How to Avoid Harming Farmers' Interests in Land Transfer

Along with the acceleration of China's urbanization and agricultural modernization, rural land transfer has also notably accelerated. Practice has proven that land transfer and moderate-scale operation should be the path for modern agriculture. However, in advancing urban-rural integration, China needs to implement a series of institutional arrangements to safeguard farmers' interests.

The Urban-Rural Dual Structure and the Rural Land Management System

Since 1958, when China promulgated the Regulations of the People's Republic of China on Household Registration, a strict household registration management system gradually took shape, restricting the influx of rural population into cities. As a result, in the nearly three decades before reform and opening up, rural labor rarely transferred to the industrial sector and cities, and basically remained within the agricultural sector. Since reform and opening up, with the development of the market economy, urban-rural links have significantly strengthened, but the urban-rural segmented dual structure system has not fundamentally changed. The social management system evolved from the household registration system, characterized by "urban-rural division of governance, two policies for one city, two groups of people in one place, two systems for one matter," not only restricted farmers' freedom of migration but also hindered the sound operation of the economy and society, constraining urbanization and urban-rural integration.

China's current land management system still bears the characteristics of the urban-rural dual structure: urban land is state-owned, while rural land is collectively owned; the management rights and income rights of rural land are granted to farmers through contracting, and farmer households operate as independent production and business units; agricultural land converted to construction land must be requisitioned and transformed into state-owned land; land transfer is carried out in accordance with the law on the basis of long-term stability of existing land contracting relationships, does not change the ownership system of collective land, and only transfers land contracting and management rights.

Because there are no clear provisions on the constituent elements and operating principles of the "farmer collective" as the subject of land ownership, no clear boundaries and status of the property rights representative and executing subject, and no resolution of the interest relationship between the "farmer collective" and individual farmers, farmers cannot enjoy equal exchange rights during land requisition. After farmers' land is requisitioned, prices rise substantially, and these value-added gains are often appropriated by the requisitioning departments, resulting in infringement of farmers' land rights and damage to their land interests.

First, farmers' economic rights and interests are harmed. Under the urban-rural dual structure, farmers' economic rights and interests are mostly related to the land they own, and with economic and social development and accelerated urbanization, the property nature of farmers' land and land as a property right of farmers have become increasingly evident. Land requisition means that the economic rights and interests attached to the land are lost accordingly. Against the broader backdrop of China's incomplete land requisition compensation system and a social security system still awaiting improvement, this is undoubtedly harm to farmers' economic rights and interests. The unclear scope of land requisition and non-standard procedures also infringe on farmers' land rights. At the same time, farmers' rights to land income and to the distribution of requisition gains are also infringed due to the relatively low current land requisition compensation standards and unclear ownership of compensation fees, causing corresponding harm to farmers' rights and interests. It is noteworthy that the state monopolizes the primary land market, and farmer collectives have no right to convert their land to higher-yielding urban land uses, resulting in the deprivation of farmers' land development rights, while most of the land value-added gains are enjoyed by the state and land-using units, so that farmer collectives receive only compensation for agricultural land income.

Second, farmers' social rights and interests are harmed. Land is the source of farmers' survival, work and social security. Before new forms of security are established, losing land means losing everything. The urban-rural dual structure has created major deficiencies in the rural social security system, and coupled with relatively low land requisition compensation, farmers who lose their land and enter the urban resident category, although some enjoy certain social security and some are arranged work, still mostly remain at the lower levels of society compared with urban residents.

Finally, farmers' political rights and interests are harmed. Because the subject of agricultural land ownership is vaguely defined in law, it is often rendered nominal in reality, so farmers lack suitable spokespersons in the land requisition process, have insufficient voice, and their right to know and right to participate are often ignored. Farmers also find it difficult to organize themselves due to various problems among them, and their bargaining power with the government and land-using units is limited. As a result, farmers may ultimately know nothing about how much land was requisitioned from them, the state's land requisition compensation policies, or whether the government and village collective participated in distribution. In addition, due to the limited economic capacity of land-lost farmers and the incomplete state legal aid system for them, if land-lost farmers have objections to land requisition, they often have nowhere to complain.

