SAIC Promotes Model Contracts For Rural Land Transfers

2009-04-07

It probably comes as no great surprise that a lot of very dodgy stuff goes on with land transfers in China, and I do mean nationwide. This includes a lot of collectively-held land being transferred to private developers for way lower than its value and a lot of other questionable transactions that end up screwing over the little guy. Moreover, because some of these transfers are on such favorable terms (and/or if corruption is involved), the developers have been even more incentivized to build stuff that the country doesn't really need, adding to industrial overcapacity.

We have a relatively new property law over here, and the government has been cracking down on shady deals made by local governments.

This latest announcement by the State Administration of Industry and Commerce is another example of attempts to clean up the system:

China's industry and commerce authorities announced Monday that it will work out and promote a model contract for rural land-use rights transfer to regularize the transfer of farmland-use rights and protect the rights of the farmers.

The model will clarify the object, time limit, payment, mode and time of payment of the deal, as well as the date of land transfer, rights and responsibilities of both parties, and the liability for breach of the contract, said the State Administration For Industry and Commerce (SAIC).

The move aims at ensuring the agricultural use of the land, SAIC said. It would also protect the rights of both parties of the contract, especially the rights of the farmers.

The Communist Party of China (CPC) issued a landmark land policy in October last year to allow farmers to "lease their contracted farmland or transfer their land-use right" to boost the scale of operation for farm production and provide funds for them to start new businesses.

Cynic that I am, I wonder what the AIC will do to motivate parties to use the model contract. I assume that for many of these local "sweetheart" deals, particularly when downright corruption is involved, contracts are not the preferred way to go, and when necessary, they are incredibly short with vague language. I have seen some of these things myself, and they sometimes only run a couple of sentences.

I suppose I'm in favor of this model agreement, but I would like to see what the big picture here is and if the government is going to do anything further here.

Tags: China Business & Economy, China Law, land-use rights, real property