CAI Jiming | “Land Follows the House” or “House Follows the Land”? — Interpreting the Two “Not Allowed” in the "No. 1 central document" for 2025

       CAI Jiming   Director of the Center for Political Economy at Tsinghua University

l  The following views are compiled from CAI Jiming’s remarks at the 13th Biweekly Policy Analysis Meeting.

CAI Jiming, Director of the Center for Political Economy at Tsinghua University, believes that the heated discussions around the No. 1 Central Document during the Two Sessions stem from two key “not allowed” stipulations.

From the 1954 Constitution to the 1982 Constitution, and from the Property Law to the Civil Code, China’s legal framework has consistently affirmed the legal status of rural houses as private property. However, the collective ownership of the homestead on which these houses stand, along with the strict legal and policy constraints on the transferability of homestead use rights, creates a fundamental institutional paradox.

In physical terms, land and housing are inseparable, but in legal terms, their property rights can be divided. If the “land follows the house” principle is applied—where homestead use rights are transferred along with house ownership—it would inevitably breach the current system governing homestead management. Conversely, if the “house follows the land” approach is adopted—restricting the transfer of homestead rights—then rural houses cannot be sold to urban residents, effectively nullifying their private property status.

This institutional contradiction dates back to the 1962 Work Regulations of the People’s Commune, which established the coexistence of collectively owned rural land and privately owned rural housing. Although the 1988 constitutional amendment introduced paid-use rights for state-owned urban land, resolving urban property conflicts, the rural land paradox remains unresolved.

Laws such as the Land Administration Law, the Urban Real Estate Administration Law, and the Civil Code—all subordinate to the Constitution—serve as structural supports for this institutional paradox. On the policy level, the State Council and its departments reinforce these restrictions through administrative regulations. Academic research indicates that in practice, current policies follow the “house follows the land” approach, blocking rural residents from gaining income through property transfers and thus widening the urban-rural income gap.

There are two potential solutions: A fundamental approach would involve amending laws to extend the paid-use land system to collectively owned rural land—though the legislative process is complex and politically challenging. A pragmatic approach would seek institutional optimization within the current legal framework, focusing on legally establishing the boundaries for “land follows the house” transfers. Theoretical analyses show that the “land follows the house” model is more favorable to protecting farmers’ property rights.

As for the two “not allowed” policies in the 2025 No. 1 Central Document: It prohibits retired public servants from illegally occupying rural land to build homes. However, this requires a clear legal definition of what constitutes “illegal occupation” to avoid unintentionally restricting legitimate private capital participation in rural revitalization. If the transfer of homestead use rights is completely prohibited, this would conflict with existing policies such as the Opinions on Accelerating Rural Talent Revitalization and the Opinions on Supporting Returnees in Entrepreneurship and Rural Industry Integration. To reconcile these conflicts, judicial and administrative authorities must establish coordination mechanisms and, through judicial interpretation, clarify the legal boundaries for innovative practices such as “cooperative housing construction” and “homestead equity participation.” The ultimate goal is to ensure the smooth flow of resources between urban and rural areas while safeguarding the redline of farmland protection.

(This article is based on CAI Jiming’s speech delivered on March 27, 2025. It is intended solely for academic exchange and does not represent the position of the National Academy of Development and Strategy at Renmin University of China.)