Why is China's agricultural land facing an unbearable burden?

　　The unbearable burden on China's agricultural land: wanting both the security function and the economic function, and ending up with neither

In reality, rural land transfer is not smooth, and the reasons for this are many, but we believe that an important factor constraining rural land transfer is that rural land simultaneously carries a security function and an economic function, and these two functions are difficult to reconcile, resulting in the coexistence of a low level of security and low economic efficiency in China's rural areas, and agriculture modernization being seriously affected.

Although the Property Law turned rural land into a real right, this real right is subject to many restrictions, for example, rural land ownership cannot be transferred or bought and sold, and although land contractual management rights can be transferred, they cannot be mortgaged for financing, etc. The reason for this situation, we believe, is that the existing provisions of the Property Law are a compromise result. On the one hand, it takes into account the lack of social security for rural residents, and on the other hand, it wants to give full play to the economic efficiency function of land contractual management rights.

However, if a task has two or more functions at the same time, and these functions are incompatible with each other, then the result is inevitably inefficient, and none of the multiple functions can be fully realized.

The difficulty of reconciling the security function and the economic function of rural land is mainly manifested in the following 6 aspects.

　　The contradiction between stabilizing the land contract period and constantly adjusting the land contract period

The security function of land requires constant adjustment of the land contract period, while the economic function of land requires stabilizing the land contract period. The security function of land is realized through the qualification rights of members, that is, all members of the collective are qualified to enjoy the security brought by land, and this security is equal, regardless of gender, age, or health status. Once a person loses collective membership, for example by transferring household registration elsewhere or by death, they can no longer continue to enjoy the security brought by land, nor can it be inherited or transferred. It is precisely based on this requirement of fair security that the Rural Land Contract Law stipulates that land contractual management rights are "everyone has a share" and "members are equal." Therefore, land contractual management rights must often be adjusted in a timely manner according to changes in membership.

However, with regard to the economic efficiency function, land contractual management rights must be stable in order to stimulate operators' enthusiasm for long-term investment and their behavior of maximizing farming returns over the long term. If land contractual management rights are frequently adjusted, the level of investment in land for agricultural production will decrease, encouraging short-term behavior.

Obviously, in the Rural Land Contract Law, "everyone has a share" and "members are equal" contradict "no additional land for additional people, no reduction of land for reduced people," because the former requires constant adjustment of the land contract period, while the latter requires stabilizing the land contract period.

　The contradiction between the fairness orientation and the efficiency orientation of rural land

The security function of land requires "everyone has a share" and "members are equal," aiming to satisfy the basic survival needs of collective members, and its value orientation is social fairness; however, the economic function of land requires "no additional land for additional people, no reduction of land for reduced people," and only in this way can the returns from land contractual management rights be maximized, aiming to satisfy the development needs of collective members, and its value orientation is economic efficiency. "No additional land for additional people" means that newly added members do not obtain the land contractual management rights they should have and do not receive the security they should have; while "no reduction of land for reduced people" means that some people obtain a share exceeding their own land contractual management rights, and "no additional land for additional people, no reduction of land for reduced people" conflicts with the security function of land.

Here we can see that the security function of land contradicts the economic function of land, and the cause of the contradiction is endogenous to the two different value orientations. If the security function of land is to be satisfied, it is very difficult to also take into account the economic efficiency function of land, and vice versa. Under the current conditions in which a social security system has not been universally established in rural areas, it is an urgent problem to be solved that rural land must satisfy both the survival needs and the development needs of members.

　　The contradiction between the fragmentation of land and appropriately scaled operation

At present and for a fairly long period in the future, China's rural population will continue to grow, and the land security function of "everyone has a share" and "members are equal" will inevitably lead to the fragmentation of land. However, with the progress of agricultural science and technology and the popularization of agricultural mechanization, appropriately scaled agricultural operation is an inevitable requirement of historical development.

