Rural Revitalization and Land Institution Reform: Achievement, Conflict and Potential Risk

Abstract

Rural depression is a global issue in the process of worldwide urbanization. Compared with rural economic institution reform, rural land institution reform is more thorough in realizing rural revitalization. In this paper, polycentric governance theory is used to introduce marketization reform of collective profit-oriented land (MRCPL). MRCPL aims to allow rural collective profit-oriented construction land to be sold and leased with the same rights and at the same price as state-owned construction land. In the process of MRCPL, we suppose that the key subject is the central government, and the multiple auxiliary subjects include local governments, markets, villagers, and village collectives. Herein, Deqing County was selected as the research area and its achievements, conflicts, and potential risks in the process of MRCPL were studied. This study found that in Deqing County, a unified urban–rural construction land market has been preliminarily established, the rural revenue allocation mechanism has been updated, and the rural land finance mechanism has been developed. However, MRCPL may have conflicts with existing land requisition institutions and land banking institutions, and may also have conflicts within different subjects (farmers, village collective, local government, and central government). These conflicts may lead to potential risks, such as rent-seeking risk, land-financing risk, and real-estate-bubble risk. In general, the MRCPL aims to allow rural collective profit-oriented construction land to be sold and leased with the same rights and at the same prices as state-owned construction land. This reform can protect farmers’ land rights and promote the construction of urban and rural integration.

1. Introduction

Rural depression is a global issue in the process of worldwide urbanization. Whether in developed countries or underdeveloped areas, the gap between urban and rural areas is widening [1]. The urban area has absorbed most of the government funds, private investment, and even research resources. Large amounts of resources are concentrated in urban areas, including human resources. The proportion of the urban population of the world rose from 33% in 1960 to 54% in 2016 [2]. This growth is particularly pronounced in Asia and Africa, and has been followed by worldwide rural depression [3]. The rural recession is produced by factors such as the large number of young and strong laborers flowing to cities from rural areas, economic recession, low agricultural efficiency, a widening urban–rural gap, etc. [2,4]. Macro-regulation economic drivers flow into rural areas to achieve rural revitalization or protect agriculture, improve agricultural mechanization, increase agricultural production, and increase farmers’ income [5,6]. In order to achieve global rural revitalization, many countries have made their own efforts. In Mozambique and Kenya, the government’s policy towards rural areas has shifted from taxation to funding support, trying to correct the bias towards the urban area [7]. The Egyptian government has reformed the agricultural production system from a centrally planned economy system to a free-market economy system [8]. Thus, crop prices and quotas are determined by the market, and the private sectors are gradually activated [9]. The farmers became more independent and their incomes also increased [10]. In developed countries, such as the United States, the United Kingdom, and Australia, their governments also tend to use planning, investment, and subsidy strategies to encourage rural development [11,12]. In China, rural revitalization is a national strategy brought forward after the middle and end of China’s modernization. It is a social project with rural areas as the basic region, farmers as the main population, agriculture as the main industry, and the realization of agricultural and rural modernization as the core goal [13]. In the pilot in 2019, four years of collective profit-oriented construction land market reform policies were written into the Law of the People’s Republic of China on Land Administration, so that the rules on land used for the construction of rural collective business would accord with the law enabling its sale and transfer [14]. Relieving the collective profit-oriented construction land market of the legal barriers to its use for commercial purposes eases tension and resolves contradictions in revitalizing blocks of idle rural housing land, generating new vitality in the rural economy. Compared with rural economic institution reform, the rural land institution reform is more thorough in realizing rural revitalization [15]. Rural land institution is the basis of rural economic development, not only affecting the allocation efficiency of agricultural resources, but urban and rural economic development. Thus, land institution reform is an important institution guarantee for realizing rural revitalization [16]. The design and implementation of land institution must be balanced between rural and urban areas, rather than blindly targeting urban development while ignoring the rural areas [17]. Some countries have executed a good job in this respect. Since 1950s, South Korea has allocated state-owned land to farmers and reduced land rent to promote agricultural development [18]. Malaysia, the Philippines, and Thailand have expanded the land used for public health and education in poor rural areas, thereby improving the literacy, life expectancy, and infant survival in these areas [19].

