By Ye Xingqing

Research Report Vol.21 No.1, 2019

In the process of industrialization and urbanization in various countries of the world, the overall decline of rural areas is related to the uneconomical and relatively insufficient infrastructure and public services, as various resources naturally move from villages of low marginal productivity to cities of high marginal productivity under the influence of market pressure. Based on this reasoning, to prevent rural decline and promote rural revitalization, on the one hand, we must tolerate the relative inefficient use of public resources in rural areas, and increase the public finances’ investment in infrastructure and public services in rural areas with relatively higher per capita standards. On the other hand, it is necessary to promote the transfer of rural collective land to more efficient developers and to maximize the efficiency of land allocation. To this end, on the basis of collective ownership of rural land, we should reconstruct the property rights structure of contracted land, homestead, and collectively-operated construction, allow some powers to be transferred and distributed across the villages, and facilitate the rural collective land allocation and urban-rural integration.

1. Further Opening up Collective land Property Rights is the Trend of the Times

Collective ownership of rural land is one of the public ownership forms in China established after 1962. It is different from such systems as ownership of all people, the collective ownership of cities and towns, the shared common ownership, or the common ownership. The most prominent feature is the membership system. Because of the automatic acquisition of membership rights due to birth, marriage, etc., there is no need to pay the consideration; similarly, there is no compensation for the automatic loss of membership due to death, relocation, etc. The membership rights cannot be bought, sold, transferred, mortgaged or inherited, and the property rights based on membership rights are only limited to the average distribution and internal transfer within the scope of the collective economic organizations (collectives). This type of closed property rights system is the foundation of the people’s commune system. Obviously, it does not correspond to the reality of increasing human migration since the reform and opening up nor to the trend of cross-border resource allocation for higher efficiency.

In the past 40 years, in order to adapt to the intensified population migration and to better allocate resources, the structure of property rights to various types of land in rural areas has undergone major changes, but the direction and extent of these changes are not consistent. In general, for the arable land, there is already the “separation of two rights: ownership and contractual management rights” while the “separation of ownership, contracting rights and management rights” is now going on. Therefore, the structure of property rights is continuously improved and opening up. The property rights structure of collectively-owned commercial construction land was initially quite eased but gradually tightened for the purpose of protecting cultivated land and ensuring national food security.

In the future, during agricultural and rural modernization, the peasants’ employment and income composition will continue to be non-agriculture. The role of land in safeguarding the livelihood of the members of collective economic organizations will continue to diminish. The agricultural management pattern will continue to step away from the small-scale peasant economy, and the inter-generational differences of farmers will become more prominent. The urban-rural population and capital flow will continue to expand in both directions. In line with these major structural changes, we must gradually restructure the property rights under the premise of the collective ownership of rural land so that scarce agricultural land won’t be unattended because the members of the collective economic organization move to cities, and those who come to the village to start business but not members of the collectives can obtain the necessary land and living space.

II. Aiming to Promote Centralized Circulation and Expanded Management Scale, We should Further Open up the Ownership Structure of Rural Land

The property rights structure of agricultural land has been relatively open. The next step should be continued in accordance with the idea of “separating three rights with differentiation; preference given to members over non-members; preferably longer periods; and promoting utilization to prevent waste of land”. “The separating three rights with differentiation” means that the collective ownership, contractual management rights and management rights of agricultural land are given different entitlements when transferred to non-collective economic organizations. “Preference given to members over non-members; preferably longer periods” means that the members of the collective economic organization are preferred when transferring the agricultural land, so that they can expand the scale of operation while stay in the collectives; the transfer period should be as long as possible so as to facilitate the transferee’s long-term investment in agriculture. “Promoting utilization and preventing waste of land” means empowering people with various rights, facilitating the effective use of scarce agricultural land resources, and enhancing agricultural competitiveness, without being constrained by the narrow definition of “protection of property ownership”.

The structure of collective ownership should remain stable. At present, the main structure of collective ownership of rural land includes three tiers: first, the collective ownership of farmers within the scope of townships (roughly equivalent to the original commune); second, the collective ownership of farmers within the scope of administrative villages (roughly equivalent to the original production brigade); and third, the team of villagers within the scope of farmers collectively (roughly equivalent to the original production team). The current Constitution and related laws stipulate that land ownership cannot be bought or sold. Except for land acquisition by the state, the collective ownership remains within the community. In terms of opening up collective ownership, we need to address four issues: First, for the land collectively owned by the peasants of the villages and township, since there are more natural persons among those who constitute the subject of ownership rights, we should have a soundly designed governance structure. Second, we should implement the collective ownership of the villagers’ groups. If the administrative villages act as owners, they cannot infringe on the property rights of the members of the collective economic organizations in the village. Third, we should promote new rural community construction and maintain the same number of members with the original collective ownership rights in where a number of villages or village groups are concentrated. Fourth, in the long run and in extreme scenario, if the size of the local land collectively owned by the villager group is too small, or the members gradually move out so that the natural persons who constitute the subject of collective ownership rights disappear completely, we may consider the merger of ownership entities.

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