Why Should Homestead Land Not Be Put on the Market for Sale? A Policy Interpretation

At this year's two sessions, regarding exactly how homestead land should be reformed and whether it should be rolled out across the board, the committee members and representatives had a heated debate.

Cai Jiming, a deputy to the National People's Congress and director of the Center for Political Economy at Tsinghua University, believes that the pace of China's land reform is currently too small, and that homestead land should be allowed to enter the market.

Cai Jiming: "Farmers' homestead land is under collective ownership, and its transfer is a transfer of use rights. Whether it is transferred within the collective ownership system or outside it, there is no harm to farmers' interests, nor is there any problem of occupying arable land, because it is originally construction land. I think the intensity is still not enough."

Zheng Jianmin, a member of the National Committee of the Chinese People's Political Consultative Conference and vice chairman of the Fuzhou Municipal CPPCC, holds a relatively conservative attitude toward homestead land reform. He believes that pilot programs should come first, and only after enough experience has been gained should it be rolled out.

Zheng Jianmin: "My guiding principle for carrying out this work is always to be prudent, to continuously improve our relevant regulations on the basis of pilot programs, and only then can it be expanded across the board."

In fact, the debate over homestead land reform has a long history, and it is broadly divided into two camps. One camp advocates that homestead land should enter the market as soon as possible, just like agricultural land. The reason is that if homestead land cannot enter the market, then as urbanization accelerates, the phenomenon of vacant homestead land will worsen, causing enormous waste of resources. The other camp opposes homestead land entering the market. The reason is that if farmers can no longer survive in the city, at least they still have a house back in their hometown to live in.

Regarding homestead land reform, exactly what attitude should be taken? Chen Xiwen, a member of the National Committee of the Chinese People's Political Consultative Conference and director of the Office of the Central Leading Group for Rural Work, specifically explained this. He pointed out that to discuss reform, one must first understand that homestead land is, first and foremost, a membership right of the collective economic organization.

Chen Xiwen: "The most basic institutional features of homestead land are two points. First, one must be a member of this collective system to apply for homestead land within this collective system. For example, if both of us are urban residents and you go to the countryside, how would they give you homestead land? Why would people from the neighboring village come to our village to ask for homestead land? If you want homestead land, go back to your own village and ask for it, right? This is the most basic point. The right to obtain homestead land is a right of membership in a collective economic organization. For non-members, in my view, it is an excessive demand. You can solve your housing through other channels. There are commercial housing units in the city, so why must it be within the scope of this collective? This is one of the cores of the entire system."

Second, Chen Xiwen believes that the homestead land system is essentially a form of subsidized housing system.

Chen Xiwen: "Farmers' homestead land and farmers' housing are subsidized housing. Should they enter the market? How should they enter the market? This is a big matter. Because you also have subsidized housing in the city. For commercial housing, you have obtained complete property rights, so how you buy and sell it and how you transfer it is your own business. But can all subsidized housing in the city enter the market?"

If homestead land is farmers' subsidized housing, then what would happen after it enters the market? Chen Xiwen gave an example using subsidized housing in the city: along the Fourth Ring Road in Beijing, in a mixed-development residential community with 1,800 housing units, 600 are subsidized housing. In the same community, self-purchased subsidized housing is 8,900 yuan per sq m, while the remaining commercial housing starts at 40,000 yuan. Chen Xiwen believes that if both types of housing could enter the market, the market would be thrown into chaos.

Chen Xiwen: "If it turns out that both can be listed for sale, wouldn't I suffer a huge loss? If homestead land is commercial housing that complies with legal and institutional norms, then it can be sold however one likes. If it is not, then one must consider what consequences entering the market would have."

This year's government work report proposed prudently carrying out pilot reforms for rural land expropriation, market entry of collective operational construction land, the homestead land system, and the collective property rights system. Exactly how should the homestead land system be reformed? Chen Xiwen emphasized that homestead land system reform actually has two layers of meaning: first, after urbanization, when farmers have lost their homestead land, how should their housing be guaranteed? Second, outside the scope of urbanization, how can farmers' homestead land rights and interests be ensured against infringement?

Chen Xiwen: "The first layer of meaning is that in areas around cities and towns, if after urbanization a farmer's land includes farmland, construction land, and homestead land, then it will become urban construction land. How should the farmer's rights and interests be protected? At the very least, I have to let you live better than before. Realizing the usufructuary right of homestead land is one approach. The issue that now needs to be discussed is, for areas unrelated to urbanization, who wants to buy? Villagers themselves basically would not think of buying. Those who want to buy are all urban residents."

Chen Xiwen pointed out that if urban residents want to buy houses in more remote rural areas, it would at least be a second home for leisure use. This both violates the laws of urbanization and cannot be supported by the country's resources.

Chen Xiwen: "The law of urbanization is that farmers gradually move to the cities, and slowly some villages become abandoned. After being abandoned, they are restored to farmland. Therefore, the process of urbanization should mean fewer and fewer people living in rural areas, and only then can the scale of land cultivated by farmers become larger and larger, and only then can agriculture become modernized. Now it has become rural people going to the city, while urban people, when they have nothing to do, run off to the countryside to spend holidays and relax. The country's resources cannot support this."

Committee member Chen Xiwen's viewpoint is very clear: he does not support putting homestead land on the market for sale, and he also hopes that with gradual urbanization, homestead land will gradually be restored to cultivated land, rather than becoming villas for urban residents. But Chen Xiwen also noted that the homestead land system does indeed have some problems. Although the existing homestead land rights and interests in farmers' hands must continue to be protected, in the next step farmers' housing security may no longer take the form of homestead land.

Chen Xiwen: "First, in urbanization construction, when villages are merged into cities and farmers' original housing is gone, the urbanization process has the responsibility and obligation to provide farmers with better living conditions. Second, the current homestead land system is already difficult to sustain, and a new system must be studied. But this system must ensure that farmers continue to have housing, though it does not necessarily have to be a standalone house for each household; it can also be apartment buildings, and this does not affect production. This time it is very clear that the usufructuary rights of already allocated homestead land must be protected. As for the future, if one still wants to apply, homestead land will not necessarily be granted."

The homestead land system is very much "with Chinese characteristics." It was formed during the people's commune period, and it has a history of 60 years. At present, China's laws still clearly stipulate that the ownership of homestead land belongs to the collective, and farmers only have use rights. Therefore, selling homestead land is an illegal act.

Sixty years have passed, and with urban expansion and the development of urbanization, farmers' homestead land has become a cake of enormous profit, coveted by all parties. As committee member Chen Xiwen said, homestead land should not be put on the market for sale. This is both a legal stipulation and a compliance with economic laws. But in the future, homestead land will inevitably face reform. No matter how it is reformed, farmers' housing and rural development should be protected first. Only such reform can have vitality.