As a leading developing country, the Government of China proposed the creation of a unified market for urban and rural construction in 2013 [20]. According to the PRC’s Constitution and Law on Land Administration, rural land is owned by the rural collective, and only members of the collective can enter into contracts and manage the land of that collective. With the exception of the community itself, rural land transactions are very restricted [21]. However, under the drive of interest, there is a widespread phenomenon of buying and selling, leasing, and even mortgaging rural construction land. As stated above, such market practices are not authorized by law. Thus, the liberalization of rural–urban land markets is not only encouraged by the (central) government, but also led by socio-economic (local) development. In order to regulate the invisible rural construction land market, the central government has taken a number of measures, such as MRCPL, to protect farmers’ land rights and promote the construction of urban and rural integration. Under the land-use planning and national laws, for-profit collective rural lands may be sold, leased, or invested as state-owned construction land [22]. This measure was a prelude to the new land institution reform. Marketization reform of collective profit-oriented land (MRCPL) was elevated to become the national strategy after the 18th National Congress of the Communist Party of China. Collective profit-oriented construction land is the building land of collective enterprises belonging to rural collective economic organizations, and is primarily used for industry, mining, logistics, storage, trade, service, and other purposes [23]. In the practice process, there are different topics of for-profit collective building land, including village committees, collective economic organizations, township governments or economic co-operatives. Where collective economic organizations are not fully developed, village committees are subject to market entry. In eastern coastal areas and other economically developed regions, collective economic organizations have developed maturely, and village committees have “divided political and economic sectors”. The main purpose of government or economic cooperatives at the township level is to integrate fragmented land and narrow the gap between the rich and the poor in areas with high land prices [24]. This land institution reform will not only help spur the growth of the rural economy, improving the overall development of rural society, but also help to shorten the gap between urban and rural areas and build a unified urban and rural construction land market [25]. The scope of land to be put on the market is also regulated. In accordance with the spirit of the Ministry of Natural Resources meeting, provincial-level people’s governments will take the lead in promoting the entry of rural collective profit-oriented construction land into the market in counties (cities and districts) where the demand for entering the market is concentrated, the work foundation is good, the level of land management is high, and the amount of rural collective profit-oriented construction land can be appropriately increased in accordance with 10% to 15% of the number of counties (cities, districts) within its jurisdiction. The extent of market entry can be divided into two types of situations: one is the stock of the collective construction land in the market for commercial purposes under planning guidance, proper adjustment, and integration, and puts forward economic indicators and the interests of the parties to the scheme; the second is planning increments of collective construction land in the market for commercial purposes; in the market, the amounts of land take certain proportions, and the proportions of different areas can be different [26].

In this paper, the origin of China’s new land institution reform is discussed and further detailed steps and contents of the top-level design of this reform are evaluated. Deqing County in Zhejiang Province is selected as the research area for empirical study. Achievements, conflict, and potential risks of MRCPL in Deqing County are introduced and analyzed in detail. Through the study of MRCPL in Deqing County, we hope to find the theoretical basis and practical experience for realizing rural revitalization.

2. Introduce MRCPL from the Perspective of Polycentric Governance

2.1. Research Hypothesis Based on the Polycentric Governance Theory

Polycentric governance theory was co-developed by Elinor Ostrom and Vincent Ostrom, who undertook their research at the University of Indiana in the United States. The polycentric theory originates from the comparative study of planned economy and market economy in the economic field, and has gradually matured through further development in politics and administration. With economic globalization, modern governance theory has become public administration theory, gaining increasing international attention and being developed in studies of governance theory worldwide. Both polycentric theory and governance theory will be gradually combined to evolve into a new public administrative paradigm of the government.Multiple co-governance entities include the central government, local governments, enterprises, various market entities, social organizations, citizens and various forms of self-organization of citizens. These organizations need to cooperate and participate and assume responsibility for public affairs [27,28]. It is a theory that is directly opposed to the principle of a single center of authority [29]. Polycentric governance theory emphasizes the cooperation of multiple subjects, arguing that different main bodies exist in the common system, both competitive and cooperative; through communication, coordination, and dialogue between subjects, stakeholders can exercise mutual trust and achieve a win–win situation. However, in practice, the theory of polycentric governance is too idealistic. In terms of the use of collective profit-oriented construction land, it is the government organization that occupies the dominant position, especially the central government, which has the final decision on all systems. The purpose of central government is to maximize the interests of all peoples and social stability [30]. Thus, we are using polycentric governance theory with improvements and adjustments. We argue that the promulgation and implementation of MRCPL represent a process of institutional change, one involving key agents and other multiple auxiliary subjects. We assume that the main agent is central government, while more secondary subjects include local government, the market, villagers, and the village community.

