The Decision on Major Issues Concerning Comprehensively Deepening Reforms, adopted by the Third Plenary Session of the 18th Communist Party of China Central Committee, says farmers will get more property rights and ways will be explored to increase rural residents' income from property.

The most important property of farmers is land, which consists of agricultural land, non-farm land for housing, and collective construction land that belongs to village committees. To increase farmers' income from property, the authorities have to promote the transfer of rural land and enable farmers to enjoy the benefits of land transfer.

A debate has been raging for years on whether transfer of rural land should be promoted and whether farmers should be given more stable land property rights. Supporters believe that land transfer can increase farmers' income, and enable rural residents who migrate to cities to buy urban assets by selling their assets back home and help them complete the transition from rural to urban residents. But opponents say that an increase in land transfers will quicken the loss of land and homes for farmers, and without any security, more landless farmers will end up as urban poor, leading to social unrest.

Both arguments, however, are based on the assumption that the transfer of rural land will be complete overnight. Rural land plots that can be transferred are limited. In fact, prices of some "houses with limited property rights" shot up after the plenum issued the document because some people misread its content. They should have realized that the impact of the plenum's decision on the countryside will be in the long run rather than immediate.

Most of the farmers cannot turn their land into saleable (or transferable) asset because of poor liquidity. And even if they can transfer the land, they will earn relatively low profits. For example, rural residents (or city dwellers) rarely go to another village to buy a house. Besides, financial institutions are unwilling to accept rural houses as collateral for loans. Not only are these houses not allowed to be sold, but also it is difficult to find buyers for them when the collateral is auctioned.

The value of land appreciates when it becomes suitable to be developed into a real estate project. Only when agricultural land turns into construction land (that is, suitable for realty projects) will its price increase. The improvement in surrounding infrastructure will push its price further. But even then farmers will not get all the profits from its transfer, because they don't decide local area planning and infrastructure.