*2.1. The Theoretical Approach Based on the Shift Theory of Land Rights*

The shift theory of land rights is a development of the property rights theory in Western economics, which is mainly used to study land, a special property with both public and private benefits [19]. In China, the ownership of land has long been owned by the country and rural collectives, but the right to use land can be circulated in accordance with the law, and the right to benefit and dispose of land is also circulated to some degree among different owners with the circulation of the right to use. There is no doubt that land is also of great private benefit in China [20]. Most countries and regions implement private ownership of land, but they also provide some degrees of legal protection for the government's violation of private land rights due to public benefits from the institutional level [21,22]. Obviously, whether in Eastern countries or Western countries, the rights relationship of land is very complicated. However, the main property rights theory is aimed at the study of private property, so it is difficult to fully explain the real-world land issues because, sometimes, keeping land rights moderately ambiguous to some degree, or strengthening term duration limits, are necessary and beneficial [23]. Therefore, a theory of property rights specially used to explain land issues is very necessary, which is why the shift theory of land rights is proposed, and it has three opinions [19].

Firstly, in essence, the real rights and the creditor rights of land are only the difference in the control rights of the right holder, and the control rights are in a process of continuous change. As shown in Figure 1, when the right to control changes from large to small, the real rights shift to the creditor rights until the right holder exercises full creditor rights. On the contrary, the creditor rights shift to the real rights until the right holder exercises full real rights.

**Figure 1.** The right of control of the right holder.

Secondly, there are at least two owners who own the real rights of land, a public owner and a private owner, and they share 100% of the real rights of the land (Figure 2). When the real rights of land of the private owner become larger, the real rights of land of the public owner will become smaller, and the private benefits of land will become larger, which is called privatization. The opposite of this is called publicization.

**Figure 2.** The real right of land between the public owner and the private owner.

Thirdly, for the land, the control right of land is shifted between the public owner and the private owner and the real rights and the creditor rights, which have formed a mechanism to realize the rational distribution of land rights and promote the reconciliation of public and private benefits.

According to the shift theory of land rights, a theoretical approach of analysis farmland issue is established (Figure 3). In the separation of two rights system of farmland, the Chinese government stabilizes the rights relationship of farmland and endow farmers with the right to circulate farmland by a series of policies [24–26]. In this period, the control rights of the land of farmers further shifted from creditor rights to real rights. The real rights of farmland involve farmers that have gradually exceeded the creditor rights, and the farmland also changed from a property biased towards public benefits to a property that is more inclined towards yielding private benefits. However, rural collectives have gradually lost the right to adjust farmland due to the protection of farmers' rights by laws and policies [27]. With the improvement of productivity, rural collectives still have the ownership of farmland in name, but in reality, they cannot adjust the contracted land of farmers for the demand of advanced productivity due to the failure of the shift in farmland rights from decentralization to centralization, so the fragmentation of farmland caused by rights has become increasingly serious.

In order to alleviate the fragmentation of farmland, the Chinese government further promotes the market-oriented reform of farmland and implements the separation of three rights systems to encourage appropriate scale management of farmland [2,12,28,29]. In the new reform, the government not only redefines and clears the ambiguous rights relationship of farmland due to mismanagement, informal circulation, illegal reclamation, etc., but encourages rural collectives to try to achieve appropriate scale management of farmland by the farmland shareholding cooperation. The policy adjustments provide some new ideas for rural collectives to adjust farmland, and more opportunities are given for the shift in farmland rights from decentralization to centralization. Rural collectives can activate owner rights of farmland by the farmland shareholding cooperation so that rural collectives have the right to readjust farmland by market means. It means the control right of farmland of farmers is shifting from real rights to creditor rights, and the real right of farmland is shifting from private ownership to public ownership. Therefore, the fragmentation of farmland is gradually alleviated by the adjustment of rural collectives. It

notes that farmers still have considerable real rights because the decisions of the farmland shareholding cooperation are made by farmers, rather than the government, and farmers are free to enter or exit the shareholding cooperation organization. The private benefits of farmland are still dominant, but the proportion of public benefits of farmland is higher than the former.

