China's new rural land reform is about to enter the pilot phase, but the reform process will still advance cautiously

China's rural “new land reform” is about to enter the pilot phase, but the reform process will still be cautious

The pilot work of China's rural land system reform is about to begin, and the reform will focus on the three major areas of “rural land, collective operational construction land and homestead land”, but industry insiders believe that the results of the 2015 rural land reform may fall short of many people's expectations.

China's rural land reform, which concerns the vital interests of hundreds of millions of farmers and is regarded as a “tough nut to crack”, is speeding up, and the timetable for the reform pilot work has already been set. However, judging from a series of documents and the actual reform process, the 2015 rural land reform will still be based on pilot projects and prudence, and the central government still maintains a cautious attitude.

On January 12, the General Office of the CPC Central Committee and the General Office of the State Council jointly issued the “Opinions on the Pilot Work of Rural Land Expropriation, Market Entry of Collective Operational Construction Land, and Reform of the Homestead Land System” (hereinafter referred to as the “Opinions”), making it clear that the pilot work of China's rural land system reform will be completed by the end of 2017. This marks that China's rural land system reform is about to enter the pilot phase. But the pilot will last three years, and it is obvious that the central government is not in a hurry to promote it.

As of the deadline for Jiemian News, the “Opinions” had not yet been publicly released and was limited to circulation among government departments. Jiang Daming, Minister of Land and Resources and Director of the National Land Supervision, revealed in an interview with Xinhua News Agency on January 12 that this round of reform pilots mainly has three major tasks: building a system for the market entry of collective operational construction land, exploring the narrowing of the scope of land expropriation, and improving the reasonable, standardized and diversified safeguard mechanism for farmers whose land is expropriated.

Jiang Daming further explained that in this round of pilots, in terms of the reform of the market entry of rural collective operational construction land, it is necessary to explore and improve the land property rights system, grant rural collective operational construction land the rights to transfer, lease and become shares, clarify the scope and channels for the market entry of rural collective operational construction land, and establish and improve market transaction rules and service supervision systems. In terms of the reform of the rural homestead land system, it is necessary to improve the protection of homestead land rights and interests and the methods of acquisition, explore multiple forms of realizing housing security for farmers in different regions so that each household has a place to live, explore the implementation of paid use for situations such as occupying homestead land beyond the standard and one household having multiple homesteads, and explore allowing farmers who have settled in cities to voluntarily and with compensation withdraw from or transfer homestead land within their own collective economic organization.

Now it appears that the land reform pilot work has taken another step forward in key areas such as collective operational construction land and homestead land. Zheng Fengtian, a professor at the School of Agricultural Economics and Rural Development at Renmin University of China, who was interviewed by Jiemian News, believes that it was previously stipulated that rural collective operational construction land could enter the market if it complied with regulations and use control, but for a specific piece of land, the regulations and use control need to be clearly defined. It is also necessary to assess the risks of direct market entry to avoid land finance problems caused by excessively rapid market entry and the resulting local debt risks.

Zheng Fengtian also analyzed that Jiang Daming's statement shows that the central government is still particularly cautious about rural homestead land reform. He said: “Rural homestead land reform still cannot recklessly cross red lines. Limiting farmers who have settled in cities to voluntarily and with compensation withdraw from or transfer homestead land only within their own collective economic organization was in fact already the case before the pilot. The information previously disclosed was only that urban residents are not allowed to buy homestead land in rural areas. The current information is basically not much different from the past.”

Zheng Fengtian believes that the focus of this round of homestead land reform is to appropriately charge certain fees for rural households that occupy homestead land beyond the standard and have multiple homesteads for one household.

At present, rural residents in China generally have a piece of homestead land at home, but nearly 300 million people are currently working in cities. Zheng Fengtian believes that with the rapid development of urbanization in the future, how to deal with the dilemma of farmers who move to cities “living in rat holes in the city while leaving rural houses for rats to live in” requires reform of rural homestead land.

In an interview with Xinhua News Agency, Jiang Daming revealed that the requirements for the reform pilot are, first, to adhere to small-scale pilots. Taking into overall account the eastern, central, western and northeastern regions, and taking into account different development stages and models, the pilots will mainly be arranged in comprehensive pilot areas for new urbanization and rural reform experimental areas, and several counties or county-level cities with a foundation and conditions will be selected for implementation. Second, to adhere to reform in accordance with the law. If the pilot involves breaking through relevant legal provisions, the State Council needs to request authorization from the Standing Committee of the National People's Congress to allow pilot areas to suspend the implementation of relevant legal provisions during the pilot period. Third, to adhere to closed operation. The pilots are strictly limited to counties (cities) authorized by law, and non-pilot areas cannot blindly compare themselves with them or act without authorization, ensuring that the pilots operate in a closed manner and risks are controllable.

“Reform affects the whole situation with a single move, so a larger area of pilot projects is still needed.” Zheng Fengtian believes that in order to firmly grasp the situation of the reform pilots, the central government adopted closed operation to control risks. Since the revised version of the “Land Administration Law” has not yet been issued, many risks will still exist in the process of the rural land reform pilot work.

A latest report published by Anbound Consulting on January 13 also believes that the lack of consensus and numerous concerns have made land reform show a cautious and conservative posture. Anbound believes that the results of the 2014 land reform are still limited to basic areas such as confirmation, registration and certification. Although many places are experimenting with feasible models of land reform, it is still too early to form a mature model universally applicable nationwide. The policy operations for the circulation of rural homestead land and collective construction land are relatively difficult, and progress is slow. The results of the 2015 rural land reform may fall short of many people's expectations.

Song Hongyuan, director of the Rural Economic Research Center of the Ministry of Agriculture, said in an interview with Jiemian News: “The decision of the Third Plenary Session of the 18th Central Committee and the No. 1 Document of 2014 both clearly proposed reforming the homestead land management system and improving homestead land management policies and housing mortgage guarantees, while Minister Jiang Daming's interpretation is not complete. We still need to wait for the complete document to be officially published and then see whether there are detailed pilot opinions.”