluding chapter, I review the theoretical and empirical findings of the book, explore the argument about property rights as political bargains in comparative perspective, and finally turn to the present and future of land and capitalism in China.

The Politics of Property Rights

In the first chapter of this book, I outlined a theoretical approach that positions political choice and bargaining at the center of property-rights changes. Such changes, during the modern era, are rarely imposed on societies or economies by some exogenous forces; rather they emerge through political processes in which actors consciously seek to implement changes to property-rights arrangements. Whereas classical approaches envisage that changes in value – of land, labor, goods, and so forth – stimulate changes in the arrangements of control over property, this political approach sees value as endogenous to the political process. Property assumes greater or lesser value as the result of political decisions that assign value.

Political decisions that assign or change value and property rights are the products of political bargaining and moral argument, both of which occur under conditions of uncertainty. Social and economic actors bargain over property rights as they do over the distribution of any other power resource. However, actors do not adopt positions on property rights with exclusive attention to the expected distributional gains.