2.2. The Cooperation between Multiple Auxiliary Subjects and the Key Agent

2.2.1. Multiple Auxiliary Subjects Advancing MRCPL

China’s rapid urbanization requires a large number of urban construction lands [31]. According to the data of the current the Ministry of Natural Resources, local government can only meet ½ to 2/3 of the demand for urban construction land. According to China’s land administration law, without the process of land requisition, the collective construction of land cannot be put forward to the land market [32]. This becomes one of the ways for local governments to promote economic growth at the expense of farmers’ interests. Farmers undertake the institutional costs in the process of land requisition. It has been proved in practice that land requisition leads to several serious problems, such as irrational standards of land requisition compensation, extensive land use, and so on. To meet the city’s demand for land, the central government put forward a policy named City Construction Land Increase and Rural Residential Land Decrease to ease the pressure of urban construction land demand [33]. At the local government level, this policy has been carried out in different forms, such as the Chongqing model, the Jiaxing model, and the Wenzhou model. These policies can help farmers to improve their income in a short period; however, in the long term, these policies still hinder the sustainable development of rural areas. Construction land is the space carrier for rural development. Without the support of land elements, rural revitalization will remain in empty talk.

Under this context, the rural land market is growing and the asset nature of collective profit-oriented construction land in the countryside is gradually being highlighted [34]. The desire of farmers and village collectives to run their land is constantly increasing. Although the transfer of collective profit-oriented construction land is prohibited at present according to the law of China, it is common for farmers to spontaneously sell, transfer, and lease collective profit-oriented construction land use rights to enterprises to make a profit [35]. Thus, an invisible market of collective profit-oriented construction land has already existed for many years, especially in China’s coastal areas. On the other hand, the transferring of collective profit-oriented construction land has great significance for releasing land use efficiency, activating rural assets, and optimizing the spatial distribution of land use [36]. Therefore, most local governments have an acquiescence attitude toward the illegal transfer of collective profit-oriented construction land to solve the contradiction between the deficiency of rural construction land and the increasing demand for land with social economic development. Rural community building plays an important role in mitigating the contradiction between land supply and demand. With the growing demand for land to keep economic development, farmers, as rational “economic men”, hope to reap the potential benefits of general market demand by transferring and transacting land. As it is difficult to achieve an effective transfer of land by legal means, therefore, some farmers choose to evade and break current laws and regulations to implement “hidden circulation”. In the face of this hidden circulation, the local government not only lacks the paths of inspection, supervision and punishment to effectively restrict this kind circulation, but also lacks the feasible channels to guide its legitimate development, resulting in the long-term existence of the hidden circulation market [37].”Small Property Rights Housing” is a sort of building on the collective building plot, the price is much lower than the ordinary commercial housing. Even if you cannot obtain the housing ownership certificate issued by the national construction authorities, there are still many urban residents who voluntarily take the risk to buy. Even the local township government, village collective self-issued “property rights certificate”, tacitly acquiescing to the rationality of “Small Property Rights Housing” [38].

2.2.2. Key Center Subject Advancing MRCPL

To standardize this invisible land market, the central government of China regards rural collective profit-oriented land as the breakthrough point to start new land institution reform. The Chinese government has issued six policy documents/six steps and there has been formed a completely top-level design system of MRCPL to put forward the new land institution reform. As shown in

Table 1. Central government (key center subject) advancing MRCPL in China. Results.

Step	Time	Document Name	Key Content
Step 1	November 2013	Decision of the Central Committee of the Communist Party of China on Some Major Issues Concerning Comprehensively Deepen the Reform	Allow rural collective profit-oriented construction land to be sold, and leased with the same rights and at the same price as state-owned construction land
Step 2	December 2014	General Office of the CPC Central Committee and general office of the State Council “Opinions about trials on the reform of rural land collection, rural collectively owned profit-oriented construction land and homestead institution”	Public land ownership cannot be changed, the red line of farmland cannot be broken, and the interests of farmers cannot be decreased
Step 3	February 2015	NPC Standing Committee Decision of authorizing the State Council to temporarily adjust the relevant provisions of the law in the administrative areas of thirty-three pilot counties (cities, districts) of Beijing, Daxing District and others	In the pilot areas, the 43rd and 63rd bans of Land Administration Law and the ninth ban of the Law on Urban Real Estate Administration can be relieved
Step 4	March 2015	Ministry of Land and Resources “Notice on the implementation of the detailed rules of trials on the reform of rural land collection, rural collectively owned profit-oriented construction land and homestead institution ”	Ensure 15 trials of MRCPL in the whole country
Step 5	May 2016	Ministry of Land and Resources, Ministry of Finance “Interim Measures for the Distribution of incremental benefits from rural collectively owned profit-oriented construction land”	Make sure that the state can recieve 20–50% of the land value-added income
Step 6	June 2016	“Notice of Interim Measures for the Administration of Rural Collectively Owned Profit-oriented Construction Land Mortgage” distributed by China Banking Regulatory Commission and the Ministry of Land and Resources P.R.C	Implementation of the mortgage of rural collectively owned profit-oriented construction land in detail

