Institutional Innovation In The Hook Of Urban Construction Land Increase And Rural Residential Land Decrease

Since the mid-1990s, the level of urbanization in China has progressed at the average speed of more than a percentage point per year. The main way of urbanization is more than10millions of rural population on average has surged up to the town per year. However, China’s current urbanization has been restricted by the long-term urban-rural split system and imperfect land institutions, causing urban construction land increase not linking to rural construction land decrease in the process of population transfer. Then rural hollowing and expanding has been coexisted, resulting in a huge waste of land resources and large scales of arable land occupied. It directly threats to the protection target of China’s18million hectares of arable land, and is unfavorable for the optimal allocation of land use, and the coordinated development of urban and rural. To resolve the contradiction between supply and demand for economy development under the strictly protection of arable land, Guangdong, Zhejiang, Jiangsu and other rapid economy development regions implemented rural land consolidation. The typical method was carrying out "three concentrations" for small-scale, scattered layout, poor environment and low efficiency use of rural settlement land through excavating potential and rearranging them to arable land to displace construction land quotas. Based on the local practices, the central government began to design the institution of hook between urban construction land increase and rural residential land decrease, then formally proposed in2004, and gradually practiced in some provinces and cities. The institution was expected to an integrated approach to solve the problem of double increase of the urban and rural land, and to realize arable land protection goals.To the practices in recent years, although they basically have reached the goals of improving land use intensive degree, keeping scales of farmland, and meeting urban construction land needs, they have brought some major issues and adverse effects. In theoretical research, it has preliminarily results in the significances and necessities, the modes and planning of operation, benefit evaluation, problems and suggestions for improvement, etc, however, the internal mechanism research of institution is still absent, and it basically stays in the shallow analysis of the problem-because-counter measures, which is insufficient in depth, systematicness and effectiveness. Lacking deep analysis in the nature of the institution is the reason why there are lots of contradictions and difficulties in the theory and practice. As an important means to solve the arable land protection and urban development dilemma in future a longer period, institutional innovation in the hook of urban construction land increase and rural residential land decrease is significant. Therefore, based on the above theory and practice needs, this paper takes the institutional innovation in the hook of urban construction land increase and rural residential land decrease as its theme, probing into its connotation and system running, analyzing institution design defects, proposing innovative ideas, and building two key paths and mechanisms from property rights and market aspects.Overall, the paper is divided into three parts:the first part presents the research questions, that is why need institutional innovation; the second part studies how to institutional innovation, including designing a systemic innovation framework, and building key innovative mechanisms; the third part is the conclusions of the above study and further research prospects.The first part is consisted of chapter1to chapter3, which respectively are introduction, research progress and theoretical basis, existing institutional framework and model evaluation. Firstly it briefly introduces the research backgrounds, significances, basic concepts and research objectives, contents, research methods; then it reviews and comments the relevant abroad and domestic research progress, and summarizes the requisite theoretical basis; and then starting from the background and formation of the hook institution, it explores the institution’s connotation and existing framework using system analysis, including system’s elements, structure, function, external environment, etc, which is helpful for a complete and clear understanding; finally, it summarizes the modes of hook practices from the aspects of the hook quotas’production, usage and financing, evaluates achievements and problems, and focuses on revealing the defects and problems, which illustrates the necessities and basis directions of institutional innovation.The second part is constituted by chapter4to chapter7. This part provides the ideas of institutional innovation and builds two key innovative mechanisms in order to remedy defects and improve run effects. Hook is a complex system that more than one bodies involved in and multi-structures and functions. To break the existing barriers, it firstly needs to carry out the overall design of the institutional innovation framework. As the basis of land development rights theory, starting from the objectives and the principles of innovation, chapter four establishes the basic innovation framework and points out two key innovation points, which is required to build the idle rural residential land exit mechanism and hook quotas trading mechanism. Influencing factors analysis of the idle rural residential land exit is the prerequisite to build two key mechanisms. In chapter five, starting from the connotation of idle rural residential land exit, based on the limited rational economic man assumption from farmers’perspective, the paper puts forward the farmers’ decision-making model and then concludes the factors influencing farmers to exit idle rural residential land. Combined with the Haimen’s land department personnels and the farmers’ interviews, it also makes an empirical analysis of the influence factors. On the basis of above influence factor analysis, the sixth charpter builds the idle rural residential land exit mechanism. Firstly, it studies the compensation standard for exiting based on the property rights, then designs the procedures of exit, and puts forwards quit regulatory. The hook quotas from idle rural residential land exiting can be traded in market. To build hook quotas trading mechanism, it needs to analyze the supply, demand and conditions of trading, the hook quotas’price and income distribution, and the government regulation of transactions. Chapter seven studies above questions based on the Marxism-law of value and relevant theories about land valuation, and taking Chongqing’s "land ticket" transaction as a typical example to empirical analysis, it makes some recommendations to improve.On the above research, the third part puts forward to the following main conclusions:(1) It needs to establish a new type of urban and rural land interactive institution to improve the situation of double increase in urban and rural construction land and promote rural construction land