**Figure 3.** The theoretical approach of reform promoting agricultural modernization.

When the rural collectives manage most of the farmlands of their villages, the rural collective is the land supplier because of the increase in the quantity and quality of the supplied farmland, which is attractive to abundant high-quality farmland demanders, and a powerful gaming capability in the farmland market is given to them, which helps rural collectives to gain more benefits in the game [30]. Farmland demanders are very willing to trade with these high-quality farmland suppliers. They not only meet their business needs, but also reduce the transaction cost of circulation farmland, so these high-quality farmland suppliers are often regarded by them as the best choice. There is no doubt that the market-oriented farmland circulation that rural collectives participate in overcomes the issues of high transaction costs and fragmentation of farmland in the market-oriented land circulation that farmers directly participate in [15], and it improves the bargaining power of farmers and rural collectives, which enables farmers more capabilities to obtain benefits and resist risks, thereby reducing informal land circulation and avoiding rights risks and inefficient use of farmland [31]. It can be seen that the reform has contributed to the realization of land circulation activities with more quantity, on a larger scale, and more concentrated and contiguous land, while the large-scale, concentrated, and contiguous land is necessary for agricultural modernization, and it has also prompted the transformation of agricultural practitioner from traditional farmers to new agricultural business entities.

Intensification of factors, scale of farmlands, diversification of functions, and mechanization of production are typical characteristics of modern agriculture [32–34]. Compared with traditional farmers, new agricultural business entities are closer to the characteristics of agricultural modernization [35]. In the aspect of intensification of factors, these new agricultural business entities concentrate on less production factor inputs and overcome the law of diminishing return by advanced production technology, equipment, and management methods, in order to obtain higher yields and earnings of per unit of farmland [36]. In the aspect of scale of farmlands, new agricultural business entities can provide generous remuneration to numerous farmland suppliers, so it is easier for them to achieve the advantages of scale compared to traditional farmers [37,38]. In the aspect of diversification of functions, new agricultural business entities can not only exert the economic and social functions of agriculture by providing numerous agricultural products, but they can also fully explore the ecological functions of agriculture by optimizing planting structure, developing advanced technologies, and improving production methods [39]. In the aspect of mechanization of production, new agricultural business entities are more willing to improve the work efficiency of all production links by introducing advanced machinery and equipment, compared with traditional farmers, and some of them pay attention to research and the development of advanced technologies [40–43]. Therefore, new agricultural business entities play key roles in the process of agricultural modernization. They improve the use efficiency of farmland by pursuing intensification of factors, scale of farmlands, diversification of functions, and mechanization of production, which service development objects of high level of yield, efficient production and environment friendliness, and promote the process of agricultural modernization.

### *2.2. Indicators Selection of Evaluating Reform Performance*

According to Chinese official documents, high levels of yield, efficient production, and environmental friendliness are regarded as the three main objectives in agricultural production. In order to ensure national food security, it is necessary to ensure the supply of important agricultural products and to deal with the uncertainty of the external environment with the certainty of stable domestic production, so a high level of production is one of missions of agricultural modernization [44–46]. Meanwhile, in order to adapt to the development of productivity and changes in production relations, more capital, technology, and talents are required to be invested in agriculture, so efficient production is another mission of agricultural modernization [47–49]. Furthermore, in order to reduce the negative impact of chemical fertilizers and pesticides on farmland, and to achieve sustainable use of farmland and improve the quality of agricultural products, it is necessary for agricultural

production to change towards environment friendliness. [50,51]. Therefore, high levels of yield, efficient production, and environmental friendliness are appropriate to evaluate the degree of agricultural modernization.

Focusing on Yuyang District, the farmland rights system reform from decentralization to centralization adjusts the farmland area and the number of plots of farmers, so the relationship among average area per household, average number of plots per household, and average yield of unit farmland can be used to evaluate whether high yields have been achieved after the reform. The unit farmland area remains unchanged, and mechanization rate, labor productivity, and higher capital input-output ratio of unit farmland are higher, which means that the use efficiency of unit farmland has improved [32,52], so changes in these indicators can be used to evaluate whether the reform has promoted the efficiency of agricultural production. In addition to ensuring the production of food and raw materials, farmland also plays an important role in ecological chain support and gas regulation services, so ecosystem service value (ESV) and agricultural carbon emissions can be used to evaluate the environmental friendliness of agricultural production [53]. By measuring the change of ESV, total carbon emission, and carbon emission intensity before and after the reform, the result can be evaluated whether the reform has promoted the environmental friendliness of agriculture production. Table 1 shows the indicators system constructed to evaluate the impact degree of reform promoting agricultural modernization. Various indicators have an indirect impact on agricultural modernization by affecting the objectives of high levels of yield, efficient production, and environmental friendliness.


