Cautious hopes for China land reform The earthquake that devastated Sichuan province in 2008, killing more than 80,000 and displacing millions, ripped through the tourist town of Dujiangyan in three terrifying minutes, levelling homes, shops and ancient temples. As people rebuilt their lives and homes in the aftermath of the quake, officials eased restrictions on land sales, which are closely managed and hugely controversial in China. Five years later, in the wake of this week's senior Communist party meeting promising economic reform, a watered-down version of the Dujiangyan experiment on selling land zoned for building - as opposed to farmland - is now likely to be rolled out across the country. This week's Third Plenum concluded with calls to establish "an integrated urban-rural construction land market" and give "rural dwellers more property rights." In a sign of how eager provinces are for change, Anhui on Wednesday said it would set up rural land exchanges, cutting out the government middlemen that buy rural land zoned for building on the cheap and resell it for far more. But Chinese experts have warned against reading too much into the plenum's calls on land reform. Under the Communist system, all land in China belongs to the state. The proposed reforms will not lead to the introduction of individual property rights. There was similar talk of reform in party policy meetings five years ago but that failed to result in sweeping change, said Shi Xiaomin, vice chair of China Society of Economic Reform. The earlier communique used the word "gradually," wrote Jinsong Du of Credit Suisse in Hong Kong: "Removing "gradually" may indicate a sense of urgency, but it also implies things did not change much in the past five years - due to various challenges. Therefore, we may not see the widely expected breakthroughs on land reforms any time soon. The political impetus for change is clear. In contemporary China, farms and homes are easily expropriated to make room for cities, highways, factories and mines. Villagers are compensated according to a fixed formula that has little relationship to the market value of the property. The immense difference between the legal cost of expropriation and the price of sale to a developer is a main source of revenue for local governments, as well as a big temptation for corruption. The party itself has identified the resulting discontent - along with corruption - as a leading threat to its continued rule. "Land disputes make up the most common type of social unrest, certainly accounting for over half," says Wang Erping, who studies the reasons behind demonstrations, riots and other clashes at the Chinese Academy of Sciences. Land disputes make up the most common type of social unrest, certainly accounting for over half Wang Erping In Dujiangyan, residents rebuilding their homes were allowed to transfer some land rights directly. People rebuilt smaller, more modern homes, freeing the remainder of their plots for sale to small hotels or tourist shop developers from out of town, according to a detailed study of the pilot published in the China Economic Journal. But the fact that such small plots were sold individually might make it impractical for wider scale replication, given the speed at which Chinese cities are growing. The government is more likely to replicate pilots tried out in elsewhere in Sichuan province. In the city of Chengdu, rural land zoned for building can be sold in blocks on an exchange. This way, rural dwellers receive a much higher return on sales to urban developers than when local governments acted as middlemen. Creating a formal market for some rural land chimes with the communique's overall goals of reducing the bureaucracy that distorts the economy and fuels corruption. Given that a lot of the land on city outskirts is deemed to be rural land zoned for building, the planned reforms also fits China's new emphasis on urbanisation. But any reform is unlikely to be free of controversy. Block sales are likely to lead to disputes if villagers are forced to move. Such a big decision should be taken by the village committee together. But if village leaders sell off the land, pocket the money and don't tell people, it could be a big source of problems," says Wang.