Why is China's land marketization reform progressing slowly?
In China, market-based resource allocation has already become a basic mainstream consensus. The Third Plenary Session of the 18th CPC Central Committee even proposed to "let the market play a decisive role in resource allocation," and incorporated land system reform into the section on "accelerating the improvement of the modern market system," the implication clearly being that land allocation should also be determined by the market. Moreover, land marketization is not only the key to advancing China's market-oriented reform, but also the most core and fundamental issue in realizing farmers' land rights - because if rural collective land cannot be directly developed and traded, its value cannot be fully realized.
But strangely, land, as a foundational resource, has in fact always followed a government planned quota control model in China, and no substantive reform has yet been seen. For example, the highly anticipated and praised "Decision" of the Third Plenary Session of the 18th CPC Central Committee, although it removed the important restrictive condition from the Third Plenary Session of the 17th CPC Central Committee's decision that collective construction land entering the market be limited to "outside the scope of urban construction land designated in land use planning," at the same time limited market entry to only "rural collectively-operated construction land" - specifically, this contains two layers of restriction: first, not all collective land can enter the market, only collective construction land can enter the market; second, not all collective construction land can enter the market, only operating construction land can enter the market.
As for the first layer of restriction, in fact, as long as collective land is designated as construction land by urban and rural planning, it should be allowed to enter the market independently. This is because the fact that existing agricultural land is limited to agricultural use without compensation and in a one-size-fits-all manner is itself worth discussing. Moreover, if rural land is to be occupied for construction needs, the planning should naturally be changed first, and since the planning has changed, the use of the rural land has also been changed to construction land, so why can it not enter the market? The second layer of restriction, however, seems both unreasonable and unnecessary, and its regulatory costs are very high, thus inevitably causing this requirement and restriction to become a mere formality.
According to the latest reports, on February 25, the 13th session of the Standing Committee of the 12th National People's Congress deliberated the State Council's bill requesting deliberation on the "Decision (Draft) 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," which proposes to allow collectively-operated construction land to enter the market in the administrative areas of 33 pilot counties (cities, districts) nationwide, including Daxing District of Beijing.
This news immediately drew widespread heated commentary and cheers. However, this is in fact merely a belated implementing measure for the decision of the Third Plenary Session of the 18th CPC Central Committee. Moreover, if the content of the "Decision (Draft)" is carefully analyzed, one will find that it again imposes extremely cautious restrictive provisions: first, only the use rights of existing rural collectively-operated construction land are allowed to be transferred, leased, or contributed as equity, entering the market on equal terms with the use rights of state-owned construction land. This means that other rural construction land (including land for public facilities, homestead land, and newly added land for town and village enterprises) cannot enter the market, and agricultural land within the scope of urban planning and intended for non-public interests also cannot enter the market; second, only farmers who have settled in cities are allowed to voluntarily withdraw from or transfer homestead land within their own collective economic organization with compensation, which means that external social capital still cannot go to the countryside, and small property rights housing cannot enter the market. From this it can also be seen that compared with the decision of the Third Plenary Session of the 18th CPC Central Committee, this "Decision (Draft)" offers nothing new and is even more conservative.
On the one hand, China's current land allocation model is an important secret behind the rapid growth and development of government fiscal revenue, infrastructure construction, and the real estate industry, and can be described as an important part of the "China model"; but on the other hand, it has also triggered many extremely serious negative consequences, such as: causing high housing prices and unfair wealth distribution due to limited supply of residential and commercial land, and also causing serious land waste (especially land used by various power departments, as well as urban infrastructure land and industrial land that can directly boost political performance), harming long-term economic development; the administrative costs of land management are extremely high, land use efficiency is low, and it has bred serious corruption and the loss of public assets, while also harming land rights and triggering a large number of social conflicts...