How should rural land confirmation of rights be handled?
Reform of the rural property rights system has always been a hot social issue. Undoubtedly, the main content of rural property rights system reform is reform of the rural land property rights system. It is unclear when it started, but reform of the rural land property rights system has been classically summarized in four sentences, which are also the main content of this reform, namely: “clarify ownership, stabilize contract rights, invigorate management rights, and strengthen management authority”. These four sentences highly condense reform of the rural land property rights system. Below I discuss some of my own understanding and thoughts.
I. The basic connotation of the current reform of the rural property rights system and its problems
1. “Clarify ownership”
“Clarify ownership” means making clear the subject of ownership of rural land. Rural land was once under “three-level ownership, with the team as the foundation”, and later it was basically settled at the level of the “production team”. But in reality, there are indeed some cases in rural areas where land ownership is unclear, such as land used for village primary schools, clinics, educated youth sent to the countryside, forestry farms, and so on. Therefore, the current confirmation of rights is meant to make clear which level owns these lands whose ownership is unclear. Once that is clear, the boundaries among villages, among groups, among townships, between villages and townships, between villages and groups, and among all other subjects will also be clear. However, it should be noted that this involves only a very small portion of the land. The ownership of most rural land is very clear.
2. “Stabilize contract rights”
“Stabilize contract rights” means further implementing the “Land Contract Law”, consolidating the current rural land contract system, and carrying out the spirit of “giving farmers more complete and guaranteed” land contract and management rights.
However, regarding the understanding of this round of confirmation of rights, grassroots cadres and the masses are generally quite confused. The second round of extended land contracting around 1997 was itself a confirmation of rights. Because tax and fee tasks were heavy at the time, the extension policy was implemented roughly, which later led to some disputes over land contracting after farmers' burdens were reduced (for example, some people who had originally given up land came back to ask for land). As a result, some places carried out another round of improving the second-round extended contracting policy. Put plainly, these actions were all about carrying out land “confirmation of rights”. Up to now, most of these disputes and conflicts have basically been resolved through internal mediation, and everyone is waiting for the contracts to expire in 2028 before redistributing land. In actual life, there is nothing unclear about rural land property rights. Even if there are complaints, they are complaints that 30 years is too long, resulting in “one and a half generations” having no land, and the dead occupying the rice bowls of the living. As for why “confirmation of rights” still has to be carried out now, not only are grassroots cadres confused, farmers are actually confused as well.
Moreover, everyone is also confused about exactly how confirmation of rights should be carried out. In practice there are mainly two models. One is “confirming rights and confirming land”, which means that stabilizing contract rights means stabilizing the relationship between the farming household contracted and the specific plots it contracts. The other is “confirming rights and confirming shares (without confirming land)”, which means only confirming the contracting relationship between the contracting household and collective land, without specifying which plot. In actual work, when farmers mainly cultivate their own land, “confirming rights and confirming land” is easier to do; but once the separation of land contract rights and management rights is involved, especially large-scale land transfer, because the original boundaries have already been broken, then if confirmation of rights requires “confirming land”, it is very difficult to do, so localities generally need to adopt the method of “confirming rights and confirming shares (without confirming land)”. But no matter how it is operated, this work can hardly avoid “going through the motions” and “confirming empty rights”. Put plainly, it is just replacing the land contract and management rights certificates from the second round of extended contracting with new certificates, without changing anything else. Or, at most, the area is made more accurate and the four boundaries are written clearly, with no substantive breakthrough.
Actually, if it were only like this, that would be one thing, but some places insist on making innovations and rushing ahead to break through the “30 years unchanged” stipulated in the “Land Contract Law”. For example, a city in the southwest proposed that land confirmation of rights should be “unchanged for the long term”, thinking that in this way the farmers' land contracting relationship could be made more stable. In fact, at first it was generally also “confirming empty rights” and “going through the motions” there. Unexpectedly, this was discovered by some people during research and reported back to the relevant higher authorities. As a result, the higher level demanded that it be redone and that rights be “truly confirmed”. So the lower level had no choice but to take back the newly issued certificates, and according to the higher-level requirement, set them as “permanently unchanged”, and then issue the certificates again. Later, someone argued that the character “permanent” is a philosophical concept and inappropriate, and that it should be called “unchanged for the long term”. So the certificates that had been issued were taken back again, changed to “unchanged for the long term”, and issued again. After several rounds of this tossing back and forth, not only was a large amount of funds spent, but a large amount of administrative resources at the township and grassroots levels was also occupied. For many townships, this was the central task for two years. When we conducted surveys, many grassroots cadres said, “the property rights reform has really done us in”, and the “property rights reform” made them feel they “could not bear the hurt”. What is even more interesting is that the government thought that by this point contract rights should be stable, but unexpectedly farmers said: “What does unchanged for the long term mean? 10 years is a long time, and 3-5 years is already very long. If there is a need, we will just change (adjust) it again when the time comes”. From this it can be seen that everyone was not only confused before confirmation of rights, but actually equally confused after confirmation of rights.
3. “Invigorate management rights”
“Invigorate management rights”, simply put, means land transfer. Three aspects need attention here. First, “management rights” being proposed separately is a relatively important marker. Land has moved from the separation of “ownership” and “use rights” into two rights, to the current separation of “ownership”, “contract rights”, and “management rights” into three rights, and there are important and profound changes involved. But as for what this change actually means, the academic and policy circles still do not seem to be very clear at present.