The contradiction between land fragmentation and appropriately scaled land operation is in fact the contradiction between the security function of land and the economic function of land. To resolve this contradiction, institutional innovation is necessary, and the key point of innovation is that modern social security systems must be developed in the vast rural areas, and it is not possible to rely solely on land to solve the growing strong demand of the vast number of farmers for social security. A social security system without the participation of the vast number of farmers is imperfect and also unfair.

　　The contradiction between unpaid use and paid use of land

To satisfy the land security function of "everyone has a share" and "members are equal," the acquisition of land contractual management rights must inevitably be unpaid, while the economic function of land requires paid acquisition. According to Coase's theorem, land should be contracted and operated by the person who can use it most efficiently. Under the principle of paid use, the highest bidder is usually also the most efficient user, while equal distribution of land contractual management rights cannot reflect the principle of efficiency.

At present, rural land contractual management rights are acquired without compensation, which reflects the security function of land and implements the principle of fairness first. However, the Property Law stipulates that rural collective land contractual management rights are usufructuary rights, which means that the use of land must implement the principle of efficiency first. The contradiction between the principle of fairness first and the principle of efficiency first is very obvious.

　　The contradiction between restricted transfer and free transfer of land

The security function of land aims to provide a reliable source of survival for members of the collective, so only members of the collective can enjoy land contractual management rights, and non-members of the collective may not enjoy them. This means that land contractual management rights can at most be transferred within the scope of members of the collective. If some collective members lose the ability to contractually manage land, they can only ask others to cultivate and operate it on their behalf, and those who cultivate and operate it on their behalf must usually also be members of the collective, so that supervision and management by the collective organization are facilitated.

However, the economic function of land requires land to have complete real right characteristics and to be freely transferable according to the will of the subject of the real right, so that the party transferring out the land can obtain higher transfer returns, and the party transferring in the land can obtain the right to use the land according to efficiency, achieving a win-win result.

Section 5 of Chapter II of the Rural Land Contract Law stipulates that land contractual management rights may be transferred according to law, with the aim of promoting the efficiency of land transfer; however, Article 37 of the same law also says that "considering that farmers in the vast majority of China's rural areas will still have to rely on contracted and operated land for their livelihood for a fairly long time, they must not lose the land on which they depend for survival because of arbitrary transfer," and therefore sets up various restrictions on land transfer. Contradictory legislative provisions like those in the Rural Land Contract Law can also be seen everywhere in the Property Law and other agriculture-related laws.

　　The contradiction between land as a means of production and land as property

Land as a means of production aims to provide produced goods and satisfy the needs of one's own survival and development. As property, however, land is used more broadly, and can be used both as a means of production and for transactions. Whether it is used for production or for transactions depends mainly on which method can bring higher returns to the subject of the property.

If it is used only as a means of production, then it usually cannot be freely traded, nor can it be used for mortgage, because the means of production mainly satisfies the basic survival needs of its owner and has a security function. As property, however, its free transfer or transaction usually cannot be restricted. Whether under civil law or common law, except for a small number of special properties, general property can basically be freely traded and can also be mortgaged for financing.

Article 128 of the Property Law stipulates that land contractual management rights may be transferred, but Article 184 also stipulates that land contractual management rights may not be mortgaged. The Mortgage Law also stipulates that land contractual management rights may not be mortgaged. The reason lies mainly in the fact that legislators worry that when the mortgage right is enforced, the contractor will lose the land contractual management rights, thereby losing the guarantee of livelihood and causing social instability.

In fact, before the promulgation of the Rural Land Contract Law and the Property Law, land in China was treated as a means of production, mainly to satisfy the basic living and survival needs of rural residents and play a security role. After the promulgation of the Property Law, land was not only treated as a means of production but also acquired the characteristics of property, but these property characteristics were subject to many restrictions, reflecting a compromise way of thinking.

As a result, it can neither play a good security role nor play a good role in improving land use efficiency. Therefore, it can be considered that the current Rural Land Contract Law, Property Law, and other laws are transitional laws that await further reform and improvement.