Legal and institutional analysis of land expropriation in China

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Legal and institutional analysis of landexpropriation in China

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Introduction

China has a bifurcated land system, with clear distinctions between urbanand rural land-use rights. While state-owned land in urban areas hasbecome commercially transferable, rural land cannot be transferred.1 Thisdiscrepancy has been exploited by property developers, investors, villageheads, and local governments, which has caused widespread, large-scalemalpractice in relation to expropriation of land. Thus, conflict over expro-priation of land has been, and continues to be, a simmering hotpot of socialunrest in China.2 It has been claimed that land disputes over expropriationis one of the most common ways of provoking grass-roots resistance andundermining public confidence in the government.3

The last two decades have witnessed exponential growth in China’sproperty and construction sectors, which has also brought about socialtensions and innumerable complaints of inequitable treatment. Peasantsare perceived to be weak and vulnerable to infringement of their prop-erty rights by the local government and property developers. Landexpropriation (and the subsequent sale of land to property developers)has become a major source of lucrative revenues and financing for localgovernments, as peasants are drastically undercompensated for their

1 It is worth noting that there is no private ownership of land in China. Reflecting itssocialist traits, all land in China is owned by the state (urban land) or by rural collectives(rural land). Public landownership has undergone various reforms since the mid-1980s.As a result, there is a separation of land-use rights from landownership. Although allurban land is still publicly owned, rights to use such land may be allocated to, andtransferred among, private individuals.

2 See Yu Jianrong, “Land Issue Became the Focal Point of Peasant’s Rights Maintenance,”The World of Research and Study (调研世界), 8 (2005), 22–23.

3 See Dang Guoyin, “A Theory on Social Stability and its Application in China’sCountryside,” China Rural Survey (中国农村观察), 3 (1996), 52–61.

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expropriated land.4 More disturbingly, there is increasing media cover-age of forced evictions and demolition cases involving violence, some-times even resulting in death,5 which have highlighted underlying socialtensions and raised public awareness and concern. All in all, most ofthese problems can be attributed to the dysfunctional bifurcated landtenure system. This chapter argues for the introduction of clearly definedproperty rights by way of legislation, in view of the mounting number ofinfringements of property rights via expropriations (formerly known inurban China as “demolition and reallocation”).

Lin has suggested that the dichotomy of urban and rural land rightsunder the bifurcated system is actually a root cause of urban“overdevelopment” and “land hunger.”6 The separate regimes for ruraland urban land allow local governments in China to monopolize landsupply and thus benefit from converting rural land to urban use at littleexpense.7 Many local governments in China have relied on land con-version and allocation charges as an important source of revenue.8 Ho,on the other hand, argued that China’s land tenure system is a“deliberate institutional ambiguity,” which allows local governments toadapt and respond quickly to a variety of pressures and rapidly changingconditions.9 This is particularly the case in relation to the collectiveownership of land in rural areas. Hence, there has never been a land

4 See, generally, Wang Cailiang’s blog, “Annual Report of Expropriations in China 2012,”available at: http://blog.caijing.com.cn/expert_article-151549-46704.shtml.

5 In 2010, a forced eviction at a home slated for demolition ended in tragedy when threemembers of a Jiangxi Province family set themselves on fire outside the Yihuang Countyhouse. One died, and two were seriously injured after they doused themselves in fuel andset themselves on fire. Several local Communist Party cadres were later suspended fromtheir jobs in connection with these self-immolations. Yihuang County is certainly not thefirst community to engage in deadly evictions (血拆). See at: http://english.caixin.com/2010-09-21/100190928.html. In 2004, a local government party chief in Jiahe County,Hunan Province, was among several officials sacked for abuse of power in connectionwith illegal evictions. Even the State Council was involved, calling a meeting to work outappropriate preventive measures and penalties. In 2009, a Chengdu woman set herselfaflame during a standoff with expropriating officials, available at: www.21cbh.com/HTML/2010-12-27/zNMDAwMDIxMjczNA.html. See also the report on this case atSouth China Morning Post.

6 See George C. S. Lin, Developing China: Land, Politics and Social Conditions (London:Routledge, 2009), pp. 27–29.

7 A.C.M. vanWesten, “Land inChina: Struggle andReform,”Development, 54 (2011), 55–58.8 See Jiang Shengsan, Liu Shouying, and Li Qing, China’s Land Policy Reform: PolicyEvolution and Local Implementation (Shanghai: Joint Publishing, 2010), p. 108.

9 See Peter Ho, Developmental Dilemmas: Land Reform and Institutional Change in China(London: Routledge, 2005).

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policy that has been “uniform and consistent” throughout China.10

Interestingly, Merrill and Smith, in their property law textbook, statedthat “notwithstanding . . . government interference with property rights,China has had little difficulty in recent years attracting large amounts ofcapital from foreign investors.”11 For them, the investment influx wouldappear to be due to the fact that “Chinese administrators in the Post-Maoera have developed a strong norm against interfering with the expect-ations of foreign investors.”12 As a result, economic growth can still takeplace notwithstanding lower protection for court-enforced propertyrights, as various social arrangements may provide alternative forms ofprotection for property rights underpinning economic activities.13

However appealing the above argument may appear, this writer believesthat secure property rights formalized by the use/revision of legislation isstill the most reliable solution (and should be the ultimate solution) toachieve socially permissible control. Economic growth driven by foreigninvestment is only one aspect of the myriad issues related to land-use rights.Emphasizing economic development may well further encourage landexpropriation, and the increase in the number of cases of land seizuresacross the countrymay have been fuelled in part by high housing prices andthe government’s urbanization policy. Without a properly functioning,comprehensive property law, China cannot accomplish economic develop-ment in a sustainable manner. In the past, local governments were able toprovide cheap land for foreign investors, but this cannot continue indef-initely.14 The social norm model worked in the past, but is not feasiblenowadays.15 Today, individual farmers who are subject to unfair

10 See GeorgeC. S. Lin and Samuel P. S. Ho, “The State, Land System, and Land DevelopmentProcesses in Contemporary China,” Annals of the Association of American Geographers,95(2) (2005), 411–436.

