There is growing concern that farmland transfers lead to less agricultural investment, which may adversely affect agricultural productivity growth in China. Prior research has primarily focused on the differences between owned cultivated land and rented plots, but little is known about how farmland transfers between relatives, which are popular in rural China, specifically affect agricultural investment. In this paper, we present a conceptual framework of transaction cost economics to compare different contracting strategies in China's farmland rental markets. As farmland rental markets in China are immature, land transfer between relatives establishes bilateral governance, which has the advantage of addressing the opportunistic activities of both parties and can ultimately increase investment by tenants. Based on data from two waves of household surveys, we empirically examine the impact of bilateral governance on the application of organic fertilizer, an indicator for agricultural investment. Our findings show that apart from economic factors, kinship is important to the functioning of farmland rental markets in rural areas.

Soil testing and formulated fertilization technology can effectively solve the problem of the excessive and inefficient use of chemical fertilizers. Previous studies have found that the use of the Internet can increase the adoption of soil testing and formulated fertilization technology among farmers. However, they do not distinguish between the effects of the different uses of the Internet (with or without productive use) on the adoption of soil testing and formulated fertilization technology. This study investigates the Internet use of 5341 professional farmers in rural China in 2019, finding that 18.97% of them still use the Internet for only communication and entertainment and do not use any agricultural productive services on the Internet. The adoption rate of soil testing and fertilization technology among these farmers is only 23.77%, which is approximately 10 percentage points lower than that of farmers who use the Internet for productive purposes. The double robust model shows that the probability of the adoption of soil testing and formulated fertilization technology by farmers with productive use of the Internet increases by six percentage points, which is both statistically and economically significant. In the future, China should train more farmers to use the Internet for productive purposes; this will help more farmers, particularly those with low skills and low educational attainment, to use the Internet and play a positive role in promoting the Internet for green agricultural production techniques.