How to Advance Innovation in Rural Property Rights Financing Systems
The "Decision" adopted at the Third Plenary Session of the 18th Central Committee proposed granting farmers the right to mortgage and use as collateral their contracted management rights, and prudently and steadily advancing the mortgage and collateralization of farmers' housing property rights. The 2014 No. 1 Central Document made specific arrangements. The introduction of these two documents will surely provide a strong impetus for advancing rural financial reform. At present, some regions across the country have already carried out rural property rights mortgage financing work represented by land contracted management rights. Summarizing domestic practice in rural property rights financing, learning from the advanced experience of developed countries, and exploring ideas and paths for rural property rights financing to form replicable and promotable models is of great significance for deepening rural reform.
Assessment of the Development Trends of Rural Property Rights Financing in China
Examining domestic practice and studying the advanced experience of foreign regions, China's rural property rights financing development will exhibit phased characteristics and can be divided into three stages: guarantee financing, mortgage financing, and property rights securitization. At the same time, internet credit, as a new model, will become a supplement to rural financing. Overall, rural property rights financing development consists of three stages and four models.
Guarantee financing, mortgage financing, and property rights securitization have different levels of development, from lower to higher. This development trend is not inevitable and can only be achieved through effort. Revitalizing rural resource assets and promoting rural property rights mortgage financing requires achieving this development. The three stages and four models may coexist for a long time. In the initial period, guarantee financing will predominate; in the medium and long term, mortgage financing will predominate; in the long term, property rights securitization will predominate, with mortgage financing as a supplement and internet credit as a supplement, with the three models coexisting.
Ideas for Rural Property Rights Mortgage Financing
Advancing rural property rights financing is an important part of deepening rural reform. It is innovation in the "deep-water zone," with complex and intricate circumstances and a myriad of tasks. It requires both top-level design and, even more so, "rolling up one's sleeves." Studying foreign advanced experience, domestic exploratory practice, and the approach of Tianjin, the ideas for rural property rights mortgage financing are as follows:
(1) Confirmation of rights and issuance of certificates. To advance rural property rights mortgage financing, property rights must be clarified. Rights must be confirmed and certificates issued, granting farmers property rights over land. Tianjin has actively carried out the confirmation of rights and issuance of certificates for rural land contracted management rights, forest rights, and agricultural facilities, adopting methods such as confirming land and confirming rights, and confirming shares and confirming rights, to implement land contracted management rights, forest rights, and agricultural facilities down to the household level.
(2) Public disclosure of ownership. At present, China's rural property rights financing includes a mortgage registration step, but there are problems such as registration authorities being too dispersed, registration rules not being unified, inconvenient inquiries, and deficiencies in paper-based registration, which easily lead to disputes such as illegal mortgages and mortgage fraud. Tianjin has unified agricultural facility mortgage registration and inquiry disclosure, and forest tree rights inquiry disclosure, into a financing registration service institution approved by the central bank. This is an important innovation of Tianjin.
(3) Mortgage financing. Rural property rights mortgage financing plays an important role in the development of modern agriculture in developed countries and is an important component and breakthrough point for deepening rural financial reform in China. In rural property rights mortgage financing, Tianjin highlights strengthening agriculture, enriching farmers, and increasing efficiency, mainly promoting mortgage financing for three types of projects: new business entities, emerging business formats, and industrial upgrading, to promote large-scale land management and develop modern agriculture.
(4) Guarantee credit enhancement. Under current circumstances, guarantee credit enhancement is the key to promoting rural property rights mortgage financing. Tianjin has specially authorized the establishment of a municipal-level agricultural investment guarantee limited company fully funded by the government, and is studying and formulating cooperation mechanisms with district and county guarantee institutions for joint guarantees, co-guarantees, and re-guarantees, to provide guarantee credit enhancement for rural property rights mortgage financing.