Second is the word “invigorate”. A simple understanding is “activation”, which means making the transfer of management rights smoother and making market transactions of management rights more active. At present, the confirmation of rights, building market transaction platforms, asset evaluation, optimizing market services, strengthening management, providing subsidies and support, and providing safeguard measures in many places are basically all centered on how to “activate” the land management rights trading market. Logically speaking, land transfer should be a matter for the two parties to the transfer themselves. Only when there is demand and supply is there transfer, so it should belong to market behavior. However, because of the particularity of “agriculture, rural areas, and farmers”, the government always feels that it should do something about this. Therefore, it requires policy intervention in the transfer of management rights.
“Invigorating management rights”, plainly put, refers to local governments attempting to intervene in the market for the transfer of land management rights. Such intervention is necessary in some respects, but may not be needed in others. The key lies in the difficulty of grasping the “degree”. As a result, the controversy over invigorating management rights is mainly concentrated on whether the government actually has the responsibility and necessity to do so, and how it should activate the market for the transfer of management rights. Interestingly, those who usually appear to be “very market-oriented” often feel at this time that it is very necessary for the government to intervene in this market, because industrial and commercial enterprises always lose money when they go down to farm, so the state has an obligation to support them and give them subsidies and preferential policies. Meanwhile, those who usually appear to be “not market-oriented at all” instead feel at this time that there is no need for the government to intervene in this market, because it is common knowledge that the small-peasant economy has a higher land output rate than enterprises, and farmers' spontaneous land transfer can ensure that farmers do not lose their last means of survival. There is no need for the government to help industrial and commercial capital go to the countryside to defeat small farmers.
Third is the word “release”. Plainly put, it means “delegating power”, or “empowering”. The state grants land management rights the power of “mortgage financing”. This is a very new content, and it is a new power that neither land ownership nor land contract rights possess. It needs attention. But the purpose of “release” is still “invigoration”, in order to make the transfer of land management rights more “invigorated”. Unfortunately, the credit of rural land management rights itself is seriously insufficient, and loans cannot be obtained from banks with it. This is not because banks do not support this work, but because banks themselves need to obey economic rationality. After all, banks are not finance departments, nor are they charitable organizations. Land management rights themselves have insufficient credit, so it is necessary to enhance their creditworthiness through other channels. For example, using government fiscal guarantees, or using administrative means to pressure banks, and so on. But if this is done, then the “invigoration” of management rights also means increased economic risk. In fact, banks are often unwilling to bear such risk, and local governments have limited control over banks. Therefore, in many places the mortgage of management rights is carried out with local rural commercial banks (credit cooperatives) charging to the front line. Thus, on the whole, in invigorating management rights, local governments can still do some things on the word “invigorate”, while on the word “release” it has always been very difficult to advance.
4. “Strengthen management authority”
“Strengthen management authority” is a sentence that someone added later. At first there were only the previous three sentences. What is meant here by “strengthen management authority” mainly refers to strengthening the government's management of land transfer. “Strengthen management authority” mainly solves two problems. One is the government's problem of “absence”, and the other is the government's problem of “overreach”. Plainly put, it means that during land transfer, the government has failed to manage what it should manage, while taking on everything it should not manage and managing it in a bustling manner. This situation now needs to be corrected.
Government “overreach” in land transfer is a phenomenon we often see. Many times, governments at all levels press down targets layer by layer, set tasks, engage in tournaments, and sign responsibility statements, forcibly turning “enriching the people” into “forcing the people to get rich”, and ultimately turning a good deed into a bad one. This phenomenon of government behavior replacing market behavior is still very common now. The problem is that this kind of “replacement” will soon be punished by economic laws, and government subsidies often become the target of capital seeking profit. Therefore, “strengthen management authority” first of all means getting the government to straighten out its position and role in land transfer. At the very least, it must not “overreach”.
Second, “strengthen management authority” also points to the government's “absence”. Having departments manage land has the benefit of specialization, but it also has the disadvantage of departmental fragmentation. For example, generally the economic management system manages land transfer, but the land and planning departments may plan these transferred lands as reserved construction land, so after the land is transferred it may soon face expropriation, thereby also increasing the difficulty and cost of expropriation. Because of professional division of labor and departmental interests, departments find it difficult to communicate directly with one another, so a comprehensive institution such as the government is needed to integrate information among departments. Therefore, government management authority needs to be strengthened. Second, similar to the activation mentioned earlier, the government also plays a role in building market trading platforms. This is done to make the market more complete and to build market infrastructure, so of course it also belongs to reasonable and necessary intervention behavior. Third is controlling risk during the transfer process, especially giving special protection to farmers' interests. For example, requiring the payment of transfer deposits, setting guiding prices for land transfer, standardizing land transfer contracts, and so on. These are also necessary government interventions.
Objectively speaking, “strengthen management authority” increases the transaction costs of transferred land to a certain extent. But in the long run, it helps make the market for the transfer of land management rights safe, rational, and stable, and also helps protect farmers' interests. In turn, it also has a positive function for the party transferring the land. This is both a necessity and an innovation.