Land is an important production factor and asset, and the land
administration one of the important government functions. Under the
market economy system, land constitutes an important part of the
whole market system. Since China's reform and opening up,
significant changes have taken place in China's land market. The
marketization of land has become the focus of attention both at
home and abroad. This chapter will present an in-depth analysis on
various aspects concerning the marketization of land such as the
supply and demand situation in China's land market, the way land is
utilized, the rules applied in the operation of land market, the
intermediary service sector and the way land is administered,
etc.
Ⅰ. The Process of Marketization of Land in
Retrospect
(I )Development of China's Land Market Administration
System
China's marketization of land originated from the reforms in the
land use system at the end of 1980s. From the land lease under
government approval in Shanghai and the first auction of land use
right in Shenzhen to the following modifications made by the
Constitution of the People's Republic of China on land lease and
transfer, the system of no compensation and no time limit in supply
of land was terminated, and land began to enter the market as a
commodity. The Land Administration Law promulgated in 1986 has
provided a land use pattern combined with administrative allocation
and lease with compensation, and brought about an initial outline
of establishing land market. The revolution on supply of land
started in 1987 and lasted for over a decade and experienced three
climaxes: the first one during the period from the end of the
Seventh Five-year Plan to Eighth Five-year Plan, the second during
the period of the Ninth Five-year Plan and the third after the
Tenth Five-year Plan especially in 2001.
In November 1987, the State Council approved the decision to
conduct the pilot reform in land use in Shenzhen, Shanghai,
Tianjin, GuangZhou, Xiamen and Fuzhou. Shenzhen Economic Special
Zone was the earliest city in China having realized the value of
land. On December 1, 1987, Shenzhen made its find selling of land
use right with 8,588 square meters for 50 years by public auction.
44 enterprises with corporate qualifications in Shenzhen competed
vigorously for the land, one of which won the competition by paying
5,250,000 yuan. In Shenzhen, land use right entered the market as
assets for the first time in China's history and initiated the
selling of right to use state-owned lands by tender and auction.
After that, in April 1988, the National People's Congress made
modifications to the Constitution of the People's Republic of
China, adding the provisions that land use right may be transferred
according to the provisions of the law, while at the same time
deleting the provision that land cannot be used for lease. In line
with the modified the Constitution of the People's Republic of
China, the State Council issued the Interim Regulations on
Assignment and Transfer of Right to Use State-owned Land in Urban
Areas, explicitly stipulating that land use right may be
transferred by ways of contract, tender and auction. From without
compensation to with compensation, without a time limit to with a
time limit, and without mobility to with mobility, China's system
of land use met its first climax. During the period of the Ninth
Five-year Plan, the reform in system of land use was further
deepened, from the principle of dynamic balance of cultivated land
put forward in 1996 to the permanent policies in strengthening land
administration (No. 11 Document of the Central Committee of the CPC
in 1997), together with freezing the employment of cultivated land
for construction works, revising the Land Administration Law of
the People' s Republic of China in all respects, amending mid
editing the general plans for the utilization of land and
establishing the control system in usages of land. All these
significant reforms in system of land use paved the way for the
establishment and improvement of land market. Modifications to the
Constitution of the People' s Republic of China and formation and
implementation of the Provisional Regulations not only helped to
restore the original commodity nature of the state-owned land
assets at the levels of law and regulation, but also marked that
the land administration had started its process of
commercialization. Based oi1 the advice and suggestions collected
from all walks of life, the Fourth Session of the Standing
Committee of Ninth National People's Congress held on August 29,
1998 promulgated the revised law: Administration Law of the
People' s Republic of China. According to this Law, the State
Council issued the Regulations on the Implementation of Land
Administration Law on December 27 in the same year. With the
establishment of land market, lands in most cities and regions are
being transferred in the way of paying compensation to the
government.
In the wake of the establishment of market economy system, the
principle of allocating land resources and determining land prices
by the market is gradually set up. In regions with a well-developed
market economy such as Guangdong, Jiangsu and Zhejiang, an active
exploration was started in establishing land market, such as the
land purchasing reserve system in Hangzhou and the physical market
building in Guangdong. The tender and auction system for use of
operative land was established in Guangdong and Zhejiang Provinces,
which became a trend in reforming the land use system in these
areas. The outline of land market establishment is gradually
emerging. These activities gained the full support from the
Ministry of Land and Resources. In 1998, the Ministry of Land and
Resources issued the Circular on Further Promoting the
Assignment of Right of State-owned Land by Tender and Auction.
The bold promotion by the local governments and the active guidance
by the Ministry of Land and Resources jointly contributed to the
second climax in land market establishment.