Note: The form is in summary of the relevant meeting materials, especially the meeting about improving the mortgage of rural collectively owned profit-oriented construction land which was organized by the China Banking Regulatory Commission and the Ministry of Land and Resources P.R.C, the officers from all the 15 trails taking part in it on 3 June 2016, Deqing.

, in the beginning, the central government developed policies to allow rural collective profit-oriented construction land to be sold and leased with the same rights and at the same prices as state-owned land. However, this policy conflicts with many existing laws. Thus, in the pilot areas, the central government relaxed the 43rd and 63rd rules listed in China’s Land Administration Law, as well as lifted the ninth rule of the Law on Urban Real Estate Administration to reduce the resistance to this reform. Additionally, then, several concrete measures are carried out, such as stipulating that the state can receive 20–50% of the land value-added income and the rural collective profit-oriented construction land can be mortgaged. The new institution not only satisfies the demand for economic and social development and the will for farmers to bargain for their land, but also keeps the urban and rural construction land market under the control of the government, reducing the uncertainty risk of the land market [39]. By the end of April 2016, a total of 97 plots of collective profit-oriented construction land had been bargained in the new market.

3. Research Area and Data Source

Deqing is located in the middle of the plain between Hangzhou Bay and Taihu; most of Deqing County is flat, crisscrossed by numerous canals. It is a subordinate county of Huzhou which is the provincial capital of Zhejiang Province. Additionally, there is only 15 min rail distance to Hangzhou. Compared with Hangzhou downtown’s rapid urbanization, Deqing’s economic development and population growth are relatively slow, even facing a recession. However, as a typical rural area along the southeast coast of China, Deqing gains more attention and support from the Chinese government and is the trial district of 41 national or provincial reforms in China. In 2021, the per-capita disposable income of all permanent residents in the county was CNY 57,837, an increase of 10.9% over the previous year. The per capita disposable income of permanent rural residents was CNY 42,548, an increase of 10.9 percent compared to the previous year. In 2021, Deqing County generated a total volume of CNY 4.65 billion of agricultural, forestry, animal, and fishing production. The county has 80 modern agricultural parks, 3 newly constructed modern agricultural parks, and 132 leading agricultural businesses, with a 57,600 mu green food zone and 122 green foods. Deqing County innovatively launched a new grassroots governance model of “Digital countryside with a map”, and was awarded the “Advanced County of National Digital Agriculture and Rural Development Level Evaluation” for two consecutive years with the highest score, becoming the only national digital agriculture pilot county in the province. MRCPL is promoted by Deqing County on a high level. According to the central government’s spirit of the rural land institution reform and the requirements of current the Ministry of Natural Resources, Deqing has explored an effective path for MRCPL reform, including the government establishing a reformed system, the masses participating in deliberations, and the market setting prices and revenue sharing. Deqing’s MRCPL reform focuses on policy design and system construction. Regarding the new land institution reform, Deqing has unique traits, as follows.

(1)

Deqing has a large number of rural collective profit-oriented construction lands. It is the first place which successfully sold the collective profit-oriented construction land legally. By April 2016, Deqing had successfully sold 45 plots of collective profit-oriented construction land, accounting for nearly 1/2 of the total amount of the country, covering 33 out of 151 villages.

(2)

Deqing has fruitful achievements of MRCPL in practice. The institution system of the new rural land market formed in Deqing has been established (

Table 2. Top-down patterns of MRCPL in Deqing County.

