Pilot Program for Market Entry of Rural Land Fully Launched, Farmers' Permanent Income Doubles
The reform allowing collective commercial construction land to enter the market will inject new vitality into Deqing's economy, accelerate the pace of transformation and upgrading, and give a strong boost to tourism and the commercial and service industries. It will be of particularly great help in stimulating the rural economy. “First, collective assets have developed and grown stronger; second, ordinary people have obtained permanent income.”
By our reporter Yao Jianli
Intern reporters Lu Haiqing and Zhang Xiaoqing reporting from Shanghai and Deqing
The entry of rural collective commercial construction land into the market is unleashing the dividends of land reform.
On September 8, Zhejiang's first auction of the right to use rural collective commercial construction land concluded in Deqing, with the 40-year right to use 20 mu of village-level collective land in Shacun Village, Luoshe Town, in the county successfully transferred for 11.5 million yuan. The auction sparked widespread discussion in society about national rural land reform and raised the curtain on the reform.
On February 27 of this year, the State Council designated the administrative areas of 33 pilot counties (cities and districts) nationwide, temporarily adjusting the implementation of the relevant provisions of the Land Administration Law and the Urban Real Estate Administration Law on rural land expropriation, the entry of collective commercial construction land into the market, and the homestead management system. This is also the direction and task of rural land system reform set out clearly at the Third Plenary Session of the 18th Central Committee.
Deqing County became one of the pilot areas and undertook the task of reforming the entry of rural collective commercial construction land into the market. According to the rules, among the 33 pilot areas, 15 are carrying out this reform. By the end of 2017, the central government and the Ministry of Land and Resources will evaluate these 15 places and finally provide suggestions to the National People's Congress on amending and enacting laws.
According to 21st Century Business Herald reporters, several pilot areas, including Yiwu in Zhejiang, Jinzhai in Anhui and Jinjiang in Fujian, are preparing matters related to the reform.
21st Century Business Herald reporters interviewed the transferor involved in this auction in Deqing County, the individual transferee, the person in charge of the land and resources department, and experts related to land reform, to conduct an in-depth analysis of the specific operation of this case, the significance of the pilot, and the exploration situation and difficulties faced at the national level.
Through investigation, it was found that the main goal of the national pilot for the entry of collective commercial construction land into the market is to achieve “equal rights, equal land and equal price” with state-owned construction land, without having to go through the intermediate stage of “transfer to state ownership,” so as to better protect the rights and interests of farmers' collectives, increase rural collective assets, and at the same time make it easier for investors to obtain land certificates and property certificates for mortgage loans and investment operations.
However, many interviewees also said that this is still in the initial exploratory stage, and issues that pilot areas may face, such as reform of the rural property rights system, specific supervision of huge returns, and rent-seeking by power, may become important topics testing the wisdom of local governments.
Farmers' Income Increases Several Times Over
At 3:25 p.m. on September 8, the hammer fell, and a 20-mu plot of land in Shacun Village, Luoshe Town, Deqing, was successfully transferred to local villager Lin Guoxiang for 11.5 million yuan. For a time, Lin Guoxiang became a media favorite, with “a steady stream of interview requests.”
Shacun, as the name suggests, prospered because of sand, and many years ago became a well-known local “boss village.” In 2013, as Deqing advanced the construction of “Beautiful Villages,” Shacun shut down all mines. It had 800 million to 1 billion yuan in idle funds, but had never found a suitable investment channel.
Before this, the 20 mu of land had been rented to a mining enterprise at a rent of 4 yuan per square meter, or 2 million yuan for 40 years.
“Several villagers in our village formerly ran mines and have accumulated a certain amount of capital, which can now be put to use.” Hu Jinzhang, Party branch secretary of Shacun Village and chairman of the village shareholding economic cooperative, said in an interview with 21st Century Business Herald reporters that this 20-mu plot is located east of the 10,000-mu industrial platform under construction and only 150 meters east of the Hangzhou-Ningbo high-speed railway, making transportation very convenient.
This was also one of the important factors that Lin Guoxiang valued. In an interview with 21st Century Business Herald reporters, he pointed out that because he is optimistic about the customer flow and business opportunities brought by the industrial platform, he plans to focus on developing the commercial and service industries, opening hotels, restaurants, supermarkets and so on.
Before the reform, Article 63 of China's current Land Administration Law clearly stipulated that the right to use land owned collectively by farmers must not be transferred, assigned or leased for non-agricultural construction.
If Lin Guoxiang wanted to obtain the right to use this plot, it first had to go through expropriation compensation and be transferred to state ownership before it could go through the land transfer process of public bidding, auction and listing, or negotiated transfer. Moreover, due to the influence of land certificates and other factors, it was extremely difficult to obtain a loan. After this auction succeeded, however, a loan of 6.9 million yuan was signed on the spot with Agricultural Bank of China.
