China’s second round of rural land contract is about to expire, with the pilot program of extending contracts for 30 years expanded to 7 provinces, affecting the vital interests of hundreds of millions of farmers. At the same time, there have been reports online about capital flowing into rural areas under the guise of long-term leasing but neglecting farming management, leading to land abandonment and raising widespread doubts.
Experts point out that under the unclear ownership of land and constraints of the party-run system, the implementation of policies has deviated, leaving farmers’ rights in a vulnerable position, and the persisting challenges in rural areas remain unresolved.
According to data from the Ministry of Agriculture and Rural Affairs, the pilot program of extending land contracts for 30 years after the expiration of the second round has been expanded to 7 provinces.
Rural land contracting began in the 1980s, with the first round from 1983 to 1997, and the second round from 1997 to 2027. Around 30 million households faced contract expiration in 2024-2025, with about 160 million households set to renew their contracts during the “14th Five-Year Plan” period (2026-2030).
Taking Anhui Province as an example, the province plans to renew contracts for 12 million households in three years, with around 11 million households due for renewal in 2024-2025, accounting for 90% of all rural households in the province. This extensive and impactful task is a critical part of China’s agricultural reform.
However, the ongoing land contract renewal process involving hundreds of millions of farmers is facing complex structural contradictions.
Chen Ming, Deputy Researcher at the Institute of Political Studies of the Chinese Academy of Social Sciences, told Interface News that rural land contracting faces two major contradictions: some families did not receive land during the second round of contracting, coupled with frequent population migration leading to tense land relationships; and the increasing contradiction between the contracting rights of small farming households and the modernization and scale operation of agriculture, challenging the implementation of pilot policies.
Xu Zhen, a veteran figure in Mainland China’s capital industry, stated in an interview with Dajiyuan that the essence of rural issues lies in the unresolved ownership of land. In theory, the land is “collectively owned,” but with farmers contracting for 30 years, it essentially means “working for the CCP for 30 years.” Despite the proposal of separating ownership, contracting rights, and operating rights, organizations like cooperatives are still controlled by party branches and village committees.
He pointed out that local governments, capital, and village committees collude, forcing farmers to sign unfavorable lease contracts, which not only threaten farmers’ livelihoods and rights but also pose potential risks to national food security. Within the all-encompassing party-controlled system, the challenges of farmers becoming wealthy and truly resolving food security issues are formidable.
Simultaneous with the land contract renewal process is the recent influx of a large amount of capital into rural contracted land. A mainland Chinese blogger revealed that these capital entities, under the pretext of long-term leases exceeding 20 years at a rental rate of 800 to over 1,000 yuan per mu, have taken over vast areas of rural contracted land, but the actual operation conditions have been disappointing.
The blogger analyzed that in the past three years, over 13 million mu of farmland nationwide has been contracted out to various capital groups, but many of these lands yield lower crop outputs than those cultivated by farmers themselves, with some even left abandoned for a long period.
The blogger further mentioned that the true intention of these capital entities contracting the land is not for agricultural production but for financial operations. Their main arbitrage models include:
1. Low-interest loan arbitrage: Using land operating rights as collateral to obtain agricultural loans with an annual interest rate as low as 3-4%, and then investing in other projects with a return rate of over 10%, earning the interest differential.
2. Secondary subletting for profit: Renting out the contracted land at a higher price to farmers or large landholders while controlling the agricultural supplies and product acquisitions, forming a monopoly in the industry chain.
3. Asset value conservation considerations: State-owned enterprises or large capital groups holding land operating rights are viewed at the policy level as preventing land loss, receiving credit in performance evaluations without regarding actual operational effectiveness.
Xu Zhen believes that some large-scale agricultural institutions show the situation where “wild grass is taller than rice,” directly processing the crops with a shredder during harvest, reflecting that the true purpose of capital entering rural areas is not for agricultural production.
He mentioned that the primary source of profit for major central enterprises comes from futures rather than their main business, as these institutions aim to turn this into a financial operation, treating assets as financial instruments for arbitrage.