The fees to transfer the rights for land used for industrial purposes will have minimums in a scheme announced yesterday by the Ministry of Land and Resources (MLR).

The minimum fee scheme will take effect from next Monday. The move came after the State Council released a statement to strengthen the macro control of land management in August.

The move was designed to curb investments involving too much land for a rights transfer fee that was too low. Industries were acquiring rights to more land than they could immediately use.

MLR Vice Minister, Wang Shiyuan, said local governments were driving down the transfer fees or even promising a "zero fee" to attract investment. "Low land rights transfer fees led to excessive expansion fuelling a large amount of unnecessary, low-level construction," he said. "The vicious competition has ruined a fair market environment resulting in a regional imbalance."

Wang said that the practice also brought a huge loss of State assets and damaged the interests of farmers who’d been using the land. "The low land rights fees are often at the cost of higher compensation fees that farmers should have received," he said.

Although the State Council ordered local governments to set up their own minimum use transfer fees in 2004 many didn’t carry out the order or set a very low standard to lure investment, Wang said.

By way of the new scheme the country's land is divided into 15 classes that were divided according to socio-economic status, the land condition and the average of the fees of the land around it, said Liao Yonglin, director of the ministry's land utilization department.

For example the minimum rate for first-class land, such as the Huangpu District in Shanghai, is 840 yuan (US$107) per square meter. Beijing's Chaoyang District is labeled second class at 720 yuan (US$92) per square meter. And land rated 15th class such as that in the western provinces of Gansu and Yunnan is only 60 yuan (US$7.67) per square meter.

However, each government is allowed to set a higher standard according to its own situation. "Through the rights transfer fee policy we hope to promote a better industrial arrangement," Liao said. "For example, in some coastal areas where land is scarce, some industries would not be suitable to these areas."

Liao said that some governments in the region had already started to select projects that benefited long-term development. "Facing increased transfer fees enterprises will make their own choices and governments will also readjust their investment introduction policies," he said.

He added that a gradual trend would result in some industries moving from the eastern part of the country to central and western areas because land prices were so low.

Wang said that rather than leading to price increases the new scheme would help stabilize housing prices. "The standard, which aims to curb the development of too much land for industrial use, will promote environmentally friendlier use of the land," he said.

He also said the country was devising a plan to allot 30 percent of the income from land-use fees to help farmers who had lost their ground.

(China Daily December 28, 2006)