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Jiang Xingsan & Liu Shouying

Research Report No.242, 2007

I. Foreword 　

To this day, China still carries out the system of divisional governance in urban and rural areas with the government monopolizing the first-grade urban land market. Such a system, on one hand, has brought rural and urban lands under different legal framework and under the governance of different institutions, thus forming different market and power systems; on the other hand, it has given rise to an imperative requisition of land by the governments in case of changing the agricultural lands to the lands for construction purpose and state-owned lands are the only available lands for construction. The system has made the government to be the only decision-maker in turning the agricultural lands into the lands for construction purpose and to be the only supplier in the first-grade urban land market. The reform has enhanced the market capacity for the distribution of resources. However, like the large state-owned enterprises monopolizing upstream resources, the government has further strengthened its monopoly of lands. The status quo of the Chinese economy driven by investment is closely related to the majority of investment being supplied by banks and the use of lands by local governments to activate the finance. By endowing local governments with the monopoly of lands, laws are not only the important guarantee for the local governments to survive and function, but have also precipitated the formation of the special incentive structure for the local governments to start the economic growth by use of lands. The more lands the governments take over through requisition and offer for sale, the more disposable incomes the localities will acquire; the more lands the governments possess, the less the cost will be for the cities to expand, the easier it will be for the cities to invite and attract investment and the more sources of tax the governments will have. The drawback of such a growth pattern has loomed up in finance, taxation, banking, investment, formation of pricing mechanism, social harmony and governmental behavior. The purpose to use lands for macro-control is to restrict the behavior of the local governments. However, it is the Central Government who gets hold of the lands, and it is the local governments who decide the use of lands. Moreover, as the local finance depends much on land while the related financial conditions cannot be improved, the local governments will then have the impulse to loosen the control over the lands or even make it all out of control thus to further underplay the Central Government's control over the lands and to pose serious challenges in sustainable economic and social development. A thorough reform of the present land system must be carried out.

This paper stresses the necessity of planning the national lands as a whole with the establishment of the development priority zones as a starting point, puts forward the basic principles for formulating the land policy in the construction of the development priority zones and illustrates the related land policies in terms of optimized development zones, important development zones, limited development zones and prohibited development zones.

II. Basic Principles for Promoting the Formation of the Land Policy for Development Priority Zones

1. To conduct land planning with the planning of the development priority zones as a starting point

Among China's economic development plans, some are five-year plans focused on economic development, some are overall plans for land utilization aimed at control of land use and protection of arable lands, and some are urban construction plans and rural plans for the development of urbanization. Such plans, when carried out, function independently and conflict with each other, thus underplaying their respective roles to a large extent. Economic development plans take such indicators, like GDP growth, as the dominant factors and are crucial for the economic development of an area during a certain period of time and reflect the achievements made by local administrators in their work. As a result, the economic development plans will usually become the dominant plans. Urban construction plans are directly oriented toward the urbanization of an area and, expansion of a city determines the financial capacity of an urban government. Besides, China is now in the stage of a rapid urbanization，therefore, it is not strange for the local governments to revise or compile the urban construction plans within two- three years' time. The overall plans for land utilization are indicator plans for land use structure, land transfer and the protected volume of arable lands under a given pace of economic development and the level of urbanization during a certain period of time. However, as the economy and urbanization in various localities have developed more rapidly than expected and China's first land utilization plan was worked out in 1997 after the reform, the plan is notably characterized by the planned economy with an evidently lower expectancy for the economic development, thus making the overall plans for land utilization fall far behind and to become less and less authoritative and even become the bottlenecks checking the economic development in some areas. The plan for development priority zone is a strategic, rudimentary and restrictive plan for land development. We should take development priority zone as the foundation, the national economy and social development plan as the basis, the urban and land plans as the strut to gradually set up the planning system for land development with a clear positioning and a complement of mutual functions. Advancing the formation of development priority zone should be taken as the turning point to place the land planning on agenda. The land resources should be planned in a comprehensive way with a view to sustainable development and coordinated regional development and the land development and protection should be carried out in a scientific way. The lands for optimized development, important development, limited development and prohibited development should be distributed in a scientific way and should be defined by Land Planning Law so as to improve the planning in a more scientific way, to reduce the administrative intervention and to decrease the conflicts and contradictions between the lower-level laws.

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