11 See Thomas Merrill and Henry Smith, The Oxford Introduction to US Law: Property(Oxford University Press, 2010), p. 232.

12 Ibid.13 See Donald C. Clarke, “Economic Development and the Rights Hypothesis: The China

Problem,” American Journal of Comparative Law, 51 (2003), 89–111; Zhang Xiaobo,“Asymmetric Property Rights in China’s Economic Growth,” discussion paper forInternational Food Policy Research Institute, 2006, available at: www.aeaweb.org/assa/2006/0108_1300_0204.pdf, accessed August 10, 2013.

14 See Chen Ruoying, “Divided World: China’s Land Tenure System and Implication toForeign Investment in China,” available at: http://ssrn.com/abstract=1665175.

15 Clarke andUpham cogently argue that they do notmean that property rights are undesirablein China. For example, see Frank Upham, “From Demsetz to Deng: Speculations on theImplications of ChineseGrowth for Law andDevelopment Theory,”NYU International Lawand Politics, 41 (2009), 551–600.

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expropriation need more than governmental policies and a mish-mash ofsocial norms. They need legal certainty, provided by legislation andenforced by the courts.

While valuing Ho’s insightful and context-sensitive theory of deliberateambiguity, some normative questions should be asked: is allowing localgovernments to manipulate the land market, albeit subject to local con-ditions, legitimate and fair?; how should the grievances suffered by therural farmers be redressed: and how should the Chinese government drawthe fine line between economic development and individual propertyrights? In order to answer these questions, this chapter addresses the rootcauses of land disputes both from a legal perspective, evaluating the mostrecent statutory changes, and from the policy perspective, analyzingthe national strategy of integrating urban and rural areas (城乡一体化),including the recent local experiments on transforming the inalienability ofrural land-use rights.

This chapter is structured into four parts, with this introduction beingthe first. The second section will review the historical development of theChinese land tenure system in both rural and urban areas from 1949 tothe present. The understanding of historical land institutional changeswill provide further insights into the actual implementation of landpolicies and laws in China today. This section ends by summarizingthe key features of the current Chinese land tenure system and identify-ing the major problems in the current system. The third sectiondescribes the current legislative framework in relation to the expropria-tion of land in China. By discussing the significant reforms in such laws,the major changes between the 1997 and 2011 Regulations will bemapped out. Subsequently, two normative elements of expropriationlaw are analyzed against the new changes, namely, public interest andfair compensation. The fourth section summarizes the progress andpitfalls of the current land expropriation system and depicts the futureoutlook of land reform in China.

Historical background and current issuesof Chinese expropriation law

Rural land

Shortly after the founding of the People’s Republic of China in 1949, Chinainstituted a land collectivization program that replaced private farmingunder the “tiller owns land” policy of 1947. This initiative in Mao’s era

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was modeled on the former Soviet system.16 However, under the collectivesystem, and later, the People’s Commune system, there was a lack ofeconomic incentives to encourage farming productivity.17 This unfortunatesituation was worsened by the Great Leap Forward (1958–1961). Takinginto consideration the outright failure of the People’s Commune system, thedecentralization of collective ownership to the production team was carriedout in the early 1960s. As a result, the sheng chan dui 生产队 (productionteam) became the de facto manager of the land in most villages, and thissystem was retained up to the mid-1980s.18

When the Cultural Revolution ended, China steered a new course withdramatic economic and social changes. As an integral part of Deng’sreforms, the Household Responsibility System (HRS) was introduced toreplace the People’s Commune system with a family-oriented farmingsystem in villages.19 Under the HRS, land is contracted to individualhouseholds for fifteen to thirty years. The decentralization of land usefrom the collective level to the household level improved the peasants’incentives to enhance farming productivity. As a consequence, agricul-tural production boomed and rural incomes increased rapidly.20 TheHRS was initially conducted as an experiment in several designated areasand, due to its success, was soon introduced nationwide. Under the HRS,households are allocated land-use rights, but not the right to dispose ofthe land, that is, the right to transfer land or to use it as collateral toobtain a loan. These limited property rights dampened the farmers’

16 This does not mean that there no expropriation occurred in this period. The firststatutory instrument at the national level concerning land expropriation was enactedin November 1953 by the State Council, namely, the Expropriation Measure for theConstruction of National Projects.

17 See Wu Jinglian and Bruce L. Reynolds, “Choosing a Strategy for China’s EconomicReform,” American Economic Review, 78(2) (1988), 461–466.

18 See Chris Bramall, “Chinese Land Reform in Long-Run Perspective and in the WiderEast Asian Context,” Journal of Agrarian Change, 4(1/2) (2004), 107–141.

19 See James K. S. Kung, “Choice of Land Tenure in China: The Case of a County withQuasi-Private Property Rights,” Economic Development and Cultural Change, 50(4)(2002), 793–817.

20 This was so despite the fact that its success was short-lived for various reasons. Someattributed this to the tenure insecurity. See Roy Prosterman, Tim Hanstad, and Ping Li,“Can China Feed Itself?” Scientific American, 5 (1996), 90–96. Others thought the reasonwas due to the low farm-gate price instead of property rights. See James K. S. Kung,“Equal Entitlement versus Tenure Security under a Regime of Collective PropertyRights: Peasants’ Preference for Institutions in Post-Reform Chinese Agriculture,”Journal of Comparative Economics, 21 (1995), 82–111. Whatever the reason, this neces-sitated further rural land reform, which is discussed in the subsequent parts of thischapter.



investment because there was no guarantee that “those who invested toimprove the land would be the long-term beneficiaries of suchinvestments.”.21 Moreover, under the HRS, land parcels are subject toperiodic reallocation at the discretion of the village leaders in view ofchanges in population and the formation of new households.22 More tothe point, tenure insecurity has worsened due to land expropriation forurban expansion and infrastructure development.23

