China to Allow Land Leasing, Transfer

Farmers in Hubei province gather bok choy. China's farmers own their own produce, but land is collectively owned.
Farmers in Hubei province gather bok choy. China's farmers own their own produce, but land is collectively owned. (By China Photos Via Getty Images)
By Maureen Fan
Washington Post Foreign Service
Monday, October 20, 2008

BEIJING, Oct. 19 -- China's Communist Party issued new rules on Sunday that would allow farmers to lease their contracted farmland or transfer their land-use rights, an important part of a land reform effort intended to double rural incomes by 2020, the official New China News Agency said.

The decision published Sunday was approved a week ago at a four-day session on rural reform aimed at tackling the growing urban-rural wealth gap that increasingly threatens the party's legitimacy.

There are thousands of protests in the countryside every year, often over land grabs or a lack of compensation. Even in some cities in central and western China, nearly 80 percent of new land projects are illegal, a survey by the Land and Resources Ministry showed last year.

Although China's 800 million farmers own their produce, farmland in China is still collectively owned and parceled out in 30-year leasing contracts. Allowing the transfer of land-use rights is a major step toward privatization.

"The new measures adopted are seen by economists as a major breakthrough in land reforms initiated by late leader Deng Xiaoping 30 years ago, which will avail farmers of opportunities to conduct scale management and new business operations," the New China News Agency said.

Markets for land leasing and rights transfer will be set up to allow farmers to subcontract, exchange and swap their rights, the agency said. All transfers of land-use rights must be voluntary, with adequate payment.

"Before, the land belonged to the country, so local officials could always take it away very easily," said Dang Guoying, a researcher with the Institute of Rural Development at the Chinese Academy of Social Sciences.

Land transfers have occurred but were not common, Dang said. "There was no article in the law about transfers, so the rights of the contract holders were not well protected," Dang said. "The law needs to be very practical so it can be enforced. Can farmers transfer to companies in cities? What percent of their land?"

Xu Xiaoqing of the Development Research Center, which operates under the State Council, China's cabinet, said there was a difference between farmers swapping plots, which already happens, and farmers selling to real estate developers.

"When it comes to the transfer of land for business development, there are always problems," Xu said. "The core significance of the document is it tries to regulate and protect farmland more strictly than before."

The document also provides guidance for setting up a modern rural financial system, the news agency said. Officials plan to lower the threshold for establishing rural financial institutions, steer more credit and investment funds to rural development and direct banks in rural areas to lend new deposits primarily to local farmers, the document said.

Researcher Zhang Jie contributed to this report.

© 2008 The Washington Post Company