State Council Releases Text of New Land Management Circular

As of November 1, the Chinese government lifted a ban on the sale of arable land that was imposed in April as part of an effort to cool China’s overheated economy and address abuses related to land seizures (see posting on 10/26). In place of the ban, the State Council issued a new circular on land management in an effort to clamp down on unlawful land requisitions and prevent a flood of new problems and social unrest. An analysis posted in Caijing notes that the circular is not a “fundamental solution,” but a “makeshift step” designed to ameliorate a series of problems until amendments to China’s land management law and related regulations are passed. Articles in the China Daily (11/2) and other domestic papers stressed the State Council’s new commitment to strict land management.

The text of the circular, which contains 25 articles, is dated October 21 and was released in early November. Many of the provisions confirm pre-existing legal rules on land requisitions or stress that such rules will now be more strictly enforced, giving much of it a “now we really mean it” flavor. Nevertheless, the circular contains some new or revised requirements worthy of note, either because they implicitly confirm specific abuses or may foreshadow coming amendments to China’s land laws. Among other provisions:

• Article 2 specifically prohibits local governments from dividing one project into several projects in order to evade requirements for State Council or provincial-level approval of land transfers (which are based on the amount of arable land in question).
• Article 7 states that localities in arrears on land requisition compensation at the end of 2004 may not add any land to the quota allocated for construction for 2005, and that the government shall temporarily suspend its transmission of new land requisition quotas for 2005. (According to a November 16 article in the South China Morning Post, Chinese land officials acknowledge that farmers are owed 15 billion yuan in unpaid compensation.)
• Article 9 prohibits local governments from approving land use plans that do not include a preliminary hearing opinion from the Ministry of Land and Resources.
• Article 10 prohibits cities from requisitioning collectively owned land without authorization by making peasants urban residents (cun gai ju). This practice is based on a loophole in Article 2(5) of the Land Management Law Implementing Regulations, which states that collectively owned land becomes urban land when all of the residents of the collective become urban residents. In a controversial practice discussed in a September Caijing article, some cities have been evading detailed requirements on land conversions contained elsewhere in the law simply by granting urban residence permits to nearby farmers.
• Also under Article 10, urban residents are prohibited from purchasing village homesteads.
• Article 11 prohibits the development of basic level farmland in the name of “agricultural industrial installations" or “modern agricultural parks.”
• Articles 12 and 13 require local governments to adopt measures to ensure that the living standards of peasants do not drop after their land is requisitioned and to ensure the livelihood of displaced peasants. To accomplish this goal, it calls on local governments to increase compensation and authorizes them to use income from land-use fees to compensate farmers when total compensation has already reached the maximum provided for by law. The provisions also require local governments to establish job placement programs and social security systems.
• Perhaps in part in response to recent unrest in Sichuan (see related story here), Article 12 also provides that the State Council will set compensation rates for all large-scale hydroelectric projects.
• Article 18 extends a ban on approvals for luxury villas and golf courses.
• Article 24 calls on local governments to use not only fines, but also to require demolitions of illegal buildings and mitigation measures, to punish violations of land law and regulations. Many developers simply consider fines a cost of doing business.

The circular itself notes while the land sale ban and related measures resulted in some progress in stemming the loss of arable land and addressing related abuses, basic problems of land management have not yet been resolved. Given that such problems have persisted in the wake of a series of similar pronouncements and circulars over the past several years, the practical impact of the new circular may be questioned.