The core essence of the separation of three rights is to liberalize land management rights

The Fifth Plenary Session of the 18th CPC Central Committee proposed stabilizing rural land contracting relationships and improving the arrangement for separating land ownership rights, contracting rights and management rights. Recently, the General Office of the CPC Central Committee and the General Office of the State Council issued the "Opinions on Improving the Arrangement for Separating Rural Land Ownership Rights, Contracting Rights and Management Rights," clearly stating that the "separation of three rights" is another major institutional innovation in rural reform following the household contract responsibility system. Under the "separation of three rights," ownership rights, contracting rights and management rights each have their own functions while also producing an overall effect. Proceeding from current realities, the focus of implementing the "separation of three rights" is to liberalize management rights, and the core essence is to clearly grant management rights their proper legal status and powers.

The positioning of land management rights under the "separation of three rights" framework

Liberalizing management rights is the basic starting point for implementing the "separation of three rights." Looking at the evolution of rural reform, at the beginning of reform and opening up, by granting the broad masses of farmers contracting rights and operational autonomy, the most fundamental motivational problem troubling farmers at that time was resolved, the development of productive forces was greatly unleashed, and the basic system of collective land ownership and household contracted operation was established, becoming the cornerstone of the Party's rural policy and laying the foundation for extending reform to more fields. At present, China's economic and social development has entered a new historical stage, and the situation facing issues relating to agriculture, rural areas and farmers has also undergone profound changes. Through implementing the "separation of three rights," rural reform is further deepened, moving from granting the broad masses of farming households land contracting and management rights to allowing more production and operation entities willing to engage in agriculture to hold land management rights.

Liberalizing management rights is an important goal of implementing the "separation of three rights." A suitable property rights arrangement influences people's economic behavior by stabilizing expectations, thereby promoting the economic activities of various entities within a controllable range. From the perspective of the evolution of property rights systems, a modern property rights system must adapt to large-scale socialized production and the modern market economy, and its main features are clear attribution, complete powers, smooth transfer and strict protection. Through implementing ownership rights, stabilizing contracting rights, and delimiting and empowering management rights, the main purpose and achievement of the "separation of three rights" is to enable the rational allocation of land resources and the flexible and efficient exercise of management rights.

Liberalizing management rights is the practical basis for implementing the "separation of three rights." As industrialization and urbanization advance in depth, a large agricultural population has moved to cities and towns, the scale of rural land management rights transfer has continued to expand, the phenomenon of the separation of the subject of land contracting rights from the subject of management rights has become increasingly common, and various new types of operation entities have flourished, becoming a vital force in developing modern agriculture. The implementation of the "separation of three rights" conforms to grassroots practice and responds to the respective needs of farmers' collectives, contracted farming households and operation entities. By reasonably defining the content of their rights in operating land and clarifying their relationship with land ownership rights and contracting rights, it has greatly promoted the formation of scale operation and the development of modern agriculture.

The relationship between liberalizing management rights and upholding ownership rights and stabilizing contracting rights

In implementing the "separation of three rights," handling the relationship among the "three rights" well is a difficult point, and the goal is to form a pattern with distinct levels, a reasonable structure and equal protection.

The nature of the attribution of management rights. Since the "separation of three rights" was proposed, some scholars have focused on the nature of the attribution of land management rights, putting forward different views such as the "real right theory," the "creditor's right theory" and the "theory of applying real right protection to creditor's rights." At present, defining land management rights as creditor's rights while improving their powers and strengthening protection appears relatively consistent with reality. Moreover, from the perspective of China's stage of economic and social development and the evolution of the land operation system, a feasible and relatively prudent plan does not necessarily have to determine the nature of attribution as a single form through legal form. Instead, it is enough to proceed from problems and from practical needs to solve specific issues such as land fragmentation, the constraints of small-scale operation on the development of modern agriculture, and the need of operation entities for stable operational expectations, leaving flexible space for practice. It should also be noted that no matter how the nature of management rights is determined, their specific exercise must not affect the lawful rights and interests of farmers' collectives and contracted farming households.

The relationship between management rights and contracting rights. Under the "separation of two rights," ownership rights give rise to contracting rights, which has already been widely recognized and understood by all sectors. When contracted farming households lease out land, transferring part of the powers and producing a relatively independent management right, this brings about the issue of the "three rights." The "separation of three rights" is in the same line as the "separation of two rights," rather than starting over, so it is logical and easy to accept that contracting rights give rise to management rights. In reality, the specific content of management rights is produced through consultation and agreement between contracted farming households and operation entities, and the setting of their powers is open, rich, individualized, infinitely variable and full of multiple possibilities. Therefore, the specific forms of realization of management rights are not unique or fixed either. Land leasing, land shareholding, land trusteeship, joint cultivation and joint seeding, and contracted cultivation and contracted seeding all have their applicability, and active exploration through multiple methods should be encouraged.

