Capital Intensive China

Land deals set to transform rural China

  • Published 03 Sep 2009

Farmers, agricultural entrepreneurs and rural financial institutions are finding myriad ways to monetise one of China's last great untapped assets.

Agricultural land used to be a largely inert asset, largely untraded and with indeterminate monetary value. This is now changing, and quickly. Farmers, agricultural entrepreneurs and rural financial institutions are finding myriad ways to monetise one of China's last great untapped assets. The broader consequences of this change, in our view, are set to be no less significant than the privatisation of the nation's housing stock, which took off from the late 1990s onward: It should help to make farming larger scale, more mechanised and more efficient. It should also accelerate the establishment of new rural enterprises and the use of land usage rights as collateral will, over time, significantly increase the financial assets held by rural financial institutions. As with many incipient rural trends, comprehensive statistics on the monetisation of land do not exist. Thus, we have compiled a range of local government statistics and anecdotal evidence.

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