In recent years, this issue has been a priority for Cai Jiming, a professor of economics and social sciences at Tsinghua University and a member of the Financial and Economic Affairs Committee of the 14th National People's Congress (NPC), China's highest organ of state power.
Cai said urbanization is essential for addressing this issue. According to his calculations, for rural residents' incomes to reach the parity with those of urban workers, each rural household must operate farmland of at least 4.76 hectares. To achieve this, some rural residents will need to leave the land. "This requires a large-scale shift of surplus rural labor to non-farming industries and the urbanization of the rural population," Cai told Beijing Review.
Many rural residents have already migrated to cities and many more will in the future, leaving their rural houses and land unused. As a result, finding ways to generate income from these idle assets has become another focus of Cai's research.
A land issue
"We will protect the lawful land rights and interests of former rural residents who now hold permanent urban residency, protect, in accordance with the law, their rights to contract rural land, to use their rural residential land, and to share in the proceeds from rural collective undertakings, and explore avenues to facilitate voluntary, paid transfers of these rights," states the Resolution of the Central Committee of the Communist Party of China (CPC) on Further Deepening Reform Comprehensively to Advance Chinese Modernization, which was adopted at the Third Plenary Session of the 20th CPC Central Committee in July 2024.
Rural households will be allowed to make use of houses under their legal ownership by leasing them out, contributing them in the form of shares, and engaging in cooperative ventures, according to the document. For instance, farmers' housing can be repurposed for leisure agriculture, rural tourism, cultural experience programs, makerspaces, e-commerce logistics facilities, and other emerging rural industries, rural economy experts say.
In China, rural residents own their own houses but not the land beneath them, which is owned collectively by the village they live in and allocated for use by each household. As a result, while houses can be mortgaged, used for commercial purposes and rented or sold to anyone, each share of homestead can only be traded or transferred to other residents of the village. "These restrictions prevent the formation of a viable market. Consequently, it is difficult to gauge the market value of rural housing," Cai said.
Cai's team has researched this issue for many years. Based on their findings, he proposed a solution at this year's NPC full session, held from March 5 to 11. He suggested expanding the scope of recipients eligible for rural homestead use rights transfers.
Currently, the income gap between urban and rural residents is narrowing. However, Cai said the per-capita income of urbanites is still 2.34 times that of rural residents, and their property incomes are as high as 10 times those of the latter.
Contributing to inequality is the slow pace of registering migrants in cities after they arrive from the countryside. Over 200 million migrant workers and their families, who are counted as permanent urban residents or those who have lived in urban areas for six months or longer, do not obtain permanent urban residency. As a result, they are unable to enjoy the same public services as urban residents in areas such as employment, education, housing, healthcare and social security. This also makes it more difficult for them to sever ties with their rural land, which contributes to the low per-household landholdings. Additionally, the wide gap in property incomes between urban and rural residents is mainly due to restrictions placed on rural residents' rights to use or mortgage their contracted land, which limit their access to property incomes.
On February 23, the CPC Central Committee and the State Council, China's highest state administrative organ, jointly released their first policy statement of the year, dubbed the 2025 No.1 Central Document, outlining nine tasks to promote rural revitalization. It calls for exploring feasible ways to make good use of legally owned rural housing through methods such as leasing, investing in houses for commercial activities in exchange for a share of profit, and other forms of commercial cooperation. But it also states that urban residents are prohibited from purchasing rural houses or homesteads.
"However, urban residents are allowed to rent houses or lease land in rural areas to build houses," Cai said. "We also need to facilitate two-way flows of production factors between urban and rural areas, ultimately increasing rural residents' incomes and fostering integrated urban-rural development."
A wider concern
Chen Wangdi, Secretary of the CPC Branch of Ruxi Village in Foshan, Guangdong Province, and a deputy to the 14th NPC, also addressed rural development in her suggestions at this year's NPC full session, albeit from a different perspective.
This year, Chen focused on supporting new types of agribusiness to increase rural residents' incomes. "One of my suggestions is that governments at all levels support rural collectives in developing agribusinesses through targeted business projects," she told Beijing Review.
For instance, this could involve attracting enterprises to invest in rural business projects. However, the enterprise's role should go beyond merely taking full control or just paying land rent to village collectives and farmers. Instead, a collaborative model should be encouraged in which enterprises and rural residents jointly invest and share the returns.
The 2025 No.1 Central Document emphasizes the need to strengthen supportive policies for emerging agribusiness models to boost rural prosperity. Enterprises, rural cooperatives, family farms and rural households should be encouraged to collaborate more closely and rural residents should have a greater share of the profits of collaborative projects, it states.
"Nurturing and expanding new types of agribusiness while enhancing village collectives' capacity to implement collaborative models can drive income growth for both the collectives and rural residents," Chen concluded.
Cai also called for greater efforts in developing agricultural new quality productive forces featuring new economic models, new businesses and new industries. "Only industrialization can provide agriculture with advanced machinery and enable the shift of surplus rural labor to non-farming industries," he said.
China will support the development of smart agriculture and expand the application of technologies such as artificial intelligence, big data, and low-altitude technologies such as drones, according to the 2025 No.1 Central Document.
