Chapter Five Land Use Conversion in Sihui Land Use Conversion in Sihui: A Case Study Figure 5.1 Sihui People’s Square and Government Buildings Previous chapters have examined the general political and fiscal institutions that structure local governments’ behaviour in supplying land for conversion. To account for local variations in the extent of land use conversion, this chapter and the next present a case study of Sihui with a focus on the determinants of land use conversion at the county level as well as the township level. As we shall see in this chapter, Sihui’s geographical landscape consists of a relatively small area of flat terrain in comparison to the area of hilly and mountainous land within its territory. The difficulty of developing land with accessibility and infrastructure on mountainous terrain has been compounded by Sihui’s long-term fiscal deficit. Yet the need to improve Sihui’s fiscal solvency has also compelled local officials to exploit the land resources under their jurisdiction, which resulted in the concentration of land use conversion and construction land in a few towns and the city district located on flat plain. Riding on Pearl River Delta’s industrial relocation Yew Chiew Ping 110 Chapter Five Land Use Conversion in Sihui beginning from late 1990s and encouraged by the top-down emphasis on industrialization, career-maximizing officials have flouted land use quotas in order to meet their goals. The outcome is a conversion of agricultural land in excess of what was initially planned as a survey of the area of agricultural land taken up for nonagricultural development in Sihui reveals discrepancies when verified against the county’s land use plan (tudi liyong zongti guihua).1 Sihui’s Geography and Land Use Distribution A county-level city of Zhaoqing, Sihui, whose name derived from the confluence of four rivers in its territory, is situated on the northwestern fringe of the Pearl River Delta.2 As of 2005, the city had a population of 430,058, of which agricultural population made up 67 percent and non-agricultural population 33 percent.3 An overwhelming 89 percent of Sihui’s 121,299 hectares of land is agricultural whereas construction land and unused land take up 7.9 percent and 3.2 percent respectively.4 This, however, does not mean that Sihui has an abundant supply of developable agricultural land for conversion to non-agricultural purposes. Its geographical landscape, which has a distinct impact on the way the city has evolved, imposes severe limitations on the availability of agricultural land for conversion. Sihui is dominated by mountainous and hilly terrain. The northwestern region, including the towns of Weizheng, Jianglin, Huangtian and Shigou, is mountainous The land use plan is important because the approval for converting land to non-agricultural use, granted annually in batches by the next higher level of government, is tied to the approval for a locality’s land use plan. The amount of arable land to be conserved and converted has to strictly adhere to that determined in the land use plan at various administrative levels. According to Chapter 5, Article 44 of the Land Administration Law: “Within the limits of the scale of land for construction in cities, villages or towns confirmed by the overall land use plan, where agricultural land is to be converted to land for construction to execute the aforementioned plan, approval is to be granted in batches in accordance with the annual land use plan, by the organ that originally approved the overall land use plan.” See also Keng, “China's Land Disposition System,” pp. 344. Liu Weikeng, “Lingnan shezhi zuizao de liu xian zhiyi – Sihui” (“Sihui – one of the six counties set up the earliest in Lingnan’s history”), Lingnan wenshi (Lingnan Cultural History), No. (2006), pp. 12-14. Sihui was administratively reclassified as a county-level city in November 1993. Refer to “Sihui shi fazhan gaikuang” (“The general development of Sihui city”), Sihui government website, http://www.gdsihui.gov.cn, accessed 20 June 2007. See Zhaoqing tongji nianjian 2006 (Zhaoqing Statistical Yearbook 2006), Wang Ronghua et al. (eds), (Zhongguo tushu chubanshe), pp. 89. Sihuishi guotu ziyuanju (Sihui city Land Resources Bureau), “Sihuishi tudi liyong zongti guihua tiaozheng shuoming” (“Explanation of adjustments in Sihui city’s land use master plan”), April 2005. Yew Chiew Ping 111 Chapter Five Land Use Conversion in Sihui while the towns in central Sihui – Xiamao and Jianggu – are situated on hilly terrain. Only southeastern Sihui is an alluvial plain through which the River Sui runs. Figure 5.2 Map of Sihui Sources: Available at http://photo.lvren.cn/big_image_2/23169.html; http://www.shatangoj.cn/node/183, accessed 12 May 2008. Yew Chiew Ping 112 Chapter Five Land Use Conversion in Sihui A large part of Sihui’s land for construction falls within the southeastern territory. In 1996, most of Sihui’s land for construction was concentrated around the lower reaches of River Sui, where the towns of Dongcheng, Chengzhong and Zhenshan and Dasha took up 39.2 percent of the county’s total land for construction. Moreover, Dongcheng, Chengzhong and Zhenshan alone accounted for 82 percent of the entire county’s land for urban use. Fifty-seven percent of stand-alone mining and industrial sites was also clustered in the southeastern town of Dasha, the rest being distributed mostly in the Chengzhong and Dongcheng region. The transportation system was most developed in the central and southeastern towns of Dasha, Jingkou, Jianggu, Shigou, Longfu, Chengzhong and Dongcheng, Zhenshan, occupying more than 55 percent of Sihui’s total land for transportation (refer to Appendix A for a breakdown of the land use distribution in each town).5 According to Sihui’s land use plan, over the period of 1996-2010, agricultural land and unused land in the entire county shrink by 92 hectares and 609 hectares respectively while land for construction expands by 700 hectares mainly in the towns of Dasha, Xinjiang, Huangtian, Zhenshan, Chengzhong, Dongcheng (see Table 5.1). The period also witnesses the loss of 171 hectares of arable land.6 Most of the land for residential, industrial and mining sites is devoted to village settlements and for use in the central city district of Dongcheng, Chengzhong and Zhenshan over the period.7 By 2010, only 2,065 hectares of land shall be devoted to industrial and mining sites in the whole of Sihui, increasing by around 570 hectares from 1996.8 Sihuishi guotu ziyuanju (Sihui city Land Resources Bureau), “Sihuishi tudi liyong zongti guihua, 1996-2010” (Sihui city’s land use master plan, 1996-2010). That said, there is no guarantee that the quality of arable land does not suffer in the process since local governments are prone to using land of inferior quality and in remote locations for replacement. Without further information, it is impossible to gauge the actual loss in cultivated land area. “City district” in the context of Sihui refers to the areas of Dongcheng, Chengzhong and Zhenshan. Sihuishi guotu ziyuanju, “Sihuishi tudi liyong zongti guihua, 1996-2010.” Yew Chiew Ping 113 Chapter Five Land Use Conversion in Sihui Sihui’s land use plan also indicates that the distribution of different categories of land does not change significantly from 1996 to 2010. By 2010, Dongcheng, Chengzhong, Zhenshan and Dasha still account for 39.4 percent of the entire city’s land for construction and 44 percent of the city’s land for residential, industrial and mining sites. In the most developed city district, construction land as a proportion of Sihui’s total construction land only increases from 22.6 percent in 1996 to 24.5 percent in 2010 while agricultural land area is reduced slightly from 8.89 percent to 8.65 