Why Should Rural Property Rights Reform Be Gradual Rather Than Urgent?

“Reform of property rights over rural collective assets bears on the core foundation of national economic development. The issues of agriculture, rural areas and farmers occupy a foundational position in overall economic and social development, and have always determined and influenced how steady the reform and opening up can be. From this perspective, property rights reform should be gradual rather than urgent; the reform can proceed slowly through pilot programs, in a steady and sustainable manner, but it should not be radical.” He Xuefeng, director of the China Rural Governance Research Center at Huazhong University of Science and Technology, said this in a recent interview with a reporter from China Economic Times.

Shao Ting, associate researcher at the Market Economy Research Institute of the Development Research Center of the State Council, likewise believes that, given the current domestic situation, safeguarding farmers' rights and interests means reform of property rights over rural collective assets should be a gradual rather than radical reform. He pointed out that rural property rights reform has already been piloted at the local level for many years, and the practical experience in Guangdong, Shanghai, Sichuan, Chongqing and other places is very rich. The central government intends to summarize the experience and lessons on the basis of actual local exploration and refine them, thereby establishing the basis for amending the law. He stressed that, against the backdrop of simultaneously advancing industrialization, urbanization and agricultural modernization, better safeguarding farmers' transfer rights is the key to this reform.

“China's vast rural areas can be seen as the ‘stabilizer’ and ‘reservoir’ in China's modernization drive. Therefore I believe that reform targeting rural issues and involving the issues of 900 million farmers should still be primarily steady.” He Xuefeng told a China Economic Times reporter this.

He Xuefeng said that, according to the provisions of China's Land Administration Law, rural homestead land in China is obtained free of charge and used without compensation, under a system of one household, one homestead. Homestead land is arranged to facilitate farmers' agricultural production and rural life; farmers' housing is self-built, self-occupied, self-owned and self-enjoyed, and must not be used for non-agricultural purposes, especially not for business purposes. In this sense, farmers' land, including homestead land and the housing on it, is not property but the basic supporting facility for farmers' operations, production and life. Only when farmers' housing and land are treated as property can they be mortgaged and used as collateral. In other words, rights that mainly served a social security function in the past have become rights that allow farmers to monetize their land, a fairly significant change in meaning.

He Xuefeng also mentioned that the Third Plenary Session of the 18th Central Committee proposed the reform tasks of “giving farmers more property rights,” “protecting farmers' usufructuary rights over homestead land, reforming and improving the rural homestead system, selecting a number of pilot sites, and cautiously and steadily advancing the mortgage, collateral and transfer of farmers' housing property rights, and exploring channels for farmers to increase property income,” as well as “protecting the membership rights of farmers in collective economic organizations, actively developing farmers' share cooperatives, and giving farmers the rights to possess, receive income from, paid exit from, mortgage, use as collateral, and inherit shares in collective assets.” The 2014 Central Document No. 1, in addition to the Third Plenary Session of the 18th Central Committee's emphasis on “cautiously and steadily advancing,” once again stressed the requirement that “relevant departments must promptly propose specific pilot plans, and localities must not act on their own or rush ahead and cross the line.” Subsequently, at the fifth meeting of the Central Leading Group for Comprehensively Deepening Reform held on September 29, General Secretary Xi Jinping, in a speech on the issue of rural land transfer, reiterated that “during the pilot process, we must prevent the embezzlement of farmers' interests, and all pilot work should be strictly limited to within collective economic organizations. China's rural conditions vary greatly, and collective economic development is very uneven; we must do a good job in institutional design and arrange pilot programs in a targeted way.” This too reveals the central government's cautious and scientific attitude toward reform.

“China's industrial upgrading is not yet complete, and when cities cannot guarantee all migrant workers entering the cities income and employment conditions that allow them to live with dignity, reform of property rights over rural collective assets must be handled with extreme caution.” He Xuefeng pointed out that, constrained by the current legal framework, although this reform of property rights over rural collective assets has already set out a clear pilot direction, the specific process of advancing the pilots still requires detailed design and cautious progress.

Ma Qingbin, associate researcher at the Research Department of the China Center for International Economic Exchanges, also agreed with this. He pointed out that in recent years the pace of rural land transfer has accelerated, and at the same time it has brought many risks. For example, while “giving farmers the rights to possess, receive income from, paid exit from, mortgage, and use as collateral shares in collective assets,” there must be policy arrangements to safeguard farmers' rights and interests and the state capital's shareholding ratio. If large numbers of industrial and commercial enterprises controlled by foreign capital enter agricultural land, it is very likely to trigger risks such as monopolization of pricing power, which would undoubtedly be unfavorable for maintaining economic stability in China's rural areas and even nationwide. “I suggest that while carrying out reform of property rights over rural collective assets, giving farmers more rights and seeking more income for farmers, we should still pay attention to appropriate planning, respect farmers' wishes, and be even more prudent in controlling the pace of reform.” Ma Qingbin said.

Similarly, Li Guoxiang, deputy director of the Rural Development Institute of the Chinese Academy of Social Sciences, also stressed that the significance of reform of property rights over rural collective assets is beyond doubt, but for this reform, which directly involves the vital interests of hundreds of millions of farmers, stability should still be the priority and it should be treated cautiously. “First, we must legislate, analyze specific situations case by case, and gradually improve things during implementation, obtaining detailed specific data on the basis of pilot programs and continuously adjusting and carrying it out according to actual conditions.”

Chen Xiaohua, Vice Minister of Agriculture, likewise said that, on the one hand, we must recognize that, with the accelerated advance of industrialization and urbanization, problems such as unclear ownership of property rights over rural collective assets and unclear rights and responsibilities have become increasingly prominent, eroding the foundation of rural collective ownership; but on the other hand, we must also recognize that this reform is very complex, involves the vital interests of hundreds of millions of farmers, and involves the revision and improvement of many laws and policies. Moreover, China's rural conditions vary greatly, so pilot programs are needed, and the path and methods must be explored through pilots.