More land transfer revenue headed to rural areas

China will greatly increase the share of revenues from land transfers diverted to agriculture and rural areas, a measure expected to help finance rural rejuvenation.

More than half of net income acquired by governments across China from transferring the rights of land use will go to agriculture and rural areas by the end of 2025, according to the latest guideline.

The exceptions are a few areas, such as Beijing and Shanghai municipalities, that have high urbanization. However, these municipalities still need to invest more in agriculture and rural areas, said the guideline, made public by the State Council, China's Cabinet, in late September.

Transferring land for purposes such as industrial and property development is an important source of revenue for governments in many areas in China.

However, most of these revenues are used for urban development despite the land being in rural areas, Han Jun, vice-minister of agriculture and rural affairs, said at a news conference at the State Council Information Office on Sept 24.

In China, land is State-owned or collectively owned, and individuals can use land. In many areas, local governments transfer land use rights for development after paying compensation to the original users.

Between 2013 and 2018, government income from land transfers reached 28 trillion yuan ($4.1 trillion), with a net income of 5.4 trillion yuan after costs such as paying compensation and land development, but only 34 percent of the profit was diverted to agriculture and rural areas, according to the ministry. The revenue from land transfers may exceed 7 trillion yuan this year, it said.

With the percentage of land transfer revenue to increase, an additional hundreds of billions of yuan will be invested in agriculture and rural areas every year, the ministry estimated.

Most of the money will be used to make up for shortfalls in rural development, including building high-quality farmland, farming and water resource facilities, improving the living environment and education, Han said.

Han said redistribution of revenue will contribute to a steady increase in investment, which is vital to carrying out the rejuvenation strategy to modernize China's agriculture and rural areas by 2035.

"With the urbanization rate in China having exceeded 60 percent, it is time for urban areas to start to support the development of rural areas, to solve the imbalance in overall development," he said.