percent. Roads are still concentrated in the same central and southeastern areas, accounting for around 57.2 percent of the total land area taken up by roads.9 Table 5.1 Land Use in Sihui (hectares) 1996 2000 2010 Difference between 1996 and 2010 Total land area 121299.11 121299.11 121299.11 Land for agriculture 107988.13 107862.39 107896.11 -92.02 Arable land 23637.77 23590.36 23467.01 -170.76 Orchards 4242.72 4392.63 4397.65 +154.93 Forest land 65956.86 65856.69 66964.37 +1007.51 Grassland 108.31 101.65 110.00 +1.69 Water surfaces 14042.47 13921.06 12957.08 -1085.39 Land for construction 9419.69 9567.97 10120.67 +700.98 Residential, industrial & mining 6647.08 6766.10 7158.35 +511.27 1. Residential 2973.33 2. Industrial & mining 2065.02 3. Others 2120 Roads 1292.81 1320.18 1492.46 +199.65 Water conservancy 1479.80 1481.69 1469.86 -9.94 Unused land 3891.29 3868.75 3282.33 -608.96 Source: Sihuishi guotu ziyuanju (Sihui city Land Resources Bureau), “Sihuishi tudi liyong zongti guihua tiaozheng shuoming” (“Explanation of adjustments in Sihui city’s land use master plan”), April 2005. Industrial Relocation from Eastern Pearl River Delta Industrial restructuring and relocation from the more developed parts of Guangdong since late 1999 had boosted the demand for construction land in Sihui. The recent spate of industrialization in Sihui has to be seen in context of uneven development in the Pearl River Delta.10 Its western wing, which comprises of five prefectural-level Refer to Appendix A. Gu Chaolin, Shen Jianfa, Wong Kwan-yiu and Zhen Feng, “Regional Polarization under the SocialistMarket System since 1978: A Case Study of Guangdong Province in South China,” Environment and Planning A, Vol. 33, No. (2001), pp. 97-119. 10 Yew Chiew Ping 114 Chapter Five Land Use Conversion in Sihui cities including Zhaoqing, has registered a slower growth than its eastern wing. Although 62 percent of the total population in the Pearl River Delta resided in the western wing, which takes up half of its total area, it produced only 31.6 percent of the region’s GDP in 2002. A development bottleneck, however, had set in with shortages in cheap land and labour in the eastern Pear River Delta, leading investors to turn to the western cities for less expensive land and labour.11 Situated in the western Pearl River Delta, Zhaoqing is still a largely agricultural prefecture-level city with a cultivated land area of 132,439 hectares, in contrast to other highly industrialized prefectures, such as Dongguan, Foshan, Shantou, and so on.12 The prefecture’s location in the mountainous region and the underdevelopment of roads had foiled its government’s attempts to draw investments through offering affordable land and other factors of production in the mid 1990s.13 With improvements in its basic infrastructure over the years and China’s plan to construct a bridge linking Hong Kong, Zhuhai and Macau by the end of 2009, the developmental potential of the western Pearl River Delta looks to be greatly enhanced in this decade.14 In 2004, the Guangdong provincial government announced its decision to make Zhaoqing the destination for foreign capital and the relocation of industries within the Pearl River Delta.15 Pearl River Delta’s industrial adjustment began in late 1990s as Yeung Yue-man, “An Emerging Development Focus from the Pearl River Delta West to Western Guangdong: A Research Report,” Eurasian Geography and Economics, Vol. 47, No. (2006), pp. 245-46. 12 Guangdong tongji nianjian 2005, pp. 287; Zhaoqing tongji nianjian 2006 , pp. 389. Zhaoqing’s composition of GDP by industry type is similar to that of Maoming, Meizhou, Shanwei, Heyuan, Yangjiang, Qingyuan and Yunfu, and is therefore exemplary of a typical agricultural prefecture on the road to industrialization and urbanization. See Guangdong tongji nianjian 2005, pp. 84. 13 Luo Xiaotian, “Xiujian huangjin lu, lutong caitong” (“Building the road to prosperity”), Zhujiang jingji (Zhujiang’s Economy), No. 10 (1996), pp. 17-18; Xing Yi, “Zhaoshang yinzi xintiandi” (“New terrain in drawing businesses and investments”), Zhujiang jingji (Zhujiang’s Economy), No. 10 (1996), pp. 19-20. 14 Yeung, “An Emerging Development Focus,” pp. 246; Chen Jianxing, “Fagaiwei: lizheng mingnian niandiqian kaijian gangzhu’ao daqiao” (“The Committee of Development and Reform: Aiming to build the Hong Kong-Zhuhai-Macau Bridge before the end of next year”), Xinhua meiri dianxun (Xinhua Daily News), 12 November 2008, pp. 007. 15 Deng Honghua, “Fanzhu sanjiao fazhan zhanlüe zhong de ‘Zhaoqing xianxiang’,” (“The ‘Zhaoqing phenomenon’ in the strategic development of the Pan Pearl River Delta”),Taisheng (Voice of Taiwan), 11 Yew Chiew Ping 115 Chapter Five Land Use Conversion in Sihui traditional labour-intensive industries such as textiles, food and beverage, leather, plastic and toy manufacturing, moved out of the region to make way for new industries.16 The diffusion and relocation of industries from nearby Foshan, Guangzhou and Dongguan where land is in severe shortage has contributed to the setting up of development zones in Sihui. In 1999, five industrial zones – in the towns of Dongcheng, Chengzhong, Xinjiang, Longfu, and Nanjiang – were set up in Sihui to “seize the historic opportunity of the Pearl River Delta’s industrial adjustment.”17 In November 2000, the first talk between business and government representatives from the Pearl River Delta River and those from Guangdong’s mountainous region took place, during which over 600 deals for cooperation and industrial relocation were sealed.18 The pace of industrial relocation quickened in 2001 when the Guangdong provincial government embarked on a plan to adjust and upgrade its industrial structure.19 One of the strategies was to encourage the relocation of certain industries in the Pearl River Delta to the less developed eastern, western and mountainous regions of the province to solve problem of labour shortage, land saturation and others. Some of these industries are heavy pollution industries, such as biochemical, pharmaceutical, metal processing and so on. This is a deliberate strategy as one of the main reasons for structural adjustment is the pressure of environmental degradation on the development in the Pearl River Delta. From 2005, for instance, Shenzhen and Dongguan had established environmental protection policies to eliminate heavy No. (2004), pp. 64-65; Liang Ganghua, “Zhusanjiao chanye jiasu xiang zhoubian ‘shanzhuang zhuanyi’” (“Pearl River Delta industries accelerating their transfer to surrounding regions”), Zhonghua xinwenbao (Chinese News), 27 December 2007, pp. K01. 16 Wang Xianqing, “Zhusanjiao chanye zhuanyi : di’erci langchao xia de jueze” (“Industrial relocation in the Pearl River Delta: making a choice under the second wave”), Zhujiang jingji (Pearl River Delta Economy), No. Z1 (1997), pp. 22-25. 17 Sihui nianjian 2000, pp. 95. 18 Huang Jian, “Shoujie Zhusanjiao yu shanqu jinghe qiatanhui chengguo fengshuo” (“The first talk on economic cooperation between Pearl River Delta and the mountainous region bears fruit”), Guangdong kejibao (Guangdong Science News), 30 November 2000, pp. 001. 