China

Farmers to have financial rights over land

Article published on the 2008-10-12 Latest update 2008-10-12 13:23 TU

A farmer in Qinyuan county, Shanxi province
(Photo: Reuters)

In a major economic reform designed to improve the country’s food security, the Chinese government passed a plan to allow farmers to trade and mortgage land rights. This is part a larger reform plan aimed at reducing the income gap between the rich and poor which has grown in the last three decades.

“At the moment if you have land in rural areas you can have a lease on that land and you can farm it, but you can’t use that land, can’t trade that land, can’t borrow against it. In other words, you can’t raise capital out of it,” correspondent Richard McGregor told RFI, explaining the reforms.

“[This] really has put people in rural areas at a great disadvantage to people in city areas where there is now a private property system. And essentially they are trying to consider changing that, and if they do change that it will have major ramifications for the Chinese economy and Chinese society.”

A communiqué, carried by the state-run Xinhua news agency, did not give specific details about the reform plan, but the final statement of the meeting that approved it called for an end to rural poverty, and doubling China’s rural per capital income by 2020 (currently at 4,140 yuan, or 455 euros).

"The issues facing agriculture, rural areas and farmers are linked to the overall task of development facing our party and state," said the communiqué.

The reform could help China develop bigger – and more productive –farms, says McGregor, by allowing farmers to aggregate land.

“At the moment China has very small farms, mainly single plot farms, which sort of inhibits the development of a larger agribusiness,” he said.

Industrial farm is seen as the only way China will be able to remain self-sufficient in grain and keep feeding its 1.3 billion people.

But opposition in China is coming from people concerned about land security.

“Many people are concerned that once people leave the land… they will have nothing to go back to,” explained McGregor. “The fact that they keep their land, even if they can’t gain any value from it, has always been considered the ultimate form of social security for 500 million people.”

“There’s a lot of opposition of privatising rural land because they’re afraid that wheelers and dealers will get a hold of it and they will have nothing left,” he continued.

The reforms are likely to start on an experimental basis, said McGregor, as many reforms tend to do.