Proposal on land reform in China
Barun Mitra
Proposal on land reform in China
SIFL Institute, Shanghai
SIFL Weely Report, Aug 26, 2014
Even after the Decision of the Third Plenary Session of the 18th Communist Party of China has been published, the arguing of land reform is still heating. Central government, together with relevant departments, is at present drawing up plans for land reform. However, understanding of the Decision from different circles still diverges. Therefore, some experts have sent a Proposal on Land Reform to the Policy Research Office of CPC Central Committee, urging to advance the market reform of land resource allocation. The executive president of SIFL Institute Fu Weigang is one of the experts.
Reform the land use regulation system:
Nowadays, it is still controversial on land reform related questions such as “ should market play a decisive role in land resource allocation”, “the position of land use regulation”, “the ownership of land development rights”, “the definition of profit-oriented construction land” and other questions alike.
There are views thought land use regulations instead of the market play the decisive role in land resource allocation. And the land development rights are not belonging to the owner.
In regard of this, the Proposal holds that to establish an open, competitive, unified and ordered land market as well as to make use of the decisive role of the market in resource allocation does not mean that we do not need land use regulation. It indeed means to clarify the boundary between government and the market. It aims to limit the function of the land use regulation within the scope of correcting market failures, instead of using such regulation to displace or hinder the function of the market allocation.
China’s current land use plan and land use regulation system is in nature a kind of planned allocation- the use of each land is determined by the plan. Therefore, all changes in land use are subject to administrative approval and as for collective land, it should first has a quota, get approval and then be under the ownership of the state before it can be put into the market.
Although land use regulation is also prevailing in western countries, it has different connotations at home and abroad. In the West, there is no mandatory plan quota for land use. These countries all implement zoning management system. There is, respectively, a special set of regulations for each region in terms of land use, land size, building density and building type. And all these regulations are just collectively a “cannot do” list of the land use without detailing the use of each specific land. Under this “cannot do” list, the owner of the land still has considerable flexibility in terms of construction. Moreover, as a correction of the rigid land zoning and strict building use limits in previous years, there is more tolerance of the mixed use of land as well as mixed use of buildings in the new regulation.
The Proposal also states that the function of the government should be transferred: government should not continue to monopolize land supply. It should not continue to allocate land resource or decide the land use by mandatory planned quota. The total amount of the profit-oriented lands and their composition should be dynamically adjusted in accordance with the progress of industrialization and urbanization. Also, government shall not be a direct land operator. The land enclosure right and land pricing right of the government shall be called off. Because the land price should be determined by the market itself. And then we can talk about establishing an open, competitive, unified and ordered land market.
In terms of plan formulation, the Proposal suggests that we should learn from the western mode, converting planned control to public participating planning. Plan should not be the basic allocator of land resource, but be the director and regulator of the land market allocation. As for zoning, it is necessary to borrow the zoning system implemented by countries of market economy. The zoning system is targeted mainly at the negative externalities. It can raise the economic, social as well as ecological efficiency of land use. And moreover, through certain procedures, zoning and zoning regulations should also be adjusted in accordance with the market demand.
Expand the scope of collective profit-oriented lands which are allowed to be put into the market:
The Decision points out that:” we should establish a unified urban-rural market of construction land. Allow the sale, leasing and demutualization of rural, collectively owned profit-oriented land under the premise that it conforms to planning. Rural profit-oriented lands enjoy same market access, same rights and same price as those of the state-owned lands.” Some opinions also argue that only the previous township enterprise lands can be regarded as profit-oriented lands.
In response of this, the Proposal noted that the so called previous township enterprise lands only account for 10% of the rural collective construction lands, which are in total 165,000 m2. With the speeding up of the industrialization, urbanization and new rural construction, the composition of the rural collective construction lands has gone through huge changes. Therefore, we should dynamically adjust our definition of profit-oriented construction lands in accordance with the requirements of the new-type urbanization. The Proposal, additionally, raises the question that if we limit the rural lands which can be put into the market within the lands of the previous township and village-owned enterprises, then how can we establish an urban-rural construction land market which is “unified, open, competitive and ordered”?
Besides, the Decision also indicates that “Farmers will be given more property rights. The homestead system in rural areas will be improved, and farmers' usufruct rights of homestead will be ensured. A pilot program will be carried out in some areas to discover other channels for improving farmers' income. A rural property-rights trading market will be established.” Some opinions thought famers only have the right to use the homestead, and only the house built on the homestead can be deemed as their private property while the homestead should be regarded as collectively owned. Because of this, the homestead of farmers should not be used for mortgage, guarantee and transfer.
However, the Proposal has the opposite opinion. It suggests that China’s rural homestead accounts for 70% of the collective construction lands. It is one of the main forms of famers’ property. If collective land does not equally enjoy the same use right of legal construction land as the state-owned land, and the homestead could not be lent, transferred or mortgaged.
Legislation should go first:
The Proposal advise that we should carefully choose right breakthrough points for land reform and well arrange the sequence of each reform thus to map out a route map and timetable for the reform.
President Xi Jinping has pointed out that all major reforms should rely on laws. Hence, the Proposal believes that the most urgent thing is to carry out the law amendment work on land related laws such as Land Management Law and other law formulation work which is related to land reform thus to make reform policies legal.
Take the reform of allowing collective lands into the market for instance. The underground market for rural collective construction lands (including homestead) has been existed for 30 years; the pilot transfer of collective construction lands initiated by government has also been spreading in 22 provinces with 20 years practical experience. Guangdong and other 5 provinces with 20 cities and counties have already had local transfer regulations of collective construction lands. However, for now, each place has their own method, with their own merits and shortages. As long as we study into the reality, summarize by the theory of market economy, we could successfully conclude a legal system for collective construction lands to enter into the market.