Old Version

Extended Lease

Analysts hope extending rural land leases for an additional 30 years will bolster the rural economy and provide certainty for farmers

By NewsChina Updated Dec.1


One of the main rural policy takeaways from the 19th National Congress of the Communist Party of China (CPC) in October 2017 was a decision to reform rural land contracts that includes extending their terms for 30 years.  

Chinese President Xi Jinping pledged that his government would pursue a rural revitalization strategy to boost farmers’ confidence and certainty. He said the government will consolidate and reform the rural land management system, and separate ownership rights, contract rights and management rights. 

Rural land contracting practices will not change in the long term, he said, adding that the current round of contracts will be extended for another 30 years upon expiration. Most of the leases are due to expire in 2027.  

A draft revision of the Rural Land Contract Law was recently submitted for review to the Standing Committee of the National People’s Congress, China’s top legislative body.  

In an exclusive interview with NewsChina, Liu Shouying, an economics professor at the Renmin University of China and former deputy director of the Rural Economy Institute under the Development Research Center of the State Council, discusses the reforms and the current round of rural land contract extensions. 

NewsChina: How will the current round of land lease extensions be rolled out? 
Liu Shouying: First we should clarify China’s rural land policy, as it currently stands. From the founding of the People’s Republic of China in 1949 up to this day, China’s rural land policy has gone through three phases. During the first phase, China implemented the “land to the tiller” principle which saw the abolition of private ownership of land by feudal landlords, and gave hundreds of millions of rural farmers their own plots of land. During the second phase, which began in 1953, the CPC moved land policy in rural areas away from individual to collective land ownership. In the third phase, the household responsibility system (HRS) – a rural land contracting system – was initiated when land use rights were separated from land ownership to enhance agricultural productivity and maintain the basic stability of rural society. 

Since the HRS was introduced, it has gone through several phases: a ban before February 1979, a relaxation from March 1979 to February 1980, approval within a small circle from March 1980 to November 1981, and formal policy promotion from January 1982. In the six years to 1983, rural land contracts created a powerful incentive for the vast number of Chinese people who live in rural areas.  

Until 1984, rural households could only lease land for two or three years. In 1984, the Chinese central government proposed a 15-year contract term for farmers, and in 1993, extensions were granted for another 30 years, projecting forward to the late 2020s. In March 2003, China implemented the Rural Land Contract Law, which stipulated, “The term of a farmland contract is 30 years, grasslands 30 to 50 years, and forests 30 to 70 years.”  

From a policy perspective, the central government was very cautious, knowing contract terms were highly sensitive to rural people who were concerned that a sudden policy change could leave them empty-handed. This recent land lease extension aims to provide reassurance for China’s half a billion rural residents. 

NC: Some say the rural land contracts should have no term limit, or be extended to 50 or even 70 years. What do you think? 

LSY: This has generated heated debate in academia over the years, where some have argued a steady and consistent rural policy will give farmers a sense of security and more confidence in their rights. The idea was proposed in 2008, and the discussion went on until 2013. 

In my view, the best policy would have no time limit, and the longer the land contract terms, the better. Failing that, a limit of 50 or 70 years allows many factors to be considered.  

Some scholars have argued that if there were no limit on contract terms, rural people would be placed in a state of greater anxiety against the backdrop of the current collective ownership of farmland. They worry that the government may at any moment expropriate their land. Scholars also worry that it could result in the privatization of farmland.  

These worries have had a profoundly negative impact on rural society. Permanent contracts are aimed at maintaining stability, but could have the opposite effect.  
We have doubled the 15-year time limit to 30 years, and the new policy follows a logical line of 30 years. In addition, there is no legal or academic basis to extend the contract for 60 years. 

According to the Rural Land Contract Law that was implemented in March 2003, rural land contracts can last for up to 30 years. The National People’s Congress made a judicial interpretation that the contract should be “stable for at least 30 years,” which reflects the determination of China’s top legislature. 

NC: What are the main rights of farmers within the terms of a land contract? 

LSY: Contract terms are only one facet of the rural policy changes. Perhaps more important are the land rights of farmers, which involve earnings, transference, mortgages, and inheritance. A well-designed system provides a complete set of rights. The more complete this set, the more reliable the system. Without them, farmers would not trust a policy, even if it guaranteed them 100-year leases.  

Today, farmers can use, profit from, and transfer rural land they have contracted, and mortgage the operating rights. These rights are as important as the contract term. When farmers settle in a city, their right to transfer land needs to be protected, which is the goal of rural property rights reform. 

NC: How can farmers protect their rights within the terms of a land contract? 

LSY: Problems with the infringement of farmers’ land rights are sure to eventuate. Some local governments will try to cash in on rural land in the name of collective development. This is an abuse of private rights by government.  

You often see village heads transfer rural land on behalf of farmers. Because of the relatively short length of contracts, farmers tend to have low legal awareness of rural land property rights, and many of them are indifferent to the circulation of their contracted land, leading them to lose it. 
What’s more, inequality has abounded during the collective recovery of rural land. Chinese law stipulates that when a woman marries elsewhere, any land contracts she holds should not be voided if she is unable to contract land in her new place of residence. But this stipulation is often ignored. Some married women demand a land contract in their new place of residence while retaining contracted land in their hometowns, which can form the basis for a legal challenge. All these problems stem from the short term of land contracts, as well as misconceptions about land contracts and management rights by both farmers and local officials.
Many of the problems that arise in rural land expropriations involve the term of the land contract. Land acquisition compensation is closely linked to the term of the land contract. If contracts are due to expire in 20 years, the compensation is calculated on that basis. According to the law, however, it is illegal to tie compensation to the term of the contract. Compensation should instead be based on the annual output of the farmland most – and should not exceed 30 times this. This is sometimes deliberately confounded with the 30-year contract term, misleading the public.
It is crucial to restrict public power in order to protect the rights of farmers and to prevent the abolition of rural land contracting rights in the name of collective ownership.