Rural Land Reform Pilot Finally Breaks Ground

In recent years, the mainland's reform of rural land expropriation, market entry of collective commercial construction land, and the homestead system, which has drawn attention at home and abroad, has finally broken ground.

According to the mainland official media People's Daily report on February 25, the Standing Committee of the National People's Congress deliberated that day the "Decision on Authorizing the State Council to Temporarily Adjust Relevant Legal Provisions in the Administrative Areas of 33 Pilot Counties (Cities, Districts) Including Daxing District of Beijing Municipality" (referred to as the “draft decision”), proposing to authorize the State Council to temporarily adjust, in the administrative areas of 33 pilot counties (cities, districts), the implementation of the relevant provisions of the Land Administration Law and the Urban Real Estate Administration Law concerning rural land expropriation, market entry of collective commercial construction land, and the homestead management system.

This marks that the pilot reform of the rural “three plots of land” has finally entered a substantive stage.

According to the draft decision, 33 counties (cities, districts) including Daxing District of Beijing Municipality and Jixian County of Tianjin Municipality will carry out pilot reforms in the “three plots of land” aspect, to explore land reform experience for the whole country that can be promoted and replicated.

The reform of the rural land system has always been regarded as one of the keys to the mainland's current comprehensive deepening of reform. The prelude to the mainland's reform and opening up in 1978 began with villagers in Xiaogang Village, Anhui Province, turning collective land into household contracting.

Since the 1980s, Guangdong, Jiangsu, Zhejiang and other regions have always had a hidden market for the transfer of collective commercial construction land. According to statistics from the land department of Guangdong Province, in the Pearl River Delta region, the rural collective construction land used through transfer has actually exceeded 50% of the collective construction land. These lands have been used in large quantities for building factory buildings, staff dormitories, and so on.

Since the 1990s, some places have carried out pilot reforms on the transfer of the right to use rural collective commercial construction land. But the pilots have never been able to be promoted nationwide, because these pilots conflict with existing laws. This limits the transferability and mortgageability of land, making enterprises afraid to use it, and banks also do not accept such mortgages. The lag of the land system has severely limited the vitality of the market, and the fairness of the distribution of land value-added benefits has also been widely disputed.

Farmland Market Entry Strictly Observes Three Bottom Lines

According to the mainland's existing laws, local governments are the only suppliers in the land market, and farmers' land can only be expropriated by the government and then transferred, which greatly suppresses farmers' interests and also forces some real estate developers to obtain development plots through rent-seeking.

The draft decision proposes suspending the implementation of Article 43 and Article 63 of the Land Administration Law and Article 9 of the Urban Real Estate Administration Law regarding provisions such as the prohibition of the transfer of the right to use collective construction land, and clearly stipulates that, on the premise of conforming to planning, use control, and lawful acquisition, the transfer, leasing, and shareholding of the right to use existing rural collective commercial construction land are permitted, implementing market entry, equal rights, and equal prices with the right to use state-owned construction land.

Rural collective construction land is divided into three major categories: homestead land, land for public welfare public facilities, and collective commercial construction land. Among them, rural collective commercial construction land refers to rural collective construction land of a production and operation nature, such as that used by rural collective economic organizations to establish enterprises and businesses.

Jiang Daming, Minister of Land and Resources, introduced that the pilot administrative areas only allow collective commercial construction land to enter the market, and non-commercial collective construction land may not enter the market. Moreover, market entry must meet the conditions of conforming to planning, use control, and lawful acquisition, and the scope of market entry is limited to existing land.

Farmland market entry still faces strict restrictive conditions, to prevent problems such as arbitrarily changing land use and breaking through construction land quotas in the pilot and future reforms.