Abstract

A new urbanization and rural revitalization strategy has been implemented in China over a number of years, under which farmers’ land contract rights (LCRs) flow inevitably through various means. The practice in reform pilot areas indicates that government funds cannot meet all the needs, so exploring market-based LCR payout paths is important for rural land tenure system reform. The purpose of this study is to answer questions such as the following: How would farmers respond if they were allowed to trade LCRs? Is there an equilibrium point between the potential supply and demand of LCRs? Which factors would affect the potential supply and demand of LCRs? In this study, 697 valid questionnaires from Ningxia, Hebei, Henan, and Shandong provinces, China, were used for analysis by the multiple bounded discrete choice (MBDC) method and MBDC-Tobit model. The results show that there is a potential market among rural collective households in China, with an equilibrium price of ¥27,800/mu ($59,714.4/ha), and a proportion of farmers who are willing to buy or sell LCRs is around 10.0%. The factors affecting the potential supply and demand of LCRs include land grade, average agricultural income per unit, total money to buy urban houses and cars, age, number of household members with a college education or above, and risk appetite. If the institutional barriers that hinder LCR transactions were eliminated, the potential supply and demand of LCRs would be matched, and the market would provide funds for next-stage reforms.

Highlights

  • The first is the self-declared (SD) method, asking farmers questions such as: Assuming there are no institutional barriers for land contract rights (LCRs) transactions and there is a legal land bank, do you choose to buy, sell or neither buy nor sell? If you choose to buy, what is the highest price you can afford? If you choose to sell, what is the lowest compensation price?

  • It can be seen that the average price in terms of farmers’ willingness to sell LCRs is higher than the average price in terms of farmers’ willingness to buy

  • The number of household members with a college education or above has a significant negative effect on farmers’ min-Willingness to sell (WTS); that is, the more members with a college education or above in a household, the lower the min-WTS. Such farmers have stable incomes and are unwilling to engage in agricultural production, so they are willing to sell their LCRs at lower prices

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Summary

Introduction

The dual urban–rural land tenure system has been implemented for decades in China. Urban land is owned by the state and managed by the government. Rural land is collectively owned by farmers and is managed by rural collective economic organizations. Since the reform and opening-up, urban land has been traded for a long time, and "land finance" has helped China experience rapid economic development. In order to ensure a basic living for farmers, rural land transactions are prohibited. With the improvement of China’s modernization, urban–rural integration has become a major trend. The land tenure reform for separating rural land ownership rights, land contract rights (LCRs), and management rights (the 3R policy) has led to the rapid development of a land leasing market and a reduction of farmers’ dependence on land

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