The land quota system in China (sometimes also referred to as “Farmland conversion quota system”) restricts the maximum amount of land used at the subnational level, i.e. provincial level. Then the total quota will be allocated to each city and county town within the province based on their economic performance and population forecast. It should be noted that the land quota is just virtually allocated and can be transferred spatially as long as the land use amount in a city is still within its total allocated land quota. By so doing, theoretically, each city will be offered the equal development right in land use, but in reality, it is a rather controversial instrument in realizing its expected role.
The land quota system in China was largely introduced in 1998 and initially imposed as a counter-measure for addressing the challenge of losing farmland due to the ever fast urbanization and the urban sprawl beyond control in urban spatial development, and for safeguarding the country’s food security. Two policy tools, prime or basic farmland preservation and farmland conversion quotas, were applied in the system. Prime farmland is basically untouchable as even occupying a small size of prime farmland will require an approval by central government, which usually can be long time consuming and be double checked through a hard process.
Another intention of the system is to encourage or push cities to use their developable land more efficiently by using the land in a more intensive and compact manner. “There are three main sources of urban land supply in China: (1) the conversion of farmland into urban land (requires new quota); (2) the conversion of rural construction land into urban land (requires quota transfer mechanism); and (3) the redevelopment of the existing stock of urban land (without quota limitation but with increasingly higher relocation cost)” (Yuan Xiao, Jinhua Zhao, 2015).
Key Words: land quota system, farmland conversion quota, prime/basic farmland preservation
The land quota system is intended to make sure the allocation of the existing urban construction land and the pace of land conversion from farmland to urban land in a reasonable scale, order and speed in the whole country. More importantly, though implementation of this instrument, all cities can obtain more or less the equal opportunity for development in sense of land use.
Land quota system is well implemented in China. The instrument is a purely top-down mechanism, implemented in various government levels. However, due to the different development dynamics and competition between cities, the actual land demand varies. Therefore, the equal allocation of land quota practice caused many challenges in urban development in China. The more dynamic cities cannot get enough land for meeting their needs, while less dynamic cities can have a lot of wasted land. This project has address this issue in its policy briefing.
While generally the land quota system helps urban China slow down its pace of urban expansion, the quantitative assessment on land use efficiency in urban China indicated that the system did not achieve as much as it should be or as expected. For example, a research on assessing the impact of farmland preservation efforts on the changes in urban land use intensity indicates that “(1) the farmland conversion quota system did not contribute to promoting urban land-use intensification between 2000 and 2010; (2) the prime farmland preservation had very limited impact on the intensity of urban land-use intensification; and (3) the central government's supervision of local land-use played a significant role in promoting urban land-use intensification” (Taiyang Zhong, et al, 2018).
The land quota allocation within the jurisdiction between locality and sectors can be distorted too and influence the economic structure for good or bad. A study on impact of land quota allocation on local economic structures based on 120 city sample in China finds” that more land quotas are distributed to industry when the local revenue base relies more on the value-added tax and less on business tax, when local Party secretaries, but not mayors, have long time horizons, and when the locality is assigned more quotas” (Meina Cai, 2011).
Land quota system has advantages at:
Like one coin with two sides, land quota system has various disadvantages for urban development:
Land quota system has been well practiced by most provinces and all prefecture level cities in China although it is controversial in its effect. A more flexible land quota system has been introduced since 2013 read more: Dynamic balance of farmland occupation and reclamation in China). Various studies show that through implementing the land quota system, urban sprawl has been generally controlled and land use intensity increased. Yet due to the stimulation of getting more off-budget from selling land, many cities still consumed more land as they really needed by exaggerating their population forecast and designating more economic development zones. But nevertheless, without the land quota system, much more land would be consumed otherwise.
XIAO YUAN & Zhao JINHUA. 2015. Fixing China’s distorted urban land quota system. In Paulson Policy Memorandum. Chicago, IL: The Paulson Institute. Available at: http://www.paulsoninstitute.org/wp-content/uploads/2017/01/PPM_Land-Quotas_Xiao-and-Zhao_English_R.pdf [Accessed: 25.01.2021].
TAIYANG ZHONG, ZHU QIAN, XIANJIN HUANG, YUNTAI ZHAO, YAN ZHOU & ZEHUI ZHAO. 2018. Impact of the top-down quota-oriented farmlandpreservation planning on the change of urban land-use intensity in China, Habitat International Vol 77, July 2018, Pages 71-79. doi.org/10.1016/j.habitatint.2017.12.013.
CAI, MEINA. 2011. Local determinants of economic structure-evidence from land quota allocation in China. Conference paper, 16th Annual Conference of the International Society for New Institutional Economics. Available at: http://extranet.sioe.org/uploads/isnie2012/cai.pdf [Accessed: 25.01.2021].