VZCZCXRO3729
PP RUEHCN RUEHGH RUEHVC
DE RUEHBJ #2805/01 2730738
ZNR UUUUU ZZH
P 300738Z SEP 09 ZDK
FM AMEMBASSY BEIJING
TO RUEHC/SECSTATE WASHDC PRIORITY 6292
INFO RUEHOO/CHINA POSTS COLLECTIVE
RUEHKO/AMEMBASSY TOKYO 0049
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RHEHNSC/NSC WASHDC
RUEHRC/USDA FAS WASHDC

UNCLAS SECTION 01 OF 03 BEIJING 002805 
 
SIPDIS 
 
SENSITIVE 
 
COMMERCE FOR ALBERT HSU 
TREASURY FOR OIA CWINSHIP AND TTYANG 
NSC FOR LOI 
USDA/OSEC FOR MMICHENER 
USDA/FAS FOR OGA/HOUSE 
FAS FOR OCRA/RADLER/SHEPPARD 
FAS FOR OFSO/WAINIO 
 
E.O. 12958:  N/A 
TAGS: ECON EAGR SOCI CH
SUBJECT: CHINA/REBALANCING: RURAL LAND POLICY 
 
REFORMS MOVING SLOWLY AS FOOD SECURITY AND JOB 
CONCERNS LINGER 
 
REFS: A) 08 Beijing 4100 
 B) 08 Beijing 4102 
 
BEIJING 00002805  001.2 OF 003 
 
 C)http://www.intelink.gov/communities/state/c hen 
gdu/archives/southwest_china_302.html; 
http://www.intelink.gov/communities/state/che ngdu/ar 
chives/southwest_china_293.html; 
http://www.caijing.com.cn/2009-04-10/11013651 5.html 
 D) Beijing 1097 
      E) Beijing 693 
 F) Shanghai 380 
 
¶1. (SBU) SUMMARY:  China has made only incremental 
progress on rural land policy reforms needed to 
restructure China's rural economy and increase rural 
consumption.  Transfers of land use rights have 
increased gradually in recent years, but the overall 
amount of rural land that has been transferred into 
larger, more efficient plots is small.  Land 
consolidation in many areas is inhibited by the lack 
of market linkages needed to make large-scale 
commercial operations viable, and authorities are 
cautious due to concerns about migrant employment 
and the loss of agricultural land.  END SUMMARY. 
 
¶2. (U) This cable summarizes the status of rural 
land policy reforms highlighted during Econoff trips 
to Ningxia Hui Autonomous Region in May and August 
2009, Henan Province in July 2009, and northern 
Hebei's Changwei County and Chengde City in August 
2009, as well as recent meetings with rural policy 
experts in Beijing. 
 
--------------------------------------------- -- 
More Land Transfers, But No New Official Policies 
--------------------------------------------- -- 
 
¶3. (SBU) Provincial officials and rural experts who 
spoke with Econoff cited gradual progress expanding 
the scope of rural land transfers.  (Note: Land 
transfers involve transferring land use rights and 
can take the form of renting, informal exchanges, 
formally transferring contract rights (zhuanbao), 
and exchanging land for equity in a cooperative or 
"land bank" that then transfers consolidated tracts 
of land to a company or large-scale farmer. End 
Note.)  Land transfers, according to contacts, have 
picked up in recent years as factories have sprung 
up in peri-urban areas, as rural residents leave to 
work outside, and as commercialized aquaculture, 
animal husbandry, and agriculture operations that 
require larger, consolidated land holdings have 
become more prevalent. 
 
¶4. (SBU) The pace of land transfers has picked up 
since 2007.  The October 2008 Third Plenum of the 
Chinese Communist Party 17th Central Committee 
("Third Plenum", see refs A, B) gave high-level 
approval to proceed with land transfers and 
encouraged continued growth of this practice, but 
according to one local agriculture official it did 
not bring about new policies.  In southern Ningxia's 
Guyuan City, local officials said the Third Plenum 
and other recent land-policy announcements were only 
"government guidance" and no new impetus was in 
place; local transfers are still conducted according 
to existing law and the willingness of parties to 
conduct a transaction. 
 
----------------------------------------- 
And Growth is Limited by Local Conditions 
----------------------------------------- 
 
¶5. (SBU) According to a Henan agriculture official, 
about 4.8 percent of farmland in Henan has been 
transferred.  In Ningxia, land transfers constituted 
 
BEIJING 00002805  002.2 OF 003 
 
 
5.9 percent of household agricultural land and 
involved 9.9 percent of rural households.  In 
Hebei's Chengde City, according to an agriculture 
official, approximately 20 percent of agricultural 
land has undergone a transfer.  (Note: According to 
results from a nationwide survey recently published 
by the U.S.-based Rural Development Institute, 
currently about 15 percent of Chinese farmers are 
transferring their land in some way. End Note.) 
 
¶6. (SBU) Land transfers are occurring most 
frequently in areas close to urban markets and where 
agriculture is highly commercialized.  Land 
transfers in remote areas are less common, according 
to the officials and scholars in Ningxia, because 
there are no large scale farmers or companies 
interested in using the land for large-scale 
production.  The rural land being transferred in 
Henan is much less than in other provinces, 
according to officials, because urbanization in 
Henan is limited, and the province focuses on grain 
production rather than vegetables and other higher 
value crops.  In Hebei, an official explained that 
the number of land transfers is relatively low 
despite significant numbers of migrant workers 
because enterprises that want to consolidate land 
and upgrade production techniques want irrigated, 
fertile land, not the marginal land found in much of 
northern Hebei.  Officials in Henan and Hebei also 
explained that many older residents want to maintain 
the safety net of farming their own land, even if 
they are not profiting. 
 
--------------------------------------------- ------- 
Comment: Slow Land Policy Reforms Limit Rural 
Contribution to Rebalancing 
--------------------------------------------- ------- 
 
¶7. (SBU) Instead of making dramatic steps to 
privatize rural land at the Third Plenum in late 
2008 as some observers hoped, China reemphasized 
maintaining the amount of land under cultivation, 
increasing land transfers, and solidify rural land 
rights.  News reports highlight local experiments to 
mortgage land and allow transfer of village non- 
farming land for non-farming purposes (Ref C), but 
these practices are not widespread.  As Chinese 
concerns about food security and the impact of the 
global financial crisis on the rural workforce and 
rural incomes grew over the last year, officials 
such as State Council rural expert Chen Xiwen 
cautioned against mortgaging farmland and other land 
policy reforms that could leave rural residents 
without the safety net of having their own land to 
cultivate. 
 
¶8. (SBU) Barriers to increasing land transfers and 
land consolidation hinder the shift to higher-value 
farming, the transition of farm labor to higher 
paying non-farm jobs, and farmers' ability to sell 
or mortgage their land to start businesses.  This 
adds to difficulties maintaining per capita farmers' 
net income growth, which a Ministry of Agriculture 
official recently predicted will increase less than 
6 percent this year.  (Note: The 2004-2008 rural net 
income average annual growth rate is over 8 percent. 
End Note.)  According to the official, if this 
growth rate continues, China will have difficulty 
achieving the 2008 Third Plenum Communist Party goal 
of doubling rural incomes by 2020.  Despite moves to 
increase rural social safety net spending and other 
transfers (Ref D), as long as farmers own few real 
assets (e.g., land) and their incomes remain low, 
they will be unable to consume more and contribute 
to rebalancing China's economy to rely less on 
 
BEIJING 00002805  003.2 OF 003 
 
 
HUNTSMAN