The relationship between management rights and ownership rights. For rural land that has already implemented household contracting, ownership rights do not directly give rise to management rights, but they still constrain each other in the process of exercising their respective rights. On the one hand, the exercise of ownership rights must not hinder the normal exercise of management rights; for example, farmers' collectives may not without cause intervene in, obstruct or damage the production and operation activities of operation entities. On the other hand, the exercise of management rights is subject to ownership rights; for example, farmers' collectives have the right to stop operation entities from harming or damaging land and agricultural resources, and the further transfer or mortgage of management rights must be filed with the farmers' collective. In reality, because the contracted farming households of some transferred land live and work away from home year-round, farmers' collectives must also assume responsibilities such as supervision, management and protection, and coordination.

The setting of the content of management rights under the "separation of three rights"

The starting point for setting management rights is, on the premise of protecting collective ownership rights and farming household contracting rights in accordance with the law, to equally protect the land management rights obtained by operation entities according to transfer contracts, and to protect their enthusiasm for developing agricultural production and their stable expectations. Like land ownership rights and contracting rights, management rights are also extremely rich in connotation. The most fundamental is the right to cultivate and obtain returns, and the most important content is concentrated in the following aspects.

First, the right to use land for cultivation. Contracted farming households are allowed and encouraged to transfer their land out, with the aim of attracting more capable and willing operation entities to develop agricultural production. Therefore, it should be made clear that neither contracted farming households that transfer out land management rights nor farmers' collectives that lease out land in other ways may hinder the right of operation entities to independently use the transferred land for agricultural production and operation and to obtain corresponding returns, so as to protect the enthusiasm of operation entities for self-decision-making and independent operation and enable them to respond flexibly to changes in market risks and make rational decisions. It should be noted that operation entities must exercise these rights on the premise of complying with the provisions of transfer contracts and relevant national land management regulations. At the same time, as national policies supporting agriculture and benefiting farmers are implemented, operation entities have also been included in their coverage. It is necessary both to give play to the positive incentive role of fiscal support policies and to guard against phenomena such as defrauding national funds and infringing on the interests of contracted farming households.

Second, the right to reasonably use land. The Contract Law provides that a lessee shall use the leased property in the agreed manner and may, with the consent of the lessor, improve the leased property or add other things to it. Unlike traditional contracted farming households, new types of operation entities that develop agricultural production through transferred land often need to improve soil, build infrastructure and even construct ancillary facilities in order to maximize the agricultural output utility of the land. Therefore, operation entities should be encouraged to reasonably use land resources and improve agricultural production efficiency. At the same time, according to the principle that whoever benefits compensates, the two parties to the transfer should be guided to stipulate relevant matters in the contract, and operation entities that invest in improving soil fertility should be supported in obtaining reasonable compensation after the transfer expires. Within the scope permitted by policy, eligible operation entities should also be guided to undertake infrastructure construction projects and reasonably manage and protect the assets formed by the projects.

Third, the right to further transfer land management rights or set mortgages. The Third Plenary Session of the 18th CPC Central Committee for the first time clearly stated that farmers are to be granted the powers to possess, use, obtain returns from and transfer contracted land, as well as the power to mortgage and guarantee contracted management rights. The No. 1 Central Document of 2014 further clarified that the management rights of contracted land are allowed to be mortgaged to financial institutions for financing. In practice, some operation entities, in order to improve land output efficiency or labor productivity, need to further transfer land to reduce transaction costs and give play to the benefits of scale operation. Their purpose is to develop agricultural production, and this is also one of the specific ways of "liberalizing management rights," so it should be allowed. In 2015, the State Council issued the "Guiding Opinions on Launching Pilot Mortgage Loans for Rural Contracted Land Management Rights and Farmers' Housing Property Rights" (Guo Fa [2015] No. 45), deploying pilot mortgage loans for rural contracted land management rights and temporarily adjusting the implementation of the provisions of the Property Law and the Guarantee Law that the use right of collectively owned cultivated land may not be mortgaged in 232 pilot counties (cities, districts). In 2016, the People's Bank of China, together with the Ministry of Agriculture and other relevant departments, issued the "Interim Measures for Pilot Mortgage Loans for Rural Contracted Land Management Rights" (Yin Fa [2016] No. 79), making specific provisions on the conditions, operating procedures and other aspects for contracted farming households and agricultural operation entities applying to banking financial institutions for mortgage loans using the management rights of contracted land. Considering that management rights derive from contracting rights and that further transfer involves the interests of contracted farming households, the written consent of the contracted farming households must be obtained, and it is also necessary to avoid operation entities using this to hoard land and profiteer. It should be noted that in the disposal of mortgaged property, the bottom line must be firmly upheld that the nature of public land ownership is not changed, the red line for cultivated land is not breached, and farmers' interests are not harmed.