Urban-Rural Integration and Rural Land Transfer

Over the past decade or more, especially in recent years, urban-rural integration has gradually become an important national strategy. The basic approach of urban-rural integration is: relatively developed cities and relatively backward rural areas should break down the barriers that separate them, gradually realize the rational flow and optimal combination of production factors, promote the rational distribution of productive forces between city and countryside, closely integrate and coordinate urban and rural economic and social life, and gradually narrow and ultimately eliminate the basic differences between urban and rural areas, integrating city and countryside into one. Among these, equalization of the basic rights and interests of urban and rural residents is the prerequisite for achieving urban-rural integrated development. At present, the urban-rural gap is mainly reflected in the gap in public services, while inequality in the rights and interests of urban and rural residents is concentrated in inequality in property rights and the household registration system. The key to rationalizing the allocation of urban and rural factors is to establish an integrated urban-rural factor market, eliminate various artificially set obstacles, give play to the decisive role of the market in resource allocation, and promote the free two-way flow of various production factors between urban and rural areas.

Land is an important production factor, and according to the development approach of urban-rural integration, the market should also play a decisive role in land allocation. Although land also involves use regulation, for example, converting cultivated land into construction land must conform to urban and rural construction planning and undergo corresponding legal procedures, under the land finance operations of certain local governments, its role in restricting agricultural land transfer is negligible. Therefore, in comparing urban-rural integration with the land management system under the urban-rural dual structure, some new situations have emerged in current rural land transfer.

First, in the context of urban-rural integration, the urban-rural land distinction set by the current land management system is very likely to become blurred and disappear. For example, converting cultivated land into construction land may bypass the legal hard requirement that rural collectively owned land must be transformed into state-owned land before development and construction can proceed, thus no longer requiring land requisition, demolition, compensation and resettlement procedures. In this way, rural land would be treated equally with urban land, which would undoubtedly open wide the door for certain local governments to plunder farmers' land.

Second, under the land management system of the urban-rural dual structure, especially the land requisition system, although farmers' land rights are infringed and their land interests harmed, farmers can still obtain certain social security by converting to urban residents and can receive partial economic compensation. Under the slogan of urban-rural integration, however, certain local governments have adopted the method of transferring farmers as a whole into towns and forcibly obtained farmers' land. But if these farmers transferred into towns cannot enjoy the same social security system as urban residents, changing rural household registration to urban household registration will be meaningless, and facts have proven that this concern exists.

Third, under the rural land requisition system of the urban-rural dual structure, there are certain resettlement policies for farmers who convert to non-agricultural household registration, so land-lost farmers obtain some employment opportunities. In the process of urban-rural integration, however, the compensation and employment opportunities obtained by requisitioned farmers may shrink. Due to the current limits of China's industrialization and urbanization and farmers' lack of employment skills, land-lost farmers do not easily obtain job opportunities, making their right to reemployment impossible to realize. With livelihoods unprotected and reemployment difficult, land-lost farmers will become a new vulnerable group, and social stability will therefore be affected even more.

Therefore, due to the improper actions of certain local governments, in this sense it can even be said that the urban-rural dual structure has instead formed a protective mechanism for farmers. The development of urban-rural integration and agricultural land transfer must be conceptually centered on rural areas, changing passive coercion into farmers' active choice.

Safeguarding Farmers' Land Rights Requires New Institutional Arrangements

Rural land is the basic means of livelihood on which farmers depend for survival, and also an important means of production for rural economic and social development. For a long time, China's rural areas have faced the coexisting contradictions of too many people and too little land and low land utilization rates. Accelerating rural land transfer is an important way to alleviate the contradiction of too many people and too little land and to efficiently use limited land resources. It can both optimize land resource allocation, promote large-scale rural land operation, and effectively improve land utilization, and also enable rational rural land transfer, promote agricultural industrial structure adjustment, and advance agricultural industrialization. Therefore, in China's urban-rural integration process, realizing farmers' land transfer is an inevitable trend.

