Freedom of the land

China's main export markets are all slowing sharply, and prospects of a global recession are mounting. More migrant workers are being forced to return to their farms after losing their construction jobs in big cities. Amid these darkening social and economic conditions, the Communist Party has issued a landmark policy document setting out proposals to restructure land-use rights in rural China. The policy is dramatic and far-reaching, and shows the depth of the government's supply of economic initiatives.

    Rural land is now collectively owned, but distributed to farmers in small plots under 30-year leasing contracts. These plots cannot be mortgaged, and selling usage rights is both legally problematic and fraught with local political difficulties. The result is that millions of China's farmers are sitting on equity that they cannot access.

    Although no concrete measures have yet been announced, it is widely expected that the existing land use contracts will be extended from 30 to 70 years. This will create markets for the lease of contracted farmland and the transfer of farmland use rights by way of swaps, exchanges, or sub-contracting arrangements, or through the establishment of joint-stock companies.