Outline	Document Name
One Measure	(1) The Notice about the Measure of Deqing’s Bargain Market of Rural Collective Profit-oriented Construction Land
Two Suggestions	(1) Suggestion on the establishment of democratic management mechanism for rural land by CPC Deqing County Party committee office (2) Deqing County people’s Government Office Guiding suggestion on encouraging financial institutions to carry out the mortgage loans for Rural Collective Profit-oriented Construction Land
Five Regulations	(1) The Selling Regulation about Deqing’s Rural Collective Profit-oriented Construction Land (2) The Regulation about charging and distributing of incremental benefits from Deqing’s Rural Collective Profit-oriented Construction Land (3) The Regulation on the adjustment of different Rural Collective Profit-oriented Construction Land in Deqing County (4) The Regulation about distributing of benefits from Deqing’s Rural Collective Profit-oriented Construction Land (5) The Regulation on the Administration of the Granting of Land for Deqing’s Rural Collective Profit-oriented Construction Land

). The government has promoted the reform in a top-down pattern. This can be understood as MRCPL being carried out via government administrative measures which can reduce the resistance to the reform effectively.

(3)

Deqing’s MRCPL has been officially approved. Since the start of the reform procedure, the Ministry of Natural Resources, the Ministry of Finance and the State Council Development Research Center, and other departments have been to Deqing for investigation many times.

4. Achievements, Conflict and Potential Risk of MRCPL

MRCPL aims to allow rural collective profit-oriented construction land to be sold and leased with the same rights and at the same price as state-owned construction land. This reform can protect farmers’ land using rights and promote the construction of urban and rural integration. However, the circulation of collective constructive land lacks legal guarantees in practice; the collective management of construction land is unevenly distributed; and there are conflicts of interest between government and rural collectives in the process of MRCPL, including problems of misappropriation of land interests of the rural collective organizations. In rural areas which have low population density and where the economic development extremely relies on agricultural production, farmers’ non-agricultural income can be effectively improved via MRCP, and further improve agricultural efficiency and corresponding productions.

4.1. Achievements of MRCPL

Preliminarily established a unified urban–rural construction land market. The MRCPL implemented in Deqing County was guided by the principle that the land is owned by the village collectives. Through process re-engineering in this reform, the commodity attributes of collective profit-oriented land are recovered. This means it can be traded on the market freely without land requisition. Farmers’ collective land value-added income can be protected and the state’s monopoly situation in a land transaction will be terminated. In Deqing County, the direct connection between rural and urban land markets has been established, and a unified urban–rural construction land market has been set up (Figure 1). The ultimate aim of the reform is to promote the development of rural areas. The essence of the reform is to realize the reconstruction of the relationship between the government and market in the process of land resource allocation. This can help local government to change its role from manager to servant and further enhance land use efficiency. Compared with the former rural land institution, the current MRCPL in Deqing County has many advantages. (1) The time cost in marketization is declined and the land use efficiency is rapidly improved. Before MRCPL, only the government departments at or above the provincial level have the right to approve a land requisition, provoking low efficiency of land marketization. Now, the marketization of collective profit-oriented land can be examined and approved by government departments at the county level. The village collective does not have to waste time negotiating with developers. (2) Farmers’ economic rights and interests are fully guaranteed. A series of contradictions caused by land requisition can be avoided in the process of MRCPL by reducing land requisition procedures. (3) Activating idle assets in rural areas to promote land-intensive use. After MRCPL, the marketization of collective profit-oriented land will not occupy additional construction land. Additionally, a large amount of abandoned rural enterprises’ land could have the potential to be reinvigorated.

The rural revenue allocation mechanism is updated. In the process of MRCPL, the Deqing County classifies the revenue subjects into government, village collective, and individual farmers. Under the principle of “who owns, who benefits”, the interests of farmers and village collectives will be given priority. Most of the land value-added incomes generated by the marketization of collective profit-oriented land are allocated to farmers and village collectives. Deqing County established a new revenue allocation mechanism for developing rural areas. The central government, thereafter, takes the rest of these revenues. According to

Table 3. Government allocation proportion of land value-added income.

Location of the Land	Industrial Land	Commercial Land
In county planning area	24%	48%
Out of county planning area, but in village planning area	20%	40%
Out of village planning area	16%	32%

Note, the data are obtained from the government of Deqing County.