From the mid-1980s to the end of the 1990s, the Chinese CentralGovernment encouraged village collectives to utilize agricultural land forbuilding up township and village enterprises (TVEs).24 Farmers wereencouraged to “leave the land but not the countryside” in order to work inthe newly initiated TVEs. This essentially allowed agricultural land to beused for non-agricultural (mainly manufacturing) purposes. Interestingly,TVE land was later used to circumvent the overarching policy of the non-transferability of rural land by way of involuntary transfer: bankruptcy,mergers and acquisitions, and expropriations.25 There are two reasons forthis policy. One reason is that the stimulating productivity effect of the HRShad deteriorated during that period, and the other reason is that there was ahuge proportion of the labor force that did not need to personally engagein farming. While the TVE policy shifted resources and discretion to localgovernments to encourage localized strategies of development,26 andTVEs have more resources and clout than a single farmer, thus alleviatingthe fear of land-taking,27 the law never defined TVEs as a unique secure

21 See Jean C. Oi, “Two Decades of Rural Reform in China: An Overview and Assessment,”China Quarterly, 159 (1999), 616–619.

22 See K Mullan, P. Grosjean, and A. Kontoleon, “Land Tenure Arrangements andRural–Urban Migration in China,” World Development, 39(1) (2011), 123–133; LorenBrandt, Jikun Huang, Guo Li, and Scott Rozelle, “Land Rights in Rural China: Facts,Fictions and Issues,” China Journal, 47 (2002), 67–97 at 74.

23 Tao Ran and Xu Zhigang, “Urbanization, Rural Land System and Social Security forMigrants in China,” Journal of Development Studies, 43(7) (2007), 1301–1320.

24 This policy eventually became a piece of legislation to the same effect. See Arts. 12 and 28of the TVE Law, 1996.

25 It should be noted that the number of conversions from rural land to urban land underthis method is rather small. The main method is still through government expropriation.See Wang Xiaoli, Land Law (Beijing: Law Press, 2003), p. 200.

26 See Vivienne Shue, “Legitimacy Crisis in China?” in Peter Hays Gries and Stanley Rosen(eds.), Chinese Politics: State, Society, and the Market (London: Routledge, 2010), pp. 45–46.

27 See Donald Clarke, “What Kind of Legal System is Necessary for EconomicDevelopment? The China Puzzle,” in Tim Lindsey (ed.), Law Reform in Developingand Transitional States (London: Routledge, 2007), pp. 71–72.

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property-holder. Therefore, the pressing issue of non-transferability of ruralland (including TVE land) still persists and calls for further reform. TheRural Land Contracting Law (RLCL), implemented in 2002, aimed to securehouseholds’ rights of use and possession by allowing the enforcement ofthirty-year land-use contracts in order to prevent large-scale arbitraryreallocations of land and to allow transfers of land between households.28

Generally, under the current land system, farmers have two use rights overrural land. The first right is the right to contract out the land for agriculturalproduction, and the second right is the right to use the land to construct aresidential homestead. Rural land is also periodically redistributed amongcommunity members as a result of village demographic changes.29 Becausethe right to contract out themanagement of land is only a limited use right, aholder of such right does not have the power to assign such contractedland.30 However, the contractor may assign its interests in relation to thecontracted management land right, albeit subject to certain limitations, asexplicitly allowed by Article 32 of the RLCL. It is clearly stated that suchright can be assigned by “subcontract, lease, exchange, or transfer or byother means.”31 This right is, of course, limited to the term of the right-holder’s contract, which was specified in the land management contract.32

The method of transferring the rights is up to the individual rights-holder,not the collective on behalf of the local government.33

28 Li Ping, “Rural Land Tenure Reforms in China: Issues, Regulations and Prospects forAdditional Reform,” Land Reform (special edn.), 3 (2003), available at: www.fao.org/docrep/006/y5026e/y5026e06.htm, accessed August 15, 2013. See also Li Ping and Roy LProsterman, “From Collective to Household Tenure: China and Elsewhere,” in Roy L.Prosterman, Robert Mitchell, and Timothy Hanstad (eds.), One Billion Rising: Law,Land and the Alleviation of Global Poverty (Amsterdam: Leiden University Press, 2009).

29 See Wang Hui, Tong Juer, Su Fubing, Wei Guoxue, and Tao Ran, “To Reallocate or Not:Reconsidering the Dilemma in China’s Agricultural Land Tenure Policy,” Land UsePolicy, 28 (2011), 805–814.

30 Such a limited use right has been a popular subject of debates among scholars as to itslegal nature, namely, whether it is a proprietary right or a mere contractual right. Thedebate was not settled until the introduction of the 2007 Property Law, which definesthis land-use right in terms of the civil law concept of usufruct. See Arts. 128 and 129 ofthe Property Law.

31 Article 32 of the RLCL 2002.32 Property Law, Art. 128: “The holder of the right to the contracted management of land

shall be entitled to circulate the right to the contracted management of land according tothe provisions in the law on the contracting of rural land. The circulated term shall notexceed the remnant term of the original contract on right to the contracted managementof land. Without approval, no contracted land may be used for non-agriculturalconstructions” (an English translation is available at www.lawinforchina.com).

33 Article 34 of RLCL 2002.



Another distinguishing feature of the Chinese rural land tenure sys-tem is that in order for rural land to enter the open market, it has to befirst converted into urban land by state monopolistic appropriationunder the Land Administration Law (LAL).34 Primarily, both theUrban Real Estate Management Law (UREML) and the LAL requirethat various structures must be completed on state-owned land. Since thelocal government is the only authority that may assign a piece of state-owned land to developers, or take collectively owned land and convert itinto state-owned land, the government effectively monopolized thesupply of land for construction.35

Urban land

Initially, there was no provision for private property rights in the 1982PRC Constitution. With subsequent dramatic changes in economic andsocial conditions, the PRC Constitution has been amended several timesto constitutionally entrench private property rights.36 The burden facedby the Chinese government to provide enough housing for its citizenswas seriously challenged by urbanization and an exploding population.In order to ease the housing burden, China embarked on a new economicpolicy based on creating wealth by selling land and housing. In accord-ance with this policy, China amended its Constitution in 1988 to recog-nize privately owned, transferable land-use rights. This constitutionalamendment has far-reaching consequences because it allows the creationof a revolutionarily new form of land-use right. More significantly, thesubsequent 2004 amendment of the Constitution places private propertyon an equal legal footing with state-owned property, such that “citizens’legally obtained private property rights” should not be violated.37

Furthermore, the amendment requires compensation whenever privateproperty is expropriated. In other words, a limitation of a private prop-erty right is permissible, but subject to explicit safeguards or conditions.