On January 1, 2000, the Ministry of Land and Resources
promulgated the Circular of the Ministry of Land and Resources
on Establishing the Physical Land Market and Promoting the
Standardized Transactions of Right of Land Use establishing
and improving the administration system of land transaction and
standardizing the operation of physical market. The Ministry of
Land and Resources emphasized in its Circular that it would focus
on establishing and improving the following systems during the
process of consolidating and standardizing the orders of land
market: firstly, controlling system on total supplies of land for
construction purposes. According to the general plans for the
utilization and the actual demands for each construction in
different regions, total supplies of land for construction purposes
will be strictly controlled. Secondly, centralized supplying system
on urban lands for construction purposes. The urban governments
centrally controlled the supply of newly-added lands for
construction purposes. The newly-added lands for construction
purposes were to be requisitioned and supplied by land
administration departments of the urban governments in unified way,
and the newly-added lands for construction purposes in districts
directly under the city and in parks and areas of all kinds must be
included in the supplying channels centralized by the urban
governments. Thirdly, public transaction system of right of land
use. Lands to be transferred must be made public to the society in
the designated areas or by way of news media. Those required to be
auctioned by way of tender must be subject to auction by open
tender. When transferred by agreement, the results of such
agreement must be publicized. Fourthly, the system of regular
renewal and promulgation of standard land prices. In principle, the
standard land prices are renewed every three years and regulated at
appropriate time according to changes in the market. Fifthly,
inquiry system for land registration. Except otherwise required by
the state confidentiality, the results of land registration were
subject to public inquiry in the society ensuring completeness of
inquired information, promptness of examination and correctness of
authentication. Sixthly, collective decision-making system. Those
significant items involving administration of land assets, such as
examination and approval of lands for construction purposes,
disposal of land assets and determination of land prices must be
subject to internal joint hearing, and relevant decisions must be
made collectively.
In 2001, the State Council publicized the Circular on
Strengthening the Administration of Land Assets(Decree No.
15), which made specific requirements focusing on strictly
controlling total supplies of land for construction purposes,
strictly performing the system of use of state-owned land with
compensation, greatly promoting auction by open tender,
strengthening the administration of transference of land use right,
enhancing the administration of land assets and standardizing the
examination and approval of land. A series of new measures in
administration system of land assets were formulated with a view to
strengthening the administration of land assets in the fields of
resource and system. Systems of physical land market, standard
prices of land and information publicity etc were established in
many counties (cities) of China. Decree No. 15 of the Sate Council
brought about the third climax in reforms of land use system. It
further improved the land market mechanism and remarkably displayed
the fundamental functions of allocation of land resources through
market mechanism, meanwhile played an important role in
standardizing the examination and approval of land and rectifying
the market economy order.
The basic systems ensuring the standard operation of land market
serve as important tools in standardizing land market order. Under
the guidance of those land laws and regulations, the right of
state-owned land resources quickly shifted from examination and
approval to auction resulting in a further standardization of land
market. Up to 2001, the promulgations of a series of local
regulations and standard documents helped initially establish and
improve the systems of controlling total supplies of land for
construction purposes, centralized supplying of urban lands for
construction purposes, public transaction of land use right,
regular renewal and promulgation of standard land prices, public
inquiry for land registration and collective decision-making.
(Ⅱ)Evolution of Land Use Policies for Foreign-Invested
Enterprises in China
Lands used for foreign-invested enterprises were among the
earliest lands used with compensation. The Law of the People' s
Republic of China on Sino-Foreign Equity Joint Ventures promulgated
in 1979 explicitly stipulates that the investment by Chinese party
in a Sino-foreign joint-venture may take the form of land use
right, and "where land use right is not taken as a part of the
investment by Chinese peaty, the equity joint venture will pay the
Chinese government fees for its use ; the Regulations for the
Implementation of Law on Sino-Foreign Equity Joint Ventures
further made it cleat- that sites applied by joint ventures for use
can be granted by signing contracts with land administration
departments, indicating the use of land, period of use and fees for
such use. We can find similar provisions in the Law of the
People' s Republic of China on Sino-Foreign Contractual Joint
Ventures, the Regulations for the Implementation of Law on
Sino-Foreign Contractual Joint Ventures and the Rules for
the Implementation of Law on Sino-Foreign Contractual Joint
Ventures. With the deepening of reforms in the land use system
in China, the abovementioned laws made it clear that
foreign-invested enterprises may be granted the right of land use
according to the provisions of other regulations in China, apart
from by way of paying fees for land use. In 1998, the new Land
Administration Law provided in its Article 85 that : this law
applies to the use of land by Sino-foreign equity joint ventures,
Sino-foreign contractual joint ventures and foreign-capital
enterprises. Whereas there are other provisions by law, those
provisions prevail. After the promulgation of Decrees 55 and 56 in
1990, a great many of foreign-invested enterprises were granted
lands by way of transfer. In August 1999, the Decree 73 issued by
the General Office of the Sate Council made it clear that
foreign-invested enterprises that were granted the right of land
use no longer had to pay fees for the use of sites. According to
the above-mentioned regulations, all the lands applied by
foreign-invested enterprises for use will be granted with
compensation. Among which, before the promulgations of Decree 55
and 56 of the Sate Council in 1990, foreign-invested enterprises
got their lands with compensation mainly by way of signing contract
of site use and paying fees for the use of lands ; after the
promulgations of Decree 55 and 56, foreign-invested enterprises may
get the right of land use by way of transfer. The Several
Suggestions on Strengthening the Administration of Land Assets and
Promoting the Reform and Development of State-owned Enterprises
(Decree 433 [1999] issued by the Ministry of Land and Resources),
promulgated in November 1999, explicitly provides that joint
ventures or cooperative ventures established by state-owned
enterprises and foreign investors, if complying with the provisions
of Catalogue of Allocated Lands, may get their lands by way of
allocation upon approval. The Catalogue of Allocated Lands
promulgated in 2001 (Minister's Order 9 of the Ministry of Land and
Resources) further explicitly stipulates the non-distinguishing of
land users' identities. Those lands for construction purposes
complying with this Catalogue of Allocated Lands, upon approval,
may be granted their lands by way of allocation. Foreign-invested
enterprises and other land users are equally treated with the same
land use policies.
(China.org.cn November 7, 2003)
