Land Transfer in Rural China

Two forms of land transfer

As farmers in rural China immigrate to cities, their farm land, which is only allowed to be used for farming, in villages needs to be transferred to others. In most cases, one's land is transferred to his family members in his village. The closer family members have higher priority to receive the land. This is the norm that all farmers follow. The farmers still have the sense that land belongs to their family. So when an family member does not use the land he is distributed, it should naturally be transferred to other family members. Only when no member in this family can receive the land, it can go to someone outside the family. The next adequate receiver is usually the neighbours, who are just less intimate than family members. The land is seldom transferred to someone outside the village (natural village, or group under administrative village) as all the land is owned by the collective that is made up of all members in the village. 

The above describes the spontaneous transfer among farmers in the same village or occasionally involving farmers in nearby villages. The amount of land involved in a single transfer is generally very small, but most of the transfers in rural China are conducted in this way. These transfers are unorganised and informal. Contracts are not used in these transfers. They often bring about disputes and conflicts. The government wants to reduce this form of transfer and encourage the transfer in a more standard way that use contracts. Nowadays, more and more transfers use contracts. The form of transfer usually involves a large amount of land and many households. The transferee are usually legal entities such as agricultural companies, farmers' cooperative and family farm. Compared with farmers' spontaneous transfer, the rents paid to the transferrers are higher.

Therefore, two forms of land transfer take place in rural China, the farmers' spontaneous transfer and the organised transfer. Still, the former is the majority in rural China.

Three types of land rights

In rural China, the farm land in a village is own by the collective that is made up of all famers in the village. This is, the collective has the ownership of the land. The collective contracts out the land to each household. The most recent contracts between farmers and the collective are signed around 1998 and the tenancy is 30 years. Farmers have the right to possess, use, profit from and transfer the land out during the tenancy. These rights together are termed as farmers' contractual right. When a farmer transfer his land to another farmers, the transferee will obtain the right to operate the land.

Ownership, contractual right and right to operate are the types of property rights that matter for the farm land in rural China. The contracting between the collective and farmers separates the ownership and contractual right, and the land transfer separates the contractual right and right to operate.