34 Article 63 of the LAL. See more specifically, Art. 8 of the Urban Real Estate ManagementLaw.

35 See Peter Ho, Institutions in Transition: Land Ownership, Property Rights, and SocialConflict in China (Oxford University Press, 2005), pp. 44–48.

36 See Lei Chen, “The New Chinese Property Code: A Giant Step Forward?” ElectronicJournal of Comparative Law, 11(2) (2007), 1–24, available at: http://www.ejcl.org/112/abs112-2.html, accessed August 22, 2013.

37 Article 13 of China’s Constitution (amended onMarch 14, 2004 at the 2nd session of the10th NPC).

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This means that under the Chinese constitutional property clauses, theprivate property of citizens may be encroached upon only for reasons ofpublic interest and with compensation. Thus, the Chinese Constitutionacknowledges the right to private property as a fundamental freedom.

Despite these constitutional amendments, China still lacked a com-prehensive and consistently regulated expropriation law. There werenumerous divergent property law statutes,38 administrative regula-tions,39 ministerial circulars,40 and judicial interpretations.41 Thus, theChinese expropriation law was fragmented and susceptible to structuralweakness, inconsistent treatment, corruption, and an environment gen-erally inconsistent with sustainable development. Before 1994, whenhousing privatization occurred, the expropriation of urban housingland was aimed mainly at serving the needs of urban regeneration.42

Expropriations were largely government-oriented and benefited thepublic by improving living conditions. However, the UREML changedthe nature of expropriations of urban housing land. The law creates anumber of de facto monopolies that render the implementation of justcompensation almost impossible. The distinct feature of Chinese landtenure system is the twofold role played by the local governments,that is, the public function of government and as general landlord ofall land. Understandably, the entrepreneurial interests of local govern-ments are easily intermingled, but not necessarily aligned, with the

38 For example, the LAL and the UREML.39 For example, the Interim Regulations for Granting and Transfer of Land Use Right on

State Owned Urban Land in Cities and Towns of 1990 by the State Council, theRegulations on the Administration of Urban Private-owned Buildings of 1982 by theState Council, and the Interim Regulations on Assignment and Transfer of Rights to UseState-Owned Land in Urban Areas (城镇国有土地使用权出让和转让暂行条例) ofMay 19, 1990. The regulations issued by the State Council are administrative orders innature and are ranked lower than the statutes, but they are also applied nationwide.

40 The Urban Housing Demolition and Relocation Working Manual issued by the Ministryof Construction in 2005.

41 For example, Provisions of the Supreme People’s Court on Several Issues ConcerningHandling the Cases of Application for Enforcing Expropriation CompensationDecisions of Housing on the State-Owned Lands by the People’s Courts; Notice of theSupreme People’s Court on Strictly Implementing Laws, Regulations and JudicialInterpretations and Legally and Properly Handling Cases Concerning Expropriation,Demolition and Relocation; Interpretations of the Supreme People’s Court about theIssues concerning the Laws Applicable to the Trial of Cases of Disputes over Rural LandContracting of 2005 issued by the Supreme People’s Court.

42 Decision on Furthering Housing Reform in Urban Areas of 1994, issued by the StateCouncil.



public interest.43 The UREML allows only licensed developers with thenecessary qualifications to construct infrastructure facilities and housingin urban areas, while individuals, organizations, and enterprises areunable to build their own housing.44 In order to maximize profits fromland redevelopment, a private developer buys out the existing residentsof a piece of land at a low price, redevelops the area, and thereafter sellsthe real estate at a much higher price.

In response, the Property Law of the PRC came into effect in 2007.45 Thislegislation is intended to secure property rights by clearly defining differenttypes of property rights and safeguarding title security, thus providinggreater economic stability in the (real property) marketplace.46 The effec-tiveness of this legislation is still an open question as it was introduced toorecently for us to assess its impact adequately. Nonetheless, Article 42 of theProperty Law of 2007 is commendable as it fleshes out some safeguards forproperty owners who have had their land expropriated. It provides that:

Land and housing owned by a collective, juristic persons and individualscan only be expropriated for public purposes or in the public interest; theexpropriated land owned by collectives should be compensated to the fullextent of the loss suffered subject to law. The compensation includes,among others, compensation for taking the land, a resettlement subsidyand compensation for the fixtures, crops and plants on the expropriatedland as well as the premiums for social security for farmers. When theresidential houses owned by individuals and institutions are expropri-ated, compensated shall be provided in order to maintain the legalinterest of the expropriated institution or individual. When privatehousing is expropriated, the accommodation of the expropriated personsshould be guaranteed during the removal period.47

However, this provision was heavily criticized immediately after itsintroduction. The main criticism is that the above provisions are skeletaland provide little detail in relation to actual day-to-day, operationalpractices. First, the term public purpose is not clearly defined and thus

43 See Sally Sargeson, “Full Circle? Rural Land Reforms in Globalizing China,” CriticalAsian Studies, 36(4) (2004), 637–640.

44 Article 29 of the UREML.45 The enactment of the Chinese Property Law immediately attracted international media

attention. See, for example, “China’s Clause Four: The Recognition of Property Rights isan Ideological Landmark,” The Times, March 17, 2007; and “Chinas Volkskongressbilligt Eigentumsgesetz,” Frankfurter Allgemeine Zeitung, March 16, 2007.