19 Yuefuban document no. 15 (2005), “Guangdongsheng renmin zhengfu bangongting guanyu yinfa Guangdongsheng gongye chanye jiegou tiaozheng shishi fang’an [xiudingban] de tongzhi” (“A notice from the Guangdong provincial people’s government office regarding the promulgation of the measures for industrial restructuring in Guangdong [revised version]”). Yew Chiew Ping 116 Chapter Five Land Use Conversion in Sihui pollution industries and those using backwards and low productivity technology. Some of these industries will be relocated to industrial parks in the mountainous regions to “centralize pollution control.”20 One such industrial zone is the Zhaoqing Municipal Asia Metal Recycling and Processing Zone located in Longfu town of Sihui, which has been set up with the approval of the provincial environmental protection bureau and the Guangdong government. As its name indicates, it targets metal processing industries seeking relocation. In 2008, at a meeting with potential investors in Shunde of Foshan, Sihui signed agreements with 60 enterprises, of which 30 are metal processing industries, 19 relocating from the Pearl River Delta.21 The local government’s decision to supply more land for industrial development in Sihui had been encouraged by the top-down emphasis on industrialization. In a bid to spur Sihui’s industrialization drive, local officials had adopted several measures, such as using land to incentivize investments and using land proceeds to furnish monetary benefits for cadres who bring in investments. Top-down Emphasis on Industrialization The industrialization of less developed regions had been exhorted by government leaders of Guangdong. Guangdong provincial level leaders had repeatedly urged Zhaoqing to quicken the pace of industrialization and urbanization.22 Its governor, for Wang Pang, “Zhusanjiao chanye dazhuanyi zhimian ‘huanjing menkan’,” (“Industrial Relocation in Pearl River Delta confronts ‘environmental threshold’”), Zhongguo xinxibao (China Information News), 21 June 2006, pp. 002. 21 “Woshi chengwei chengjie Zhusanjiao hexinqu jinshu jiagong chanye de ‘wadi’” (“Sihui becomes the ‘collection point’ in receiving metal processing industries from the Pearl River Delta”), Sihui dianshitai (Sihui TV Station), 23 April 2008, available at http://www.gdsihui.gov.cn, accessed 14 May 2008. 22 Huang Huahua, “Ruiyi chuangxin, jiakuai fazhan” (“Innovation to speed up development”), Guangdong jingji (Guangdong Economy), No. 11 (2004), pp. 6-9; Wang Chuilin, Zheng Jun and Yue Zong, “Guangdong shanqu yao dali tuijin gongyehua jincheng” (“Guangdong’s mountainous region should push for industrialization”), Minying jingji bao (Minying Economic News), 20 May 2005; Pan Chaoyang, “Yong ‘fanzhusanjiao’ zhanlue tuijin Sihui shi (xian) yu jingji fazhan” (“Promote the economic development of the Sihui region with a ‘pan Pearl River Delta’ strategy”), Xiandai xiangzhen (Modern Town and Township), No. (2005), pp. 41-43. 20 Yew Chiew Ping 117 Chapter Five Land Use Conversion in Sihui instance, had called for a path of “new” and “hi-tech” industrial development for Zhaoqing. He lamented that the prefecture’s GDP was “only 50 over billion yuan,”23 prioritized industrialization over agriculture and stressed the importance of attracting foreign investments to Zhaoqing: I had been to Dawang, Zhaoqing’s new and hi-technology development zone. Initially an agricultural farm, Dawang was transformed into a new and hi-tech development zone. This is the right path to go because Dawang’s development would be hampered had it chosen to promote agriculture. In these two years, Dawang had attracted over 100 items and doubled its financial strength through drawing investments and businesses. I hope Zhaoqing can also create innovative ways of doing so, actively bring in international consortiums as well as private enterprises within and outside of Guangdong . . .24 At the prefecture level, Zhaoqing aims to ride on the development of the Pearl River Delta region and galvanize the industrialization of counties and cities along River Sui including Sihui, Guangning and Huaiji to realize the goal of a “River Sui Industrial Corridor.” The growth of development zones was encouraged by Zhaoqing government to attract industries in the Pearl River Delta region seeking to relocate.25 This development strategy was quickly adopted and echoed by Sihui’s local leaders. In May 2005, Sihui’s mayor and Party secretary took the lead to promote the city to investors in Shenzhen, bringing 32 enterprises to the county-city; Sihui’s Xiamao town government also led a team to Foshan in 2006 to draw investors to the town’s Longwan Ceramic Industrial Zone.26 In an interview with the press, the city’s Party The governor was mistaken. As of 2005, Zhaoqing’s GDP was 45 billion yuan, lower than what he thought. Refer to Zhaoqing tongji nianjian 2006, pp. 389. 24 Huang Huahua, “Ruiyi chuangxin,” pp. 7. 25 “’Wucheng yiti’ daidong jingji kuaisu fazhan” (“‘Five zones in one’ to promote fast economic development”), Zhongguo xinxi bao (China Information News), 25 November 2002, pp. T00; Liu Shidong, “Dali fazhan nongcun jingji, tuidong Zhaoqing shixian kuayueshi fazhan” (“Strengthen village economic development to promote Zhaoqing’s growth beyond boundaries”), Guangdong jingji (Guangdong Economy), No. (2004), pp. 112-14. 26 Xiao Lihuai and Ye Lanying, “Sihui zai Shen zhaoshang miaozhun chaoyiyuan xiangmu” (“Sihui’s efforts to draw investments in Shenzhen aim for items beyong 100 million yuan”), Shenzhen shangbao (Shenzhen Business News), 31 May 2005; “Xiamaozhen zai Foshan juxing Longwan taocicheng zhaoshang tuijiehui” (“Xiamao town promotes Longwan Ceramic Zone in Foshan”), 12 January 2006, Zhaoqing nongye xinxi wang (Zhaoqing Agricultural News Web), http://www.gdzqagri.gov.cn, accessed 15 October 2005. 23 Yew Chiew Ping 118 Chapter Five Land Use Conversion in Sihui secretary urged the development of industrial zones and clearing of land to make room for industries in the Pearl River Delta region seeking relocation: To better accommodate the relocation of industries and make full use of Sihui’s potential as the “nationwide top hundred small and medium cities with the best investment potential” in 2006 . . .Sihui should ride on the brand name of the [city’s] Provincial-Level Non-State Scientific Technology Zone to spearhead the construction of industrial zones in the whole city, and spare no effort in building 120 square kilometres of an industrial cluster zone. While going all out to resolve the land bottleneck in drawing investments and actively seeking higher quota of non-agricultural land from the upper levels, we must clear up idle land, free up existing land stock for more efficient use of land.27 The Party secretary’s words highlight the tension between land and industrialization in Sihui. Going by Sihui’s land use plan, the proposed 120 square kilometres (12,000 hectares) of industrial cluster zone has already exceeded the city’s designated area of total construction land in 2010, which is 101.2 square kilometres (10,120 hectares) in all for industrial, residential, mining, water conservancy and transport purposes (See Table 5.1).28 Yet land use quotas in Sihui have been cast aside by local cadres in response to the top-down emphasis on industrialization. The drawing of industries and the setting up of development zones in Sihui gained pace from the early 2000s. After the Fuxi Industrial Zone was set up in 2001, other towns in Sihui quickly followed suit to set up Xinjiang, Dongcheng, Chengzhong, Zhenshan, Longfu and Fulong industrial zones. Smaller zones also sprung up in other towns and villages.29 As of 2002, Sihui city reportedly had 16 development zones with a total area exceeding 20 square kilometres (2,000 hectares).30 This land area had already surpassed the 15.58 square kilometres (1,558 hectares) allocated to industrial and mining sites in 2000 based on Sihui’s land use plan.31 Liang Zhiqiang, “Dazao chengjie chanye zhuanye de qiaotoubao” (“Creating a bridgehead to accommodate industrial relocation”), Nanfang ribao (Southern Post), 25 September 2007, pp. A12. 28 Sihuishi guotu ziyuanju, “Sihuishi tudi liyong zongti guihua tiaozheng shuoming.” 29 Sihui nianjian 2002, pp. 117, 198, 203-204, 208, 213, 215-216, 218, 220. 