What are land contracting rights?

Land contracting rights(承包经营权)are the rights for the members of rural collective economic organizations (CEOs) to contract land owned by the CEOs or other owners for cultivation or similar uses. Armed with land contracting rights, land users, often farmers, are entitled to enter into contracts with CEOs or other owners to possess, make use of and benefit from collective land (under certain circumstances, State-owned cultivated land, forest land and grassland) for a fixed period of time.

The term of rights to use collective land for cultivation or similar purpose is:

The term for cultivated land is 30 years, for grassland it is from 30 to 50 years, and for forest land it is from 30 to 70 years. The term for special woods may be longer, subject to approval from the government authority in charge of forestry.

Land contracting rights play critical role in Chinese countryside. Chinese law requires that all villagers are entitled to acquire land contracting rights to encourage them to increase agricultural products. Chinese law further requires that farmers can only transfer land contracting rights under very few circumstances to keep social stability.

As a result, all collective land is divided into small pieces and it inevitably discourages farmers from investing in land such as buying machines.