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Chinese Bogeyman and Land Reform in Kazakhstan

Oct 03 , 2016

Countries of Central Asia, along with the rest of the post-Soviet states, have a very complicated history of land reform and redistribution. This timeframe spans from Stolypin’s reforms of Tsarist Russia that transformed collective land ownership and allowed peasants to own land, to Lenin’s revolutionary decree on an abolition of private property, to Stalin’s policy of forced collectivisation, and even to infamous post-Soviet experience of dubious privatisations. Thus, it is no wonder that land reform has been a recurring and uneasy theme of colossal consequences in the history of Central Asia, as it directly affected the lives of millions of people throughout the region.

Land reform is often understood as measures designed to impact a more equitable distribution of agricultural lands and as holding the promise of advancing economic growth. In turn, unresolved land disputes are viewed as having the tendency of spiralling into confrontations and protracted conflicts. Accordingly, there is a general consensus that land reform, which includes both land redistribution and land tenure reform, is not solely about economic growth and poverty reduction, but also about equity and conflict prevention.

Nonetheless, despite the prevalence of empirical evidence on the importance of land reform, the subject remains politically explosive in nature. Recent unrests in Kazakhstan demonstrate that land reform is not a routine policy issue, but a complicated process with the potential of igniting social movements and mass mobilisations. In March 2016, the government of Kazakhstan announced its plans to implement the changes to the Land Code of Kazakhstan. Adopted by the Parliament of Kazakhstan back in November of 2015, the new bill extends a permit to lease agricultural land from an initial 10 years to 25 years for entities with a 50% (maximum) foreign ownership. The bill also assumed the sale of agricultural land to the citizens of Kazakhstan through public auctions.

However, the reception of this bill by the Kazakh population came rather unexpectedly. Kazakhstan, which boasts of political stability, suddenly found itself in a situation of political crisis and turmoil. Large numbers of people took to the streets of Kazakhstan to express their anger at the changes in the Land Code of the republic. In order to mitigate revolutionary temper of the population, President of Kazakhstan, Nursultan Nazarbayev, was forced to fire his ministers of national economy and agriculture and place a moratorium on land reform until the end of 2016 in addition to the creation of a special committee on this issue.

Internal political discontent aside, what this wave of protests exposed was strong enmity of the local population towards China. China, perhaps the actor least involved in advancing this bill, emerged as the key locomotive of the new Kazakh legislature in the eyes of the public. Rumours that the new bill would allow foreigners to own land in Kazakhstan fanned public dissatisfaction with reforms, which in reality aimed at attracting critical investment to the agricultural sector of Kazakhstan. Protesters were quite selective in identifying foreign threat – it was Chinese investors that they feared the most. Beijing is still viewed in the country through the prism of distrust and fear although China has already established itself as “an elephant in the Kazakh room” by replacing Russian and Western partners as the top source of foreign direct investment.

Sceptics of land reforms throughout the world fear that land redistribution in developing states may further victimise those who are already more disadvantaged and marginalised. For instance, one of such concerns is related to the threat of land capture by elites. However, even with the absence of institutional or kleptocratic barriers, acquiring agricultural land in the market by those who work it most productively can be difficult. Market value of land may be inflated, because farming is not the only reason investors can be interested in land. Yet, protests in Kazakhstan underlined that arguments for and against land reform occur within the environment, which has a distant semblance to evidence-based decision-making. There were no specific studies conducted, which would examine the real situation in the Kazakh land market: Are there national Kazakh companies willing to rent the land offered to foreign investors? Are there Chinese investors? Who are these Chinese investors? What are the consequences of such policies based on the experience of other states? Is there an illegal immigration from China under the pretext of land development? There are numerous unanswered questions, which require informed and balanced explanations.

As a result, land reform in Kazakhstan is besieged by untested evidence and speculative assumptions. In fact, under existing legislation, foreigners are already allowed to rent Kazakh agricultural land for 10 years, and they currently rent 65 thousand hectares of land out of 99.5 million hectares of leased farmland – in other words, foreigners rent only 0.06% of all available Kazakh farmland. In turn, Chinese rent only 282 hectares of land in total, according to the Ministry of National Economy of Kazakhstan. Obviously, at this moment there are no queues of foreign investors willing to rent Kazakh farmland.

On the other hand, the Chinese agriculture industry is infamous for its low sanitary and phytosanitary standards. Contamination of soil with heavy metals and excessive usage of pesticides in China do not play in favour of Chinese investors. Chinese customers themselves (those who can afford to) prefer foreign-grown products to local foods. Accordingly, in addition to attracting Chinese investment into farmland, it is important to ensure a proper oversight of ecological variables such as quality of soil. As a practice, perhaps counterintuitively, short-term leases of land do more damage than good to land since investors try to maximise their profits at the expense of sustainable exploration.

In any case, Kazakhstan is not the first—and most likely is not the last—country to face the dilemma of renting farmland to Chinese investors. Land reform is a complicated political process, and unless consensus is reached on the objectives of land reform between all stakeholders, it will be very difficult to run an effective land redistribution programme. As protests in Kazakhstan demonstrated, although benefits of successful land reform are enormous, the costs of failing this reform may be even greater.

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