By Zhang Yunhua, Research Department of Rural Economy of DRC

Research Report No 176, 2010

I . Farmers' Land Rights and Interests in the Process of Urbanization

Urbanization is one of the important features over more than thirty years of reform and opening up in China and will remain the major thrust for China's economic and social development over a long period of time in the days to come. Coupled with urbanization is the continuing process of agricultural land being turned into non-agricultural land and land owned collectively by farmers being requisitioned as state land. An outstanding problem in China's urbanization process has turned out to be the land acquisition on a large scale and the land-losing farmers in great number. From 1997 to 2008 alone, the number of arable land occupied for construction across the country reached 37.04 million mu, showing a yearly average of 3 million mu. It is estimated that the number of land-losing farmers has reached as many as 40 million – 50 million in China. Protection of famers' land rights and interests has become increasingly a major economic and social issue that needs to be properly handled in the process of urbanization.

1. High proceeds from the transfer of land-use rights and taxes and low compensation for requisitioned land

In recent years, the land proceeds from the transfer of land-use rights in the course of urbanization have been constantly on the increase. In 2009, the acreage of land sold nationwide totaled 3.135 million mu, up by 38% from a year ago, and the amount of cost totaled 1.59102 trillion yuan, up by 63.4% year on year, with the average proceeds from the transfer of land-use rights reaching 508,000 yuan per mu. Land tender and auction prices have become even higher. The auction price often comes to several millions of yuan per mu in economically developed areas. The government has laid down myriad and handsome taxes and dues on land acquisition and sales. Major taxes and dues collected on land acquisition and sales include farmland conversion tax, deed tax, land value increment tax, farmland reclamation fee, cost for paid use of construction land, agricultural priority construction funds, termite control fee, wall remolding fee, civil air defense fee, management fee and business cost, etc. Take the survey made by us in 2006 in a region of Jiangsu Province. Taxes and fees turned over for requisition of each mu of land added up to about 40,000 yuan and, during land sales, deed tax, land value increment tax and termite control fee turned over for sales of land through auction totaled nearly 100,000 yuan. The ratio of taxes and dues turned over for sales of each mu of land through tendering and auction to the average sales price in land acquisition and sales made up 12% or so, and the percentage of taxes and dues turned over for agreed sales of each mu of land accounted for about 40% of the average sales price.

On the other hand, the compensation gained by farmers for land acquisition is low, making it difficult for farmers to share earnings from appreciation of land value. It is prescribed in China's Land Management Law that land compensation fees and manpower placement allowance are all calculated at the average annual agricultural output value three years before the land is requisitioned and have nothing to do with price factors relating to possession of the requisitioned land, economic and social development levels, land supply and demand and use and market value of the requisitioned land. The compensation standards drift away from the land market prices. Compensation gained by farmers has no bearing on the huge increment value of the requisitioned land. A farmer can get only 20,000 yuan – 30,000 yuan per mu once and for all as compensation for his requisitioned land and for farmers in economically developed areas, they each can get 30,000 yuan – 50,000 yuan as compensation. Compensation for requisitioned land for the construction of state key projects comes even lower to several thousand yuan per mu. The Ministry of Land and Resources' survey of 12 state key projects, such as the Beijing-Zhuhai Expressway and the Beijing-Fuzhou Expressway, find that compensation for requisitioned land usually accounts for merely 3%- 5% of the total project investment, with the minimum being only 0.8% and the maximum 12.2%. The National Audit Office's findings from 34 high-class highway projects indicate that the roughly estimated investment totaled 166.2 billion yuan and yet the compensation for requisitioned land only came to 5.17 billion yuan, making up only 3.1% of the total project investment. Nonetheless, internationally, the compensation for requisitioned land for the construction of transport infrastructure facilities usually accounts for 40%-50% of the total investment.

2. Land-losing farmers inaccessible to jobs, with their livelihood insecure in the days to come

Farmers will lose their stable sources of income and their guaranteed means of livelihood once they lose their land. Many farmers have become jobless after losing their farmland. It is much difficult for some laborers, especially female laborers above 40 years of age and males older than 50 years, to find appropriate jobs in the secondary and tertiary industries. Our surveys among 1,106 land-losing farmers in 4 provinces and municipalities show that 28.6% of laborers have become jobless. The proportion of jobs to land-losing farmers has been low and the number of people having stable jobs has not evidently increased. Land-losing farmers discontent with the employment situation are in great number. In underdeveloped areas, in particular, some farmers have lost both land and jobs, getting bogged down in a dilemma and living only by compensation. Nonetheless, for farmers, the compensation is not enough for their livelihood in both short and long run. In many regions, the social security system has not been set up for land-losing farmers. Although measures have been adopted in many regions to provide social security benefits to land-losing farmers, thus increasing the number of farmers covered by social security network, the security has remained at a low level at large.

3. Sharp conflicts incurred by "demolition-for-land" in some regions, laying down hidden perils for the future

In recent years, shortage of land for construction has become notably tight in the process of industrialization and urbanization in various localities. In the context of the state carrying out the most rigorous farmland protection system and the land-saving system, some regions have started to seek ways out from rural homesteads and land for construction in rural areas. Those regions, through such methods as village rehabilitation, concentrated inhabitation of farmers and "homesteads replacement for new housing", have turned part of the collectively-owned land for construction sorted out in rural areas into land for urban and industrial construction. The positive significance of "demolition-for-land" lies in its supply of space for urban and industrial development, which has, to some extent, facilitated the economic and intensive use of land and the construction of a new countryside. The "demolition-for-land" activities conducted in some regions, however, have infringed upon farmers' rights and interests to homesteads to some extent, and have given rise to some new social issues.

Leaving their homesteads for urban areas in a passive way, farmers' courtyard income and agricultural harvests have decreased. They have to spend money in buying foodstuffs and vegetables that used to be self-sufficient and with living expenses spent on tenement management, water, electricity and heating supply, farmers' expenditures have increased all at once, bringing a huge pressure of survival to bear on families with precarious sources of income. Some places, in particular, have assembled the land contracted by farmers and lease them to companies or major clients for business operation, virtually depriving farmers of their land. With the Chinese economy growing rapidly at present, urban areas and non-agricultural industries have been much in a position to create job opportunities. The problem of "slum areas" similar to that in South American countries will not yet happen. Once the economic growth slows down or fluctuates drastically, migrant rural workers will be the first to join the unemployed labor force. As a result, it would be quite a problem for urban peasant families to maintain their basic living standard. A great number of land-losing and jobless farmers in urban areas will be the main factor triggering social instability.

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