China’s rural land is vast, vacant — and untradable
Experts call for free trade of rural land to spur growth, ease country-city gap
Under an unassuming WeChat profile, “Baishun Farmer’s Property,” Zhang Ming provides updates on a large and growing market. Through this account, he shares details of new village houses in suburban Shanghai that are up for sale — a real estate listings board, unexceptional in most of the world.
Not so in China. Personal transactions of rural homes are strictly forbidden under the rules of property ownership. But at any given time, Zhang has information on over 400 houses scattered across the outskirts of the metropolis.
“Most of the owners have moved downtown and have no plans to go back, so they need to cash out,” said the property agent.
This grey market has persisted for decades, as a protracted debate has raged over whether urban residents should be allowed to buy rural property.
It has remained a point of contention because of the potential consequences — a loss of agricultural resources for one of the world’s most populous countries and a burning of bridges for the roughly 300 million migrant workers who uproot their lives in the countryside to seek employment in population centers.
But researchers and former officials continue to advocate for the legalization of such transactions, an action which would herald a new era for rural land reform for the country and have profound implications for its future.
China has gone through three rounds of land reform since the founding of the People’s Republic in 1949. The most recent, in 1978, allowed collectively owned land to be contracted by individual households.
Changing the rules on land in the countryside carries particular appeal at this moment due to several urgent economic issues.
An ongoing property market crisis, an urban-rural divide which has blunted plans for revitalization and a lack of suitable options to ensure sustainable growth in the world’s second-largest economy — all are problems which could be tackled, in whole or in part, via the opening of rural land ledgers.
The country recorded gross domestic product growth of 5.2 percent last year — and has set this year’s target for “around 5 percent” — but its post-pandemic recovery has been shaky.
“If rural land is made tradable, I believe it can push the Chinese
How to make use of the property left behind by China’s 300 million migrant workers to stimulate the Chinese economy has
become an issue.
economy back to an annual growth rate of more than 8 percent for over two decades,” said Meng Xiaosu, a retired official who spearheaded China’s property reform policies in the 1990s, at a forum in Jilin province last month.
He said that China’s future lies in equalizing land systems in rural and urban areas and making rural residents rich via their holdings.
Unequal property purchase system
China has two different legal regimes for urban and rural land. All land in urban areas is directly owned by the state and can be leased to businesses and individuals on a contract of 40, 50 or 70 years depending on its use allocation. These automatically renew, thereby granting functional rights similar to private property ownership.
Rural land, however, is owned by village collectives, and can only be traded among members of the same village.
This effectively keeps farmers from selling and buying their land or using it as collateral for loans, limiting their opportunity to raise capital and leading many to move to the cities for work. This has created vast swathes of abandoned land and property in the countryside.
The Chinese government has vowed to reform the rural land system — an object of frequent criticism over its perceived responsibility for income and social welfare gaps between town and country — but progress has remained sluggish.
At a meeting of top officials on improving the land management system last month, President Xi Jinping pledged to allocate more land resources to areas that are more economically developed.
“As for reformative measures that are exploratory but pressing, we should study them thoroughly and promote them prudently,” he said.
Wang Huiyao, founder of the Centre for China and Globalization, a Beijing-based think tank, said that this is a signal for the acceleration of rural land reform.
Rural land reform
“Economic growth was quite fast in the past and people might have not realized its importance, but now we’re slowing down,” he said.
“How to make use of the property left behind by China’s 300 million migrant workers to stimulate the Chinese economy has become an issue,” he added, citing a figure from the National Bureau of Statistics (NBS).
Those workers seek better-paid jobs in the city most of the year, but few have access to city residents’ superior social benefits as welfare systems are tied to the hukou, the national system of household registration.
They also miss out on capital gains from the real estate market due to lack of complete home ownership.
Despite some improvement over recent decades, the annual disposable income of urban households was still 2.4 times that of rural families last year, according to data from the NBS.
Wang said allowing free trade of rural homes will bring many urban residents to the countryside, a behavior encouraged by the government in its campaign for rural revitalization. That initiative was introduced in Xi’s report to the Communist Party’s 19th national congress in 2017.
“This will immediately add vigor to the economy and support highspeed growth in China for another 20 years,” Wang said.
As party secretary of Yuli village in Fengxian district — one of over 100 county-level localities designated by the central government as sites for land reform Jin said the district is not experimenting with allowing urban dwellers to purchase rural homes.
Like Fengxian, most designated counties are making mild changes such as moving villagers to towns and leasing their homesteads to businesses through the village collective for commercial development.
He Xuefeng, dean of Wuhan University’s School of Sociology, said keeping things the way they are means social stability in China’s vast rural expanse.
“The situation today, as President Xi put it, could be one of ‘terrifying waves and stormy seas’,” He said. “So where should farmers go when this occurs?”
Xi has used the phrase repeatedly as a metaphor for the complicated and dangerous environment China faces, with domestic as well as geopolitical challenges.