VZCZCXRO0319
RR RUEHCN RUEHGH RUEHVC
DE RUEHBJ #0113 0050921
ZNR UUUUU ZZH
R 050921Z JAN 07
FM AMEMBASSY BEIJING
TO RUEHC/SECSTATE WASHDC 3540
INFO RUEHOO/CHINA POSTS COLLECTIVE
RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/USDOC WASHDC
RUEHC/DEPT OF LABOR WASHDC
RUEHRC/DEPT OF AGRICULTURE WASHINGTON DC

UNCLAS BEIJING 000113 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
USDA FOR FAS/ITP - SHEIKH 
TREASURY FOR OASIA/ISA CUSHMAN 
LABOR FOR ILAB 
USDOC FOR ITA/MAC/OCEA - MCQUEEN 
 
E.O. 12958:  N/A 
TAGS: ECON EAGR PGOV SOCI CH
SUBJECT: DOUBLING LAND USE FEES: RURAL WATCHERS HOPE 
FARMERS WILL BENEFIT 
 
SUMMARY 
------- 
 
¶1. (SBU) China's Central Government, seeking to slow 
development in urban areas and protect farmland, 
implemented a new regulation on January 1 to double 
land use fees.  The regulation, announced by the 
Ministry of Finance, Ministry of Land Resources, and 
People's Bank of China in November 2006, also seeks to 
curb abuses by local officials who confiscate land 
without adequate compensation, by reallocating revenue 
from land use fees to the Central and Provincial 
Governments.  Observers in Beijing cautiously welcomed 
the regulation and said they hope it will be 
implemented in such a way that it increases 
compensation provided to farmers when their land is 
confiscated.  END SUMMARY. 
 
NEW LAND USE FEES GO INTO EFFECT 
-------------------------------- 
 
¶2. (U) The Ministry of Finance, Ministry of Land 
Resources, and People's Bank of China announced in a 
joint notice in November 2006 that China's Central 
Government would double land use fees for all new 
construction projects on January 1, 2007, in an effort 
to cool fixed-asset investment (FAI) and improve land 
use management.  The fee increase, which went into 
effect as scheduled on January 1, is part of a series 
of measures aimed at protecting arable land, 
discouraging land abuse, and curbing FAI, according to 
a previous article in the English-language China Daily. 
 
¶3. (U) The joint notice stated that the regulation 
seeks to curb abuses by local government officials who 
confiscate land without adequate compensation.  These 
abuses have been a significant source of rural 
discontent in recent years, sparking protests 
throughout China, particularly on the outskirts of 
urban areas.  Under the new regulation, local 
governments lose their share of the revenue from land 
sales; 30 percent of the revenues will now go to the 
Central Government with the remaining 70 percent 
allocated to Provincial Governments.  In addition, the 
regulation stipulates that land use fees will be 
levied on land that is illegally confiscated. 
 
COULD BE GOOD NEWS FOR FARMERS... 
--------------------------------- 
 
¶4. (SBU) Land policy observers in Beijing said they 
are cautiously optimistic about the new regulation. 
Du Xiaoshan, Deputy Director of the Rural Development 
Institute at the China Academy of Social Sciences 
(CASS), stated that the primary goal of the regulation 
is to protect the long-term interests of farmers.  Du 
said that doubling the land use fees will help farmers 
at risk of losing their land while also preserving 
limited arable land.  Li Ping, a staff attorney at the 
Rural Development Institute (an American NGO not 
affiliated with CASS), added that the regulation is a 
step in the right direction, expressing hope that its 
implementation will increase compensation provided to 
farmers when their land is confiscated. 
 
...OR COULD BE MORE OF THE SAME 
------------------------------- 
 
¶5. (SBU) COMMENT:  Past experience, however, suggests 
that local government officials will continue to find 
ways to circumvent the new regulation and confiscate 
land from farmers and sell it to developers for 
personal economic gain.  The new land use fee is the 
latest salvo fired by the Central Government in its 
effort to rein in local government abuses and control 
overheating investment in the provinces.  Whether or 
not the regulation actually protects farmers' 
interests, however, will depend o how it is 
implemented at the local level. 
SEDNEY