, different allocation proportions of land value-added income will be occupied by the government after the marketization of collective profit-oriented land. Normally, the government will earn more revenue from commercial land than industrial land. Take a specific land located out of the town planning region as an example. The area of this rural commercial land is 13,640 m². The village collectives and farmers hold 307 m² and 13,333 m², respectively. Before MRCPL, normally, the enterprises should sign contracts with the farmers to obtain the land use right by paying rent (3.75 CNY/m²) annually. After MRCPL, the enterprise should pay 16.1 CNY/m² per year. The government can earn 5.2 CNY/m² per year, and the village collective and farmers can earn 1.1 CNY/m² per year and 9.9 CNY/m² per year, respectively. The incomes of the government, village collective, and farmers are all improved. Meanwhile, the enterprise can obtain the right to use the land legally; thus the operation of the enterprise can be protected by law. By carrying out the MRCPL, the government, village collective, farmer and enterprise achieve a multi-win situation (

Table 4. Rural land value-added income allocation. Unit: CNY/m².

	Rent Paid by Enterprise	Government Revenue	Village Collective Revenue	Farmer Revenue
Before MRCPL	3.75	0	0	3.7
After MRCPL	16.1	5.2	1.1	9.9

Note, the data are obtained from the government of Deqing County.

).

Rural Land Finance mechanism is developed. In Deqing, most of the collective profit-oriented lands are far away from the county center, and normally, the area is relatively small; thus, the government hardly has the enthusiasm to take them back, and it is also hard for the village collectives and farmers to use because the construction land permitted to be used by the government is limited. The priority will be given to the project that has a location advantage and obvious economic returns. Due to collective land is not allowed to mortgage, financing in rural areas, village collectives, and farmers cannot use this land for profit-oriented purposes, and this further enhances the difficulties in improving the transformation and upgrading of rural industries [40].

The village collective and farmers themselves do not have the inherent power to make reasonable planning for these lands which leads to land desolation. Thus, small pieces of collective profit-oriented lands far away from the county center are rarely considered to be used before MRCPL. Now, the MRCPL carried out in Deqing County revitalizes the collective profit-oriented land, and establishes a new land carrier for economic investment projects. Through the introduction of guidance that financial institutions shall be encouraged to carry out the mortgages of collective profit-oriented land use right. The government services as a credit guarantor to encourage financial institutions to enhance investment in the rural area. A mortgage system for rural collective profit-oriented land use rights is established for achieving the same right and price obtained by state-owned construction land. Deqing took the lead in issuing a policy document allowing the mortgage loan of the use right of rural collective operational construction land, which included the right of collateral, triggering the first mortgage loan in the country. According to data provided by the government of Deqing County, in April 2016, 16 rural collective profit-oriented lands successfully entered the market via mortgage. The mortgage value is about 41.82 million, accounting for 40.3% of the total annual turnover. MRCPL relieved the financing pressure in the process of rural project development. At the same time, after the completion of the project, it will provide thousands of job opportunities and promote the employment of the rural surplus labor force, and the Deqing County government distributes the market income in the form of stock exchange quantification, transforms the resource asset of collective land into an operational asset, develops and expands the collective economy, increases the income of farmers, reduces the income gap, and enables farmers to enjoy the sense of gain of the reform. In addition, the development of the reform of collective management of land in the market is beneficial to the optimization of rural land allocation and the optimization and upgrading of the rural industrial structure, and promotes common prosperity.

4.2. Conflicts of MRCPL

Several subjects benefit from winning results in cooperation. In the process of collective commercial construction land reform, Deqing places a vital role on establishing a mechanism to equitably share value-added income among government, community, and farmers, and forms a multi-party win–win model. As the only channel for converting rural collective-owned land to urban state-owned land, land requisition normally is used by local governments to monopolize the primary land supply market. This can help the local government to increase revenues via price scissors which means requisitioning land at a low price and selling it at a high price. After MRCPL, rural collective profit-oriented land can enter into the primary land market directly and can make bargains in the market like state-owned construction land. Compared with the benefits generated from land requisition compensation offered by the government, farmers and village collectives can make more profits from enterprises in the market. Taking Deqing as an example, before MRCPL, the average land requisition compensation is 75 CNY/m² which is only limited to construction land in a construction project. However, a construction project normally requires a large amount of collected land including agricultural land and unused land. Therefore, farmers can hardly receive considerable land requisition compensation, while after MRCPL (April 2016), the price of industrial land is 171 CNY/m² and 413 CNY/m² for commercial land, both much higher than land requisition compensation. The government, village collective, and farmer all benefit from MRCPL. They will reconsider the existing land requisition institution.

