Rural land transfer to help farmers

The Decision on Major Issues Concerning Comprehensively Deepening Reforms, issued by the Third Plenary Session of the 18th Communist Party of China Central Committee, highlights the CPC's efforts to ensure that rural residents enjoy an equal share of the fruits of modernization.

The document issued by the plenum says: Form a construction land market that unifies urban and rural areas; allow the sale, lease and demutualization of rural, collectively owned construction land (where buildings can come up) under the premise that it conforms to planning and use control; enlarge the area in which State-owned land can be leased and reduce land allocation that does not promote public welfare; establish a distribution mechanism of value-added income from land that takes into account the State, the collective and the individuals, and improve individual benefits reasonably; and upgrade the secondary market for land lease, transfer and mortgage.

The decision to allow the transfer of rural construction land has once again drawn the public's attention. In China, urban land is owned by the State while rural land is normally under collective ownership. Under the current land regulations, the transfer of rural construction land is strictly controlled. Though only farmers have the right to use such land, they cannot directly transfer or mortgage it. Existing laws prohibit transaction in the rural construction land.

Collectively owned construction land in rural areas must first be acquired by a local government and become State-owned land before being transferred to a realty developer for construction. Such a system complicates the transfer procedure of rural construction land, severely compromising farmers' economic interests and obstructing the industrialization and urbanization process in rural areas.

The problem, therefore, is how to protect farmers' interests in the transfer process and allow them to more liberally use their land-use rights, which would boost the rural land market and facilitate economic development.

The existing land regulations, which impose strict control over the transfer of rural construction land, go against some provisions of the Constitution and the Property Law, resulting in meager compensation for farmers. This is unfair and not conducive to social advancement.

For a long time, experts have been urging the authorities to lift the restrictions on rural land transfer. In 2004, the State Council issued the Decision on Deepening Reforms and Strengthening Land Management, which emphasized that the right to use rural construction land can be transferred according to the law if all planning requirements are fulfilled.

But the regulation on the transfer of land-use rights has not been implemented because of the lack of an applicable law. In 2008, the CPC decided to gradually build a unified market for urban and rural construction land. In the plenum's document, the word "gradually" has been deleted and the official wording is to build a unified market for urban and rural construction land. Therefore, direct market transactions in rural construction land are now feasible. The question is: When will the decision be implemented?

Allowing market transactions in rural construction land will undoubtedly benefit farmers. It's true that local governments' revenue depend, to a large extent, on transfer of land-use rights. But because of the central government's determination to control housing prices, land prices will not be determined solely by market demand, at least for the time being.

The Property Law of 2007 clarifies the policies to narrow the scope of land acquisition, regulate land expropriation procedures, enlarge the area for lease of State-owned land and reduce land allocations not conducive to public welfare.

The Constitution and the Property Law say that only for the purpose of public interests can farmers' land and homes be expropriated. Unfortunately, because of the Land Management Law and the Urban Real Estate Administration Law, local governments have been enjoying a monopoly in the land market. Local governments can acquire construction land and then allocate or transfer it to a developer to start construction on a project. Some local governments have been using the situation to acquire, at times with force, as much land as possible to earn more revenue. The resulting protests by farmers have led to increasing incidents of violence.

The reason for the increase in violence in land acquisition and demolition cases is also that farmers are not getting proper compensation in many cases. Also, land used for construction in rural areas should not include plots occupied by farmers' homes. But recent years have seen developers encroaching upon an increasing number of farmers' homes.

It is thus necessary to establish a guarantee system for landless farmers and a distribution mechanism of value-added income from land that takes into account the State, the collective and the individuals, and improve individuals' benefits reasonably.

The problem is that local governments still rely on land for a big part of their revenue, and the proportion is rising by the year. An increase in farmers' income means a cut in local governments' revenue. And the only way to increase the income of farmers and the government both is to sell land at a higher price. But can land users and homebuyers pay even higher prices? No.

The question then is: How to implement the spirit of the plenum's document, reform the land expropriation and compensation system and allow direct market transaction in rural construction land. Although there is no straightforward answer, the solution could be a more specific law on land-use rights in rural areas. Only a proper law can help the transfer of rural construction land without complications and to the benefit of farmers.

The author is a Beijing-based lawyer.