Rural land reform needs holistic design: three basic recommendations for reference

Rural land system reform faces three most important aspects: market entry of collective operational construction land, paid withdrawal from homestead land, and narrowing the scope of land expropriation. From the current situation, institutional design shows a tendency toward fragmentation, and the three should be designed holistically and integrated into one.

Land system reform is a whole

The reform actually involves three major categories of land. First, collective operational construction land, mainly manifested as existing industrial and commercial land; second, homestead land, mainly manifested as residential land for rural residents, which in the inner suburbs of cities and towns also includes a certain amount of land for small property rights housing; third, state-owned construction land to be expropriated. At present, the above three categories of land constitute the sources of construction land through two different channels, among which expropriated state-owned construction land is mainly used to meet the production and living land needs within cities and towns, while collective operational construction land and homestead land are mainly used to meet the industrial, commercial production and residential land needs outside cities and towns.

Although the two channels and two markets are completely separated institutionally, which is what we call the “dual structure”, in reality the use of the three categories of land has long been mutually interpenetrating and closely related. For example, with the expansion of scope, the construction of urban infrastructure and public facilities has long been integrated, and urban villages and villages within cities are everywhere. State-owned construction land and collective construction land around cities are interlocked, and it is also the norm for people to live outside the city and work inside the city, or live inside the city and work outside the city. Most rural residents who work and live in cities still have homes in their hometowns, quite a few enterprises invest in collective operational construction land, and there are even cases where urban public facilities use collective construction land. Most notably, although strictly prohibited, quite a few people still buy or rent small property rights housing.

In short, with the integration of production and living, the use of urban and rural land and the interest relationships have long been integrated. According to the spirit of the 18th National Congress, building a nationally unified construction land market and implementing equal rights and equal prices genuinely requires the support of an inclusive and holistic land institutional system.

From the perspective of future development needs, although the central government's expectation for economic growth rate will not be as high as before, the basic volume of China's economy is already very large, and even if the current growth rate is maintained, the total economic increment will continue to increase, which also indicates that the demand for resources will remain large, among which the demand for construction land is a major part. On the other hand, we have an important issue to face: in the next ten years, due to reform of the household registration system and the substantial increase in the new generation of rural residents who have no farming experience and grew up in a migrant working environment, it is expected to be the peak period for rural residents entering cities and towns, and the pressure of urban construction land demand can be imagined.

In fact, our current supply of construction land has already fallen into an inefficient bottleneck area caused by the system. In the future, as the scope of state-owned land expropriation continues to narrow and homestead land is completely prohibited from transfer, the gap in construction land supply will become larger and larger, and the pressure of demand will become stronger and stronger. There is an urgent need for the strong support of a tolerant, future-oriented and effective land system, and fragmented reforms and policies can no longer undertake this task.

Under such premises, if land system reform is carried out, fragmentation must be avoided and it should be advanced holistically. Only in this way can the goal of integrated construction of urban and rural land markets be achieved. If separate mechanisms are built and managed separately for the three contents of market entry of rural collective operational construction land, paid withdrawal from rural homestead land, and narrowing the scope of land expropriation, more trouble may be accumulated for the future.

Three basic recommendations

The new reform plan has not yet been published, and the specific contents are unknown. The author offers only a few personal recommendations on the holistic design of land reform. The author believes there are three most basic ones.

First, incorporate the three reform contents of market entry of rural collective operational construction land, narrowing the scope of land expropriation, and paid withdrawal from rural homestead land into one institutional system with holistic linkages, and establish an overall institutional framework oriented toward an integrated allocation channel and platform for construction land.

This specifically includes two aspects: first, link the narrowing of the expropriation scope with the market entry of operational land, and consider as a whole the construction land supply capacity reduced by narrowing the expropriation scope and the scope of operational land market entry. The main purpose is to ensure that after the expropriation scope is narrowed, the urban construction land supply capacity can at least maintain the current level. Second, link homestead land market entry reform with operational construction land market entry. Idle homestead land within the scope of urban planning should be included in operational construction land and gradually participate in transfer; for idle homestead land outside the planning scope, according to the principle of voluntariness, part may be transferred for compensation, and part may be encouraged to be reclaimed as farmland through reclamation compensation and reward payments.

