BEIJING - A former senior official of the country's land authority has urged local governments to reform their land-based financing and end their monopoly on the land market to ease intensifying conflicts and bridge the urban-rural gap.

Zheng Zhenyuan, former deputy director of the planning department at the National Land Management Bureau, predecessor of the Ministry of Land and Resources, said on Sunday that an open, competitive and orderly land market means lifting the ban on collective land circulation in China.

Most of the sites involved are in rural and suburban areas and may not be used for commercial projects without government approval.

The limitation on collective land circulation, along with the government's arbitrary right to approve the commercial use of such land, has brought big profits to local governments, which have taken undervalued rural land and sold it at high prices, he said.

China has a dual land tenure system. Land use rights are separate from land ownership, which is divided into two categories.

First there is State-owned land, generally in cities. Second is collectively owned land, mostly in rural areas, which may not be transferred, sold or leased for non-agricultural use.

Zheng said the process of converting collective land to State-owned land, which can only be done by local governments, is often carried out improperly in the quest for profit.

He said this situation contributed to widespread land-related violence and an increased population of landless farmers.

Nevertheless, Zheng said, he is concerned that local governments have been "so reliant on land revenue that even minor reform of the land requisition system will not be tolerated".

Out of 10.7 trillion yuan ($163 billion) in local government debt, 2.5 trillion yuan must be repaid with land revenue, according to an annual report released by the national audit authority in late June.

Further, local infrastructure projects, public housing, educational subsidies and other items must also be funded by local land revenue, under the current policy.

"Under these circumstances, it is very unlikely for the government to fundamentally reform the land requisition system, which will greatly cut into its profits," Zheng said.

China's Land Management Law, a foundational regulation aimed to manage land use and maximize land values, has not been sent for lawmakers to read, two years after it was listed on the schedule of China's top legislature for revision.

Fulfilling such a mission is no easy task, said Zheng.

"The top legislature's delayed reading has in some way given a hint of the complex distribution of interests of different parties, such as the government, developers and farmers," Zheng said.

Gan Zangchun, deputy inspector-general of the Ministry of Land and Resources and deputy chief of the amendment drafting team, said "the protection of farmers' rights" has become the key issue being considered in the amendment.

China Daily

(China Daily 08/08/2011 page4)