The government is about to approve a new pilot plan, aimed at liberalising rural construction land-use rights, by granting farmers the right to transfer and use rural land-use rights as collateral. The follow-up document, nongdi rushi shidian fang’an (农地入市试点方案), aims at developing the policies issued from the Third Plenary Session of the 18th Central Committee of the CCP held in November 2013.
According to the plan, all collective construction land that meets the requirements of the urban plan could be transferred, leased, or mortgaged. The collective economic system will operate a transformation into a shareholding system, through land contributions. The period of tenure will be identical to urban construction land-use rights.
The plan introduces a system, well known in Western legal systems, by which society as a whole have a right to participate in the economic benefits brought by urbanisation. Thus, the government might levy taxes on the increase in land value that accrues when it is transferred. In Spain, this principle is incorporated in Article 47 of the constitution, which declares that “the community shall have a share in the benefits accruing from the town-planning policies of public bodies”, which is a specific reference to the increase in the value of land accrued as a consequence of the modification of its use from rural to urban. It might turn out to be an excellent tool to increase the local government’s revenue, putting an end to the expropriation game, and hopefully improving the lives of millions of farmers.
For more information on the draft plan, please click here (source in Chinese): http://www.eeo.com.cn/2014/1017/267452.shtml.