The main reasons for such consideration are, first, to establish new channels and guarantees for integrating construction land supply, and only under this new platform can market integration be discussed; second, looking in reverse, if there is no new source of construction land, even if the scope is narrowed it will rebound, the expropriation scope will expand again, and the reform will be undone.

Of course, the above idea is only a foundation of the system, or merely a precondition. It is not intended to be fully opened at once, but rather to be gradually expanded through certain measures to control the degree of reform, and the specific contents will be discussed below.

Second, determine the connotation of operational construction land based on future use nature, integrate the three categories of land - existing operational collective construction land, newly added collective construction land due to the narrowing of the expropriation scope, and idle homestead land - into one, and on this basis do good planning. Without encroaching on the red line of cultivated land, clarify the specific scope of operational construction land and guarantee an effective source of construction land.

The specific methods are: first, at the institutional level, clarify that the connotation of operational construction land is determined according to the nature of future land use, that is, under the premise of unified planning, construction land to be expropriated within the planning scope, newly added construction land included due to the narrowing of the expropriation scope, currently defined operational construction land, and homestead land that has become or will become idle and can be included in construction land - except for that used for infrastructure and public facilities construction and land reserved by village collectives - shall all be included in the category of operational construction land. Second, the specific scope of operational construction land must be delineated in advance through planning and implemented on maps, rather than simply defined qualitatively through the system.

There are three reasons for doing this: first, the currently stipulated scope is too narrow. Relevant research reports say it is less than 10% of collective construction land, and most collective construction land is not included, so it cannot play a reform role. Second, if it is stipulated through the system, it can only be a principled qualitative definition with a vague scope and cannot be implemented on maps like planning, which will leave many policy loopholes and lead to a large number of rent-seeking methods, with people finding ways to convert farmland or other land into operational construction land and enter the market to seek profits. Third, if the current definition is followed, operational construction land will soon be transferred out, and it cannot become a sustainable market. This policy may lose effect in 2 to 3 years.

Third, establish a protective system for the transfer of rural collective operational construction land, and on this basis separate collective ownership from use rights. Collective ownership remains with the collective, and land use rights are permitted to be transferred, laying the foundation for realizing “equal rights and equal prices” with state-owned land.

The protective system mainly includes: first, establish use right transfer while ensuring that the original collective still holds ownership after the land is transferred; second, set a maximum transfer term, and after the term expires, if a transfer occurs, the original collective has the right of mandatory recovery; third, establish a right of first refusal for the original collective, so that when the transferee transfers the land within the validity period, the original collective may, if willing, buy the land back first at market price; fourth, establish a right of mandatory recovery, so that because of collective public interest needs, the original collective may fund the mandatory buyback of land use rights at below-market price under the auspices of the government; fifth, establish a state takeover system, so that if a collective organization normally disappears, state trusteeship may be implemented or state expropriation may be adopted, making the land public assets; sixth, establish a relief system, so that if the collective encounters difficulties in basic needs such as housing after land transfer, the government purchases land to resolve the corresponding difficulties; seventh, set a maximum one-time transfer area, and the maximum limit on transfer area may be gradually relaxed according to the maturity of the market.

Rural land system reform faces three most important aspects: market entry of collective operational construction land, paid withdrawal from homestead land, and narrowing the scope of land expropriation. From the current situation, institutional design shows a tendency toward fragmentation, and the three should be designed holistically and integrated into one.

The main reasons for doing this: first, it can ensure that the nature of collective land ownership does not change, and under ordinary circumstances ensure that after collective land transfer the original collective organization can intervene lawfully and reasonably; second, according to the principle of “equal rights and equal prices”, collective land has the right and should realize property rights transfer through use rights entering the market; third, these settings currently have no legal obstacles, and some obstacles mainly come from the institutional level, which is exactly what we need to change.