A long-term mechanism for distributing the value-added returns from rural land needs to be established more quickly

The Third Plenary Session of the 18th Central Committee of the Communist Party of China clearly stated that “a mechanism for distributing land value-added returns that takes into account the state, the collective and the individual should be established, and individual returns should be reasonably increased.” The Central Rural Work Conference also stressed that “farmers' rights to the possession, use, returns and transfer of contracted land, as well as the rights to mortgage and guarantee their contracted management rights, should be safeguarded in accordance with the law.” On the whole, the core issue in China's economic and social development is the “three rural issues” (agriculture, rural areas and farmers), and the core of the “three rural issues” is the rural land issue. To some extent, the core of China's rural land issue is the distribution of land value-added returns, that is, the issue of benefit distribution.

I. Two characteristics of the distribution of value-added returns from rural land in China

Using data from statistical yearbooks or websites such as the China Land and Resources Yearbook, the Land Market Dynamic Monitoring and Supervision System, and commercial housing sales prices on the China Real Estate Index Network, the author conducted empirical research on the distribution pattern of value-added returns from rural land in China, and concluded that the distribution results have the following two characteristics:

First, among the three land value-added stages, farmers (collectives) receive the smallest share of land value-added returns. By selecting and calculating relevant data from 23 provinces (municipalities and autonomous regions) including Beijing, Tianjin, Shanghai, Hebei, Hunan and Guizhou in 2013, it was found that in the land value-added return stage, developers receive the most land value-added returns, followed by the government, while farmers receive the least, and the overall distribution ratio shows a characteristic of increasing from collective to government to developers. It is worth pointing out that in recent years, because commercial housing in various regions has shown a trend of excessively rapid increases, even after deducting construction and installation costs, relevant taxes and fees, and other expenses in the real estate development process, the land value-added returns obtained by real estate developers may be higher than the distribution ratio in the above results.

Second, the distribution of value-added returns from rural collective land shows relatively obvious differences among provinces, autonomous regions and municipalities. In the distribution of value-added returns from rural land, another relatively prominent feature is that the regions where the three major interest subjects - farmers, the government and developers - obtain relatively high absolute value-added amounts are mainly concentrated in the eastern coastal areas of China, such as Shanghai, Guangdong and Jiangsu. On the contrary, the provinces, autonomous regions and municipalities with relatively low absolute land value-added levels are mainly located in the central and western regions. This characteristic of the distribution pattern also shows that land return distribution exhibits a regional distribution pattern in which “the higher the level of economic development, the higher the land value-added returns.”

II. Building a rural land value-added return distribution pattern of “distribution according to rights and powers”

In fact, the reform of the land property rights system does not lie in which type of ownership is implemented, but in that under a given ownership system, each property rights subject obtains corresponding rights, interests and benefits according to its own property rights and powers. This is the fundamental solution to China's rural land issue, and this is the core idea of “distribution according to rights and powers” first proposed by the author. The basic meaning of “distribution according to rights and powers” is: in the distribution of national income, each subject of property rights and powers obtains a form of distribution of national income based on its own rights and powers. According to the theory of “distribution according to rights and powers,” building a long-term mechanism for distributing value-added returns from rural land requires efforts in the following aspects:

First, build an institutional framework for land property rights and powers based on the “separation of three rights.” Regarding the issue of land property rights reform, the theoretical circles currently roughly put forward four different reform approaches: land nationalization, land privatization, collective land ownership, and multiple land ownership. The author believes that the key to the reform of the land property rights system does not lie in the form of ownership, but in that under a given ownership system, each subject of property rights and powers can obtain corresponding rights, interests and benefits from land value-added returns. To realize the distribution form of land value-added returns based on “distribution according to rights and powers,” separating management rights from the current land contracted management rights and building an institutional framework for land property rights and powers based on the “separation of three rights” of land ownership, contracting rights and management rights is an important prerequisite for effectively solving the distribution of value-added returns from rural land in China.

Second, establish a unified urban-rural market for commercial construction land. To establish a unified urban-rural construction land market, expanding rights and powers is the foundation, land expropriation reform is the key, and urban-rural unification is the direction. First, it is necessary to accelerate the establishment of a transfer system for rural collective commercial construction land. Bring transactions of rural collective commercial construction land into existing trading platforms such as the state-owned construction land market, promote open, fair, just and standardized transactions, and enable farmers and collective economic organizations to directly become interest subjects participating in land market transactions. Second, it is necessary to vigorously cultivate and develop intermediary service institutions. Accelerate support for the development of intermediary service institutions such as unified urban-rural construction land market information, transaction agency, market consulting, land grade agency, land price evaluation, and dispute arbitration. Third, it is necessary to design a scientific and reasonable transfer procedure for rural commercial construction land. It can be stipulated that the transfer of rural collective land should be discussed and agreed upon at a villagers' meeting, and should be carried out publicly on a lawfully established unified urban-rural commercial construction land market through public bidding, auction, listing and online bidding.

Third, improve the diverse channels for farmers to participate in land value-added returns. In China's current distribution mechanism for rural land value-added returns, three forms - shareholding, mortgage and leasing - can be mainly promoted, while other forms such as subcontracting, exchange and reverse leasing and subcontracting can be gradually summarized and improved in practice. First, shareholding: through land shareholding and dividends, establish an interest incentive mechanism and return growth mechanism that attracts land shareholding participation in industrial operations. Second, mortgage: according to the institutional framework of the “separation of three rights” of land ownership, contracting rights and management rights, separating management rights from contracting rights can enable farmers' management rights to obtain the function of guarantee and mortgage. Third, leasing: land can be leased, and the distribution of land value-added returns according to the distribution form of “distribution according to rights and powers” can well rationalize the distribution relationship among interest subjects such as farmers, collectives, the government and developers.

Fourth, use taxes and fees as levers to regulate the secondary distribution of land value-added returns. China's taxes related to rural land mainly include tax and fee categories such as farmland occupation tax and farmland reclamation fees. According to the theory of “distribution according to rights and powers,” the state neither occupies ownership of rural collective land nor occupies contracting rights and management rights over rural collective land, so the government should not participate in the primary distribution of rural land value-added returns. Only in the urban primary land market does the government obtain monopoly land rent and land transfer fees based on ownership of urban land. However, as the provider of public service products, the state needs to provide large expenditures for public services such as rural infrastructure and social security, so the local government representing the state participates in the secondary distribution of rural land value-added returns in the form of taxes and fees.