Haining breaks new ground in land reform

Farmers in Zhejiang city likely to be allowed soon to sell houses to developers or urban residents freely, in line with urbanisation drive

PUBLISHED : Monday, 23 September, 2013, 12:00am
UPDATED : Monday, 23 September, 2013, 2:58pm

Haining, a county-level city in Zhejiang province, has been designated as a pilot city to implement a reform that would encourage sales of collectively owned rural land. The trial is in compliance with Premier Li Keqiang's goal of moving more mainlanders into cities.

The city, about 130 kilometres west of Shanghai, is awaiting final approval to promulgate a series of "groundbreaking" policies, which officials described as a "powerful weapon" to spur economic growth.

According to officials with knowledge of the reform, rural land for residential use in Haining would hit the property market, an unprecedented move on the mainland since 1949.

Rural land ownership reform is aimed at commercialising the so-called minor property right - a kind of land right obtainable by rural residents.

Under existing laws, urban residents are barred from buying residential properties in rural districts where the land is collectively owned by farmers in the villages.

Theoretically, the villas and houses built on the rural land are not marketable owing to the land's collective ownership nature.

The government has been considering a major reform for the past decade to make the most of rural land, but the former leaders were reluctant to take a significant step forward.

Some local authorities have expropriated such land to sell to developers or manufacturers for construction and industrial projects while relocating the farmers.

Haining had proposed the reform measures to the provincial government and was likely to receive the go-ahead soon, the city's Communist Party chief Lin Yi told a forum recently.

The city's economic planning agency would not disclose details about the reform, but it is understood that initially farmers at a limited number of villages would be allowed to sell houses to developers or urban residents freely.

"This will be a drastic reform in the country since there are no established models to follow," said an official with the agency, who asked not to be identified. "Haining understands there's a long way to go before it can claim success of the reform."

Haining, with a population of nearly 700,000 and known for its leather industry, covers an area of about 700 square kilometres, or about the size of Singapore. Singapore has a population of about 5.3 million.

Allowing farmers to sell their houses based on the minor property right would enable them to collect enough cash to move to cities.

The liberalisation could also be of benefit to a recovery in land prices with market forces playing the dominant role in setting prices for the rural land.

It will eventually bolster the mainland's urbanisation drive strongly advocated by Premier Li.

Zhou Qiren, a professor with the National School of Development at Peking University, said the mainland had a total of 164,000 square kilometres of rural land for farmers' residential use, providing a vast market for developers and urban residents to tap.

He said in a commentary published on the Economic Observer that commercialising the minor property right would be a great reform that would have a huge impact on the country's economic and socialist systems.

Indeed, anecdotal evidence showed that an increasing number of urban residents, balking at the lofty housing prices in cities, were considering relocating to the countryside because of the lower prices there.

If the reform on rural land were to expand nationwide, it would largely bolster transactions on home ownership and help the country better allocate land for mainlanders, economists said.