30 Gao Jiao, “Sihui shi gongye yuanqu jianshe de diaocha fenxi” (“A research and analysis on the construction of industrial zones in Sihui city”), Tongji yu yuce (Statistics and Projection), No. (2002), pp. 53-55. 31 Sihuishi guotu ziyuanju, “Sihuishi tudi liyong zongti guihua, 1996-2010.” 27 Yew Chiew Ping 119 Chapter Five Land Use Conversion in Sihui roads as well as the administrative charges for the land use certificate. Land was also offered for rent at the lowest stipulated price in each industrial zone. There was even a further “discount” for investments exceeding 50 million yuan or projects with a short construction period. Various administrative charges, such as various license fees, the construction enterprise management fee, urban basic infrastructure fee, construction safety supervision and quality control fee were also waived.37 In 2007, new measures were drawn up by Sihui’s government. Industries and enterprises labelled as “high technology” may pay 50 percent of the land conveyance fee as initial sum and the balance by instalment over the next three years.38 On top of the waiver of various administrative fees, enterprises that contribute tax amounting to five million yuan and above in a year are entitled to a cash reward of 50,000 yuan. In addition, there is a “progressive award” of 10,000 to 20,000 yuan for every million yuan of tax increment using the sum of tax paid in 2006 as the base amount.39 As from 2007, the Sihui government has allocated ten percent of the net income from land conveyance as cash rewards for drawing businesses and investments of above 10 million yuan to the county-level city every year. The money is paid to a specialized account managed and dispensed by the county’s finance bureau. Individuals are entitled to a lump sum of up to 15,000 yuan while a danwei is rewarded with 5,000 yuan for every one million US dollars of foreign capital it secures. Additional 20 percent monetary reward is given to those who manage to fulfil 60 percent of the year’s investment quota by June and a further 30 percent is awarded for the full attainment of the quota by September.40 These bonuses or monetary rewards vary by “Sihuishi guli yuanqu gongye fazhan zanxing banfa” (“Tentative measures to promote industrial zone development in Sihui city’”). 38 “Sihuishi gongye xiangmu touzi youhui banfa” (“Preferential measures for the investment of industrial items in Sihui city”). 39 Sifu document no.4 (2007), “Yinfa ‘2007 nian Sihuishi nashui dahu jiangli banfa” (“Promulgation of ‘Measures to reward major tax payers in Sihui city in 2007”). 40 Sifu document no. (2007), “Sihuishi zhaoshang yinzi jiangli zanxing banfa” (“Sihui city’s tentative measures for rewarding the attraction of business and investment”); Siban document no. 14 (2007), “Guanyu xiafa 2007 nian xishou waizi gongzuo jiangli banfa de tongzhi” (“Regarding the notice on the 37 Yew Chiew Ping 122 Chapter Five Land Use Conversion in Sihui sector and the amount of tax or investment contributed by the particular business (see Table 5.3). Towns and street offices that bring in new enterprises are further rewarded when the tax revenues collected from enterprises exceed the requirement set by the county government. Table 5.3 Monetary Rewards for Attracting Businesses and Investment to Sihui Category A. Industry Cash reward based on the amount of value-added tax (VAT) and enterprise income tax contributed by the enterprise to local revenue in the first year: 1) A cash reward of 50,000 yuan for a tax contribution of one million yuan and above 2) A cash reward of 80,000 yuan for a tax contribution of three million yuan and above 3) A cash reward of 150,000 yuan for a tax contribution of five million yuan and above Category B. Agriculture Cash reward based on the amount of initial investment by the enterprise: 1) A cash reward of 30,000 yuan for an investment of 30 million yuan and above 2) A cash reward of 50,000 yuan for an investment of 50 million yuan and above 3) A cash reward of 80,000 yuan for an investment of 100 million yuan and above Category C. Trade and Commerce, Tourism Cash reward based on the amount of VAT and enterprise income tax contributed by the enterprise to local revenue in the first year: 1) A cash reward of 50,000 yuan for a tax contribution of one million yuan and above 2) A cash reward of 80,000 yuan for a tax contribution of three million yuan and above 3) A cash reward of 150,000 yuan for a tax contribution of five million yuan and above Source: Sifu document no. (2007), “Sihuishi zhaoshang yinzi jiangli zanxing banfa.” These incentives appear to be highly effective. In 2007, the GDP growth of Sihui hit 18 percent, surpassing that of other counties in Zhaoqing.41 Sihui’s revenue was reportedly the highest in Zhaoqing in the same year, hitting 436.72 million yuan and recording a growth of 38 percent from the previous year. Tax revenue made up 62.3 percent of its total revenue, and the revenue growth was attributed to the promotion of industrialization as ten out of 15 enterprises contributing over ten million yuan in tax revenue each year were industrial enterprises.42 For instance, a ceramic plant taking up 1,000 mu of land in a development zone in Xiamao town had paid 110 million yuan for rights to the use of land alone, investing a total sum of 600 million measures for rewarding the bringing in of foreign capital in 2007”). 41 “Woshi qunian jingji fazhan liangdian shanxian, GDP zengfu ju Zhaoqingshi diyi” (“Highlight in Sihui city’s economic development last year; GDP growth is top in Zhaoqing city”), 25 January 2008, Zhaoqing nongye xinxi wang (Zhaoqing Agricultural News Web), http://www.gdzqagri.gov.cn, accessed 21 April 2008. 42 “Woshi shishi chuangshui jihua jie shuoguo” (“Our city’s implementation of the tax increment plan bears fruits”), January 2008, Sihui government website, www.gdsihui.gov.cn, accessed 14 May 2008. Yew Chiew Ping 123 Chapter Five Land Use Conversion in Sihui yuan and generating an estimated tax revenue of million yuan.43 Table 5.4 shows the projected revenue and output of various industrial enterprises that chose to locate or expand their production in Sihui in 2007. Together, the forecasted tax revenue generated by these enterprises amounted to 1.67 billion yuan. Table 5.4 Revenue from Industrial Enterprises in Sihui, 2007 Item Land Area (mu) Total Investment (million yuan) 800 to 1,000 1.Jingdaxing Paper Products 3,000 Processing Base 2. Zhejiang Shangguang 594 1,000 Group 3. Tenghui Huanan Mould 200 200 Processing Centre 4. Dahong Minggui 110 100 5. Huimei Apparel 10,000 8,500 6. Fuchang Aluminium 2,000 500 Products Limited 7. Jiaxin Glass Manufacturing 40 60 Limited 8. Kunpeng Recycling Limited 180 20 9. Lehua Ceramic Sanitary 1,000 600 Ware 10. Xingliao Nonferrous Metal 300 160 Limited 11. Zhengrong Thermal 200 50 Insulation Materials Limited Source: “Sihuishi zhaoshang yinzi zhongdian gongye xiangmu.” Projected Annual Output (million yuan) 6,000 Projected Tax Revenue (million yuan) 100 15,000 600 3,000 50 500 26,000 2,000 250 600 200 300 300 3,000 50 100 Government Engineered Urban Sprawl Along with the development zone fever was a boom in Sihui’s real estate from the late 1990s. There was a sudden expansion in the floor space of buildings constructed, from 224,747 square metres in 1998 to 314,091 square metres in 1999. This increased further to 354,375 square metres in 2001.44 Over the past decade, there were two sharp hikes in government investment in capital construction (see Figure 5.3). From 1998 to 1999, government expenditure on capital construction grew nearly tenfold from 1.09 million yuan to 10.67 million yuan. It more than doubled from 2001 to 2003, reaching a high of 22.48 million yuan in 2003.45 “Sihuishi zhaoshang yinzi zhongdian gongye xiangmu qingkuang tongjibiao” (“Statistics on prime industrial projects drawn to Sihui city”), Sihui government website, http://www.gdsihui.gov.cn, accessed 21 April 2008. 