Wen Jiabao

Wen's land pledge gives farmers hope

PUBLISHED : Tuesday, 17 January, 2012, 12:00am
UPDATED : Tuesday, 17 January, 2012, 12:00am


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Mainland farmers' hopes were raised when Premier Wen Jiabao vowed to let them benefit more from land sales, saying that China had 'lowered the costs of industrialisation and urbanisation by sacrificing farmers' rights to land'.

Speaking at last month's National Rural Work Conference - details of which were only published in the Communist Party journal Qiushi yesterday - Wen listed reforming collective-land requisitioning in rural areas as a major task. He said the government should respect and protect farmers' property rights, especially rights to land, and allow them to use the rights as they wished when they left for cities.

'This administration should work out regulations regarding reform on this issue,' the premier said in the article, which was a speech he made at the conference.

Wen promised that regulations aimed at increasing farmers' share of profits from the sale and development of rural land would be issued this year.

Local governments have been requisitioning rural land cheaply in recent years before selling it on to developers at great profit, triggering conflicts.

Analysts say the root of the problem is that farmers do not own their land.

Since 1956, rural collectivities - a vague concept that can be interpreted either as all the people in a small village or all the farmers in a large province - have owned the land, not farm households. The system, which allows farmers to farm their share of land but bans them from using it in other ways, such as trading or mortgaging it, has remained untouched for decades despite reform of other sectors of the economy.

Professor Peng Zhenhuai, director of Peking University's Institute of Local Government and a keen observer of rural issues, said it was the primary cause of rural poverty today.

'Overall, 85 per cent of China's fortune is from increasing property values, but for farmers, this portion is just 3.8 per cent,' he said.

Only when farmers had complete rights to land could they take full advantage of it, he said, making large-scale farming possible.

Professor Li Yining, a prominent economist, said the top rural priority was to give farmers property rights to their land and their houses.

'We encourage farmers to go to cities or start their own businesses, but where is the money for this? They have nothing to mortgage,' he told China Real Estate Business.

Despite the urging of many, Beijing had refused to talk about privatising land in rural areas because of fears it would shake the country's socialist foundations, Peng said.

But it was possible to improve the current system in that direction, and Wen's recent promise at the conference was a good sign, he said.

Wang Xiaoying, a researcher at the Chinese Academy of Social Sciences' Rural Development Institute, said changes were being made in the way rural land was treated, although authorities were reluctant to use the word 'privatisation'.

In Chongqing, farmers have been allowed to mortgage their farmland, houses and trees in collective forests when applying for bank loans since October.

Huang Qifan, mayor of the municipality, told an economic forum last month that the biggest problem facing farmers was that they did not have property rights.

To solve this problem, the Chongqing government had included farmers' rights to use the land as a property right under the Property Law and made mortgages on land possible.

'In 2010, each Chinese farmer earned an average of more than 5,000 yuan (HK$6,150). Only 3 per cent of this is income from property,' Huang said. 'Farmers are incapable of finding financing.'

Farmers in Chongqing had previously only taken out bank loans worth about 3 billion yuan, Huang said, but that had risen to 18 billion yuan because of the reform. Lending to farmers was still a risky business for banks, Huang said, because government regulations kept the value of farmland low by prohibiting its use for anything but farming in the case of foreclosure.