Those who benefited most clearly were the farmers' collectives. “Previously it could only be turned into state-owned land, and farmers' returns were relatively small. Now not only are the returns increased, but the property rights still belong to the farmers' collective,” Xie Yang, deputy director of the Rural Department of the Development Research Center of the State Council, said in an interview with 21st Century Business Herald reporters.
Qiu Fangrong, deputy director of the Deqing County Land and Resources Bureau, told 21st Century Business Herald reporters that of the 11.5 million yuan transaction price, 32% is an income adjustment fund handed over to the county finance department. The remaining price is not distributed directly, but is quantified into equity as public welfare reserve funds, allowing the village to use this money in stable forms such as purchasing government bonds and buying property. “For example, if all of it is used to purchase government bonds, with an annual interest rate of 8.5%, more than 600,000 yuan in returns can be obtained in a year.”
After discussion by the shareholders' meeting, this more than 600,000 yuan can be distributed, further quantified, reinvested, or used to build bridges and roads, but it must be approved by the villagers' representative meeting.
Before the reform, the price per share of land in Shacun was about 5,000 yuan. According to Hu Jinzhang, if all idle land is auctioned off, preliminary estimates suggest each share will reach 16,500 yuan, and farmers' income will increase several times over.
The pilot effect is obviously enormous. It is reported that since the pilot began, Shacun has prepared 50 mu of village-level collective commercial construction land available for transfer, with 20 mu launched in the first phase. Luoshe Town in central Deqing, Zhongguan Town in the east, and Moganshan Town and Fatou Township in the west have also prepared several plots with mature conditions, waiting for local market entry. It is understood that at present, Deqing County has a total of about 1,881 parcels of rural collective commercial construction land, with an area of 10,691 mu. Next, plots with mature conditions will be launched in an orderly manner one after another.
21st Century Business Herald reporters learned from the land and resources bureaus of other pilot areas, including Yiwu City in Zhejiang Province, Jinzhai County in Anhui Province and Jinjiang City in Fujian Province, that since the State Council designated 33 pilot areas in February, the reform pilot work entered a stage of full launch in July. But all localities have been very cautious about it.
Equal Rights and Equal Prices in Progress
Deqing stated that next it will, in accordance with the principle of prudence and steadiness, launch plots of rural collective commercial construction land that can enter the market in phases and batches, and explore and improve a market entry system for rural collective commercial construction land featuring “equal rights and equal prices, smooth circulation, and shared returns.”
The most critical part is truly achieving “equal rights and equal prices” between collective land and state-owned land. But Xie Yang also said that this goal cannot be achieved in one step. First it must enter the market and form a price standard. It may not necessarily reach the price of state-owned land, but the rights are the same, and ultimately equal prices will be achieved.
Taking Moganshan Town as an example, its economy is relatively average locally. In recent years, tourism development has driven homestays, but due to land policy restrictions, capital can mostly only be invested in renting vacant rural homes. At present, Moganshan Town has about 300 mu of town- and village-level collective commercial construction land. Once the reform is launched, its value will reach over 100 million.
Even before this auction, Deqing had already transferred one parcel of rural collective commercial construction land by negotiated transfer on August 19, the first case in the country. The land area was 4,040.9 square meters, and the negotiated transfer price was 3,071,084 yuan. Zu Qingfeng Resort Hotel in Moganshan Town, Deqing County, became the “new owner” of the right to use the land.
For the transferees of these two parcels of land, the most obvious change is that after obtaining the land certificates, bank loans were “delivered to their door.”
The reason Deqing was able to become a pilot is inseparable from its local coordinated urban-rural development, urban-rural system reform and innovation in the land management system, and good land management order. It not only took the lead in reforming the rural property rights system, but also completed the shareholding reform of collective commercial assets, and clarified and delineated the “boundary for expansion of urban and rural construction land” through “integration of multiple plans.”
At the national level, the situation in this regard varies from place to place. For example, Guangdong was long ago authorized to establish a separate market and set rules for the use of collective construction land; while Beijing has township enterprise compounds, and although collective commercial construction land is not called market entry there, it has objectively already been operating.
“The land under many hotels and restaurants in Beijing is collective construction land. So-called market entry is about how the land price should be handled when it is retransferred. That is the focus of the experiment. The market entry of collective land is equivalent to transfer,” Xie Yang said.
At the seventh meeting of the Central Leading Group for Comprehensively Deepening Reform at the end of 2014, the “Opinions on the Pilot Work for Rural Land Expropriation, the Entry of Collective Commercial Construction Land into the Market, and Reform of the Homestead System” was deliberated. In addition to the entry of rural collective commercial construction land into the market, the requirements of the other two reforms were: in rural land expropriation reform, explore narrowing the scope of land expropriation; in reform of the rural homestead system, explore paid use for situations such as occupying homestead land beyond standards and one household having multiple homesteads, etc.