Reporter: How do we guarantee farmers get fair demolition payments?

Li: Local governments and property developers make capital premium as the farmlands expropriated turn tradable or transferable. Farmers only get a small share. Farmers should get compensation for that, but it has been neglected by many local governments. Decision makers should listen to farmers and take into account their opinions and needs.

Reporter: What are the obstacles preventing land from being transferable or tradable?

Li: Land ownership reform needs to be carried out. The government should endow farmers with contracted land-use rights, homestead-use rights, and property rights over the buildings on their homesteads. Certificates should also be issued to justify these rights.

Farmers' land ownership should be protected so as to guarantee land transaction. Rural areas with good financial services could try mortgage loans as a way to provide farmers with money for production and settlement. Farmers won't get enough money to move to cities if their contracted lands and homesteads can't be mortgaged, transferred, or rented, although they claim communal ownership over the land.

Reporter: How to make a breakthrough in the reform of the household registration system?

Li: China's urbanization will be a rather long process. In its very beginning, or even for a long time, the hukou system that identifies people as rural or urban will last, and the fact that people of rural hukou don't have equal rights as people of urban hukou will continue to exist. During this period, there will be farmers living permanently in the old cities, new urban areas, and new country communities. Farmers may consist most, if not all, of the population in new rural communities.

As economic reform goes deeper, those permanent dwellers will get an urban hukou sooner or later. It's a trend that no one can resist.

In the process of urbanization, China not only saw itself transform from an agricultural society to industrial society, but also from a planned economy to a market economy. China will achieve its urbanization plans when it grows into an industrialized market economy. It means a lot to China's transformation whether to maintain or abolish the current policy dividing people into the urban or the rural. Its abolishment will remove the identity division between Chinese people, and make sure all Chinese people enjoy equal rights.

Reporter: The urban-rural income gap has grown larger in recent years. What are your suggestions to improve it?

Li: Opinions differ on income distribution reform: primary distribution or secondary distribution. I think an adjustment to primary distribution is more necessary.

China's market is still fairly underdeveloped. This is a result of many factors, including historical reasons, regional imbalance, the traditional trade customs. The road to a market economy is still hindered by monopolies in certain sectors, and the income allocation rules inherited from the planned economy era, including different payment standards for different jobs, different job levels and different regions.

At the same time, we should guarantee farmers' rights to lease their contracted farmland or transfer their land-use rights. This will enhance the capacity of farmers to access the land market, and help them gain more value. We should encourage farmers and people from low-income households to start a business, like micro- and small-size enterprises. This will make primary distribution more balanced.

China should choose an urbanization path that suits its national condition. Great importance should also be attached to primary income distribution, and also solve the secondary distribution. Efforts should be strengthened to make social security, education services and land allocation more balanced between rural and urban areas.