It should be emphasized even more that land transfer is a lawful right of farmers. The Third Plenary Session of the 18th Central Committee proposed to "adhere to collective ownership of rural land, safeguard farmers' land contracting and management rights in accordance with the law, and develop and strengthen the collective economy. Stabilize rural land contracting relationships and keep them unchanged for the long term. On the premise of adhering to and improving the strictest cultivated land protection system, grant farmers the rights to possess, use, benefit from, and transfer contracted land, and to mortgage and guarantee contracting and management rights, and allow farmers to use contracting and management rights as shares to develop agricultural industrialized operations," granting farmers the right to freely transfer agricultural land.

It should be noted that while land transfer brings benefits to agricultural land operation and agricultural development, it objectively also leaves some farmers with no land to farm. In the urban-rural integration process, sufficient attention should be paid to the future social security problems of this group. Top-level institutional design can absolutely ensure that cultivated land is not lost or that capital cannot excessively merge land, so as to safeguard land-lost farmers' right to survival while achieving moderate-scale operation of agricultural land. To this end, it is necessary not only to eliminate existing unreasonable institutions and solve problems of unfairness and impropriety in certain institutions, but also to carry out some institutional innovations to solve problems of weakness and ineffectiveness in certain institutions; it is necessary not only to realize and safeguard farmers' economic equality and rights and interests, but also to realize and safeguard farmers' political equality and rights and interests.

First, in agricultural land requisition, reform and implement the agricultural land requisition system and effectively guarantee farmers' interests. Further improve the land requisition system, clarify the scope of land requisition, standardize land requisition procedures, adjust income distribution, and promptly implement land requisition compensation, personnel resettlement policies and follow-up supporting safeguard measures under lawful and voluntary conditions, so that farmers do not become "unemployed" after losing their land. Avoid illegal acts such as forced requisition and forced demolition that infringe on farmers' rights and interests, and reduce social conflicts. The Third Plenary Session of the 18th Central Committee proposed to "narrow the scope of land requisition, standardize land requisition procedures, and improve reasonable, standardized and diversified safeguard mechanisms for requisitioned farmers. Expand the scope of paid use of state-owned land and reduce allocation of land for non-public-interest uses. Establish a land value-added income distribution mechanism that takes into account the state, collectives and individuals, and reasonably increase individual income," which is a policy effort in this direction.

Second, the issue of agricultural land transfer must fully take into account farmers' actual needs. For example, for farmers preparing to enter cities, they welcome free land transfer or requisition. For such farmers, what matters is that after giving up their farmer status they can settle in cities and towns, enjoy social security, and have stable work to maintain their livelihood and live and work in peace and contentment. Otherwise, if they can neither enjoy urban population treatment nor return home to find their land lost and housing gone, they will absolutely not take this path. Therefore, if not forced, they are unwilling to give up land and prefer to retain land as a retreat and insurance; only when they truly obtain urban social security might they give up rural land. It can thus be seen that for land transfer, only when institutional safeguard arrangements are made can it become farmers' rational choice.

For farmers preparing to engage in large-scale agricultural land operation, they undoubtedly hope to obtain more transferred agricultural land and do not want agricultural land to flow into the hands of people from other villages, especially urban capital. If there are no restrictions on the recipients of agricultural land transfer, they simply cannot compete with urban capital, which clearly has stronger bidding power. As more agricultural land flows to urban capital, their operation scale will not only fail to expand; on the contrary, their operating situation will likely worsen. Therefore, institutional regulation of free agricultural land transfer is needed, restricting free transfer transactions of agricultural land to anyone, in order to protect the interests of farmers who genuinely intend to engage in large-scale operation. It can thus be seen that for land transfer, institutional regulatory arrangements are needed for it to become farmers' rational choice.

Finally, from the current perspective, the fundamental measure to solve the problem of agricultural land transfer is to eliminate the differential treatment of urban and rural residents in housing, employment, social security, education, medical care, taxation, finance and other aspects attached to household registration, and realize the unification of urban and rural policies and fairness of institutions. Specifically, it is necessary to further deepen household registration system reform, guide the rational transfer of rural surplus labor, and improve management of the transferred population; gradually unify urban and rural labor markets so that urban and rural workers enjoy equal employment; accelerate urbanization, so that agricultural population with stable occupation and residence in cities can register locally for household registration, enjoy the rights due to local residents and assume due obligations; and promote the integration of urban and rural social security systems, unify pension, unemployment and medical insurance for urban and rural residents, and relieve farmers of worries about entering cities.