Paid Use of Homestead Land Included in Top-Level Design of 13th Five-Year Rural Reform

On November 3, the "Recommendations of the Central Committee of the Communist Party of China on Formulating the 13th Five-Year Plan for National Economic and Social Development" (hereinafter referred to as the Recommendations) was officially released.

The Recommendations proposed: stabilize rural land contracting relationships, improve the measures for separating land ownership rights, contract rights and management rights, and advance the orderly transfer of land management rights in accordance with the law. Deepen the reform of the rural land system.

One day before the release of the Recommendations, the General Office of the Central Committee of the Communist Party of China and the General Office of the State Council issued the "Comprehensive Implementation Plan for Deepening Rural Reform" (hereinafter referred to as the Plan). As the top-level design for rural reform in our country, the Plan clearly defines the pilot approaches for rural land expropriation, market entry of collective commercial construction land, and reform of the homestead land system.

Among them, it mentions exploring a system of paid use of homestead land and a mechanism for voluntary paid withdrawal, exploring effective channels for mortgage, guarantee and transfer of farmers' housing property rights; and putting forward specific plans in due course on matters such as the method for extending cultivated land contracts after the second round of contracting expires and the new contract term.

A 21st Century Business Herald reporter found upon review that the Plan integrates recent attempts in areas such as land reform as well as local pilot experience, and identifies five core areas of rural reform for the current period and a period to come, including the rural collective property rights system, the agricultural operation system, the agricultural support and protection system, the institutional mechanisms for integrated urban-rural development, and the rural social governance system.

Academics and people in local agricultural systems commented that the reform plan is relatively prudent overall and emphasizes “prudent and steady” progress.

The greatest breakthrough is in homestead land reform

Since the Third Plenary Session of the 18th Central Committee, the new round of land reform has remained a focus of attention.

The above Plan emphasizes the basic principles of implementing collective ownership, stabilizing farmers' contract rights, and liberalizing land management rights.

Regarding the “three plots of land” that the market watches most closely, the Plan proposes “carrying out pilot reforms of rural land expropriation, market entry of collective commercial construction land, and the homestead land system.”

The basic approach for reforming the rural land expropriation system mentions narrowing the scope of land expropriation and standardizing land expropriation procedures.

The basic approach for reforming the collective commercial construction land system mentions allowing existing rural collective construction land designated for industrial, mining and warehousing, commercial services and other commercial uses in the overall land use plan and urban-rural plan to enjoy the same rights as state-owned construction land, and, on the premise of complying with planning, use control and lawful acquisition, to be transferred, leased or used as equity contributions, while improving market-entry transaction rules, service supervision systems and mechanisms for the reasonable distribution of land value-added returns.

Among these, the greatest breakthrough is homestead land reform. Its basic reform approach is: on the basis of safeguarding the usufructuary rights to homestead land lawfully obtained by farmers, reform and improve the rural homestead land system, explore new mechanisms for farmers' housing security, clearly define farmers' housing property rights, explore a system of paid use of homestead land and a mechanism for voluntary paid withdrawal, and explore effective channels for mortgage, guarantee and transfer of farmers' housing property rights.

An official in an agricultural department in Hubei Province told a 21st Century Business Herald reporter that regarding homestead land reform, some areas in Jiangxi and Hunan have already been conducting pilots; in areas without pilots, a small number of irregular “transactions” also exist among the people.

In January 2015, the central government issued the "Opinions on Pilot Work for Rural Land Expropriation, Market Entry of Collective Commercial Construction Land, and Reform of the Homestead Land System," which decided to select about 30 county (city, district) administrative areas nationwide for pilots, including 15 pilots for rural homestead land system reform.

The Recommendations for the 13th Five-Year Plan also mention: safeguard the land contract rights, homestead land use rights and collective income distribution rights of farmers who settle in cities, and support and guide them in lawfully, voluntarily and with compensation transferring the above rights and interests.

Taking the pilot city of Yicheng in Hubei as an example, the city has currently issued draft versions for public comment of relevant management measures on paid use of rural homestead land, voluntary withdrawal, management of revenue funds, village self-governance, and handling of leftover historical issues.

New term for the second round of contracting to be introduced in due course

It is worth noting that, in deepening reform of the rural land contracting and operation system, the Plan mentions promptly amending relevant laws, implementing the central government's major decision to stabilize rural land contracting relationships and keep them unchanged for the long term, and putting forward specific plans in due course on matters such as the method for extending cultivated land contracts after the second round of contracting expires and the new contract term.

This policy will affect a large amount of industrial and commercial capital leasing farmers' contracted land. According to the 2015 "Opinions on Strengthening Supervision and Risk Prevention for Industrial and Commercial Capital Leasing Agricultural Land," for the first time clear upper-limit controls and regulatory measures were set on lease duration and land area for industrial and commercial capital leasing farmers' contracted land. As for lease duration, it should be reasonably determined according to the implementation of the project, and phased leasing may be adopted, but in all cases it must not exceed the remaining time of the second round of contracting.

Calculated according to the current 30-year contract period, the second round of contracting will expire at the latest in 2028. When a 21st Century Business Herald reporter previously interviewed at the grassroots level about the transfer of land contract management rights, many grassroots agricultural management departments as well as industrial and commercial enterprises were extremely concerned about the new contract term plan.

Emphasis that local pilots need authorization

In encouraging local reform pilots, the Plan particularly emphasizes “for major reforms that break through existing laws and regulations, reports must be submitted for approval in accordance with procedures, authorization must be obtained, and pilots must be carried out within a certain scope.”

An official in the Hubei agricultural system told a 21st Century Business Herald reporter that the Plan emphasizes pilots going first, encourages active exploration, and allows differentiated and transitional institutional and policy arrangements, but clearly proposes that pilots require authorization. In the past, many places rushed into pilots, and while there was good experience, there was also blindness.

He also said that the Plan itself also summarizes a great deal of local pilot experience, turning reform from local pilots into nationwide revitalization. For example, the mention of “exploring the establishment of a risk guarantee fund system for industrial and commercial capital leasing agricultural land” is a summary of Wuhan's experience. And improving and expanding pilots such as the linkage between increases and decreases in urban and rural construction land and land coupons is a summary of Chongqing's experience.

“Many formulations are summaries of the past, and the entire plan is still relatively prudent and cautious,” said Lu Dewen, associate professor at the China Rural Governance Research Center of Huazhong University of Science and Technology.