Easing of farmland controls considered

Beijing looks at ending state's monopoly on acquisition of land for development

Beijing is considering ending the government's monopoly on sales of farmland, a top rural policymaker said yesterday, amid increasing unrest in the countryside.

But Chen Xiwen warned authorities would not relinquish their sole right to acquire and convert farmland to non-agricultural use unless an effective way was found to preserve the size of farmland if controls were relaxed.

'Eventually, we have to propose land acquisition reform gradually,' said Mr Chen, vice-minister of the Office of the Central Leading Group on Financial and Economic Affairs.

'The crux here is whether the state should monopolise the acquisition of land for development, meaning the state first acquires the land and provides it to the developers,' Mr Chen said.

'The problem is whether collectively owned rural land can enter the property market directly.'

China's farmland is 'collectively' owned by grassroots bodies such as village committees.

According to the Land Management Law that came into effect in 1999, the government has a monopoly on acquiring and converting farmland for non-agricultural use, and there is no direct contact between farmers and developers during land transactions.

Rural land is acquired by local governments from village committees and then leased to developers. In many cases, village officials keep most of the profits and pay low compensation to farmers, leading to unrest and even violent clashes between farmers and local officials.

Research has also found that the living standards of displaced farmers usually fall after their land is taken away.

Mr Chen's remarks represent the first official statement that Beijing is looking for ways to reform land policy.

They also coincide with the release of a two-year study by a State Council think-tank which calls for an end to the government monopoly on rural land acquisitions, and unification of the rural and urban land markets.

According to the study carried in the latest issue of Caijing magazine, sales of rural land have become the most important source of income for many local governments to finance urban infrastructure.

The report, based on studies in nine provinces, said many cities had set up 'land reserve centres' for stocking up pockets of farmland to be sold to property developers for huge profits.

Many local governments also used land contracts as collateral to extend bank loans, exposing them to huge financial risks.

The report suggested that the rural and urban land markets be unified and rural collectives be allowed to sell land directly for industrial use.

Mr Chen cautioned yesterday that farmland could be depleted rapidly if farmers and rural collectives were allowed to participate directly in the property market.

For the time being, the government would only stick to the suggestions outlined in a rural development blueprint issued on Tuesday to provide social security and job training to displaced farmers in order to help them to adapt to new lives, he said.

Mr Chen denied land disputes were on the rise and said there were fewer protests by farmers over land disputes last year than in 2004. However, he would not give specific figures.

Nonetheless, he acknowledged land disputes had become a key cause of instability in 'some areas' and that making officials adhere to the law in the process of land acquisitions remained a difficult task.

Meanwhile, Mr Chen said the document on building a 'new socialist countryside', a keynote document for rural development, required local officials to report debts incurred by rural governments.

He said the central government would consider ways to resolve the growing problem after it determined the total figure incurred.