Conflict with land banking institution. A land banking institution is an important measure for local governments to supply land uniformly and stabilize the land market. The key to running a land banking institution is the government’s control of the total volume of construction land. Since the establishment of the first land reserve organization in Shanghai in 1996, more than two thousand land reserve organizations have been established, covering most of China’s cities. However, after MRCPL, the construction land supply quantity and time are no longer limited by the land reserve institution. This will cause disorder in construction land supply, imbalance in land supply price, and even oligopoly in the inland market. Some functions of land banking institutions, such as regulating land prices, may be lost via MRCPL. However, in the process of Deqing’s MRCPL, the conflict between a land banking institution and MRCPL can be controlled. Although, after MRCPL, the regulation strength of land banking organizations is weakened, the local government still maintains a strong macro-control of the total amount of construction land. Farmers rely on land as a basis for survival, and land reserves will deprive farmers of their livelihoods. If the compensation for land expropriation fails to reach the total discount of the expected land income of farmers in a certain future year, there will be conflicts between farmers and the land banking system. In this process, all the subjects concerned with land reserves can provoke conflicts between the institutions of land reserves and farmers. For the government, when the rural collective land comes into the market, it is difficult for the local government to obtain land, and the revenues will be negatively impacted. For farmers, some cadres in collective economic organizations withhold compensation money for profits, or developers collude with local governments to lower land acquisition costs, which invades farmers’ interests, in order to meet the needs of local governments.

Conflict within different subjects after MRCPL. Farmers, the village collectives, local governments, and central government potentially have conflicts of interests after MRCPL. There are several issues that need to be addressed before and after MRCPL. For example, who is entitled to the increased value of rural construction land and how much is reasonable? What are the alternatives of land-based finance of local governments? How can we define public interests that justify land requisition? All these should abide by one principle, that is, farmers and the government should share the land value increment, and the land developers should obtain earned land value increment according to their direct investments. Farmers are obviously the weakest among these subjects; their interests may be deprived by other subjects. This will lead to multiple conflicts at the grassroots level of rural–social. Equal access to the collective building land market is conducive to safeguarding and protecting farmers’ rights and interests and increasing their land incomes. Restricted by area and quantity of farmers’ own land, new large-scale farm subjects will be more efficient and profitable. When cooperatives or agricultural enterprises use high-tech production, it can not only help farmers to produce, but also help to provide employment opportunities for farmers, revitalize rural resources, and realize the connection between small farmers and the development of modern agriculture. The economic pressure on small enterprises in rural areas has been reduced via mortgage rural collective profit-oriented construction land. These enterprises can have enough money to demolish the old factory buildings and upgrade the machine equipment. Additionally, they can promote the transformation and modernization of enterprises, and stimulate and improve the level of local agricultural development. According to the data obtained from the government of Deqing County, in 2015, there were 41 rural collective profit-oriented construction land units marketed. A total of 16 of them are loans on the mortgage for 41.82 million, accounting for 43.5% of the total land transaction income.

4.3. Potential Risk of MRCPL

Rent-seeking risk after MRCPL. Village economic cooperative plays a key role in MRCPL. The director board of the village economic cooperative has the obligation to draw up the investment to stabilize or increase the value of collective assets. However, there are overlapping functions between village committee members and village economic cooperative directors. Some of them, as members of the directorate, are not only the decision-makers of the marketization of collective profit-oriented land but also play the role of supervising subject as the village’s committee members. This leads to a very sensitive reality that the investment decision-making power of rural assets is still mastered by village cadres. With the increased area of marketization of collective profit-oriented land, the village collective assets continue to increase. The village cadres have both economic income distribution rights and policy formulation and implementation rights. In the context of the absence of effective policy to restrict their powers, the appearance of rent seeking is unavoidable. This will lead to deviations in future policymaking, and even in the name of the collective to achieve personal interests. When the functions of village committees coincide with rural collective economic organizations, a governance path of joint internal and external supervision and participation of all subjects under the condition of “separation of politics and economy” can be explored based on the background of rural property rights system reform. The village committee is separated from the collective economic organization and overseen by an outside supervisor. Enterprise-led cooperatives are responsible for rural businesses, farmers, and collective economic organizations. The power of capital is limited within co-operatives to minimize the impact of capital intrusion on rural governance [41].