44 Sihui tongji nianjian 1990-2001, pp. 195 45 Zhongguo chengshi tongji nianjian 1997, Ren Caifang et al. (eds.), (Zhongguo tongji chubanshe, 1998), pp. 65; Sihui nianjian 2005. 43 Yew Chiew Ping 124 Chapter Five Land Use Conversion in Sihui Figure 5.3 Sihui’s Government Expenditure on Capital Construction (10,000 yuan) 2500 2000 1500 1000 500 2004 2003 2002 2001 2000 1999 1998 1997 1996 Sources: Sihui nianjian 1998, pp. 220; Sihui nianjian 1999, pp. 256; Sihui nianjian 2000, pp. 233; Sihui nianjian 2001, pp. 529; Sihui nianjian 2003, pp. 239; Sihui nianjian 2004, pp. 252; Sihui nianjian 2005, pp. 267. Urban building, including an expansion of the city district (chengqu), was part of Sihui government’s ambition to attain a level of urbanization of over 70 percent by around 2010, financed through bank loans, private investments and subsidies from upper level government while expropriating and amassing land.46 The city district of Sihui had already expanded from 19.2 square kilometres (1,920 hectares) in 2000 to 23.7 square kilometres (2,370 hectares) in 2006, growing by 23.4 percent, which surpassed the 14.1 percent growth in non-agricultural population from 2000 to 2005.47 In 2004, Sihui government announced ambitious plans to expand city district to beyond 48 square kilometres (4,800 hectares) in five years, with an urban population and non-agricultural population of over half a million.48 Given that the total area of construction land in the city district spanning Dongcheng, Chengzhong and Zhenshan is only 24.75 square kilometres (2,475 hectares) by 2010, the government’s plan means that it will exceed the quota for construction land by 100 percent or more. Even if all the 3.84 square kilometres of unused land in the city district is occupied for the expansion, the government will still have to take up over 20 square kilometres (2,000 hectares) of agricultural land to meet its target. “Sihuishi 2004 nian zhengfu gongzuo baogao.” Wu Sheng, “2006 nian zhengfu gongzuo baogao” (“Government report 2006”), 17 March 2006, Sihui government website, http://www.gdsihui.gov.cn, accessed 16 May 2008. 48 “Sihuishi 2004 nian zhengfu gongzuo baogao.” 46 47 Yew Chiew Ping 125 Chapter Five Land Use Conversion in Sihui Furthermore, even if city expansion encroaches into the adjacent Xinjiang town, the town has a total of only 4.95 square kilometres of construction land which the government may utilize (Refer to Appendix A).49 Through city expansion and infrastructure building, the Sihui government also benefits from higher land prices and revenues. Its key strategy is to relocate its cluster of government offices to the periphery of the city district to create another “prime district.”50 The new government buildings sit on 230,000 square metres (23 hectares) of land in the newly constructed Sihui People’s Square, unprecedented in scale in Guangdong and about half the size of Tiananmen square. According to a local informant, the Square had taken over what was previously fish ponds and paddy fields. On its side is the 160,000 square metres (16 hectares) Sihui International Jade Centre while across the square is the biggest shopping mall in Sihui, the Sihui Times Square, which is built on 60,000 square metres (6 hectares) of land. Various high-end residential apartments and bungalows have also been built in the vicinity.51 Under construction behind the government buildings, for instance, is a 161,831 square metres (16.18 hectares) housing estate equipped with residential, business, education and sports facilities.52 See Appendix A. This is a strategy often used by Chinese governments to artificially push up land and property prices. Liu Shan, “Zhengfu kaifashang shi chaodi de hengha er jiang.” 51 Yu Yang, “Sihui tuxian ‘diwang zhi wang’ qianneng” (“Sihui reveals its potential to be a prime land district”), Xijiang ribao (Xijiang News), December 2001. 52 “Woshi yipi zhongdian xiangmu jinxing jiancai huodong” (“A number of key projects launched in Sihui”), Sihui dianshitai (Sihui TV Station), 30 December 2008, available at http://www.gdsihui.gov.cn, accessed 14 March 2009. 49 50 Yew Chiew Ping 126 Chapter Five Land Use Conversion in Sihui Figure 5.4 Satellite Map of Sihui’s City District Source: Available at http://uemap.com/window/moon/sihui.html, accessed 14 May 2009. This government engineered, land-centred “urbanization” has created a property boom and driven up the prices of surrounding land and property. From 2004 to 2005, investment in real estate had more than doubled in Sihui (see Figure 5.5). From 2005 to 2007, newly added residential floor space registered a growth of 75.5 percent from 158,400 square metres to 278,000 square metres. The price of commercial housing in February 2008 supposedly rose to 2,560 yuan per square metre, more than double that of five years ago. According to local residents, prices could even go as high as 4,200 yuan per square metre or more for top-end residential properties.53 Zhaoqing tongji nianjian 2006, pp. 148; “Woshi quannian xinjian zhufang 27.8 wan pingfangmi,” (“2,780,000 square metres of newly constructed residential houses in a year in our city”), available at , http://www.gdsihui.gov.cn, accessed 15 May 2008. The average annual salary of workers was 16,096 yuan and that of peasants was 4,961 yuan in 2005. Refer to Sihui nianjian 2005 53 Yew Chiew Ping 127 Chapter Five Land Use Conversion in Sihui Figure 5.5 Investment in Fixed Assets in Sihui (10,000 yuan) 80000 70000 60000 50000 40000 30000 20000 10000 1997 2003 2004 2005 Inve s tm e nt in capital cons truction Inve s tm e nt in re al e s tate de ve lopm e nt Sources: Guangdong tongji nianjian 1998, pp. 630; Guangdong tongji nianjian 2004, p. 620; Guangdong tongji nianjian 2005, pp. 546; Zhaoqing tongji nianjian 2006, pp. 133. Within two years from 2005 to 2007, the price of grade one land for commercial use in Sihui city district had soared sevenfold from 240 yuan per square metre to 1780 yuan per square metre; the price of grade one land for residential use rose more than eightfold from 96 yuan per square metre to 840 yuan per square metre while that of industrial land rose by 13 times from 32 yuan per square metre to 420 yuan per square metre. Prices of other grades of land with the city district also saw a close to tenfold increase or even exceeding that (see Table 5.5).54 In 2006, a tract of land of 17,081 square metres on the grounds of a resort hotel close to the Sihui People’s Square was sold at a record-breaking 18.6 million yuan through bidding to a Shunde property developer.55 It has been estimated that land prices might rise to 500,000 yuan to one million yuan per mu, which will enable the government to recoup the millions invested into city building in the past years.56 Sifu document no. 51 (2005); Sifu document no. 12 (2007). Xie Hui, “Sihui yidi 1860 wanyuan paichu chuang dankuai dipi chao dijia zuigao jilu” (“Land auctioned for 18.6 million yuan, setting a record for highest price above minimum for a single tract of land”), Nanfang ribao (Southern News), January 2006. 56 “Sihui shidai guangchang shangmaocheng kaiye” (“Sihui Times Square commercial and trade centre opens for business”), Xijiang ribao (Xijiang News),11 November 2006. 54 55 Yew Chiew Ping 128 Chapter Five Land Use Conversion in Sihui Table 5.5 Rates of land conveyance fee in Sihui (yuan per square metre) Land Grade Grade Grade Grade Grade Grade 240.2 96.2 32.2 20.2-63. 18.2-48. 14.2-26. 63.2 158.2 66.2 23.2 15.2-38. 13.2-32. 11.2-19. 