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Investing in Chinese agriculture industry

[时间:2010/11/1 17:49:18  查看次数:3244  作者:China Lawyer  来源:原创]

With the urbanization of China’s vast rural area, China has seen a sharp decline in production of vegetables while has seen an apparent surge in demand for vegetables and fruits. As a result, in most urban area, prices of vegetables and fruits have been on steady rise over the past decades.

This has opened a good opportunity for foreign investment that are more experienced in managing large-scale farmland, compared with the household management of small parcel of farmland in most part of rural China. The trend is that household production is being substituted by centralized scale production.

China’s policies for foreign investment in agriculture industry are positive. China has been encouraging foreign investment in agriculture industry for long. Under the Catalogue for the Guidance of Foreign Investment Industries (Amended in 2007), the first encouraged industry is about agriculture, including:

(1) Improvement of low and medium yielding field;

(2) Planting, development and production of woody edible oil, ingredient and industrial raw material;

(3) Planting technology, without social effects of pollution, of vegetables (including edible fungus and melon-watermelon), dried fruits, teas and serial development and production of these products;

(4) Development and production of new technology of sugar-yielding crops, fruit trees, forage grass;


(5) Production of flowers and plants, and construction and operation of nursery base;

(6) Planting of rubber, sisals and coffees;


(7) Cultivation of traditional Chinese medicines (limited to equity joint ventures or contractual joint ventures);

(8) Reusing in fields and comprehensive utilization of straws and stalks of crop, development and production of resources of organic fertilizers;


(9) Planting of forest trees (including bamboo) and cultivation of fine strains of forest trees and cultivation of new breed varieties of polyploid trees and genetically engineered forest trees;

(10) Breeding of aquatic offspring (excluding precious quality varieties peculiar to China);


(11) Construction and operation of ecological environment protection projects preventing and treating desertification and soil erosion such as planting trees and grasses, etc.

(12) Breeding of aquatic products, cage culture in deep water, large-scale breeding of aquatic products and breeding of eco-ocean products.


Besides, as with other type of foreign investments, local governments in most Chinese localities are very keen on the inflow of foreign capital and expertise. Local governments will very often side with the investors to help to strike a deal with farmers. From our experience, it is important to secure the support from local governments and those commissioners of the villagers’ commission/association.


Well, while the prospect seems promising, it is not easy to deal with those villagers/farmers as a whole. Remember you are not going to enter into a deal with another individual but with a collective consisting of a certain number of people. They may be divided substantially with respect to any proposed deals that are going to take their lands away.

Unlike the state-owned lands whose use rights are granted to users for a few decades of years based on the different natures of usage, there are a very different set of rules relating to collective-owned lands in rural areas.


We will introduce the basic regulations regarding rural arable land and rural construction land in later articles. If you are interested in this subject, please contact me at doroto@163.com.

田杰 律师
中国石油大学英语学士,华东政法大学法律硕士,曾在Clifford Chance上海代表处任高级翻译,在中伦上海分所和中银上海分所任专业房地产律师。现为北京大成(上海)律师事务所执业律师,主营房地产交易、投融资业务[详细]

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