46 See Chen, “The New Chinese Property Code?” pp. 1–24.47 Article 42 of the Property Law of 2007. The English translation is a modified version

based on version available at: www.chinalawinfo.com.

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remains subject to various interpretations. The ambiguity that surroundsthis term opens it to abuse by local governments that are intent onencroaching on private interests. In other words, the vexed problem ofwhat constitutes “public interest” still persists.48

Second, does the term “compensation” in the abovementioned provisionrefer to fair and reasonable compensation? The Property Law contains noconcrete yardstick or criteria that measures or determines the fairness orreasonableness of compensation. For example, valuations based on thecurrent use of the property, the history of its acquisition and use, its marketvalue, and the purpose of the expropriation, as well as the change of use, arenot mentioned in its provisions. Perhaps more frustratingly, it remainsunclear as to who has the authority to expropriate property from collectivesand individuals for a public purpose or in the public interest. Can commer-cial developers take the place of the government in exercising expropriationpowers, as regulated by the Regulations for the Administration of theDemolition of Urban Buildings and Relocation (2001 DemolitionRegulations)?49 The amorphousness of this situation leads to potentialabuse of the power to expropriate. Accordingly, it can be concluded thatread either purposively or technically, the Property Law’s expropriationprovision is skeletal and obscure. Unsurprisingly, a special, comprehensivestatute on expropriation was subsequently been enacted in 2011 by the StateCouncil, which will be analyzed in greater detail in section three.50

Reflections and some persisting issues

The belief that property rights promote prosperity and safeguard againstarbitrary intrusion has long been the norm in rights discourse.51 InChina, property rights are weak and vulnerable to the varying dictates

48 Some Chinese scholars claim that it is beyond the scope of the Property Law todemarcate the meaning of public purpose. They argue that the Constitution should bethe proper instrument to regulate the undefined nature of public purpose. See WangLiming, “The Property Law Cannot Bear the Burden on the Demarcation of a PublicPurpose,” Legal Daily (法制日报), October 21, 2006 (Chinese version).

49 Article 17 of the Regulations for the Administration of the Demolition of UrbanBuildings and Relocation.

50 The Regulations for Expropriation and Compensation for Houses on State-owned Landof 2011 issued by the State Council.

51 See Douglass North, Institutions, Institutional Change and Economic Performance(Cambridge University Press, 1990); Harold Demsetz, “Toward a Theory of PropertyRights,” American Economic Review, 57(2) (1967), 347–359; Yoram Barzel, TheEconomic Analysis of Property Rights (Cambridge University Press, 1989).



of government policies.52 Many Chinese farmers learned this lesson thehard way. As stated in the introduction, China employs a bifurcatedsystem of land-use rights, differentiating between urban land and ruralland. In the past, while urban land-use rights have been commerciallytransferable, rural land has been locked and frozen. A village collective isallowed to transfer rural land-use rights to individuals, but such a trans-fer is subject to the consent of both two-thirds of the villagers’ repre-sentatives and the township authority.53 Households who wish totransfer their contracting management rights have to give preferenceto potential transferees in the same collective.54 This has changed,albeit in a low-key fashion. In 2007, the State Council (the CentralGovernment) allowed Chengdu and Chongqing to conduct pilot projectsin relation to the registration and transfer of agricultural land.55

Politically, the top leadership has signaled a clear message that it intendsto end the bifurcated urban and rural land systems.56 Since then,Chengdu has been implementing and fine-tuning many concrete policiesto set up a legal and institutional framework for markets in ruralproperty rights.57 Specifically, Chengdu has introduced a decentralizedand temporary initial registration system. Village authorities can registera person-based land-use right at the village level for the homestead right(residential construction right), and there is now a household-basedregistration for the farmland-use right.58

Allowing transactions in rural land-use rights would be amajormilestonein the economic liberalization of China.59 Currently, demand for land in

52 Merrill and Smith, Oxford Introduction to US Law, p. 230.53 Article 15 of the LAL. 54 Article 33 of the LAL.55 National Development and Reform Commission (NDRC), Circular approving

Chongqing and Chengdu as the Special Experimental Zones for Coordinated Ruraland Urban Development areas (发改经体 [2007] No. 1248). This Notice was datedJune 7, 2007. The Chinese version of this Notice is available at: www.sdpc.gov.cn/zcfb/zcfbtz/2007tongzhi/t20100511_346231.htm, accessed August 12, 2013.

56 Guangdong was actually made a provisional laboratory even earlier than Chengdu andChongqing.

57 See Guo Xiaoming, Coordinating Urban and Rural Development and Rural LandTransfer Reform: An Empirical Study on Chengdu Model (Beijing: China Science Press,2012).

58 Opinion concerning strengthening Agricultural land and Furthering Rural Land andHomestead Rights, Chengdu Municipality, January 2008.

59 To allow legally recognized transactions of rural land does not amount to total priva-tization of rural land, as zoning (land planning) ordinances will still apply for the sake offood security and nature preservation as well as the preservation of indigenous people’s“family land.” I thank Professor Frank Upham for making this point.

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rural China is satisfied by state-based models of expropriation convertingthe legal status of rural land, rather than through impersonal exchanges ofproperty rights. The current model is a cause of widespread land conflicts inChina, as state officials appropriate the benefits of transitions to higher valueuses of land. The writer calls it “Government gains, farmer pains.” Ruralland transactions offer a potential alternative to state-based mechanisms ofproperty rights exchange. However, allowing the contractual transfer ofrural land-use rights is a sensitive sociopolitical issue in China, not onlybecause of unrest arising from smallholder farmer landlessness, but alsobecause it raises issues of citizens’ engagement with the state.

Property rights cannot exist as a social and economic institutionwithout laws that define their content and structure. As stated above,there is a clause in the Chinese Constitution prohibiting the governmentfrom taking private property for public interest without fair compensa-tion. But in practice, the public interest requirement is a “black hole” thatis open to wide and vague interpretations, and is therefore a toothlessprovision that is unable to hold local governments accountable for theiractions. Moreover, the compensation mechanism does not have to takerelevant factors into account: for example, moving costs, the location ofthe property, the demand and supply situation, and the farmers’ employ-ment and social security issues. Therefore, there is a dire need to spell outpublic interest and fair compensation in more detail in a special statute.