**Table 1.** Indicator system for evaluating impacts of the reform on agricultural modernization.

#### *2.3. The Methodology and Data Sources*

Case analysis is a commonly used method to summarize theoretical results from practice, so this study will adopt this method to sort out the practice of farmland rights system reform from decentralization to centralization in Yuyang District. Above all, this study will introduce the general situation of Yuyang District. By sorting out the local history of changes in the farmland rights system since 1980, it clarifies the problems that existed in the local farmland before the latest reform was implemented and analyzes the causes of the problems. Besides, this study will explore the practice of farmland rights system reform in Yuyang. It aims to summarize the process of reform, to analyze the direction of shift in farmland rights, and to search out the causes of these changes. Finally, this study will survey the impact path of the reform on agricultural modernization and evaluate the reform performance by comparing key indicators before and after the reform.

Questionnaire surveys, in-depth interviews, and document analysis are used to collect data required for this study. The study group went to Yuyang District four times in September 2020, July 2021, February 2022, and August 2022 to conduct field research. Questionnaire surveys were conducted in Yuyang in the first and fourth research fields, and these surveys helped the study group to collect numerous relevant data. In the second and third research fields, the study group lived in Yuyang District for more than three months. Through in-depth interviews with government cadres, village cadres, and farmers, the practice of reform and impacts on agricultural modernization were fully understood by the study group. Meanwhile, some relevant documents have been obtained with the help of local government. Table 2 shows the data obtained by the field research of study group, which provide strong support for this study.


**Table 2.** The data obtained by the field research of this study group.

#### **3. The Practice of The Farmland Rights System Reform in Yuyang District**

*3.1. The General Situation of Yuyang District*

Yuyang District is the center of Yulin City, the second largest city in Shaanxi Province. It is located in the arid and semi-arid regions of China and the interlaced zone of agriculture and animal husbandry. With the Great Wall as the boundary, the land in the north is relatively flat, and the land in the south is mainly mountainous. The GDP of Yuyang District reached 135.5 billion yuan<sup>2</sup> in 2021. In the 1980s, with the implementation of the household contract responsibility system for farmland, it successfully stimulated farmers' enthusiasm for production and effectively solved the issue of food. However, the "fat and thin matching" method of farmland division, based on the principle of fairness, led to the fragmentation of farmland. Each peasant family in Yuyang District has an average of 15 mu and 16 pieces of farmland, and each peasant family in the southern part has an average of 12 mu and 18 pieces of farmland. With the process of urbanization, 80% of the local rural laborers have left the countryside and choose to work in cities. There is a limited labor capacity of the elderly left behind, so they usually only cultivate some farmland close to home, with a large area and good soil conditions for the purpose of subsistence. The fragmentation of farmland has delayed the process of refined division of labor and specialization in agricultural production. Meanwhile, some issues, such as low input per mu of farmland, low farmland utilization efficiency, and abandoned farmland, have begun to appear. These issues have seriously hindered the development of agricultural modernization.

However, rural collectives in Yuyang District have difficulties adjusting these inefficient farmlands, so the failure of farmland rights from decentralization to centralization has occurred. Many reasons cause this result. Firstly, the central government's policy of 'increasing people without increasing farmland, and decreasing people without reducing farmland' made rural collectives in Yuyang District lose the right to adjust farmland after the second round of farmland contracting. In practice, some rural collectives in Yuyang District have tried to adjust the distribution of farmland for the purpose of giving landless people farmland for their livelihood, but this ultimately failed. Their attempts were strongly opposed by members of their collectives and led to collective petitions by farmers. Finally, the local government resolved the conflict by coordination, but some people responsible for making these attempts were punished accordingly. There is no doubt that these incidents provided lessons for other rural collectives in Yuyang District, strengthened the notion that farmland cannot be adjusted, and blocked the attempt to shift farmland rights from decentralization to centralization. The other reason is that rural collectives did not have enough standardized asset management before, coupled with the informal circulation and irregular reclamation among farmers, there were common issues of unclear boundaries and ownership of farmland, which undoubtedly increased the transaction costs of farmland circulation in the formal market. The increase in the transaction cost of farmland circulation means that it is more difficult to realize the shift in farmland rights from decentralization to centralization by market means.

Under the combined effect of administrative and market challenges, the failure of farmland rights from decentralization to centralization has occurred, resulting in a structural imbalance between the supply and demand of farmland. According to official statistics, 31,900 of the 118,000 peasant households in Yuyang District have no farmland, but on average, 7% of the farmland in each township is in a state of abandonment. The lack of farmland supply and the phenomenon of farmland abandonment coexist. Moreover, when rural collectives face the needs of social capital to invest in the development of scale planting industries locally, there is often no land available, which eventually leads to the abortion of social investment and damages the overall welfare of the collective.
