Under existing laws, rural homes are only tradeable within the same village and cannot be used as collateral for loans – a rule widely believed to have led to wasted resources while hindering farmers from raising capital amid the process of urbanisation.
And while it was ambiguous and will need to be laid out later in legislation, the pledge represents an important policy decision in breaking down limitations to the use of rural property, which on paper is owned by village collectives and only meant to serve as farmers’ current residence, according to Zheng Linyi, a researcher with the China Academy for Rural Development at Zhejiang University.
They said rural homes can be utilised in multiple ways, which I believe is big progress
Calling it a “very valuable” proposal, he said it not only opened the door for rural homes to be used for commercial purposes, it also covered all rural residents instead of just those who have left to work in the cities.
“This is quite a big breakthrough,” Zheng said. “I hope it will transform from the party’s decision to a state policy and be reflected in law.”
Local authorities have launched a series of experiments in reforming the rural land system over the past decades, allowing transactions and the use of property as collateral within small scopes, but none of the trials have been expanded nationally.
These included a widely lauded pilot scheme called the land-coupon system, which was introduced in Chongqing municipality in 2008. A land coupon represents entitlements granted by the government that allow holders to lease land for development purposes, and coupons may be traded or sold among developers and investors, thus increasing the value of rural resources and improving farmers’ income.
“In the past, when they touched upon the topic of homesteads in rural areas, they would use the phrase ‘cautiously pushing’ reform in this regard, but this time it disappeared from the document,” said Zheng Fengtian, a professor with Renmin University’s School of Agricultural Economics and Rural Development in Beijing.
“Instead, they said rural homes can be utilised in multiple ways, which I believe is big progress,” he said.
Only when they feel secure in cities will they be willing to give up their property in rural areas
China had 297 million migrant workers as of last year, but they mostly do not have urban hukou, or a local permanent residence, without which they are not counted as part of the permanent population and cannot enjoy all the same public services as local residents.
The measure was written into a policy directive for the first time after being urged over the past couple of years, Zheng Fengtian noted.
Sunday’s plan also pledged to safeguard migrant workers’ rights to their rural property, even when their hukou status changes to bigger cities, including by still being entitled to contract farmland, using the homestead, and being paid when there is a collective income.
They can also voluntarily give up their rights in return for compensation, but it said that detailed measures for this have not yet been fully explored nor established.
“Only when they feel secure in cities will they be willing to give up their property in rural areas,” said Zheng Fengtian.