Abstract
Recently, the liquidation of farmland has become mandatory in Chinase villages. However, the farmland property right is a contracted management right. Therefore, from the viewpoint of economics, the validity of the latter right must be determined for the land to be liquidated. We conclude the following: (1) The contracted management right has been revised to encourage farmers to invest more, by expanding the scope of residual claims. (2) Partial compensation under eminent domain certifies the entitlement of the contracted management right. This measure restrains excessive investment and expropriation by farmers and the government respectively. (3) In the case of the Hunan province, the farmers perceived the establishment of land property rights to be a precursor to the liquidation of their farmland.