43.2 121.2 53.2 19.2 28.2 83.2 48.2 16.2 - 53.2 32.2 - 21.2 - - 13.2 - - Year 2005 Usage Within city district Within towns/ townships (vary by district) Commercial Housing Industrial Commercial Housing Industrial Change of land use Industrial to 33.2 30.2 28.2 housing Housing to 145.2 93.2 68.2 41.2 26.2 commercial Industrial to 208.2 134.2 103.2 71.2 53.2 commercial 2007 Commercial 1780 1430 1050 700 390 Within city Housing 840 660 470 370 280 district Industrial 420 330 260 190 Sources: Sifu document no. 51 (2005), “Sihui shi tudi churangjin zanxing biaozhun” (“Temporary rates of land conveyance fee in Sihui”); Sifu document no. 12 (2007), “Guanyu gongbu shishi xin jizhun dijia de tongzhi (“Notice to announce the implementation of new basic land prices”). The local government’s eagerness to accommodate relocating industries and its enthusiasm with urban building, both encroaching upon agricultural land, are reflective of its revenue maximizing behaviour mediated through the context of Sihui’s fiscal system and requirements. The following section shows how industrialization and the generated revenue from land development had helped to improve Sihui’s fiscal solvency. Sihui’s Fiscal Sharing System and Fiscal Situation Since 1958, Sihui’s sum of expenditure had been greater than its revenue and it had to rely on upper level subsidies each year to achieve fiscal balance. From 1952 to 1985, the county received subsidies amounting to 75.34 million yuan from the prefecture and provincial governments.57 From 1986 to 1993, it received a total subsidy of 55.1 million yuan from upper level governments.58 Sihuixian 1950-1985 nian tongji nianjian (Sihui County Statistical Yearbook 1950-1985), Sihuixian tongjiju (ed). 58 Sihuixian zhi (History of Sihui County), (Guangdong renmin chubanshe, 1996). 57 Yew Chiew Ping 129 Chapter Five Land Use Conversion in Sihui After the implementation of the revenue-sharing system in 1994, Sihui’s finances remained heavily subsidized by the upper level governments. The city had been receiving tax revenue returns (shuishou fanhuan) from the central government, which was around 50 percent of what it remits to the latter. On top of the tax returns, it also received varying amounts of subsidy from upper level governments each year, such as 95.9 million yuan in 2000, and 130.4 million yuan in 2004.59 Nonetheless, although Sihui’s fiscal revenue had grown steadily from 75.8 million yuan in 1996 to 203.1 million yuan in 2004 at the annual rate of 13.1 percent, its expenditure had increased slightly faster at the annual rate of 14.4 percent, from 132.9 million yuan to 384.6 million yuan over the same period.60 Post-1994 fiscal reforms, such as the cancellation of the agricultural taxes, have put additional pressure on Sihui’s finances and forced its government to seek alternative revenue sources and expand the collection of other existing local taxes. In 2000 alone, Sihui collected 1.3 billion yuan in village taxes and fees, which was 65.7 percent lower than the sum of 2.5 billion yuan collected in 1999.61 Subsequently, to make up for the loss in revenue due to the scrapping of special agricultural product tax, agriculture and livestock farming tax and village fees, the Sihui government stepped up efforts to collect the remaining two agricultural taxes. In the first half of 2006, for instance, total revenue from contract tax and arable land use tax amounted to over 10 million yuan, which was 50 percent higher than the sum collected in the first half of 2005, and exceeded the amount collected in the whole of 2005.62 The Sihui nianjian 1998, pp.121; Sihui nianjian 2002, pp. 119; Sihui nianjian 2005, pp. 137. Sihui nianjian 1998, pp. 220 ; Sihui nianjian 1999, pp. 256 ; Sihui nianjian 2000, pp. 233 ; Sihui nianjian 2001, pp. 529 ; Sihui nianjian 2002, pp. 247 ; Sihui nianjian 2003, pp. 239 ; Sihui nianjian 2004 pp. 251-52; Sihui nianjian 2005, pp. 266-67. 61 Zhang Ruxu, “Sihuishi wenbu tuijin shuifei gaige” (“Sihui city pushes for tax reforms steadily”), Zhongguo jiancha (China Surveillance), No. 10 (2001), pp. 14. 62 Ou Qiupei, “Woshi jiji tuijin qishui, gengdi zhanyong shui zizheng gongzuo” (“Sihui city actively promotes the self-collection of contract tax and arable land use tax”), 14 June 2005, Sihui government website, http://www.gdsihui.gov.cn, accessed 21 April 2008; Wu Xiaobing, “Woshi shangbannian qishui he gengdi zhanyong shui shixian dafu zengzhang” (“Sihui city’s contract tax and arable land use tax grows by a large margin in the first half of the year”), August 2006, Sihui government website, http://www.gdsihui.gov.cn, accessed 21 April 2008. 59 60 Yew Chiew Ping 130 Chapter Five Land Use Conversion in Sihui sum of these two taxes had doubled that of 1999, which was 5.1 million yuan.63 Both the contract tax and arable land use tax are land-related taxes – the former is levied on the conveyance and transfer of land use rights at the rate of three to five percent while the latter is levied on the taking of arable land for non-agricultural purposes at the rate of one to ten yuan per square metre.64 As with the nationwide rise in business tax after the 1994 tax reforms, earnings from business tax in Sihui increased from 14.5 million yuan to 37.5 million yuan from 1996 to 2004. From 2001 to 2004, business tax grew by over 60 percent as revenues from agricultural taxes – special agricultural product tax, agriculture and livestock farming tax, contract tax and arable land use tax – dropped sharply with the nationwide move to cut village fees and taxes (see Figure 5.6). Sihui shi caizhengju “Sihui shi caizheng yusuan shouzhi zhixing qingkuang 1999 nian shiyi yue” (“Sihui city’s execution of finance budget revenues and expenditures in November 1999”), December 2005. 64 Guowuyuanling document no. 224 (1997),“Zhonghua renmin gongheguo qishui zanxing tiaoli” (“The PRC provisional rules on the contract tax”); Guowuyuanling document no. 511 (2007),“Zhonghua renmin gongheguo gengdi zanyongshui zanxing tiaoli” (“The PRC provisional rules on the arable land use tax”). Effective from January 2008, the rate of arable land use tax has increased to five to 50 yuan per square metre. 63 Yew Chiew Ping 131 Chapter Five Land Use Conversion in Sihui Figure 5.6 Revenues of Sihui, 1996-2004 (10,000 yuan) 10000 9000 8000 7000 6000 5000 4000 3000 2000 2004 2003 2002 2001 2000 1999 1998 1997 1996 1000 Gove rnm e nt Funds and Othe rs 4000 3500 3000 2500 2000 1500 1000 500 Agricultural Taxe s Bus ine s s Tax V alue -Adde d Tax Ente rpris e Incom e Tax Sources: Sihui nianjian 1998 (Sihui Yearbook 1998), Zhang Timing et al. (eds.), pp. 220 ; Sihui nianjian 1999 (Sihui Yearbook 1999), Zhang Timing et al. (eds.), pp. 256 ; Sihui nianjian 2000 (Sihui Yearbook 2000), Zhang Timing et al. (eds.), pp. 233 ; Sihui nianjian 2001 (Sihui Yearbook 2001), Zhang Timing et al. (eds.), pp. 529 ; Sihui nianjian 2002 (Sihui Yearbook 2002), Yao Weiliang et al. (eds.), pp. 247 ; Sihui nianjian 2003 (Sihui Yearbook 2003), Yao Weiliang et al. (eds.), pp. 239 ; Sihui nianjian 2004 (Sihui Yearbook 2004), Yao Weiliang et al. (eds.), pp. 251; Sihui nianjian 2005 (Sihui Yearbook 2005), Yao Weiliang et al. (eds.), pp. 266. Business tax is levied on nine categories of industries and transactions, including three categories of land-related industries and transactions – construction industry, the transfer of intangible assets (land use rights) and the sale of property (refer to Table 5.6). In 2005 alone, 185.8 million yuan worth of residential property was sold in Sihui, which contributed 9.29 million yuan of business tax. Using the 252.2 million yuan of gross construction output value as a gauge of the industry turnover, business tax levied on Sihui’s construction industry is estimated to be around 7.57 million yuan Yew Chiew Ping 132 Chapter Five Land Use Conversion in Sihui in 2005.65 In addition, the conveyance of land use rights in the same year would have fetched total