Rural land tenure in China operates on a contract basis, with each contract lasting 30 years. The process is governed by three main bodies of land-use rights law:
Farmers are allowed to transfer their agricultural land-use rights to third-parties including other farmers or agricultural companies, as long as it is done voluntarily. Li Ping of the Rural Development Institute in Beijing said that while he considers the law "nearly perfect," stronger guidelines are needed to ensure that transfers are in fact voluntary.
Investors that want to acquire a farmer’s land-use rights often go to local government officials. Local governments, which make most of their revenue from land, either compel or directly transfer the rights to the land without consulting farmers directly – despite Beijing’s opposition to this practice. Farmers may receive compensation, but it is often less than the value of the land they have lost. Occasionally, they may also be employed by the venture that is using their land.
Land seizure law
China has a law to prevent the seizure of land without compensation, but it has been widely criticized. In a response, Beijing has issued a series of policy directives to improve the law. One of these policy directives is compensation. If a local government wants to use a farmer’s land for industrial development, it must pay compensation of approximately 30 times the value of the land. Should the compensation not be enough for a farmer to maintain his previous standard of living, the local government must pay the difference.
Li says the main problem behind this law is that the policy directives aren’t enshrined in the property laws, which means courts can’t make decisions based on these directives.
Residential land law
People who live in rural areas have two types of the land: farmland where they grow crops and residential land where their home is located. Rights to the latter are covered under residential land law and by the 2007 Property Rights Law. However, farmers are unable to sell the land the same way urban dwellers can sell their apartments.
Li feels that farmers need to be granted this right, as it would allow them to tap into a key source of revenue that is currently closed off. It would also give local governments an additional legal source of revenue to tap, rather than directing illegal seizures of farmland.