China poised to reform land markets to prop up economy

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Beijing, April 9 (TMTPOST) China released guidelines on Thursday evening regarding improving the market-based allocation of production factors in an effort to speed up the free and orderly flow of the factors and stimulate its economy.

The guidelines, titled “The Communist Party of China (CPC) Central Committee and the State Council’s Opinions Regarding Improving Market-based Production Factors Allocation Mechanism”, was hailed by some observers as a milestone in China’s economic reform and opening-up.

More efforts will be made to deepen reform and opening-up and remove institutional barriers that stymie the free flow of production factors, which include land, labor, capital and technologies and data, according to the document.

The highlight of the guidelines is to “establish an integrated urban and rural land markets for (economic) construction”. The current land market mechanism has become a barrier to further economic development, land experts have argued for a long time.

Under the current land system, all urban land belongs to the government while rural land belongs to farmers collectively. Farmers are not allowed to sell their land directly to developers and instead the government buys it first at low prices and resells it to developers at higher prices. That reduces the benefits of farmers.

“Implementation regulations related to land administration laws must be amended quickly; related supporting regulations must also be improved; guidelines regarding the entry of rural collectively-owned non-farm land into land markets must be formulated and promulgated, “ says Section Three of the guidelines, right after Section One and Section Two that set out the general idea and basic principles for improving the market-based factors allocation mechanism.

Currently many apartment buildings have been built on rural land and therefore are not allowed to trade freely. The guidelines may help lift the restrictions.

“The rural land acquisition system must be reformed fully; the scope of state-owned urban land used for a fee must be expanded. Fair and reasonable distribution system for added value from the entry of collective rural land into markets must be established. Regulations regarding land acquisitions for the purpose of public well-being must be established,” according to Section 3.

A senior official of National Development and Reform Commission of China (NDRC) explained the motive for issuing the document by saying that the relatively backyard markets of land, labor, capital, technologies and data have negatively affected the efficiency of markets in allocating resources, in response to a question from Economic Daily, a major Beijing-based newspaper under the direct leadership of State Council, China’s cabinet。

The official stressed that “prices for 97% of goods and services” have already been determined by markets though.

He stressed the approach to increasing flexibility in land administration by deliberating it from two perspectives.

First, flexible methods in land acquisition for industrial purpose must be ushered in. The mechanisms of long-term lease, acquisition after rental, flexible land supply and land as capital contribution must be improved in order to perfect land markets for industrial purpose, he said.

Second, land supply for non-farm purpose should be increasingly managed by provincial governments and a national system where non-agricultural land is traded should be established, he added.

Data as a production factor

The official of NDRC, the economic planner in China, also explained why data is also included as a production factor.

While land and labor are primary production factors for agriculture and capital, technologies, management and entrepreneurship are production factors for the manufacturing industry, information resources, represented by big data, are evolving into a production factor in the information age, he said.

The NDRC official said that China must upgrade its manufacturing industry by applying digital technologies and the internet in a smart way while using big data to improve the government’s administration efficiency.

“Promote digitalized administration services, build smart cities and establish a national information-sharing system,” he said. “Analyze risk factors by utilizing big data platforms to improve risk detection, forecast and prevention capabilities.”

Household registration reform

Meanwhile, the senior official laid out the blueprint for promoting the smooth flow of labor forces.

A trial to recognize years of residency for gaining household registration for non-locals in all cities across the Yangtze River Delta and Pearl River Delta must be started. Restrictions on non-locals from becoming registered residents must be lifted for most cities expect a few megacities, he said.

“A pilot program to register people by the place where they live mostly must be started,” he stressed. In China household registration is mainly based on a person’s birth place, rather than their actual residence.

He also said the professional accreditation system must be improved to ensure people who work at the private sector also have a good opportunity to be awarded relevant accreditation.

For example, journalists are classified as assistant reporter/editor; reporter/editor; directorial reporter/editor and senior reporter/editor. However, the journalists at non-government run news organizations are often denied the chance to be accredited.