On May 23, 2017, the Ministry of Land and Resources announced the Amendment of the Land Administration Law of the People’s Republic of China to solicit comments before June 23, 2017. This Amendment as announced this time to solicit comments (the “Draft for Comments”) amends 36 articles of the existing law. The law as amended still consists of 8 chapters and 86 articles and primarily pertains to several aspects such as the expropriation of farmland, a permanent farmland system, putting commercial collective construction land on the market and the reform of housing sites as specifically discussed below:
I. Highlights of the Amendment
1. Establishment of the “permanent basic farmland” system
The Draft for Comments revises Article 34 by changing the “basic farmland system” under the existing law into the “permanent farmland system,” under which land designated as permanent basic farmland is provided with special protection by which a special logo for the land is established and its location is announced to ensure that such land may receive actual permanent protection.
2. Permission for opening collective construction land to the market
The Draft for Comments adds a new Article 44, which allows all collective farmland to be expropriated. Another new article in Article 63 specifically provides for the state’s creation of a unified construction land market for urban and rural areas and allows the free transfer of collectively owned farmland by assignment, lease and mortgage.
3. Reform of the housing site system
The Draft for Comments proposes to revise Article 62 of the existing law by requiring not only a farmer’s housing site application to be approved in a meeting of the villagers’ representatives but also the approval of a people’s government above the county level if the farmland is to be occupied. Meanwhile, farmers who live in cities are encouraged to voluntarily withdraw from housing sites for compensation, and collective organizations are permitted to repurchase housing sites for redistribution.
4. Improvement of the land expropriation system
The Draft for Comments proposes to improve the land expropriation system under Articles 46 and 47 of the existing law by requiring an investigation of the status of the land prior to expropriation and publicly announce the purpose of the expropriation and the compensation standard within a collective economic area, as well as solicit the villagers’ opinions. Meanwhile, details about land expropriation and relocation payment are specifically stipulated. In addition, it is stressed in the amended Articles 48, 49 and 50 that the interests of the farmers whose land is expropriated should be protected through measures such as compensation before expropriation and enrollment into corresponding senior social security systems.
According to the explanation of the Ministry of Land and Resources in the Draft for Comments, the major objectives of the Amendment are to thoroughly reflect the spirit of the 18th CPC National Congress and the 3rd, 4th, 5th and 6th Plenary Sessions of the 18th CPC Central Committee by resolving issues such as inconsistencies arising from flaws in the land expropriation system, the inability of commercial collective construction farmland to be placed on the market like state-owned construction land, the incomplete realization of the usufructuary right of housing sites, unsound mechanisms for the distribution of appreciations in land value, and low utilization efficiency of land resources and factors. On such basis, the amendments are focus on the expropriation of farmland, putting commercial collective construction land on the market and the reform of housing sites under the principles of public land ownership, adherence to a very strict arable land protection, conservation of land usage system and purpose-based regulatory systems. Meanwhile, provisions concerning the three reforms are revised, and the mature practices in land administration reform over the past decade are now properly included as part of the law.
It should be noted, however, that this Amendment is still directed to revising the basic framework of the land system. For specific operational issues, such as the transfer of commercial collective construction land, it would still require the State Council to separately prescribe the relevant implementation regulations. This Amendment also stipulates additional responsibilities on local governments, particularly with respect to farmland expropriation. The relevant implementation regulations are expected to be promulgated in different jurisdictions.
It is expected that this Amendment will have a relatively significant impact on China’s land market. However, attention should still be given to further implementation measures prescribed by the government.