consolidation. The institution of hook is an important institution to reach the goals of economic and social development and farmland protection in the period of urbanization accelerated development. The hook of urban construction land increase and rural residential land decrease is an open system based on the land development rights at the core, a multi-agent and the external environment and constraints, with a certain structure and function. It’s made up of the hook quotas production in demolition areas subsystem and the hook quotas use in new construction district subsystem, through land development rights and capitals transfer, to achieve the optimal allocation of resources in urban and rural areas in urbanization development process. Summary the existing models, although the practice has achieved positive results, there are also some major issues, resulting in some negative social impacts. The important reason is the design of the hook institution is flawed. The institution defect is epitomized in the following two aspects:on the project promoting, firstly, the production of hook quotas is entire demolition and renovation, resulting in high running costs and unreasonable resettlement compensation; secondly, the use of hook quotas is closed operation, unpaid transaction and rigid configuration, resulting in low efficiency of hook quotas use and unmatched hook regions.(2) The purpose of institutional innovation is to remedy the existing deficiencies in the system, and improve the institution performance. Lacking a more perfect and convincing theoretical basis in current research, firstly we need profoundly grasp of the theoretical basis, focus on the introduction of land development rights and clear the ownership of development right. Then, following the principle of equity, efficiency and others, it proposes building idle rural residential land exit mechanism in hook quotas production to avoid entire demolition and renovation and reduce institutional operating costs, and establishing hook quotas trading mechanism in hook quotas usage regarding hook quotas as a scarce resources, making market mechanism play a basic role in the urban and rural land space configuration, in order to improve the efficiency of the hook usage.(3) The bodies of the idle rural residential land exit are farmers, rural collectives, local governments, and the objects are the use rights and land development rights of rural residential land. Idle rural residential lands are divided into two types of seasonal idle and permanent idle. Farmers" decision making is based on the net income comparison between exit before and after. If the residual value which is the exit net income minus net income before exit and exit costs in the decision-making is positive, farmers would like to exit, otherwise not. Based on this decision-making model, we can obtain the factors influencing farmers to exit idle rural residential land, including ten aspects, such as land exiting compensation standard, land and housing values, employment and income, psychological factors and so on. Through farmers’willingness surveys and practices in Haimen, the empirical results show that urban good living environment with convenient and complete public facilities, incremental non-farm income play an active role for farmers to exit idle rural residential land, and urban employment cost and risk, exit compensation standards, present assets values and other factors have a negative effect, which mainly verify the views of theoretical analysis.(4) The compensation standard of idle rural residential land exit essentially is the distribution of benefits. The compensation standard for farmers should be defined based on property rights, that is to say, the farmers deserve appropriate compensation which rights were lost in the exit process. So, under the premise of providing social security, the compensation standard for seasonal idle rural residential land exit should be at least the sum of the normal market price of rural residential land use rights and house ownership, land development right compensation, value-added profits due to land development right transfer and exit costs. The compensation standard for permanent idle does not include the rural residential land use rights and land development right compensation. From the results of theoretical and empirical analysis, we should give priority to carry out exiting permanent idle rural residential land; seasonal idle rural residential land exit should be given consideration with caution to implementation. The procedure of idle rural residential land exit can be roughly divided into six steps of applying, eligibility reviewing, agreement signing, farmers relocating, reclamation, and quotas storage. We also should focus on strengthening the regulatory to the exit funds, hook quotas and implementation.(5) The hook quota transaction is based on supply and demand willingness using the differential rent principle in inter-regional. Hook quota’s pricing has two phases:the government provides a benchmark price and the market formats transaction price. Cost approximation assessment method can be used to develop benchmark price, which is composed by the acquisition costs of land development right and land value-added profits due to the transfer of land development rights. The acquisition cost of land development rights means the cost of exit compensation, the cost of demolition and reclamation, and all taxes, interests and profits in production process. The market price depends on the buyers’willing to obtain future income. According to the contribution-income distribution, farmers deserve land use rights and house ownership compensation, land development rights compensation, land value-added profits and hook quota’s value-added profits; rural collective can obtain land development rights compensation, part of the land value-added profits and hook quota’s value-added profits; governments withdraw reclamation costs, all taxes and fees, normal average investment profits, as well as part of land value-added profits. The government should set up hook quotas trading markets, nurture intermediaries, make trading rules and establish public participation and supervisory mechanism. The typical case of Chongqing "land vote" transaction to some extent supports above theoretical analysis and related recommendations.The hook of urban construction land increase and rural residential land decrease is a comprehensive and complex system, whose operation should be more than one goal, and multi-level structure interactions. This paper has been studied only from the perspective of the urban and rural land use. And by the information, knowledge and limited space, there are many issues to further research and extension study, such as the rural land property rights system reform, building unified urban and rural land market, supporting system construction including household registration, employment, housing, reform of the government management system, financial system and administrative assessment, etc..These all need to more deep and comprehensive research in urban and rural urbanization perspective.