China's Central Government Moves to Take Back Leased Rural Land

The ruling party has also ordered local governments to deposit the proceeds of land sales in central government coffers.
By Qiao Long and Chingman
China's Central Government Moves to Take Back Leased Rural Land Farmers plant rice in a paddy in Haian, in China's eastern Jiangsu province, June 22, 2021.

The ruling Chinese Communist Party (CCP) is moving to strengthen central control over the country's land, setting up a scheme to allow farmers to be bought out of household responsibility leases set up in the post-Mao Zedong era and requiring the proceeds of land sales to be paid into central government coffers.

Under CCP general secretary Xi Jinping, the government intends to "deepen rural reforms" by rolling out pilot schemes under which rural residents who move into urban areas can have their contracts to farm land back home terminated.

Under a policy first unveiled in Central Policy Document No. 1 in 2016, local governments in the pilot areas are required to "support and guide farmers to transfer [land] rights in accordance with the law and with compensation," the ministry of agriculture said in an Aug. 27 directive published on its website.

"Some counties, cities and districts in Shanghai, Shandong, Ningxia, Hubei and other provinces, autonomous regions and municipalities [are being authorized] to carry out pilot projects for the withdrawal of contracted rural land," the directive said.

"Whether the pilot experience in those areas can be rolled out on a larger scale requires in-depth research," it said.

Jiangsu-based commentator Zhang Jianping said the "household responsibility" system, which typically signed leases of 30 years with farming families, was brought in by late supreme leader Deng Xiaoping in 1978, to enable farmers to sell off excess produce at local markets, for a profit.

He said the insistence by the ministry of agriculture that the return of land to state hands would be "voluntary" was unlikely to be implemented in reality.

"This insistence that it will be voluntary ... is very scary," Zhang told RFA. "Nobody in China today believes that our so-called voluntary vaccination program is truly voluntary."


He said the only way to solve the problem of lack of investment in rural areas was to allow full land ownership. Under the CCP, all land ultimately belongs to the state, which sells leases for specified users to land buyers.

But Beijing-based independent commentator Zha Jianguo said the policy is also in keeping with the government's support for increased urbanization of the rural population.

"Urbanization continues to gather pace, and rural residents are more and more likely to go and live in cities now, especially young people," Zha told RFA. "They are less and less willing to go back to rural areas to work the land."

"There is a growing bank of fallow and abandoned land in rural areas, which means that land resources aren't being used to their fullest extent," he said.

But he said the key to the scheme's success would be whether farmers genuinely had a choice, and whether they were compensated.

"The key, of course, lies in the mechanism used to transfer the land," Zha said. "The crucial thing is whether it is voluntary, and whether it is compensated."

"Whether or not people get compensation could vary from place to place."

The move comes after the ministry of finance announced in June 2021 that proceeds from land sales at local level would now be collected by national taxation bureaus, rather than by land and resources bureaus in local governments.

Figures released for 2020 by the finance ministry showed that the sale of land leases generated 8.4 trillion yuan for local governments, out of a total revenue of 10 trillion yuan for local governments nationwide.

Central government control

The change will deprive local governments of a lucrative source of revenue, and strengthen central government control over what they can do, commentators told RFA at the time.

A scholar who gave only the surname Zhang said the move was part of a move to nationalize huge swathes of the economy, including private corporations.

A business owner from Nanjing, who gave only the surname Zhou said Xi had always held recovering revenue from local governments as a policy goal since taking office.

"After he took office, Xi Jinping made his thinking very clear about that. He has always wanted to transfer local fiscal revenues to central government control," Zhou said.

She said that local governments had long taken a huge slice of any wealth generated from the sale of land or from incoming investment. "For example, if a developer invests in an industrial park, then they have to pay back a certain proportion of money to the local government," she said.

Beijing-based commentator Ji Feng said local governments will find other ways to generate revenue.

"In future, maybe they will have to do historic urban reconstruction schemes, which means that more and more demolitions will take place," Ji said.

Translated and edited by Luisetta Mudie.


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