I have a question about land leasing. The period of land contract seems to be 30 years. Has it been extended to 70 years or even longer? Can farmers transfer their land to businesses directly or through cooperatives? Can they determine the term of leasing by themselves?

As to the term of land leasing, including rent, transfer and reletting, previously the policy provided 30 years of land contract and management and the transfer shall not exceed such a period. The Decision says the land contract and management period will remain unchanged. I personally believe it has three implications. First, rural land is collectively owned, and the household contract and management system will remain unchanged; second, the relation of land contract and management between farmers and collective economic organizations remains unchanged; third, the specific land block and contract period of farmers remain unchanged. By remaining unchanged, it does not mean 30 or 50 years, but throughout the primary stage of socialism. Originally the transfer of land contract and management right is encouraged among farmers. Today, whether it is transferred to businesses or farmers is not so important, and it is critical to adhere to three principles. First, after transfer the collective ownership of land shall not be changed; second, after transfer the use of land shall not be changed; third, in the process of transfer farmers' land contract and management right and interest shall be protected.

What kind of land transfer is regarded as irregular? The collective ownership of land often turns to the ownership of village officials, which is detrimental to the interests of farmers. Why does not China privatize land ownership?

There are the following main types of irregular land transfers. For example, the farmers are reluctant to transfer their land but are forced to do so. This is a typical example of irregular transfer. Violation of the law is another case. Land transfer should serve agricultural production. The non-agricultural development of the transferred land is a case in point. Another example is hurting rights and interests of the original contractors in the process of transfer. The farmers who transfer their land should get compensation, but part of that money is withheld by others, which is also irregular. By standardization, we emphasize law compliance, willingness of farmers and maintaining rights and interests of the contractors. Today, we advocate confirmation and qualification of farmers' land contract and management right that shall remain intact. It shall never be manipulated by a minority of people.

Now comes to the question whether or not land should be privatized. Chinese agriculture is less competitive than that of developed countries. The root cause is that China has a large population but scarce land. Our agricultural operation is small in scale with a low productivity. There is no way for us to compete with large-scale agricultural operations. Therefore, privatization cannot solve China's agricultural issue. Today, our per-capita land area is about 1.38 mu. Even after privatization, the agricultural operational scale remains small and we are still unable to compete with American farmers. We should increase the land utilization efficiency and expand operational scale moderately in order to enhance agricultural competitiveness. Some farmers want to work in cities and transfer their land to those who are willing to cultivate it. The latter can expand their operational scale and hence increase competitiveness. This is the right way of promoting agricultural development. As to how to protect rights and interests of farmers, the Decision makes it very clear to guarantee the right of usufruct, or to protect the right of farmers of holding, using of and benefiting from the transferred land. In this sense, by guaranteeing their contract and management right, we can protect their land right. Whether privatization or not is not the core of the issue.

What are the main aspects of rural financial reform? Is land considered as a financing instrument in the process of rural land reform?

The ongoing financial reform has many new contents and breakthroughs. For example, in order to solve the problem of inadequate rural financial services, we stress that newly collected deposits of financial institutions should mainly be used to issue credit locally, which is clearly different from our old practice. The Decision also requires building various forms of rural financial institutions and small and medium-sized local banks to serve the rural area. It also allows qualified farmers' special cooperatives to conduct credit cooperation, which is another breakthrough.

Whether farmers' land contract and management right can be used as a financing instrument is an issue of collateral. I think it is one concept whether we allow or not and the other concept whether it is workable in real practice. According to the current provision, land shall not be used as collateral. However, think it in another way, will it be workable even if it is allowed? The answer is no. I once asked many bankers whether they agree to accept rural lands as collateral for credit, and they all answered negatively. The reason is that rural land is very cheap while the cost of land management of bank is very high. In order to help farmers have access to credit, the Chinese Government has adopted a series of policy measures, such as micro credit in the rural area without collateral; innovation of financial institutions, establishing rural credit companies, village banks and fund cooperatives to offer credit to farmers and guarantee companies to provide guarantee for them to apply for bank credit. Such measures have achieved effective results.

Many experts think that what is critical is not to increase government subsidy and output. They suggest relaxing control on grain price since the international grain price is relatively high. What is your comment?

Currently the subsidies the Chinese Government offers to farmers are fairly targeted. The fine variety subsidy aims at encouraging farmers to use superior varieties so as to increase grain output and improve grain quality. In response to the massive transfer of rural labor forces, the subsidy for agricultural machinery and tools is designed to increase the use of machinery in a bid to reduce the agricultural labor intensity.