Becoming Beautiful: Property Rights For Natural Resources
By Yuanchao Xu 19 March, 2020
Two Sessions may be postponed but CWR's Xu shows that China's ecological civilisation is still on track
A clear property rights system is the cornerstone of a market-oriented economy. This is not only important for doing business, but also for ecological protection. Yet unclear property rights and responsibilities have long been a restraint in the utilisation of natural resources in China.
In 2018, the Chinese government conducted a ministry reform in 2018, in which the Ministry of Natural Resources (MNR) was established and acted as a proxy to own and manage all natural resources. By centralising the ownership (as compared to the lack of clear ownership before), the MNR acts as the first step towards a clear property system for natural resources, as well as transitioning the government’s decision making process from an economy-oriented one to a holistic one which strikes a better balance between economy and environment.
By 2020, the MNR aims to build a property rights system for natural resource assets…
…confirming ownership, clarifying use rights & responsibilities, ensure strict protection etc.
As we have discussed earlier in our article Ministry Reform: 9 Dragons To 2, the MNR has two main missions: 1) the designation of ecological redlines and 2) the limiting the over-exploitation of natural resources. Both missions need a clear property system for natural resources. As such, the government has taken a further step by issuing the “Guiding Opinions for the Reform on Coordinating and Promoting a Property Right System for Natural Resources Assets” in April 2019, aiming to build a property rights system for natural resource assets with confirmed ownership, clarified use rights & responsibilities, strict protection, smooth transfer and effective supervision by 2020.
Several key tasks are proposed in this document:
Build & improve the property right system for natural resources
The top priority of the reform is to scientifically classify and register natural resources in a way that that the separation of ownership and use rights can be promoted. Regarding different types of resources, several key measures are suggested:
Principal-agent management & central-local funding systems
A principal-agent management system is suggested in the guideline in which appointed provincial level/city level governments can exercise property rights on natural resources for the people. Pilot provinces for this principal-agent system include Fujian, Jiangxi, Guizhou and Hainan.
Pilot provinces for this principal-agent system include Fujian, Jiangxi, Guizhou & Hainan
Moreover, the existing central-local income funding system for natural resources is to be improved. Reasonable adjustments can be made to the system so that local authorities can be more flexible in supporting local ecological protection projects.
For rural areas, the property rights on collectively owned natural resources belong to rural collective economic organisations.
Conduct investigation & registration of natural resources
A unified classification and accounting system for natural resources was also suggested. This means balance sheets for natural resources will be made, monitored and updated on a real-time basis.
Balance sheets for natural resources will be made, monitored & updated on a real-time basis
Furthermore, an information platform will be built for the registration of different types of natural resources. The ‘Provisional Measures for the Unified Confirmation and Registration of Natural Resources’ was issued as the guidance for the registration.
Holistic protection & intensive development of natural resources
To strike this balance, a national territory map is to be made. Controlling lines such as ecological redlines, permanent basic arable lands and urban development boundaries should be clearly designated. Holistic measures should be taken for the protection of natural resources.
Standards for natural resources development and corresponding industry access policies are to be improved. Resource exploitation efficiencies and environmental protection requirements are two important criteria in selecting transferees of natural resource use rights.
Improve the legal system for natural resources properties
Several amendments are going to be made to existing laws regarding natural resources including the Mineral Resources Law, the Water Law, the Forest Law, the Grassland Law, the Law on the Administration of Sea Areas and the Island Protection Law.
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