business tax of 5.66 million yuan (see Table 5.6). Together, business tax from land related industries and transactions is estimated to be 22.52 million yuan, which is around 45 percent of the total business tax revenue in 2005.66 Table 5.6 Business Tax Rates Taxable Item Tax Rate Transport industry 3% Construction industry 3% Finance and insurance industry 5% Communications industry 3% Culture and sports industry 3% Entertainment industry 5%-20% Service industry 5% Transfer of intangible assets 5% Sale of property 5% Source: Guowuyuanling document no. 540 (2008),“Zhonghua renmin gongheguo yingyeshui zanxing tiaoli” (“The PRC provisional rules on the business tax”). Nonetheless, extrabudgetary government funds had been the main driving force for revenue growth in Sihui since 1994. Sihui’s government funds and other revenues had shown the greatest rise since 1996, growing more than fivefold from 18.4 million yuan in 1996 to 94.7 million yuan in 2004. Growth accelerated from 2002 onwards with the reclassification of local income taxes as shared taxes. From 2002 to 2004 alone, government funds rose by 86 percent, in contrast to the growth rate of 12.6 percent from 2000 to 2002 (see Figure 5.6). Based on the incomplete data on land conveyances in Sihui in Table 5.7, it appears that land conveyance fee, as a type of government funds, has contributed significantly to the growth in the county’s extrabudgetary funds. From 2000 to 2004, revenue from land conveyance amounted to 206.46 million yuan, which is more than 67 percent of the total income from government funds and others over the same period. This does not include other sources of land revenues such as the miscellaneous ad hoc fees, which may constitute a substantial sum of income for the 65 66 Zhaoqing tongji nianjian 2006, pp. 149, 257. Sihui tongji nianjian 2005, pp. 123. Yew Chiew Ping 133 Chapter Five Land Use Conversion in Sihui local government. In 2002, for instance, the Sihui Land Bureau alone collected 5.27 million yuan of administrative fees.67 Table 5.8 lists the fees levied by the Sihui Land Bureau. Note that these not include arbitrary fees charged by other government departments.68 There is also the likelihood that not all land proceeds are reflected in the sum of extrabudgetary funds. In 2004, for example, Sihui’s partial land conveyance revenue was 93.4 million yuan. This alone constitutes 98.6 percent of total revenue from the 94.7 million yuan of government funds that year.69 Table 5.7 Land Conveyance in Sihui’s Primary Land Market 2000 2001 2002 2003 2004 2005 2006 2007 Total number of land 99 600 355 conveyances Total area of land 40.5 73.8 178.8 conveyed (hectares) By bidding Number of transactions 18 52 33 29 Land area (hectares) 1.55 17.58 5.2 5.3 44.1 44.1 Transaction sum (10,000 3465 3647 1112 1800 7933 7882 yuan) Average price per 2235.5 207.5 213.8 339.6 179.9 178.7 hectare (10,000 yuan) By auction Number of transactions 4 Land area (hectares) 2.75 3.61 44.17 10.02 Transaction sum (10,000 1281.5 1407 14194.5 35515 yuan) Average price per 466 389.8 321.4 3544.4 hectare (10,000 yuan) By negotiation Number of transactions 13 Land area (hectares) 45.9 Transaction sum (10,000 3443 yuan) Average price per 75.0 hectare (10,000 yuan) Sources: Sihui Land Bureau; Guangdong guotu ziyuan nianjian 2002, pp. 341; Guangdong guotu ziyuan nianjian 2003, pp. 401; Guangdong guotu ziyuan nianjian 2004, pp. 469; Guangdong guotu ziyuan nianjian 2005, pp. 317; Guangdong guotu ziyuan nianjian 2006, pp. 378; Zhaoqing tongji nianjian 2006, pp. 79. Guangdong guotu ziyuan nianjian 2003, pp. 401. Note that these not include arbitrary fees charged by other government departments. Refer to Table 3.4 in Chapter Three. 69 Refer to Zhaoqing tongji nianjian 2006, pp. 165 for the amount of Sihui’s revenue in 2004 and 2005. 67 68 Yew Chiew Ping 134 Chapter Five Land Use Conversion in Sihui Table 5.8 Miscellaneous Fees Levied by the Sihui Land Bureau 1. 2. 3. Item Administration of land requisition Land certificates Right to use state-owned land Right to use collectively-owned land Ownership of collectively-owned land Proof of other rights to land Construction of houses by villagers Land registration fee Land used by Party and government bodies not exceeding 2000 square metres Fee 1.4% to 2.1% of the land compensation for the requisitioned land 20 yuan per certificate 20 yuan per certificate 20 yuan per certificate 20 yuan per certificate yuan per certificate 200 yuan per case; surcharge of 25 yuan for every additional 500 square metres with a cap at 700 yuan Land used by enterprises not exceeding 1000 square metres 100 yuan per case; surcharge of 40 yuan for every additional 500 square metres with a cap at 40,000 yuan Land for housing not exceeding 100 square metres in urban 13 yuan per case; surcharge of areas yuan for every additional 50 square metres with a cap at 30 yuan 4. Idle land fee 70% of land conveyance fee Land for real estate development 7% Land for general construction 4% Land for construction of basic infrastructure 1.5% 5. Bringing land under cultivation 15 yuan per square metre Occupation of capital farmland 15 yuan per square metre 6. Land conveyance fee Refer to Table 3.15 7. Registration fee for provincial reconnaissance of mining resources Registration for reconnaissance 50 yuan per reconnaissance Reconnaissance for changes 50 yuan per reconnaissance 8. Registration fee for mining Large, medium and small mines 500 yuan, 300 yuan and 200 yuan respectively Registration fee for changes 100 yuan 9. Compensation for mining resources Coal 1% of total sales Gold, silver, rare elements, mineral water 4% of total sales Other metals and non-metals 2% of total sales 10. Payment for use rights to mining 1000 yuan per square kilometre per year 11. Payment for newly added land for construction 28 yuan per square metre Source: Sihui Land Bureau. Land Conveyances and Land Prices in Sihui In the absence of more complete data on land conveyances in Sihui, this section examines the trends in Sihui’s land conveyance and the rise in land prices over the years to suggest that the actual land proceeds are higher than official figures. In 2005, the land proceeds from the conveyance of 90 hectares of land through bidding and negotiation amounted to 113.25 million yuan, which was around 45 Yew Chiew Ping 135 Chapter Five Land Use Conversion in Sihui percent of Sihui’s total revenue of 250.95 million yuan in the same year.70 This does not include unreported revenue from the remaining 89 hectares of land conveyed in the same year. In 2006, there were 1,086 transactions on Sihui’s secondary land market, involving 94.6 hectares of land. Among these, 0.91 hectare was transferred by bidding at a price of 87.28 million yuan while 44.7 hectares by auction at a price of 141.35 million yuan. The average price per hectare for land transferred by auction was a hefty 31.62 million yuan, more than threefold that of land transferred by bidding.71 Land use rights were also mortgaged for around million yuan per hectare in 2003 and 2005 in Sihui.72 There is reason to believe that the Sihui’s total land revenue is way higher than the above figures. For example, in one of Sihui’s towns in 2007, 21 parcels of land in its prime development zone, amounting to 696,137 square metres, were conveyed via negotiation at 188 yuan per square metre. This land deal alone fetched a total revenue of 131 million yuan for the town and the county.73 Other highly lucrative land deals in 2007 include the bidding and auctioning of two parcels of land for commercial and residential use totalling 251,108 square metres, which were sold at 41 million yuan and 354 million yuan respectively.74 The parcel of land which was auctioned fetched a price of 3,774 yuan per square metre, far higher than the prices listed in Table 3.15. Moreover, the conveyance fees for prime commercial land along Zhaoqing tongji nianjian 2006, pp. 79, 165. Guangdong guotu ziyuan nianjian 2007, pp. 444-45. 