Legislative framework and structural analysis

The new 2011 Expropriation Regulations

The Regulations for the Administration of the Demolition of UrbanBuildings and Relocation (2001 Demolition Regulations) was the firststatute in China to deal with expropriations (the exact wording used was“demolition and relocation”). Under the 2001 Demolition Regulations,local governments could exercise wide discretionary powers to teardown urban buildings in order to achieve the broadly defined legislativeintent of “preserving the smooth progress of construction and urbanmanagement.”60 The extensive use (and abuse) of government power toorder forced evictions has given the Chinese citizenry (and the rest of theworld) the impression that Chinese property rights are very precarious.

60 Article 2 of the Demolition Regulations.



For years, the word “demolition,” entailing residents’ grievances andcomplaints, has been synonymous to urban regeneration in China.However, this changed in early 2011 with the enactment of a new regulationthat utilizes the term “expropriations” rather than “demolitions.” The newRegulations for Expropriation and Compensation for Houses on State-owned Land (2011 Expropriation Regulations)61 replaced the 2001Demolition Regulations, which had in many aspects contravened China’s2007 Property Law.62

The 2011 Expropriation Regulations heralded a big leap forward inChina’s legal framework for state-orientated expropriations. First, for thefirst time, the different types of public interest that justify and legitimizemandatory expropriation are demarcated. Moreover, before an expropria-tion decision is made, a cross-department review must be conducted by thelocal government in order to verify whether the proposed expropriationfulfills the public interest requirement. The expropriation cannot proceed ifthe cross-department review does not give the green light. The legislativeintent behind the 2011 Expropriation Regulations is to regulate the proce-dure governing expropriation and compensation, while upholding publicinterest and protecting the legal interests of property owners. This isdramatically different from the 2001 Demolition Regulations, which leanedin favor of the smooth operation of urban development.63 Second, inrelation to compensation, the most contentious part for any expropriation,payment levels would have to take into account the location of the propertyand market value based on independent third-party assessments. Third,procedure-wise, the 2011 Expropriation Regulations introduce somedetailed procedural safeguards, including public hearings, ensuring partic-ipation of the property owners affected, the selection of property valueappraiser, and dispute settlements during an expropriation process.A homeowner objecting to an expropriation procedure can file an admin-istrative lawsuit. Last, but not the least, under the 2011 ExpropriationRegulations, it is the housing expropriation department, as a governmentagency, that signs off on expropriation and compensation agreements withindividuals. The implication of this is that the government is the party who

61 See the Regulations for Expropriation and Compensation for Houses on State-ownedLand of 2011 (2011 Expropriation Regulations), issued by the State Council.

62 See Cui Jianyuan, “Comparing Housing Demolition with Real Estate Expropriation,” inFang Shaokun and Wang Hongping (eds.), Real Property Expropriation (Beijing: ChinaLegal Publishing House, 2009), pp. 309–311.

63 Article 1 of the 2001 Regulation.

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enjoys exclusive authority to expropriate, rather than property developers orany other intermediaries, as was provided for in Article 17 of the 2001Demolition Regulations. In order to provide a graphic and comprehensiveoverview of the reforms introduced in the 2011 Expropriation Regulations,the major differences between the 2001 Demolition Regulations and 2011Expropriation Regulations are detailed in Table 3.1. The detailed analysisthat follows compares the public interest requirement, measurement of faircompensation, and procedural safeguards.

Structural analysis

Public interest requirementOne of themost controversial issues in expropriation is the requirement thatan expropriation must be in the public interest. This requirement preventsexpropriation of private property for unlawful purposes and restricts theexercise of the power to expropriate.64 It is this public interest requirementthat legitimizes the compulsory taking of private property rights by thegovernment. Yet there is no clear-cut statutory definition of the term “publicinterest” to answer the question of whether an expropriation could beundertaken to serve private (commercial) interests. No area of Chineseproperty law has been more contested in recent years than the use ofexpropriation to boost economic development initiatives. It has been arguedthat an inclusive list of specific permissible public purposes must be adoptedin order to stave off abuse.65 However, others contend that it is almostimpossible to provide an explicit statutory definition, in an all-inclusivefashion, since the term “public interest” is so dynamic that it does not, andcannot, have an absolute meaning without considering specific circum-stances.66 In practice, this problem is compounded in China by the fineline between public interest and commercial interest, especially in thecontext of urban redevelopment.67

Before the promulgation of the 2011 Expropriation Regulations, the2007 Property Law and other relevant statutory instruments simply

64 See A. J. Van der Walt, Constitutional Property Law, 3rd edn. (Cape Town: Juta, 2011),p. 242.

65 See Liang Huixing, Commentary on Chinese Property Law Draft (Beijing: Social ScienceLiterature Press, 1999), pp. 191–193.

66 See Wang Liming, “On Implementation of Property Law and the Improvement onExpropriation System,” Law Science Magazine (法律科学杂志), 4 (2008), 15–22.

67 See Jiang Ping, “The Ideal and Reality of the Property Code,” Forum of Social Science(社会科学论坛), 11 (2007), 84–85.



Table3.1Anou

tline

ofstatutorychan

gesbetweenthe2001

Dem

olitionRegulations

and2011

Expropriation

Regulations

2001

Dem

olition

Regulations

2011

Exprop

riationRegulations

Legislativeintent

Toregu

late

housingdemolition

andrelocation

and

toofferprotectio

nto

affected

parties,while

ensuring

developm

entprojectscanbe

smoo

thly

carriedou

t(art.1).

Tostandardizeproceduregoverningexprop

riation

andcompensation,

whileup

holdingpu

blic

interestan

dprotecting

legalinterestsof

prop

erty

owners

(art.1).

