By Ye Xingqing, Zhang Yunhua & Wu Zhenjun, Research Department of Rural Economy of DRC

Research Report Vol.17 No.1, 2015

The trading markets for rural property right transfer comprise invisible and visible markets. Beginning to develop since mid-1980s when farmers were allowed to transfer the right to use their contracted land, especially after the restructuring of township enterprises in the mid-1990s, invisible market is the main channel to transfer contracted land, currently prevailing in rural areas. The visible one is more complex. In the early 1990s, there once emerged trading platforms mainly for property right of township enterprises. In 2004, China’s first forest factor market was set up in Yongan, Fujian Province in promoting the reform of collective forest right system. Besides, the first comprehensive rural property right exchange in China was established in Chengdu in 2008. So far, land transfer service centers have been established in over 13000 villages (towns) and more than 800 counties (cities). And there are over 1200 service centers for forest right transfer nationwide set up by forestry administrative departments. What’s more, a group of comprehensive exchanges, represented by rural property right exchanges in Chengdu, Chongqing and Wuhan, have been established in succession.

I. Current Status of Comprehensive Trading Markets for Rural Property Right Transfer

1. Large difference in the size of registered capital

Since the rural property right exchange was formally founded in Chengduin October 2008, other exchanges, including Chongqing Rural Land Exchange, Wuhan Comprehensive Rural Equity Exchange, Shanghai Agriculture Equity Exchange, etc, were also put into operation. In recent years, comprehensive trading markets for rural property right transfer have been established in succession in many areas, such as Zhejiang, Jiangsu, Yunnan, Tianjin, Shandong, Guangxi, Shanxi, but with big difference in size. For example, Wuhan Comprehensive Rural Equity Exchange, established in the early days, has registered capital of only 1 million yuan, while rural property exchanges in Chengdu, Hangzhou, Shanghai and other places have registered capital of 10 million yuan. Kunming Pan-Asia Rural Area Equity Exchange and the large-sized Qilu Agriculture Equity Exchange have registered capital of 20.5 million and 30 million yuan respectively. Besides, the registered capital of Chongqing Rural Land Exchange reaches 50 million and that of Beijing Rural Area Equity Exchange is as high as 55 million yuan.

2. Difference in the variety of property rights for transfer

There are, on each rural property right trading market, a variety of property rights, ranging from the right to contracted land management and the right to use rural collective construction land, to rural housing and equity of rural collective economic organizations, facilities for agricultural production such as agricultural machinery and fishery vessels, etc. Other property rights eligible for trading include agricultural intellectual property right, ownership of agricultural products (livestock and poultry), and options of agricultural products, etc. Only three kinds of property rights are traded at Chongqing Rural Land Exchange while there are over ten types at the exchanges like Kunming Pan-Asia Rural Area Equity Exchange and Wenzhou Rural Equity Exchange.

3. Profit-oriented markets

Some rural property right trading institutions are public welfare legal entities, such as Chongqing Rural Land Exchange, which is funded by Chongqing Municipal Government as a non-profit public institution with legal person status. Wuhan Comprehensive Rural Equity Exchange is established as a non-profit enterprise with legal person status undertaking the function of establishing trading platforms at city, district, town levels and establishing rural property right trading market system. Most of the rural property right trading institutions, however, are profit-oriented legal entities. For example, Chengdu Agriculture Equity Exchange is jointly established as a limited liability company by the Bureau of Land and Resources of Chengdu, the Bureau of Housing Management of Chengdu, the Bureau of Parks and Woods and public institutions subordinate to Chengdu Municipal Agriculture Committee, contributing 50%, 25%, 12.5% and 12.5% of capital, respectively. It operates based on the management model of modern enterpriseswith board of directors and board of supervisors set under the board of shareholders. Kunming Pan-Asia Rural Area Equity Exchange is established as a corporate enterprise with legal person status aiming at building a unified communication network for rural property right trading in the city and thus promoting rural property right trading. Besides, Beijing Rural Area Equity Exchange, with the board of supervisors and executive directors set under the board of shareholders, is funded by Beijing Agricultural Investment Co., Ltd and has set up branches in 14 agricultural districts and counties to improve information collection, market development and so on. Tianjin Agriculture Equity Exchange, as a wholly state-owned corporate enterprise with the board of directors, board of supervisors and many other functional departments under the board of shareholders, is funded jointly by Tianjin Municipal Agricultural Committee, People’s Government of Baodi District and Tianjin Property Rights Exchange. In addition, Wenzhou Rural Equity Exchange, a solely state-owned company, specializes in rural property trading by building a market system at the city, county and township levels.

4. Limited trading radius

Most trading markets are locally based dealers except Wuhan Comprehensive Rural Equity Exchange and Shanghai Agriculture Equity Exchange which provide services for rural property right trading in its local area as well as the whole country. For example, Beijing Rural Area Equity Exchange is responsible for rural property right trading within Beijing Municipality. Moreover, Chengdu Agriculture Equity Exchange mainly provides services within the city and other types of property with relatively complete rights, such as agricultural machinery, can be traded outside the city range or the province. As for Kunming Pan-Asia Rural Area Equity Exchange, its main task is to build a unified communication network for rural property right trading in the city. And exchanges including Wenzhou Rural Equity Exchange, Ezhou Comprehensive Agriculture Equity Exchange in Hubei Province, Hangzhou Equity Exchange, Guangzhou Agricultural Equity Exchange, etc. are mainly locally based.

In general, trading markets for rural property right transfer have played a certain role in promoting rural property right transfer in the past few years. For example, Chengdu Agriculture Equity Exchange has completed, by the end of March 2014, rural property right transactions worth 39.686 billion yuan including 10326 transfers of right to contracted land management worth 20.943 billion yuan and 766 transfers of collective construction land quota with a value of 11.684 billion yuan. By the end of 2013, Wuhan Comprehensive Rural Equity Exchange has concluded 1669 transactions of various rural property rights worth 9.969 billion yuan involving a rural land area of 981,600 mu (65472.72 hectares). And joint financial institutions have offered mortgage loans worth 1.147 billion yuan for agricultural enterprises, cooperatives, major planting and breeding households with the highest single amount reaching 55 million yuan.

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