72 In 2003, 105.4 hectares of land were mortgaged for 210 million yuan (1,992,409 yuan per hectare); in 2005, 126.9 hectares of land were mortgaged for 271.19 million yuan (2,137,037 yuan per hectare). See Guangdong guotu ziyuan nianjian 2004, pp. 469; Guangdong guotu ziyuan nianjian 2006, pp. 378. 73 Sixieshizi document no. (2007), “Sihuishi guoyou tudi shiyongquan xieyi churang yixiang gongshi” (“Public notice on the conveyance of land use rights to state-owned land in Sihui”), http://www.landchina.com, accessed 21 April 2008; Sixieshizi, document no. (2007), “Sihuishi guoyou tudi shiyongquan xieyi churang yixiang gongshi” (“Public notice on the conveyance of land use rights to state-owned land in Sihui”), available at http://www.landchina.com, accessed 21 April 2008; 74 “Dongcheng jiedao Taotang cunweihui ‘Tangkeng’ diduan” (“Land parcel at ‘Tangkeng,’ Taotang VC, Dongcheng street office”), 11 July 2007; “Sihuishi Dongcheng jiedao Xinchengqu fanghongdi xiaohaikou zhi shiyou canku diduan” (“Land parcel from the flood control xiaohaikou to the old petroleum warehouse, Xincheng district, Dongcheng street office, Sihui”), 11 July 2007; “Gonggao” (“Public notice”), August 2007; “Gonggao” (“Public notice”), August 2007. All available at Sihui Land Bureau website, http://www.guotuju.gdsihui.gov.cn, accessed 21 April 2008. 70 71 Yew Chiew Ping 136 Chapter Five Land Use Conversion in Sihui 15 streets in the city district, ranging from 9,000 yuan per square metre to 2,000 yuan per square metre, also exceed those listed in the table.75 Conclusion To sum up, Sihui’s officials seeking to maximize careers and fiscal revenues through instrumental land use had been hampered by the scarcity of developable land under their jurisdiction and the county’s relative disadvantage in comparison to more developed neighbouring regions. Industrial restructuring in the Pearl River Delta and upper level governments’ emphasis on industrialization had encouraged Sihui’s officials to convert agricultural land to meet the demands of relocating industries. At the same time, land use conversion was also extensive in the government engineered expansion of Sihui’s city district. These land development processes generated considerable amounts of taxes and land revenues for the local coffers. The next chapter continues to probe into how township cadres’ interests were maximized through land use conversion in Xiamao town of Sihui and how indiscriminate land use conversion might in turn jeopardize cadres’ careers. It also examines the externalities of land development in the county and assesses if land use conversion in Sihui is reflective of the local government’s predatory behaviour. Sifu document no. 12 (2007), “Guanyu gongbu shishi xin jizhun dijia de tongzhi (“Notice to announce the implementation of new basic land prices”). 75 Yew Chiew Ping 137 [...]... yuan.63 Both the contract tax and arable land use tax are land- related taxes – the former is levied on the conveyance and transfer of land use rights at the rate of three to five percent while the latter is levied on the taking of arable land for non-agricultural purposes at the rate of one to ten yuan per square metre.64 As with the nationwide rise in business tax after the 1994 tax reforms, earnings... yuan per square metre Source: Sihui Land Bureau Land Conveyances and Land Prices in Sihui In the absence of more complete data on land conveyances in Sihui, this section examines the trends in Sihui’s land conveyance and the rise in land prices over the years to suggest that the actual land proceeds are higher than official figures In 20 05, the land proceeds from the conveyance of 90 hectares of land. .. yuan and above 2) A cash reward of 80,000 yuan for a tax contribution of three million yuan and above 3) A cash reward of 150 ,000 yuan for a tax contribution of five million yuan and above Category B Agriculture Cash reward based on the amount of initial investment by the enterprise: 1) A cash reward of 30,000 yuan for an investment of 30 million yuan and above 2) A cash reward of 50 ,000 yuan for an... 4% Land for construction of basic infrastructure 1 .5% 5 Bringing land under cultivation 15 yuan per square metre Occupation of capital farmland 15 yuan per square metre 6 Land conveyance fee Refer to Table 3. 15 7 Registration fee for provincial reconnaissance of mining resources Registration for reconnaissance 50 yuan per reconnaissance Reconnaissance for changes 50 yuan per reconnaissance 8 Registration... not exceeding 1000 square metres 100 yuan per case; surcharge of 40 yuan for every additional 50 0 square metres with a cap at 40,000 yuan Land for housing not exceeding 100 square metres in urban 13 yuan per case; surcharge of areas 5 yuan for every additional 50 square metres with a cap at 30 yuan 4 Idle land fee 70% of land conveyance fee Land for real estate development 7% Land for general construction... bioengineering, garment production and processing Copper, ceramic construction materials Metal electroplating Recycling, aluminium, chemical Processing Food processing Electronics, machinery Leather products Metal processing Dasha 10,000 Dasha 3,000 Dasha Dasha Dasha Dasha Dasha 2,000 3,000 600 7, 950 Xiamao 10,000 Xiamao Xiamao Xiamao Xiamao Xiamao Chengzhong Longfu 1,010 50 0 1,000+ 1, 150 + Household Appliances... years.38 On top of the waiver of various administrative fees, enterprises that contribute tax amounting to five million yuan and above in a year are entitled to a cash reward of 50 ,000 yuan In addition, there is a “progressive award” of 10,000 to 20,000 yuan for every million yuan of tax increment using the sum of tax paid in 2006 as the base amount.39 As from 2007, the Sihui government has allocated... price above minimum for a single tract of land ), Nanfang ribao (Southern News), 6 January 2006 56 “Sihui shidai guangchang shangmaocheng kaiye” (“Sihui Times Square commercial and trade centre opens for business”), Xijiang ribao (Xijiang News),11 November 2006 54 55 Yew Chiew Ping 128 Chapter Five Land Use Conversion in Sihui Table 5. 5 Rates of land conveyance fee in Sihui (yuan per square metre) Land. .. residential properties .53 Zhaoqing tongji nianjian 2006, pp 148; “Woshi quannian xinjian zhufang 27.8 wan pingfangmi,” (“2,780,000 square metres of newly constructed residential houses in a year in our city”), available at , http://www.gdsihui.gov.cn, accessed 15 May 2008 The average annual salary of workers was 16,096 yuan and that of peasants was 4,961 yuan in 20 05 Refer to Sihui nianjian 20 05 53 Yew... output value as a gauge of the industry turnover, business tax levied on Sihui’s construction industry is estimated to be around 7 .57 million yuan Yew Chiew Ping 132 Chapter Five Land Use Conversion in Sihui in 20 05. 65 In addition, the conveyance of land use rights in the same year would have fetched total business tax of 5. 66 million yuan (see Table 5. 6) Together, business tax from land related industries . geographical landscape consists of a relatively small area of flat terrain in comparison to the area of hilly and mountainous land within its territory. The difficulty of developing land with accessibility. to the approval for a locality’s land use plan. The amount of arable land to be conserved and converted has to strictly adhere to that determined in the land use plan at various administrative. 8. 65 percent. Roads are still concentrated in the same central and southeastern areas, accounting for around 57 .2 percent of the total land area taken up by roads. 9 Table 5. 1 Land Use in Sihui