Com

pensation

Adequ

atecompensationisprovided

todemolition

andevictio

ntargets(art.22).

Faircompensationisprovided

toevictedperson

swho

seprop

erty

isexprop

riated

forthepu

blic

good

(art2).

Definitio

nof

key

parties

Ademolition

errefers

totheauthorized

unit

perm

itted

todemolishan

dredevelopthe

prop

erty

exprop

riated.

Ademolition

eerrefers

toaprop

erty

ownerwho

seprop

erty

issubjecttodemolition(art.4).

The

mun

icipalor

coun

tylevelo

fgovernm

entis

respon

sibleforland

exprop

riation(art.4).The

Hou

sing

Exprop

riationDepartm

ent(HED

)may

delegate

itspo

wer

tootherorganizatio

ns,w

hich

mustn

otprofi

tfrom

such

delegation

.The

HED

shallsup

ervise

such

organizatio

n(s)

andremain

legally

respon

sibleforexecutionan

dcompensationof

theexprop

riation(art.5).

Prop

osalfor

exprop

riation

Apartydelegatedwithdemolitionan

drelocation

workshalln

otcarryou

tany

workun

tilithas

acqu

ired

ademolition

perm

it(art.6).

Andemolition

ershallapp

lyto

therelevant

authority

andsubm

itthefollo

wingthedo

cuments:

(a)theapprovalfortheconstructio

nproject;

Anexprop

riationdecision

shou

ldon

lybe

madefor

thefollo

wingspecified

purposes:

(a)na

tionald

efense

orforeignaffairs;

(b)government-ledconstruction

ofenergy,

tran

sportatio

n,water

conservation

,and

other

publicutilitie

s;


(b)theperm

itfortheintend

edland

usefor

constructio

n;(c)certificatio

nof

gran

tedland

userigh

t;(d)demolition

andrelocation

prop

osal;

(e)certificatio

nissued

byafina

ncialinstitutio

nun

dertakingdepo

sitbu

siness

tocertify

compensationforrelocatio

narrang

ements.

The

Departm

entshallexaminetheapplicationan

dsupp

ortin

gdo

cumentsan

ddecide

whether

toissuethedemolition

andrelocation

perm

itto

the

applican

t(art.7).

(c)government-ledconstruction

ofscience,

education,

cultu

re,h

ealth

,spo

rts,

environm

ental,an

dresourcespreservation

,disaster

protectio

nan

drecovery,culturalrelics

preservatio

n,socialrelics,an

dothercivic

utilities;

(d)government-ledconstructio

nof

government

subsidized

housingprojects;

(e)government-ledrebu

ildingof

hazardou

sbu

ildings

andob

soleteinfrastructure

inoldrural

districtsas

requ

ired

bytheLawson

Urban

and

RuralPlanning

;(f)in

accordan

cewithlaws,regu

lation

san

dother

publicneeds(art.8).

Com

pulsory

demolition

Ifthedemolition

eeror

his/hertenant(s)fails

torelocate

withintheallowed

time,therelevant

authority

shalleith

ercarryou

tcom

pulsory

demolition

orapplyto

thecourtfor

anorderfor

compu

lsorydemolition

andrelocation

(art.17).

Whenan

exprop

riationeefails

toapplyfor

administrativereview

orfails

toinitiate

proceeding

swithinthelim

itation

period

,and

also

fails

torelocate

withintheallowed

period

,the

governmentmay

applyto

thecourtfor

enforcem

entof

theexprop

riationdecision

.This

applicationshou

ldinclud

ethefollo

wing

inform

ation:

theam

ount

ofcompensation;

the

recipient’s

bank

accoun

tnum

bers;add

ress

and

area

ofthereplacem

entstructure;an

dtran

sition

alho

using(art.28).


Table3.1(con

t.)

2001

Dem

olition

Regulations

2011

Exprop

riationRegulations

App

raisalof

the

prop

erty

Mon

etarycompensationshallbecalculated

basedon

marketvaluewithregard

tofactorssuch

asthe

location

ofthedemolishedprop

erty,the

useof

the

prop

erty,and

thesize

oftheprop

erty

(art.24).

Com

pensationshalln

otbe

lower

than

themarket

valueof

similarho

usingon

thedayof

the

anno

uncemento

fthe

exprop

riationdecision

.An

appraisalsho

uldbe

cond

uctedby

aqu

alified

real

estate

appraisalinstitution(RAI).A

partymay

challeng

ethevalueby

applying

fora

review

ofthe

decision

.Afurtheran

dfinalapp

ealo

nthe

valuationmay

belodged

attherealestate

appraisalexp

ertc

ommittee

(art.19).

ARAIshallb

eselected

bytheexprop

riationee

throug

hnegotia

tion.

Ifthenegotia

tion

falls

throug

h,theRAIcanbe

rand

omlyselected,

ordecidedby

thesimplemajority

resolutio

n(art.20).


stated that expropriations should be in the public interest, but none of thesestatutory instruments provide any further detail as to what specific purposesserve the public interest.68 Local governments were given an unfetteredpower to determine how public interest is defined, and, consequently, themeaning of public interest expanded to include anything the local govern-ment conceived and desired.69 The constitutional caveat of public interestwas rendered a “dead letter,” instead of acting as a substantive safeguard onthe operation of expropriation.70 This is because local governments havestrong financial incentives to expropriate rural land for low compensation,as the land can subsequently be sold to private developers for high pricesonce the rural–urban land conversion is completed.71 It has been arguedthat such arbitrage opportunities for local governments have caused pred-atory land grabs to spiral out of control.72

The 2011 Expropriation Regulations, however, clearly demarcate theacceptable boundaries of “public interest.” Article 8 lists the situations inwhich the public interest requirement is fulfilled. The local government,at the municipal or county level, shall make a decision to expropriate theprivate property only when it is necessary for: (1) national defense andforeign affairs; (2) the construction of energy, transportation, water,and other infrastructures initiated by the government; (3) such publicutilities as science and technology, education, culture, health, sports,environment and resource protection, disaster prevention and mitiga-tion, protection of cultural relics, social welfare or municipal utilities;(4) the construction of government-subsidized (social welfare) housing;(5) redeveloping a run-down urban neighborhood with dilapidatedbuildings; (6) any other public interest as prescribed by a law or admin-istrative regulation.73

68 See Wang Cailiang, The Law and Practice of Housing Expropriation (Beijing: Law Press,2008), pp. 26–31.

69 See Fang Shaokun and Wang Hongping, “On the Normative Model of Public Interest inPRC Expropriation,” Contemporary Law Review (现代法学), 1 (2006), 68–71.

