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
The minimum fee scheme will take effect from 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. As a result, 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
Wang said that the practice also brought a huge loss of State assets and
damaged the interests of farmers, who had 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 did not carry out the order or set a
very low standard to lure investment, Wang said.
According to 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 metre.
Beijing's Chaoyang District is labelled second class at 720 yuan (US$92) per
And land rated 15th class, such as land in the western provinces of Gansu and
Yunnan is only 60 yuan (US$7.67) per square metre.
Of course, 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 already began to pick projects
that benefit long-term development.
"Facing increased transfer fees, enterprises will take their own choices, and
governments will also readjust their investment introduction policies," he said.
He said a gradual trend would result in some industries moving from the
eastern part of the country to the central and western parts because the land
prices are so low.
Wang said that rather than leading to price increases, the new scheme will
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
Wang also said the country was devising a plan to allot 30 per cent of the
income from land-use fees to help farmers who had lost their land.
(China Daily 12/28/2006 page2)