Social Sciences in China (Chinese Edition)

No.8, 2014

The Legal Dilemma of the Financialization of Agricultural Land and a Way Forward

(Abstract)

Gao Shengping

The strict limits on the financialization of agricultural land in the current legal system impede the development of rural finance. Objective needs have driven local governments’ exploration of different modes of financialization, providing samples for analysis in connection with the next steps in institutional development. The financialization of agricultural land arises naturally from its nature as an asset. Whether one acknowledges the land’s social security function does not affect its financialization. In institutional rebuilding, the particular character of mortgages on agricultural land should be considered. The mortgage-holder must be a financial organization, not a natural person or an ordinary firm. The person mortgaging the right to operate the land under the contract responsibility system does not require a stable non-agricultural occupation, a stable source of income, or the consent of the party issuing the contract. Registration constitutes public notification of the setting up of a mortgage and is also the condition whereby it comes into effect. The mortgage cannot be realized by means of discounting, but compulsory management can be used to subcontract or let the relevant agricultural land. The debt can then be liquidated from this income and the land returned to the mortgagor.