The Communist Party of China (CPC) issued a landmark policy document on October 19 to allow farmers to "lease their contracted farmland or transfer their land-use rights" to boost the scale of operation for farm production and provide funds for them to start new businesses.

The Decision on Major Issues Concerning Rural Reform and Development was approved on October 12 at the Third Plenary Session of the 17th CPC Central Committee.

According to the full text of the document, markets for the lease of contracted farmland and transfer of farmland use rights shall be set up and improved to allow farmers to sub-contract, lease, exchange and swap their land use rights, or join share-holding entities with their farmland.

According to domestic law, farmland is collectively owned, but meted out to farmers in small plots on long-term leasing contracts. The new measures adopted are seen by economists as a major breakthrough in land reforms initiated by late leader Deng Xiaoping 30 years ago, which will provide farmers with opportunities to conduct scale management and initiate new business operations.

When the document was drafted some argued that the policy might create a few landlords and a mass of landless farmers with no means to make a living. It was also argued that arable land to be used for non-farming purposes might threaten the country's food supplies.

To ease such fears, the CPC Central Committee also provided in the document that the country would carry out "the most stringent farmland protection system" and urged local authorities to firmly safeguard the 1.8 billion mu (120 million hectares) minimum farmland set line.

The CPC Central Committee also called on local governments to stick to "the most stringent land conservation system" to control the total scale of the land used for urban development.

Modern financial system

It also set the direction for establishing a modern rural financial system in an effort to boost the rural economy. It said the country should promote innovation in the rural financial system and lower the threshold for establishing rural financial institutions.

The Party Decision also urged the establishment of a sound and safe rural financial system with the integration of commercial, cooperative and policy-based finance.

Financing channels should be widened to steer more credit and social investment funds for rural development, according to the document.

The decision called upon various financial institutions to better support rural economic growth. Agricultural development banks should work to expand their agriculture-supporting businesses and offer more policy-based financial assistance to long-term loans for agricultural development and ongoing infrastructure construction in rural areas.

Postal saving banks should develop more business in favor of rural development. Banks in rural areas should lend new deposits mainly to local farmers, said the document.

More new-type rural financial institutions should be set up, small loans promoted and more financial services tailored to rural needs, it added.

China Banking Regulatory Commission (CBRC), the industry watchdog, said on October 9 that the country would have more than 100 new-type rural financial institutions operational by year end. Through August, there were 61 such institutions.

The CPC decision also allows farmer cooperatives to develop credit cooperation to push forward the rural credit system.

Social Welfare

In addition, efforts must be made to ensure the entire rural population of 900 million enjoys basic medicare services by sticking to the rural cooperative medical system, the document said.

It demanded every county and township should have its own medical institution, while villages in rural areas were also encouraged to set up medical stations to provide "safe and inexpensive medical services" to farmers.

Endemic and infectious diseases as well as diseases that affect both human beings and livestock must be closely guarded against, with the focus on prevention.

It also demanded the acceleration of the construction of a comprehensive social welfare system in the countryside. A new old-age insurance system should be established in the countryside with the premiums paid by the beneficiaries combined with government subsidies. Authorities should find ways to incorporate the system with the urban old-age insurance system, it said.

In addition, the livelihood of farmers whose land has been requisitioned must be guaranteed before the requisition procedure, the document said.

The rural minimum living allowance system must be perfected with larger subsidies from the central and provincial budget, to cover all applicable with improved benefits.