Time to unlock rights to rural land: China’s finance minister | Land Portal

The mainland’s 900 million farmers will be on the lookout for rural land use reforms after a signal from the finance minister that change could be in the wind.

But the complexity of the issue meant any changes would not be direct or fast in coming, analysts said.

In an article published in Communist Party journal Qiushi (Seeking Truth) on the weekend, Finance Minister Lou Jiwei beat the drum for bold reforms on collectively owned rural land, saying it would be an effective way to speed up the country’s urbanisation drive.

Lou said that by unlocking rights to the land and allowing them to be bought and sold, farmers could use the proceeds from land sales to move to cities, helping to spur economic growth.

“Under the principles of proper planning, it’s advisable to encourage farmers to transfer and lease out the land, or use it for equity financing,” Lou said in the article.

Under existing laws, urban residents cannot buy homes in rural areas because the land is collectively owned by farmers.

Collective ownership also means that villas, houses and factories built on rural land cannot be traded.

The minister’s suggestion is seen by analysts as a prelude to major reform on rural land use rights, an issue that has been studied and discussed by the mainland leadership for nearly a decade.

“Commercialising rural land is a grand and ambitious idea, but it will be a very difficult job,” said Lu Qilin, head of research at property consultancy Dooioo Homelink. “The reform would easily be mired down unless policymakers and the authorities implementing the reforms had to deliver real and substantial benefits to farmers.”

Since taking office in March 2013, Premier Li Keqiang has stressed the importance of urbanisation to bolster the mainland’s economic growth.

Commercialising collectively held farmland, a legacy of the country’s socialist system, is an essential part of the urbanisation drive but the government still needs to work out reasonable and attractive compensation packages to farmers entice farmers to give up their most valuable assets in exchange for money to buy new homes in urban areas.

Numerous disputes have arisen over the years in relation to compensation packages offered to farmers who have been forced to move as part of government relocation programmes.

For the concept to work in the future, farmers would need to be given enough cash to move to cities after they transferred their rights to the rural land to the authorities for sale.

After that, the government could sell the land to manufacturers, real estate firms and investors for development.

Lou said the move could help modernise agriculture, and the authorities should also plot ways to raise efficiency in the sector using the latest machinery and techniques.

Peking University professor Zhou Qiren estimated that the mainland had about 164,000 square kilometres of rural land that could be converted to residential use.

Analysts said the government would take a go-slow approach in changing land use rights, with affluent provinces such as Zhejiang acting as test beds for the scheme.

In the past two decades, some local authorities have already conducted pilots reforms to expropriate rural land to sell to developers or manufacturers for construction and industrial projects while relocating farmers.

Some urban residents also bought villas and houses on the rural districts albeit without official acknowledgment of the transaction.

By Daniel Ren

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