Economic Watch: 30 years on, China embarks on new rural land reforms

China's organization and management of its rural economy has come a long way, and it is still growing. The people's commune system of the late 1950s was replaced by the household responsibility system (HRS) in the early 1980s and now the seeds of a new system are being sown.

Formally a grey area, farmers are now officially allowed to transfer their land rights to individuals or conglomerates, which will not only make use of idle land but will also help catapult farming into the modern age, one with greater returns and higher incomes for those that work or lease the land.

Guidelines issued Sunday called for the separation of farmland ownership rights, contract rights, and operating rights, which allows farmers to retain the rights to their allotted land if they choose to lease the land out to others.

The question of how to efficiently exploit farmland remains a pressing issue in the world's most populous country, where food security and the well-being of rural residents are high priorities.

Liu Wenyu, 56, from the southwestern province of Sichuan, was one of the first farmers to transfer her land.

In the late 2000s, Liu transferred 6 mu (0.4 hectares) of land to an orchard. For this she receives 1,100 yuan (around 164 U.S. dollars) in rent annually, and a daily wage of 60 yuan as an employee of the orchard.

Her story is in no way unique. As the country becomes increasingly urbanized, lots of rural residents migrate to cities, leaving their farmland unattended. There has been growing demand from rural residents to be able to officially transfer their idle farmland.

To improve the lives of its millions of rural residents, many Chinese villages, like Liu's, already allow people to transfer their land to companies in return for a fee.

Li Guoxiang, researcher at the Rural Development Institute of the Chinese Academy of Social Sciences, hailed this development as the biggest change in the rural economy since the HRS, saying that Sunday's guidelines will help standardize the practice as a whole.

HRS allowed rural households to lease land for independent operation. After paying a fixed fee to the government, they could dispose of surplus production to the market.

While this was the correct move at the time, the times have changed and demand for large-scale and professional farming has exploded in recent years.

"The separation of ownership rights, contract rights, and operating rights will improve land circulation, increase farmers' incomes, and help modernize agriculture," Li said.

Businessman Huang Yuanchao is another beneficiary of rural land transfers. After living in Toronto, Canada, for a handful of years in the early 2000s, Huang returned to his hometown in Tianmen in the central province of Hubei, to start a raspberry farm in 2007.

His company, Hubei Gold Berry S&T Development Co., pays villagers about 850 yuan per mu for use of their land in five nearby villages, and employs hundreds of farmers as seasonal workers with a daily wage of 50 yuan.

Occupying more than 2,000 mu, Huang's farm is now among the country's largest raspberry farm, and boasts an annual output of around 1,000 tonnes.

Huang welcomed the separation of the three rights, but hoped that more specific policies would follow. He said that he often finds it hard to secure loans to support production expansion, adding that this was an area that needed attention.

Sunday's guidelines boosted his confidence, Huang said, adding that he hoped that banks would allow investors like him to use the land transferred to them as collateral for loans.

The separation of the three rights means that the operating rights will now be of equal importance as the other two rights, a big step in protecting the interests of farmland operators like Huang, said Li Guoxiang.

"I expect more specific policies in the pipeline that will benefit the companies using the transferred land," Li noted. Endi