The state required all 33 ‘three rural land reforms’ pilot zones to begin land requisition reforms in late September 2016.
three land reforms
The 33 zones, launched in February 2015 and due to finish end 2017, pilot ways to ease the transfer of collectively owned rural land. The ’three rural land reforms’ are in
- collectively managed construction land: allowing usage rights of rural construction land to be sold, leased or traded for stock shares at the same price and under the same conditions as state-owned construction land
- homestead land: allowing transfers of homestead land within the same collective economic organisation
- local government requisition of collective rural land: creating a unified process for requisition, including developing fairer compensation, based on local development, average income and land type
Land transfers are critical to both rural and urban reform. With securer rights and fairer compensation, the state hopes rural hukou holders will be more willing to move to cities, buy housing and exit agriculture. Entrepreneurs, meanwhile, could more easily aggregate arable land, raising efficiency and rejuvenating a countryside dotted with unused plots.
forcing the issue
This move addresses localities’ reluctance to change the status quo on land seizures. Before the September decree, only three districts were piloting requisition reforms, with 15 piloting construction land and 15 homestead land reforms. Strengthening legal mechanisms and standardising compensation would check local governments’ addiction to arbitrarily seizing land, which they rely on to plug revenue holes and hit central urbanisation targets.
Rampant land seizures have long driven rural unrest. In the name of ‘public interest’, local governments take it from rural residents often at little cost and sell use-rights to enterprises for huge gains, depriving original rights’ holders from sharing in the land’s increased value. Rural land requisition is almost always followed by conversion, often for residential, industrial or commercial use, causing rapid loss of arable land and threatening food security. Currently, there is no other way for collectively owned land to enter urban markets.
New measures issued in June 2016 allow local governments to charge a 20-50 percent fee on transfers of collectively managed construction land rights, to make up for loss of revenue as requisition powers are curbed.
roundtable
Cai Jiming 蔡继明 | Tsinghua University Centre for Political Economy director
Allowing pilot zones to implement only one of three reform measures defeats the purpose of the experiment. Land requisition reform must be combined with reforms of collectively managed construction land transfers. If requisition remains the only channel for rural construction land to enter markets, governments can disregard legal requirements and seize more land than they need for urban public use. If the usage rights of rural construction land were freely transferable, governments would need to offer compensation on par with the land’s market value to obtain it. First THINKTANK
Xu Lin 徐林 | NDRC Development and Construction Office director general
Difficulty in obtaining urban hukou and restrictions on urban capital investing in rural land hinder urbanisation. Many migrants, unable to afford housing in megacities, move to smaller cities, leaving unused homestead plots behind. To address this, restrictions on trading homestead plots should be lifted. Zhejiang, Chengdu and Jiangsu have piloted combining capital and rural construction land, by following a variety of models such as developing rural tourism or merging agriculture, manufacturing and the service industries. This combination benefits peasants and more efficiently allocates land resources, but lacks adequate legal protection. 21st Century Business Herald
Wang Xiaolu 王小鲁 | National Economic Research Institute deputy director
Outdated policy and limited pilots stifle progress in land reform. Sale, lease or transfer of rural land to non-rural hukou holders is forbidden, and localities’ monopoly on land acquisitions and sales leads to inefficient land usage, corruption and inflated prices. In contrast, open land markets that guarantee peasants’ legal rights would curb excessive land price growth, reinvigorate abandoned land resources and promote urbanisation, improving income distribution and reducing corruption. Localities should continue expropriating land for important infrastructure projects, but compensate locals at market prices. Hukou reform should be accelerated, and social security and public service coverage expanded to safeguard peasants’ basic living standards after transferring land. Caixin
Zheng Zhenyuan 郑振源 | Ministry of Land and Resources Planning Bureau former director
Restricting the circulation of homestead land to members of the same collective hinders scaling rural land up. Households’ demand for new homestead land often cannot be met by those in the same economic organisation who have settled in cities and are willing to transfer their land. They have to turn to the village collectives to apply for new land quotas. As a result, in many localities homestead land keeps increasing, even as the village population falls, creating a vast number of ‘hollowed-out villages’. Caijing
context
26 Sep 2016: Ministry of Land and Resources (MLR) announces ‘three land reform’ pilots will be expanded. Pilots on marketising collectively managed rural construction land and land requisition reform will launch in all 33 pilot zones, with homestead land reform pilots continuing in 15
30 Aug 2016: Leading Group for Deepening Reform passes ‘Opinions on improving the separation of land ownership, contracting and management rights’
5 Jul 2016: Ministry of Agriculture (MoA) issues ‘Notice on operation standards for trial rural land operation rights transfer markets’
6 Jun 2016: MLR and Ministry of Finance issue ‘Temporary measures to manage collection and use of adjustment fees for rural collectively managed construction land revenue increases’, allowing governments to take 20 to 50 percent of the increase in the value of newly urbanised land
18 Mar 2016: State Council Development Research Centre Rural Economy Research Group lays out principles for reforming rural collective property rights
7 Jan 2016: MoA prioritises rural land contract and management rights confirmation registration and certificate issuance, and rural collective property rights reform, among other issues in 2016
24-25 Dec 2015: ‘three land reforms’ named a key 2016 priority at the annual Rural Work Conference Xinhua