Legacy of China planned economy

China’s new rural reforms will stop short of giving commercial firms free rein to buy land and will focus instead on creating bigger family farms, the country’s top rural official said in remarks published on Thursday.



China last month unveiled its boldest land reforms in decades, officially allowing rural collectively-owned land, a legacy of the planned economy, to be transferred, rented or pooled, but officials have called for caution, telling local governments not to “rush into action”.

Chen Xiwen, head of the Communist Party’s working group on rural affairs, told the official People’s Daily newspaper the land reforms had been “misunderstood”, and that “clear preconditions and restrictions” would govern the reorganization.



The priority for the world’s most populous country is to ensure enough land and rural labor to maintain food security, after decades of industrial encroachment and an exodus of farm workers to the cities. Chen told the People’s Daily the “bottom line” was to ensure agricultural land was not put to industrial or commercial use.



“Commercial firms are encouraged to go to villages (to take over land) that rural families cannot use, or will find it hard to use,” he said. “Those firms are only allowed to do modern farming and livestock breeding, not real estate or tourism.”



Chen had already told a forum last month that the market would not play a “decisive role” in the reforms, with Beijing unwilling to risk reducing China’s ratio of arable land to population, which already rates as the world’s lowest.



To protect the amount of collectively-owned land from further erosion, Beijing will only allow developers to buy and sell leases that have already been earmarked for construction. Leaseholders in some areas had already been allowed to rent out land, and by the end of 2012, 21.2 percent was transferred, in many cases lost to agriculture, government data has shown.The figure reached as much as 80 percent in southern regions where township enterprises have boomed.



China’s last big reform in the early 1980s gave rural households the right to lease collectively-owned land, but farmers have earned only minimal returns from their small plots, forcing millions to try their luck in the cities.



