How land property rights fuel agricultural mechanization in rural China

Improving agricultural machinery inputs and enhancing the efficiency of agricultural production is an important way to promote agricultural modernization and address food security challenges. Since 2013, China has implemented a comprehensive land tenure certification policy (LTCP) to formalize and stabilize rural land property rights. This study used panel data from the China Household Finance Survey (CHFS) conducted in 2011–2015 to investigate the impact of LTCP on farmers' agricultural machinery investment in rural China. By using difference-in-differences (DID) approach, the empirical results showed that the implementation of China’s LTCP significantly increased agricultural machinery investment. This effect operated primarily through improved access to formal financial credit for households with large-scale agricultural land. Further analysis revealed that the positive effects were more pronounced among households with more expenditure on social interactions. These findings provided theoretical and empirical evidence for the positive relationship between institutional change and agricultural mechanization in China.