Broadening of management-right mortgages: regulatory loopholes must be plugged urgently
We cannot place full hope in the trading market to voluntarily improve its own behavior. Corresponding rules and regulations should be introduced more quickly, or the regulatory authorities should be clearly designated, to set basic guidelines for the trading market. In some respects, unified standards and assessment should be established to push the land management-right trading market toward standardization.
Recently, the Ministry of Agriculture issued the "Operating Rules for the Rural Land Management-Right Transfer and Trading Market (Trial)", which follows the sequence of "submitting an application - entering the market for trading - signing a contract - supporting services" and clearly specifies trading entities, trading conditions, trading varieties and other aspects.
In recent years, China's rural land management-right transfer market has developed rapidly. According to statistics, more than one-third of contracted land has been transferred out, with more than 40 million mu of newly transferred area each year, involving millions of contracted farming households. The increasingly active market has stimulated financial innovation, and land management-right mortgage loans have emerged as a result. However, due to the non-standard development of the trading market, the lack of professional assessment of land value, and the bottleneck of difficulty in realizing mortgaged assets, which has not yet been completely broken, the large-scale issuance of management-right mortgage loans faces many obstacles.
From current practice, the development of land transfer and trading markets varies from place to place; some have developed for a long time, while others have just started. Most land management-right transfer and trading markets are public institutions or state-owned enterprises established under the agricultural system's management departments, and some are transfer and trading platforms set up by private enterprises using the internet and other means. Whether they are rural property rights exchanges of a public-institution or state-owned nature, or internet trading platforms, many problems exist, leaving the trading market inactive or developing in chaos.
The introduction of the "Operating Rules" is timely. It provides reference text for the standardized development of trading markets in various places and points out the direction for guiding public, fair and standardized transfer and trading of land management rights. More importantly, the standardized development of the trading market is conducive to accelerating the transfer of land management rights. Even if a mortgage loan becomes overdue, the loan can be recovered through a second transfer of the management right, effectively preventing the occurrence of non-performing risks. The smooth realization of mortgaged assets in the trading market is conducive to mobilizing the enthusiasm of rural financial institutions to expand the issuance of management-right mortgage loans.
However, the "Operating Rules" only serve as reference guidance, not mandatory supervision. At present, there are still no relevant rules and regulations or specialized regulatory bodies performing supervision and management functions over trading platforms. Industry insiders say that the lack of supervision over trading platforms may lead to problems such as false transactions, false warrants and fraudulent obtaining of financial loans. It is necessary to consider establishing a nationally unified rural real estate trading center and platform to ensure the uniqueness, legality and reliability of transactions.
We believe that we cannot place full hope in the trading market to voluntarily improve its own behavior. Corresponding rules and regulations should be introduced more quickly, or the regulatory authorities should be clearly designated, to set basic guidelines for the trading market. In some respects, unified standards and assessment should be established to push the land management-right trading market toward standardization. On this basis, local trading markets can then make adjustments in light of local realities, so that they better meet the needs of diversified trading entities.
Only by timely filling the regulatory gap can risks be blocked out. This is also the institutional guarantee that a market should have as it moves toward standardization and maturity. A healthy, orderly and active trading market can attract financial institutions to participate actively, increase the issuance of land management-right mortgage loans, strengthen financial innovation, stimulate the huge potential contained in land finance, and enable finance to better serve agriculture, rural areas and farmers.