Academic journal article China Perspectives

China's New Rural Land Reform? Assessment and Prospects

Academic journal article China Perspectives

China's New Rural Land Reform? Assessment and Prospects

Article excerpt

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The Third Plenum of the 18th CPC Central Committee that closed last November promised to "comprehensively deepen reforms" and introduced a number of measures that seek to expand the role of the market in the economy. (1) One of the key reform areas is land - a major source of social unrest in China - on which Chinese leaders have reiterated the promise of giving more property rights to farmers while granting them more freedom to transfer, rent out, or mortgage collectively-owned rural land on the market.

Does this signify the official beginning of China's new rural land reform? This article seeks to understand why the Chinese authorities are undertaking such reforms to address various land-related issues, and also to evaluate how progressive they are when compared to other land transfer experiments that have already been taking place in different parts of China. It argues that while the Third Plenum reforms point in the direction of reducing state monopoly on rural land transfer and restoring land use rights to farmers, they are nothing very new. More importantly, these reforms cannot enjoy much success unless more drastic reforms are undertaken. Such reforms include reconfiguring the power relations between local governments and farmers in a way that owners of collective land will truly secure their landuse rights, as well as a thorough fiscal and tax reform that reduces the reliance of local government on land sales.

Allowing the free transfer of rural construction land for commercial purposes

To some, the Third Plenum has taken an important step forward in reforming the rural land tenure system. Among these measures, the most significant is the marketisation of rural construction land, which denotes collectively-owned rural land for non-agricultural use. In China, urban land is state-owned while rural land is generally collectively owned. Rural land is mainly divided into farmland and rural construction land (see Graph 1). The former operates under the household responsibility system, which was adopted in the early 1980s as the cornerstone of economic reforms, under which collectively-owned farms could be entrusted to individual farming households through long-term contracts that could in turn be leased out to other households. The transfer of rural construction land, on the other hand, has been strictly controlled. The Third Plenum resolution now promises to "build a unified market for both urban and rural construction land," a tone that removes the hesitation in the Third Plenum five years ago, when the official line was to "gradually" bring about unification. (2)This means that the transfer of rural construction land will no longer be restricted. Farmers, on the condition that the scale of farmland remains unchanged, will be able to transfer, rent out, and mortgage their land-use rights of rural construction land to anyone, or turn the rights into shares in large-scale farming entities - in theory, at least.

Full market transaction, however, only applies to rural construction land for commercial purposes (jingyingxing jianshe yongdi ...). While the reform of the rural construction land for residential housing (zhaijidi ...), where farmers build their homes, also appeared in the resolution, it was marked by a much more cautious tone. The resolution only vows to "carefully and properly promote collateralisation, guarantee, and transfer of rural housing to increase farmers' asset revenues in a few pilot regions." In these regions, farmers will be allowed to transfer their housing plots through the property market. However, unlike the reform for commercial land, the extent of rollout for residential housing will be much more limited, while accompanied by stricter requirements. One possible reason for the Party's caution in allowing the full marketisation of rural residential housing has to do with the massive amount of land it would otherwise make available. …

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