Land financing and real estate bubble risk after MRCPL. Land financing refers to the revenue gathered from land conveyance and taxation by the government to discharge its responsibilities in carrying out public policies or delivering public goods and services needed to perform specific functions [42]. After MRCPL, the value of rural collective profit-oriented construction land will increase obviously. This may accelerate unstructured urban expansion, disadvantage farmers previously working on the land, and rapidly increase housing prices. Since 2000, land prices in mainland China have increased exponentially. Such land price appreciation stems from a series of reforms and rapid investment in land. Such rapid growth parallels the bubble experiences in Japan, Hong Kong, and the United States, and has fueled housing prices significantly, directly leading to China’s systematic real estate bubble [43]. After MRCPL, the rural collective profit-oriented construction land is allowed to be sold, and leased with the same rights and at the same price as state-owned construction land in an urban area. Due to this, the real estate bubble may spread to rural areas, and lead to various socioeconomic problems. Since mid-2020, in the context of the policy of regulating “housing and housing without speculation”, policies such as “three red lines”, “five mortgage levels” and “centralized land supply” have been introduced. More attention has been paid to supply side reform. Through policy adjustments on land supply and financial leverage, the real estate market has developed steadily.

5. Conclusions and Suggestion

The land institution reform is an important guarantee for realizing rural revitalization. The design and implementation of land institutions need to strike a balance between rural and urban development. Government should not only aim at the development of the urban area but also not ignore the construction of rural areas. The allocation efficiency of rural land resources can be improved via MRCPL. This will help alleviate the shortage of new construction land in the process of urbanization in China and further promote the development of the rural economy. In this paper, Deqing County was selected as the research area to study the achievements, conflict, and potential risk of MRCPL. We found that Deqing has preliminarily established a unified urban–rural construction land market. The rural revenue allocation mechanism is updated. By carrying out the MRCPL, the government, village collective, farmer, and enterprise achieve a multi-win situation. Rural land finance is developed in Deqing County. A mortgage system (Figure 2) for rural collective profit-oriented land use rights is established for achieving the same right and price obtained by state-owned construction land. However, MRCPL may conflict with land requisition institutions and land banking institutions. There also exists rent-seeking risk after MRCPL. Therefore, the local government should synchronize land requisition institutions and land banking institutions with the MRCPL.

The suggestion for optimizing the market entry model for collective-use construction lands is that the various MRCPL entities should take on the corresponding responsibilities. The following are primary examples from governments, businesses, and farmers. Government organizations play an important role in the MRCPL. Government organizations have rich experience and occupy a dominant position in the transaction of state-owned construction land, so the government should actively coordinate urban and rural development issues, clarify the property rights of collective operation construction land through thorough mapping, determine the main object of entering the market, protect the property rights and interests of farmers, build a unified market-trading mechanism, improve the corresponding laws and regulations, and build a trustworthy trading platform through coordination and communication with all parties to the transaction. Because the system of collective operation construction land entering the market is not perfect, compared with enterprises, they are also the main body that needs to protect their rights and interests, and only when the enterprise is stable, the income of farmers will be stable. Therefore, in terms of system design, it is necessary to take into account the interests of the main body of the enterprise, and the contract can be signed in the form of a long-term lease and short contract, leaving a way back for small and medium-sized enterprises. For farmers, we should follow the principle that the proceeds of collective operation construction land entering the market should be inclined to farmers, and adopt various methods such as increasing compensation or sharing dividends to improve farmers’ incomes.

Conflicts within the land reserve system should also be resolved on the basis of consideration of several topics. In fact, the essence of the contradiction between the reform of the collective operational land market and the land reserve system is the different interest subjects represented by different groups using the land. Common is the government, the village collective, and the farmers of these three categories, in the reform, to consider the interests of different subjects. In the reform process, farmers, businesses, government, and other issues face different risks, and their solutions are different as well. We suggest that in protecting the main rights and interests of farmers, we improve relevant laws and regulations, clarify the ownership of property rights, and increase the proportion of farmers’ income. To protect corporate interests, a unified trading platform should be established between urban and rural areas to conduct fair and reasonable transactions. In terms of the main interests of the government, the grassroots government can participate in the secondary distribution of the market in the form of tax distribution of construction land and obtain profits.

Data collection in this paper adopted the method of combining theory with the data. The data from the government’s official website and the official data, such as the statistical yearbook, discuss the achievements of MRCPL’s different main body, conflicts, and potential risks. Due to the limitations of the author knowledge and information, some data and research only allowed a simple analysis. In later studies, we hope to continue to deepen and improve the research in this field with richer theoretical knowledge and data.