Mortgaging rural land management rights should be advanced steadily, not rushed headlong

Recently, the media have frequently reported that various localities are launching pilot programs for mortgaging land management rights, and some places take great pride in this kind of "pioneering and piloting first." But this author is deeply worried about these measures: acting hastily before the law is amended or a competent authority formally authorizes a pilot will create obstacles to the in-depth advancement of reform exploration.

In November 2014, the General Office of the CPC Central Committee and the General Office of the State Council jointly issued the Opinions on Guiding the Orderly Transfer of Rural Land Management Rights and Developing Appropriately Scaled Agricultural Operations, establishing for the first time in the form of a central document the reform direction of the "separation of three rights" for rural land. There is no doubt that the "separation of three rights" is a major theoretical and practical innovation in China's agricultural land system reform: it has achieved the transformation of the allocation of rights over agricultural operating land from the "separation of two rights" of "ownership - contracted management right" to the "separation of three rights" of "ownership - contract right - management right"; it has divided the security function and the property function of land contracted management rights, allowing the contract right to continue to bear the responsibility of farmers' social security, while the management right, which bears only the property function, can enter the market lightly and circulate freely, thereby making it possible, on the basis of adhering to the collective ownership and household contracted management system, to solve the problems of abandoned contracted land, concentrated operations, and mortgage financing, thus promoting appropriately scaled agricultural operations. Moreover, from the perspective of risk control in farmers' transfer of contracted land, the theory of the "separation of three rights" decomposes land contracted management rights into contract rights and management rights, and on the basis of stabilizing contract rights, invigorates management rights, which in fact sets up a protective barrier for farmers' contracted land transfer behavior.

But a reform measure has a long road to travel from being proposed by the central authorities to being implemented in practice. The approach of some localities in "seizing the initiative first," carried out under the premise that the allocation of the powers and functions of the three rights has not yet been clarified and that there is a lack of formal legal and institutional safeguards, will face many hidden dangers.

First, the clarification of the legal relationship of land management right transfer and mortgage is premised on a clear allocation of the powers and functions of the three rights. This requires a clear definition of the allocation of the powers and functions of each property right, and clarification of their respective subjects, connotations, and extensions, as well as the rights and obligations among them. However, the Opinions on Guiding the Orderly Transfer of Rural Land Management Rights and Developing Appropriately Scaled Agricultural Operations limits the reform of the "separation of three rights" of rural land to the highly principled formulation of "adhering to collective ownership of rural land, stabilizing farmers' contract rights, and invigorating land management rights," and the allocation of the powers and functions of the three rights is not clear. Research on this issue in theoretical and practical circles is also not yet mature. Perhaps in the short term this approach poses no major problem, but as time passes, once a situation arises in which bank loans cannot be repaid and the land management right must be used to realize the mortgage right, disputes will be unavoidable. In an ambiguous state of property rights, those who suffer will inevitably be the weak, and very likely the farmers. In particular, the transfer of management rights is not a one-off deal but has a relatively long term. Rolling it out broadly under conditions lacking meticulous institutional arrangements will not only easily breed various disputes, but will also leave many difficult legacy problems for the formal advancement of reform in the future, and may even affect objective evaluation of and confidence in the reform of the "separation of three rights" of rural land.

Second, the land contracted management right system stipulated in the current Rural Land Contracting Law and the Property Law is based on the "separation of two rights" of rural land, and the reform of the "separation of three rights" of rural land will inevitably bring about a rearrangement of the system of rights over agricultural land. This means that this reform measure is not only inconsistent with the provisions of the Rural Land Contracting Law, the Property Law, the Guarantee Law, and others, but also represents a major breakthrough. In these laws there is no status for "land management right," and naturally the land management right is not among the property that may be mortgaged as stipulated in the Property Law and the Guarantee Law. Therefore, carrying out the practice of mortgaging land management rights without amending the law is clearly without legal basis. Once a dispute arises, if the law is strictly followed, the mortgage right cannot be safeguarded. Therefore, we see that the pilot practices in many places usually rely on the strong promotion and guarantees of local Party committees and governments, but this approach by governments both smacks of excessive intervention in the market and cannot be replicated. Moreover, once it is brought to litigation, it will inevitably put the courts in a difficult position. This is precisely the confusion faced by experimental zones such as Chengdu in their exploration of land management right mortgages in previous years.

