China’s relaxed land rules could speed up urbanisation, offer economic boost amid coronavirus

The State Council, China’s cabinet, lifts restrictions to allow provinces to use certain farmland for development without prior approval

Guangdong, Zhejiang, Jiangsu Beijing, Tianjin, Shanghai, Anhui, and Chongqing handed extra allowance under one-year trial

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The relaxation of the restrictions could help local government to realise their infrastructure spending plans, with at least 20 provinces having already published details of projects with a combined value of 7.5 trillion yuan (US$1 billion) for 2020. Photo: Xinhua

Published: 7:30pm, 19 Mar 2020Updated: 3:27pm, 20 Mar 2020

China has made a small but significant tweak in its rigid land management system that could accelerate urbanisation, especially in large cities and affluent coastal areas, that could spur urban development in a bid to keep growth on track amid the outbreak.

And while the overall benefits from the change will be largely long term, with significant stress already placed on China’s economy amid the ongoing coronavirus outbreak, it could allow local authorities more flexibility if Beijing opts to turn to state-led capital spending led by infrastructure investment to support growth.

All provinces will now be allowed to use farmland not already classified as “permanent arable land” for development purposes without first obtaining approval the central government, China’s cabinet, the State Council, said last week.

But under a one-year trial, eight rich municipalities and provinces, namely Guangdong, Zhejiang, Jiangsu Beijing, Tianjin, Shanghai, Anhui, and Chongqing, will also be allowed to use “permanent arable land” for development.

The intention, first and foremost, is to improve the efficiency of land uses … and one of the outcomes would be more land supply [for urban development]

Yao Wei

Local authorities, though, are still subject to annual quotas for land use and farmland protection.

While the change only represents a slight relaxation in China’s land use management regime, with major urban development plans still subject to approval by Beijing, analysts believe the change could lead to far-reaching changes to China’s urban development, municipal fiscal situations and the economic landscape.