(5) Circulation and disposal. Disposing of non-performing assets is an important link in rural property rights financing. At present, there are mainly two ways to dispose of non-performing assets domestically: targeted circulation, such as in Shouguang, Shandong, and non-targeted circulation, such as in Chongqing. Tianjin will establish an asset management company, combined with the Tianjin Rural Property Rights Exchange, to dispose of non-performing assets.
(6) Policy guarantees. Rural finance is a weak link in rural development. To advance rural property rights financing, the government needs to take proactive action. Tianjin will formulate fiscal support policies, provide interest subsidies for rural property rights mortgage loans, subsidize guarantee fees, and provide risk compensation. At the same time, it will issue judicial guarantee opinions to provide judicial guarantees.
Recommendations for Advancing Innovation in Rural Property Rights Financing Systems
(1) Improve the institutional mechanisms for rural property rights financing. Improve laws and regulations to clear legal obstacles. Establish and improve a strong working mechanism to coordinate the advancement of rural property rights confirmation and financing work. Formulate and improve supporting systems for rights confirmation and certificate issuance, ownership registration, value assessment, transaction circulation, and asset disposal, refine and standardize various processes, develop property rights trading markets and intermediary organizations, and form a complete and closed circular system. Establish and improve the rural social security system to provide social security support for the realization of rural property rights financing functions.
(2) Establish and improve risk diversification mechanisms. Compared with support funds such as fiscal interest subsidies and project support, risk compensation funds have a stronger leverage effect in mobilizing financial resources. It is recommended that the central government and local governments establish rural property rights financing risk compensation funds. For risk compensation funds, it is not only necessary to establish them but also to implement their use, so that they truly play a role. Establish a risk-sharing mechanism among banks, microfinance companies, and other lending institutions and guarantee institutions. Develop and improve an agricultural insurance system with policy-based insurance as the mainstay and commercial insurance as a supplement, and establish cooperation mechanisms among banks, insurance, and guarantees.
(3) Clarify the subject matter of rural property rights financing and establish a unified rural property rights mortgage registration and disclosure system. Rural property rights are a system of rights formed with collective land property rights as the core, and are enriched with rural economic and social development and the improvement of laws and policies. At present, in the practice of rural property rights financing, land contracted management rights are used for financing, which is actually land management rights being used for financing, and there is a problem of unclear subject matter. Clearly defining the subject matter of rural property rights is conducive to protecting the interests of farmers as collective members and also to protecting the interests of actual land operators (such as direct grain subsidies), and is significant both in theory and in practice. At present, the state is advancing the real estate registration system. This should be combined with rural property rights mortgage financing work to establish a unified mortgage registration and disclosure system, so as to disclose the true ownership status of mortgaged property, reduce financing costs, and improve financing efficiency.
(4) Strengthen positive incentives and mandatory constraints. Positive incentive measures such as loan interest subsidies, incremental rewards, and differentiated monetary and regulatory policies have played an important role in promoting rural financial development. Positive incentives should continue to be strengthened and the precision of policies improved. Local governments may, according to the principle of "deposit-loan proportionality," adjust the proportion of fiscal deposits in financial institutions to guide financial institutions to "calculate the overall account" and increase agriculture-related loan disbursement. Under market mechanisms, credit funds easily flow to low-risk areas. To develop rural finance, positive incentives are needed, and mandatory constraints are even more needed. Through legislation, strengthen the responsibility of financial institutions, especially policy-based institutions and county-level institutions, to support agriculture, and increase the design of mandatory indicators such as "three with one" and "two with one" linked increases and decreases, and agriculture-related loan growth not lower than the average loan growth rate, to correct "market failure."
(5) Strengthen rural financial innovation. At present, rural financial products mainly replicate urban products and continue traditional products, affecting rural financial development. Strengthen product innovation in response to the characteristics of rural property rights financing and new business entities, adapt to development trends and financing needs, and design "suitable products" by "tailoring to the situation." Innovate rural internet finance, promote innovative applications of internet finance, encourage and support the combination of financial institutions and agricultural e-commerce platforms, and play a positive role in alleviating rural financing difficulties. Explore rural property rights financing methods such as land management rights trusts and collective equity financing.