(Yicai Global) Nov. 1 -- China's top legislature is mulling a law revision on rural land contracts in the face of fast urbanization and increasing demand to transfer rural land-use rights.

"The revision aims to better define the use rights to rural land so that farmers can enjoy 'sufficient and guaranteed protection over their land rights,'" Liu Zhenwei, deputy director of the Agriculture and Rural Affairs Committee of the National People's Congress (NPC), said at the bimonthly session of the NPC Standing Committee yesterday.

Since the country adopted the household responsibility system in the early 1980s, the property rights of rural land have been divided into two layers -- the ownership right that is collectively owned by a rural community, normally a village, and the use right, which is held by an individual household that contracts a piece of land from the village.

The draft Amendment to the Law on Land Contract in Rural Areas further separates the use right into "the contract right" and "the management right," Liu said.

Separation of the ownership rights, contract rights and management rights of rural land will allow farmers to retain the contract right over their allotted land and only transfer the management right if they choose to lease the land to others, mortgage it to banks or invest it in a cooperative in exchange for shares.

Stressing that the state protects the stability and consistency of rural land contracts, the draft revision says that upon expiration, the current round of contracts will be extended for a further 30 years.

China has carried out two rounds of farm land contract since its reform and opening up, Song Hongyuan, director of the Ministry of Agriculture's Research Center for Rural Economics, told Yicai Global. The first started in 1978 with a contract period of 15 years and expired as early as 1993, said Song. The second expires in 2023, but some areas will expire a few years later as their contracts started late, he said. The third round will extend contracts for another 30 years and will expire in 2053, he said.

The reason China chose 30 years -- rather than 50 years, 70 years or more -- for the third round is that the 30-year contract period proposed in the second round was neither too long nor too short and has basically achieved the purpose of stable land contracting relations, Song said.

This policy arrangement is in line with the two 15-year development plans and goals proposed at the 19th Communist Party of China National Congress and represents a bid to create a modern powerful socialist country in 2050.