How are land increase-decrease linkage quotas transferred across counties

Recently, provinces such as Guangdong, Zhejiang and Anhui have begun to consider policy innovations for “cross-county” transfer of increase-decrease linkage quotas, and some provinces have already started deploying pilot programs for exploratory trials. It is reported that the Ministry of Land and Resources has begun to include “the feasibility issue of appropriately expanding the increase-decrease linkage pilot on the basis of the county level” within the scope of discussion, reflecting the latest trend in China's current land reform.

At present, Guangdong Province has basically decided to carry out a pilot for cross-county transfer of increase-decrease linkage turnover quotas in the two cities of Qingyuan and Yunfu.

The “magic” of increase-decrease linkage

In June 2008, the Ministry of Land and Resources issued the "Measures for the Administration of the Pilot for Linking Increases and Decreases in Urban and Rural Construction Land," substantively setting the pace for the increase-decrease linkage pilot. The so-called “increase-decrease linkage” refers to linking the decrease of rural collective construction land with the increase of urban construction land. Specifically, it means that, in accordance with the overall land use plan and under the constraint of issued turnover quotas, the “increase” and “decrease” of urban and rural construction land must be controlled within the scope of the project area, and through engineering measures such as building new and demolishing old structures and land consolidation, a dynamic balance is ensured in the quantity and even quality of various land categories within the project area, especially cultivated land.

The increase-decrease linkage pilot is essentially an adjustment of the relationship of rights, responsibilities and interests between the central and local governments in land use and management. Before this, in order to implement the basic national policy of cultivated land protection, the central government supplied land quotas in a relatively tight manner downward, causing local governments to face a major bottleneck in land use authority during economic development. The increase-decrease linkage pilot policy is equivalent to providing local governments with a new channel for obtaining land use quotas, namely that by reclaiming and consolidating rural collective construction land, they can obtain corresponding construction land quotas for urban construction and development. For most local governments facing tight land use quotas, this undoubtedly has a very strong incentive effect.

Since its introduction, the increase-decrease linkage pilot policy has attracted much attention from all sectors of society. This is because the policy is connected at one end to the housing of vast numbers of farmers and traditional village culture, and at the other end to local governments' land use quotas and development impulses. In some areas, there even appeared the harmful phenomenon of “forcing farmers upstairs” in order to free up land use quotas, causing tremendous social shock. For this reason, the State Council and the Ministry of Land and Resources have in recent years continuously issued binding policies at the macro level, attempting to conduct very strict, detailed and comprehensive supervision and regulation of the increase-decrease linkage pilot policy and projects.

However, the increase-decrease linkage policy did not stop amid the above controversies and regulations. Moreover, from the actual situation, in recent years this pilot policy has shown an overall trend of yearly expansion in both scope and scale. Since 2006, the pilot provinces for linkage have increased from the initial 5 to the current 29, basically covering the whole country; and the arrangement of linkage turnover quotas has increased from about 74,000 mu initially to 900,000 mu in 2013. Obviously, regarding the increase-decrease linkage pilot policy, the central government both strictly controls and continuously incentivizes local governments, presenting a kind of “duality” in attitude and action.

At the same time, local governments, as the ones specifically operating this pilot policy, have a strong impulse to operate outside the project framework and expand the scope of quota trading. Local governments hope to break free from the various rules and restrictions set by the central government in the linkage pilot, so as to obtain more autonomous power and fuller benefits in implementing linkage projects. Among these, the rule that urban and rural construction land can only be linked within the county area, and that linkage quotas must not be transferred across counties, is a binding provision specially set by the central government based on the foundational role of China's county-level economy in local economic development and in order to ensure that the overall risks of linkage projects remain controllable.

This rigid rule, to a certain extent, tied the hands of local governments in maneuvering land and involved a certain loss of efficiency. This is because, for those county-level economies within whose jurisdictions rural collective construction land resources are gradually becoming scarce while demand for urban construction land quotas is becoming stronger, it constitutes a major restriction; while for those county-level economies with relatively ample rural collective construction land resources, it is often the case that because their county-level economy is not active, the sense of tension over urban construction land quotas is not strong, and thus they cannot raise enough funds for implementing increase-decrease linkage pilot projects and for tapping and revitalizing existing construction land quotas. As a result, local governments developed strong demands and calls for breaking through the relevant central regulations and realizing the allocation of linkage quotas over a larger scope. Such demands and calls appeared as soon as this pilot policy was introduced, and in some places innovative experiments were even organized.

Progress of local pilots

At present, Guangdong Province has basically decided to carry out a pilot for cross-county transfer of increase-decrease linkage turnover quotas in the two cities of Qingyuan and Yunfu. In September 2014, the two cities of Qingyuan and Yunfu had already begun actively preparing the early-stage pilot work. According to the pilot work plan, the main content of the pilot for cross-county transfer of linkage quotas “is that after the turnover quotas give priority to safeguarding local urban and rural construction and development, the surplus portion is publicly traded throughout the city in a market-oriented manner.” From this point of view, the pilot in Qingyuan and other places belongs to the cross-county transfer of “surplus linkage quotas.” This policy pilot is to be carried out on the basis of ensuring that the land use needs of the counties and districts supplying the quotas are met, and local economic development opportunities must not be sacrificed. But this is also the key problem of this pilot: how can the land use needs of county development be accurately estimated? How can short-term and long-term interests in county-level economic development strategies be coordinated?

In the pilot reform plan submitted to the Guangdong provincial government, Qingyuan City stated that the reclamation resources of various places within the city are unbalanced; for example, the mountainous counties (cities, districts) in the north are rich in reclamation resources and have lower reclamation costs, but their land use demand is relatively small; while the situation in the southern urban area, which is the focus of Qingyuan City's economic development, is the opposite. The city hopes that carrying out the pilot for turnover quota transfer can further revitalize existing land, benefit the city's overall economic development, and realize the functional planning of the city-level main area. Obviously, in this plan one cannot see the attitudes and positions of the various county-level governments. But it can be anticipated that under this plan, the Qingyuan municipal government must possess relatively strong capacity and resources for regional coordination and for allocating among the various county-level economies. Yet the current actual situation in China is that there are not many prefecture-level cities that currently possess such supra-county capacity and resources.