Empower farmers in land deals

There is some optimism that land reform will have breakthrough progress at the Third Plenary Session of the 18th Communist Party of China Central Committee. However, there is a strong possibility that this optimism will be doused with cold water.

It is not that there will not be a major land reform plan, but rather it will fall short of the radical, concrete reforms necessary to solve the problem once and for all.

According to Chinese laws, all land is owned by the State and farmers only have the right to use it under a long-term lease from the government.

Given the large number of farmers - about 900 million based on the household registration system - each farmer ploughs a very small piece of land, thus limiting the overall efficiency of farming.

By allowing farmers to transfer their land use rights, those small pieces of farmland could be merged and become more suitable for efficient large-scale modern farming methods.

Meanwhile, soaring urban house prices in recent years have prompted local governments to requisition land from farmers and resell it to developers for a handsome profit. Farmers generally have no option but accept such one-sided deals.

By empowering farmers to transfer their land use rights, a policy that is highly anticipated from the Third Plenary Session, farmers would have more say in land transfer deals and benefit from higher returns.

As the plenum draws near, State and private think tanks have organized a number of high-profile forums to discuss the country's urbanization policy, including that of rural land transfer.

Many participants have voiced concerns about the potential pitfalls if farmers lose their land and become urban poor.

In India, large numbers of farmers have sold their land and moved to the cities, only to end up in slums. This should sound an alarm for Chinese policymakers, said Chen Xingdong, chief economist of BNP Paribas (China), at a forum organized by the China and World Economy magazine, an English-language publication under the Chinese Academy of Social Sciences.

"I've been to slums in many countries in Latin America and Asia; it's appalling," said Yu Yongding, economist and a former central bank monetary policy adviser, at the forum.

"China must avoid that from happening," he said.

During the financial crisis five years ago, 20 million farmers-turned-workers lost their jobs in cities. The reason this failed to lead to major social unrest was the majority could still return to their rural homes and rely on the family farmland to get through the hard times. If those farmers had transferred their lands to others, however, life would have been much harder.

Policymakers, therefore, must devise related reform measures, such as social security protection and training, to ensure that farmers who no longer have land have adequate skills to find new jobs and have access to a basic guarantee of their livelihoods.

Some places are taking the lead in this respect. In Yangling, Shaanxi province, for example, the local government has established a risk fund to help farmers who sell their land rights. It has also made social security arrangements and provided subsidies for such farmers if they cannot secure new jobs.

Given the complexity of the issue, policymakers must adopt a gradual approach and set out some basic principles on land transfer at the plenum so that local governments, business interests and the individual farmers can bargain with each other fairly. In that process, farmers must be respected so that they have the final say in transfer of their land.

The author is a senior writer with China Daily.