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By Ye Xingqing, Research Department of Rural Economy of DRC

Research Report, No.202, 2013 (Total 4451)

During an inspection tour in Hubei province in July 2013 on how to comprehensively deepen reform, General Secretary Xi Jinping stressed the issue of a proper handling of the relations between rural land property right, farmers' contracting right and farmers' management right related to the deepening of rural reform and the improvement of rural basic management system. It is held that over the past 30 years and more, it is necessary and proper to shift the focus from agricultural land ownership to farmers' contracting management right in the process of stabilizing and improving rural basic management system so as to protect the interests of land contractors, promote agricultural development and maintain stability in rural areas. Nevertheless, with the transfer of rural population, there is a tendency towards the separation between contractors and operators and thus it is imperative to adjust and perfect the rural land tenure structure. In this regard, we suggest improving the rural land system within the guidelines of respecting collective ownership, defining farmers' contracting right and safeguarding farmers' management right in a bid to adapt to new requirements of promoting urbanization and developing modern agriculture.

I. Historical Process of the Shift from Agricultural Land Property Right to Farmers' Contracting and Management Right

Xiaogang village in Fengyang county, Anhui province took the initiative to implement the all-round contract responsibility system in 1978 and 97.8% of rural basic accounting units applied the household contract system by the end of 1983. In just a few years, China developed the household contract responsibility system which combined unified management with decentralized management and featured by household-based contract system with remuneration linked to output. Under such a system, the collective land ownership boasted the following rights, including: first, the land contract-awarding right, according to which farmers' laborers were confined to contracted land and the collective economic organizations retained a certain proportion of reserved land; second, production and management planning right: according to which the collectives economic organizations pressed ahead with the plan for planting and unified purchasing grain and other staple agricultural products by state quotas; third, unified management right: according to which the collectives economic organizations fulfilled the overall plan including a unified job in plowing, irrigation, plant protection, epidemic prevention, seed production and breeding at the request of commune members; and fourth, income distribution rights, according to which farmers should reserve adequate agricultural products for the collective economic organizations when disposing of agricultural products. In other words, farmers only had limited rights related to autonomy of production and management such as labor time and the disposal of remaining production and management income at their own will other than those for state and the collective economic organizations.

Since 1984, the Chinese government has shifted the focus of four fundamental rights related to possession, use, income and disposal of agricultural land from collective ownership to farmer contracting management right (early called autonomy of production and management, land use right, land contract right and contracted land use right and termed as land contract and management right in 1999) and the general trend was to reduce the right and function of the collective ownership and give more rights to and expand the function of household contract management. As a result, more rights related to agricultural land use were transferred from the collective economic organizations to contractors.

In terms of agricultural land tenure, related documents and laws issued by the central government repeatedly stressed that the collective economic organizations should not recover or adjust contracted land against farmer's wishes. In 1997, the central government made it clear that the collective economic organizations should retain no more than 5% of reserved land in the second-round of contract renewal project, clean up and rectify the "two-field system" (egalitarian subsistence land distribution and bid contracting for responsibility land bid contracting) and ban reverse rent by inverse contract (the collectives economic organizations leased land from farmers and contracted it at a high price to some other farmers and external operators). To defend farmers' contracting management rights, the central government took a series of vital steps. For instance, No.1 Document issued by the central government in 1984 proposed that land should be contracted for over 15 years; No.11 Document issued by the central government in 1993 proposed extending contract term for another 30 years after expiry and advocated unchanged land irrespective of changes in household size during the term of contract; the Law of the People's Republic of China on Land Contract in Rural Areas provided in 2003 that the households that had settled down in small cities and towns should not return contracted land; the Third Plenary Session of the 17th CPC Central Committee proposed in 2008 that existing land contract relations should remain stable and unchanged for a long period of time; the General Office of the State Council issued the document in 2011 related to reform of household registration system and proposed that the households that had settled down in any cities and towns should not return contracted land.

In terms of agricultural land use right, the collective economic organizations ceased directly using agricultural land for agricultural production after the all-round contract responsibility system was implemented and related central documents and relevant laws and regulations repeatedly stressed that the collective economic organizations should not intervene in contractors' legal production and business activities. To maintain the households' status as independent market players, No.1 Central Document stipulated in 1985 that the administrative or productive units should not issue any mandatory production plan to farmers and the Law of the People's Republic of China on Land Contract in Rural Areas issued in 2003 provided that contractors were entitled to self-organized production and management as sell as the disposal of agricultural products.

In terms of agricultural land income right, rural tax reform was carried out to abolish fees paid by farmers for overall township planning and village reserve and in other words, the collective economic organizations were deprived of the right to charge land contract fees from farmers. Consequently, contractors gained more income rights related to farmland. Specifically, farmers were allowed to retain the remaining production and management incomes other than parts for the state and the collective at their own disposal and derived incomes from agricultural production and management after the all-round contract responsibility system was implemented. In 1984, households that transferred contracted land were permitted to purchase a certain amount of bargain grain from those to which contracted land was transferred, the transfer of contracted land with compensation was repetitively emphasized and contractors could derive incomes from agricultural land transfer. In 2004, direct subsidies to agriculture were granted to contractors who were offered an opportunity to derive incomes from state subsidy polices.

In terms of agricultural land disposal right, related policies，laws and regulations repeatedly stressed that the collective economic organizations should not force farmers to transfer contracted land. Although the Property Law of the People's Republic of China promulgated in 2007 failed to clearly include disposal right in land contract and management right, contractors partially gained disposal right including agricultural land transfer through various means. In 1984, No.1 Central Document proposed that farmers were allowed to self-subcontract their contracted land through negotiations. In 2003, the Law of the People's Republic of China on Land Contract in Rural Areas provided that land contract and management right gained through household contract could be transferred by means of subcontract, lease, exchange, transfer or otherwise in line with relevant laws and regulations. The Property Law of the People's Republic of China promulgated in 2007 provided that contractors had the right to transfer land contract and management right by means of subcontract, exchange and transfer or otherwise. In 2008, the Third Plenary Session of the 17th CPC Central Committee passed the Decision of Some Major Issues of CPC Central Committee on Propelling Rural Reform and Development and put forward the new circulation mode of shareholding cooperation, thereby contractors were enabled to enjoy more means to exercise the agricultural land disposal right .

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The article was published in China Development Review, No 1, 2014.

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