The State Council on Tuesday issued new rules in a new effort to stem illegal land transfers, which are believed to have fuelled the country's runaway investment.

A minimum price will be set for the transfer of land for non-agricultural uses, one of a slew of measures stipulated in the rules. The cabinet warned that local officials who fail to stop illegal sales will be penalized.

The rules also reiterated that farmers' interests must be safeguarded and compensation must be paid in full for the takeover of their farmland, which is their lifeline, and their social security costs.

The message is clear that the central government is trying to protect the interests of farmers, many of whom have fallen victim to runaway land requisitioning nationwide resulting from the latest economic boom.

Clearer is its purpose to put investment under control, in order to save the Chinese economy from drastic fluctuations after a dangerous hard landing.

This time, a new attempt resorts to pricing to control land supply, as the minimum land price rule indicates.

As important production factors, land, capital and natural resources combine to back up economic growth. They are behind the booming Chinese economy.

The problem is that their prices have often been distorted and cannot reflect their true value. Moreover, the cost of lawbreaking is also low in some places, which equates to connivance in the illegal use of those resources.

Land, for example, can be easily obtained at a low price in some places legally or illegally. Despite the central government's repeated warnings, illegal land transfers continue in some places.

In such circumstances, investors are encouraged to abuse those resources, contributing to the high rate of economic growth that could potentially trigger inflation or financial problems.

By proposing a minimum price tag for land use, the central authorities are attempting to tackle the root of the problem. It is a good start.

The policy-makers, however, did not come up with something new regarding the punishment of untoward local officials. They have merely reiterated their intent to take a harsh stance.

Such harsh wording was not rare in the past. Unfortunately, it does not seem to work.

People cannot help but ask: What if local officials go against the new rules this time, just like before?

They may not openly oppose the policies, but given their enthusiasm to push land transfers and investment to increase local revenues, whether they will toe the line remains a question.

(China Daily September 7, 2006)