Zhou Tianyong: Why Massive Properties and Land Remain Idle and Only the Market Can Revitalise Them

Well-known economist advocates for clear property rights and a unified urban-rural land market.

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Jun 05, 2025

Zhou Tianyong is Director of the National Economic Engineering Laboratory at Dongbei University of Finance & Economics and Director of the Economic Accounting and Innovative Development Committee, China Society of Economic Reform (CSER). He is also former Deputy Director of the Institute of International Strategic Studies, Party School of the Central Committee of the Communist Party of China (National Academy of Governance).

The well-known economist, selected as one of China’s top ten influential economists in 2024 by Sina, a popular news portal, is known for publicly advocating economic reforms.

A broader outline of Zhou’s reform agenda, including proposals on household registration, land and housing, and state-owned enterprises, was highlighted last week on Pekingnology, the sister newsletter of The East is Read. The following piece, published in Zhou’s WeChat blog on March 29, 2025 advocates specifically for land reforms—defining clear property rights and formalising certification to enable transactions, leasing, mortgages, equity registration, joint property construction, and inheritance; and establishing a unified urban-rural land market with equal rights and pricing for both, market-driven pricing, and no investor restrictions.

巨额房地闲置浪费与只有市场才能盘活的道理

Why Massive Properties and Land Remain Idle and Only the Market Can Revitalise Them

I. Massive Idle Land and Industrial Facilities in China’s Urban and Rural Areas

The number of residents, employed individuals, and agricultural workers across China’s rural areas has nearly halved on average from its peak levels.

In 2024, the total area of villages was 32,091 million mu [21.4 million km²], including 17,950 million mu [11,966.6 km²] for homestead land and 14,591 million mu [9,727.3 km²] for other land designated for construction purposes. Currently, the rural registered population has declined from 97,558 million in 2002 to 72,526 million in 2024, a reduction of 26%. The rural resident population has decreased from a peak of 85,947 million in 1995 to 46,478 million in 2024, a reduction of 46%. The number of employed individuals in rural areas has fallen from a high of 49,039 million in 1997 to 20,694 million in 2024, a reduction of 58%. The number of agricultural workers has decreased from a peak of 36,640 million in 2002 to 16,659 million in 2024, a reduction of 55%.

Consequently, the proportion of idle rural land designated for construction purposes nationwide has reached approximately 50% on average. The vacancy rate for rural housing and residential homesteads is as high as around 50%, with approximately 87.5 million mu of homestead land [58,333.3 km²] remaining unused.

As vital communities for residence, entrepreneurship, employment, income generation, and consumer activities, villages have seen a significant rise in the vacancy of other land designated for construction purposes (excluding homesteads). This is a result of the large-scale reduction in rural residents, employed individuals, and agricultural workers. Based on the proportional calculation of homestead land, the wasted area of other land designated for construction purposes is estimated to be around 73 million mu [48,666.6 km²].

In addition to idle rural construction land, urban areas also face significant land vacancy. Approximately 100 million mu [66,666.6 km²] of industrial parks (designated for manufacturing, cultural, and tourism purposes) have an idle rate of around 35%, meaning about 35 million mu [23,333.3 km²] remain unused. Meanwhile, an estimated 1 million mu [666.6 km²] of land designated for residential purposes is either under construction or awaiting development. Conservatively, around 5 million mu [3,333.3 km²] of idle land awaits construction near railway stations, transport hubs, and along transportation corridors, while abandoned mining areas account for roughly 10 million mu [6,666.6 km²]. Additionally, urban industrial plants, office buildings, and commercial properties also experience vacancy rates of approximately 35%.

From the perspective of gradual transition economics, the idle land and properties mentioned above essentially represent surplus land constrained by institutional distortions. The core of institutional reform is to liberalise markets, eliminate distortions, and unlock the trapped institutional surplus, thereby transforming it into new drivers of economic growth.

II. Why Only Market-Oriented Allocation Can Revitalise Idle Land

A fundamental principle of economics is that supply and demand determine prices, and prices act as the key signal for optimising resource allocation. Whether for labour or land, it is only through pricing that the substitution between physical goods/currency and the circulation and flow of factors of production can occur, thereby optimising resource allocation and improving factor productivity.

During the planned economy era, rural labourers worked collectively in “production teams” operating the “work point” system, which quantified daily labour, with agricultural products distributed as physical goods. From an economic mechanism perspective, the value exchange between labour outcomes and labourers was based on a substitution mechanism of agricultural products and work points within production teams. This system did not involve prices or currency, but rather relied only on internal circulation within production teams. Meanwhile, then strict household registration system restricted the mobility of farmers, suppressed agricultural product prices, and enforced state procurement and distribution, resulting in extremely low labour productivity and keeping farmers' incomes and living standards at low levels for extended periods.

The market-oriented reforms have provided a successful paradigm for mobilising and optimising rural surplus labour. In 1980, production teams, production brigades, and people’s communes were dissolved, alongside the abolition of collective labour and the work point system. The household contract system for farmland was implemented, village and township enterprises were encouraged, and farmers were incentivised to work in urban areas. From an economic mechanism perspective, these reforms essentially established value exchange processes between farmers’ labour products/monetary compensation, employment in village and township enterprises/wages, and urban work/monetary remuneration.

This institutional transformation fundamentally shifted the resource allocation model from administrative planning to a system of physical/monetary value exchange, marking a crucial stage in the marketisation and monetisation of the national economy. Consider this: had the rural labour allocation mechanism not reformed from the traditional work point exchange/physical goods system to a labour products/monetary wage system, how could China have achieved the massive transfer of rural surplus labour to industrial sectors and urban areas, which in turn drove tremendous productivity growth?

The economic principle is clear: to optimise the allocation of land resources, the primary task is to let supply and demand determine its price, then utilise the land/currency value exchange mechanism to regulate the circulation of land and properties through price signals. Specifically, those who own land or properties but have no personal need for it should be able to transfer it through market mechanisms, while those with demand should be able to acquire it through monetary payment.

Therefore, on one hand, while state ownership of urban land and rural collective land ownership in rural areas should be maintained, land-use rights should be extended to 100 years, with clear definitions of property rights and formalisation through certification—enabling transactions, leasing, mortgages, equity registration, joint property construction, and inheritance. On the other hand, a unified urban-rural land market should be established, ensuring equal rights and pricing for both urban and rural lands. Farmers and rural collectives should be allowed to autonomously transfer land-use rights of rural homesteads and other rural land designated for construction purposes, with prices determined by supply and demand, and without restrictions on investor eligibility.

Government departments overseeing natural resources, agriculture, rural development, and urban construction planning cannot replace market information. They are unaware of which investors need land, which landholders wish to transfer or lease their land, and they certainly cannot revitalise and optimise the allocation of such a vast amount of idle land and properties through planning or administrative methods. Managing land and properties through planning or administrative means will only exacerbate the problem of idle resources.

Since 1978, the allocation of factors of production in China’s economy—including labour, capital, and land—has all undergone market-oriented reforms. Regrettably, rather than progressing toward market-driven allocation, the distribution of land resources has regressed into an even stricter system of planning and administrative management.