The reform of the "separation of three rights" of rural land must also have a legal basis and be advanced by rule of law. At present, there are two paths by which this reform can be advanced by rule of law: first, authorize a pilot first and then legislate; second, legislate directly. Under current conditions, the conditions for directly amending the law are not yet in place in the short term: the provisions of the Rural Land Contracting Law, the Property Law, the Guarantee Law, and other relevant laws on the rural land contracted management system are built on the original "separation of two rights," and the reform of the "separation of three rights" requires reconstructing the system of rights over agricultural land, and the allocation of the powers and functions of each property right, the rights and obligations relationships, and so on will also undergo relatively large changes. This means that relatively substantial amendments need to be made to the Rural Land Contracting Law, the Property Law, and the Guarantee Law, involving many provisions scattered in various places. But at present the conditions do not exist for such substantial amendment of these three laws: first, the current theoretical reserve is insufficient. How to establish a land rights system adapted to the "separation of three rights" and to the separation of land management rights and contract rights, how to clarify the ownership of each property right and improve the allocation of the powers and functions of each property right, how to clearly define the rights and obligations of the subjects of each property right, how to express these property rights systems and rights and obligations precisely in law, how to integrate this innovative rights system into the existing legal system, and how to prevent transfer risks and "promote benefits while removing drawbacks" in the allocation of powers and functions and in institutional legal arrangements - on these questions there is still a lack of systematic and in-depth theoretical research, and in legislation there is even more to be explored. Second, from the perspective of legislative plans and procedures, substantially amending three "heavyweight" laws at the same time is not a matter of a single day. Therefore, adopting the authorized pilot model for the reform of the "separation of three rights" of rural land to pioneer and pilot first is a choice more in line with current realities. Once enough experience has been accumulated and the conditions for legislation are mature, the law amendment procedure can then be launched, and then it can be promoted nationwide.

Likewise, as an important component of this reform of the rural land system, the reform of the rural land "three plots," although the central authorities made arrangements for it later than for the reform of the "separation of three rights" of rural land, has already taken the lead in adopting the model of authorized pilot by the Standing Committee of the National People's Congress. The biggest difference between the reform of the "three plots" - land expropriation system, market entry of collective operating construction land, and homestead land - and the reform of the "one plot" of the "separation of three rights" of rural land is that the reform direction of the former is still uncertain and needs to be explored through pilots, while the reform direction of the latter is very clear, and only the specific implementation rules remain to be explored. Perhaps this is also the reason why the reform of the "three plots" took the lead in adopting the model of authorized pilot by the Standing Committee of the National People's Congress, while the reform of the "one plot" conducted pilots. This author believes that although the direction of the reform of the "separation of three rights" of rural land is clear, the specific operating rules still need to be explored and improved, and it does indeed represent a relatively large breakthrough beyond the current Rural Land Contracting Law and others. Under such circumstances, only if the organ that enacted these laws - the Standing Committee of the National People's Congress - makes an authorization decision can the pilot work have legality. Therefore, in accordance with the requirements of comprehensively advancing the rule of law, the reform of the "separation of three rights" of rural land can and should adopt the model of authorized pilot by the National People's Congress. Moreover, considering the interconnectedness of rural land institutions, the reform of the "separation of three rights" of rural land can and should be advanced together with the reform of the "three plots," which is also conducive to promoting the systematicness, coordination, and coupling among the institutional designs of the various reforms.

The "separation of three rights" of rural land is a reform measure that can benefit the broad masses of farmers, but only by advancing steadily and in an orderly manner according to law on the basis of a clear allocation of powers and functions can it meet the requirements of "comprehensively advancing the rule of law," and only then can it truly ensure the bottom line that "farmers' interests are not harmed." Therefore, on the one hand, the transfer and mortgage of land management rights is not a matter of a single day, and localities should neither rush headlong nor need to do so; on the other hand, the central authorities should promptly make specific arrangements and bring the impatient reform of the "separation of three rights" of rural land onto the track of the rule of law through formal "pilot authorization."