Law on the Organization of the Rural Collective Economy: Perpetual collective property, separation of property rights, so that everyone has a hometown to return to

A few days ago, the 10th meeting of the Standing Committee of the 14th National People's Congress voted to pass the "Law of the People's Republic of China on Rural Collective Economic Organizations", which aims to "safeguard the legitimate rights and interests of rural collective economic organizations and their members, and standardize the operation and management of rural collective economic organizations", which will come into force on May 1, 2025.

The definition of what is meant by collective ownership in rural areas is very different from that in the era of planned economy and since the reform and opening up. Before the promulgation and implementation of this law, there have been many practical and theoretical explorations in this regard. As everyone knows, the main historical achievement of the rural reform is the "household responsibility system," that is, the contract production to the households, and its operation has not broken through the shell of collective ownership. Looking retrospectively, this is a "separation of powers", with ownership belonging to the collective and contracting rights to the peasant households. Later, a third right of management was developed, and large farmers or agricultural investors rented land from many farmers to expand the scale of their operations.

In 2016, the Central Committee of the Communist Party of China and the State Council issued the "Opinions on Steadily Promoting the Reform of the Rural Collective Property Rights System", requiring the implementation of collective asset clearance and capital verification, "all provincial governments should make unified arrangements for the work of asset clearance and capital verification, starting from 2017, in accordance with the requirements of time and quality, and strive to basically complete it in about 3 years"; Promote the reform of the shareholding cooperative system of operating assets in an orderly manner, and "quantify the rural collective operating assets to the members of the collective in the form of shares or shares, as the basic basis for their participation in the distribution of collective income".

In the above-mentioned documents, the definition of rural collective economic organizations is "the main body of collective asset management, which is a special economic organization, which can be called an economic cooperative or a joint-stock economic cooperative", and stipulates that "at this stage, the competent department of the local government at or above the county level may be responsible for issuing the organization registration certificate to the rural collective economic organization, and the rural collective economic organization may go through the relevant procedures such as opening a bank account with the relevant departments accordingly in order to carry out business management activities".

The forthcoming law defines a rural collective economic organization as "a regional economic organization based on collective ownership of land, exercising ownership rights on behalf of its members in accordance with the law, and implementing a two-tier management system based on household contract management", and stipulates that the name of the rural collective economic organization shall be marked with the word "collective economic organization", registered in accordance with this law, obtain special legal personality, and engage in civil activities compatible with the performance of its functions in accordance with the law, and the provisions of the relevant bankruptcy law shall not apply (Articles 21 and 6).

Rural collective economic organizations may contribute to the establishment or participate in the establishment of companies, professional farmer cooperatives and other market entities, but they are not companies themselves, and the Company Law and related laws do not apply. From the difference with the company, we can see the peculiarities of the rural collective economic organization.

The company generally distributes equity according to the proportion of capital contribution, and the highest decision-making body is the general meeting of shareholders, which determines the control and distribution income on the basis of equity, and pilots the entry and exit of shareholders through the purchase and sale of equity. In contrast, "the general meeting of members of a rural collective economic organization is composed of all members with full capacity for civil conduct and is the authority of the rural collective economic organization" (Article 26), that is, minors and other adults with limited or no capacity for civil conduct are members of the rural collective economic organization and can enjoy benefits and benefits, but they do not have the right to vote or make decisions, and are "one person, one vote" for some members, which is very different from the principle of "one share, one vote" for all shareholders at the general meeting of shareholders.

In addition, "if a member of a rural collective economic organization voluntarily withdraws, he or she may negotiate with the rural collective economic organization to obtain appropriate compensation or retain the property rights and interests he already enjoys for a certain period of time, but shall not request the division of the collective property" (Article 16).

It can be seen that collective property is similar to the public property of a large family or Buffett's "charitable trust fund", which is not divided by descendants and passed on forever. The former is to maintain the unity and centripetal force of the rural collective, and the latter is to maintain the harmony and cohesion of the family, and the functions of the two are similar. In other words, the rural collective economic organization is not only a market entity, but also a social security mechanism.

If it is said that natural persons, companies and other market entities will disappear due to natural death or withdraw due to poor management, and thus disappear in the long river of history, rural collective economic organizations are theoretically sustainable, as long as there are successors, they will not disappear due to the old age or poor management of members, which is the particularity of its market entities.

As a social security mechanism, in the vast majority of the country, rural collective economic organizations replace the ecological niche of traditional big families or clans, and the latter provides various supports and guarantees for children and grandchildren such as childbirth, pension, education, poverty relief, emergency response and financing with sustainable public property. Obviously, it is precisely on the basis of this kind of thinking and consideration that collective property has not been confirmed as the personal property of farmers through physical or share division. This is a key to our understanding of this law.

At the same time, this law is also conducive to promoting the effective separation of property rights and political power, which is conducive to protecting the rights and interests of peasants and to making the countryside tend to be well governed. The general assembly of members of the rural collective economic organization elects the members of the board of directors, the chairman of which is the legal representative of the rural collective economic organization, and the board of directors manages the collective property. This is distinguished from the village committees, which are "grassroots autonomous organizations." Let the property rights belong to the property rights, and the political power belongs to the political power. In the past, village chiefs grasped the grassroots political power and collective property, and there was a greater risk of rent-seeking and turning the public into private, which was also a major factor leading to rural instability.

Finally, this law is conducive to the return of outstanding talents and "new rural sages" from rural areas, thereby revitalizing the rural economy and promoting the improvement of public governance and values. "Members of rural collective economic organizations shall not lose their membership in rural collective economic organizations due to schooling, military service, work, business, divorce, widowhood, serving prison sentences, etc." (Article 18). This is to delink the membership of rural collective economic organizations from household registration, so that those who go out to work, find employment, and run businesses will have "nostalgia that can be placed" and "hometowns that can be returned."

Last year, the Ministry of Agriculture and Rural Affairs, the National Development and Reform Commission and other departments issued the "My Hometown, I Construction" Activity Implementation Plan, which proposed: guide good conduct, ability, influence, prestige, and enthusiasm for the construction of the hometown of professionals, economic experts, cultural celebrities, celebrities and other capable people to return to their hometowns to participate in the construction. This law promotes this system, and it does not mean that only those who are famous outside are eligible to return to their hometowns, but theoretically let everyone who is outside can go back.

Chen Bin

Editor-in-charge: Xin Provincial Chronicles