70 The phrase “dead letter” is borrowed from Thomas Merrill, “The Economics of PublicUse,” Cornell Law Review, 76 (1986), 61.

71 See Klaus Deininger and Songqing Jin, “Securing Property Rights in Transition: LessonsFrom Implementation of China’s Rural Land Contracting Law,” Journal of EconomicBehavior and Organization, 70(1/2) (2009), 22–38.

72 According to an interview with a former party chief of a county government in HubeiProvince, the profits arising from land sales could account for up to 60 percent of theentire revenue of the local government.

73 Article 8 of the Regulations for Expropriation and Compensation for Houses onState-owned Land of 2011, issued by the State Council.



It is clear that the scope of what constitutes “public interest” has beensignificantly narrowed by the 2011 Expropriation Regulations, with anotable improvement being the prevention of mere private-to-privateseizure of land, which no longer constitutes public interest. This helps toreduce the risk that expropriation may operate as a form of private-taking, which is anathema in every jurisdiction worldwide. However, the2011 Expropriation Regulations do not rule out urban regeneration asconstituting public interest.74 This is understandable as, given the com-plexity of real economic life, public interest and economic interest areoften intermingled and sometimes inextricable. The law should notimpose a blanket prohibition on the expropriation of land for redevelop-ment projects which result in private commercial gain. This is becauseland, as an institution, embodies a bundle of interactive public andprivate rights. China is in the process of urbanization, and needs toutilize more land to build factories, shopping malls, and residentialhousing to develop its economy and accommodate an increasing pop-ulation of urban residents. Local governments usually interpret publicinterest broadly to permit an expropriation of a piece of land, beforeassigning the land to developers for a project that although benefitingprivate interests, undeniably also brings substantial benefits to thepublic.75 The affected parties, if they oppose the expropriation, areoften accused of obstructing urban economic development, which isconsidered by local governments to be in the “public interest.” Indeed,establishing a shopping mall or a factory can increase local tax revenuesand create more jobs for the local community. Taking the example ofconstructing an airport, it is commonly accepted that expropriating landto construct an airport fulfills the public interest requirement.76

However, the airport, which formerly functioned within the publicsector, is eventually privatized, and may subsequently even be publiclylisted. This casts a question mark over whether this expropriation servesa genuine public interest. Therefore, public interest requirement per secannot tell the whole story, and it functions merely as a gatekeeper. Themeasurement of compensation and procedural safeguards also need tobe taken into consideration.

74 See Art. 8(5) of the 2011 Expropriation Regulations.75 In Germany, the public interest requirement implies that expropriations cannot be taken

for improper purposes, such as the general improvement or increase of state property, orto benefit a private third party.

76 Read Art. 8(2) of the 2011 Regulations.

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Nonetheless, the 2011 Expropriation Regulations only cover urbanexpropriation and do not protect rural land seizures. As long as the statecontinues to monopolize the conversion from rural land to urban land,local governments will continue to make land development and con-struction planning decisions arbitrarily.77 Worse still, many commercialdevelopers engaged in relocation and property valuation businesses arelinked to local governments. Further legislative reform on rural land iswarranted.

Fair compensationThe 2011 Expropriation Regulations provide that compensation shallnot be lower than the market value of similar housing on the day of theannouncement of the expropriation decision. This sets up a marketvalue-based mechanism to calculate compensation. In addition, underthe new Regulations, an appraisal should be conducted by a qualified andindependent real estate appraisal institution chosen by the affectedparties. A party has a right to object to the appraisal value by applyingfor a review of the decision. A further and final appeal on the appraisalvalue may be lodged at the real estate appraisal expert committee.78

However, one may argue that compensation should be determined onthe basis of rights that the owner has in the property, not the propertyitself, as the actual rights held should determine the quantum of thecompensation. This is because the approach that takes into account onlythe market value of the expropriated property leads to under-compen-sation, for example, loss of community ties or business opportunity.A book kiosk may be peculiarly dependent on its location for its cus-tomers, for example, if it is near a university campus. Being forced tomove to another place would put it out of business. But how should localgovernments deal with the actual financial loss caused by the termina-tion of the current use rights of the expropriated land? It raises a concernthat local governments would have to incur unnecessary administrativecosts to measure it, however difficult it may be. It has been argued thatdespite disregarding the “subjective premium” of the property, themarket value approach is still workable as it deters or discourages ownersfrommaking deliberate improvements to their property when it is highly

77 See Cai Jiming, “Four Major Problems and Their Solutions Regarding Rural LandExpropriation,” available at: http://zigong.house.sina.com.cn/news/2012-12-21/1014728452.shtml, accessed August 11, 2013.

78 Article 19 of the 2011 Expropriation Regulations.



likely that the property will soon be expropriated for a public project.79

Nevertheless, the market value approach is commendable as it ensuresthat the expropriated parties are fairly compensated what they deserve.

Once again, the fair compensation rule applies only to urban expro-priations. In rural China, the lack of a functioning land market makesthis market value approach difficult, if not impossible. The current legalsystem for compensation in rural expropriations comprises of threeparts: (1) compensation for loss of land set at six to ten times the averageannual output value of the land for the three years prior to the requi-sition; (2) a resettlement subsidy set at four to six times the averageannual output value; and (3) compensation for structures and standingcrops to be determined by provincial governments.80 The compensationis capped at thirty times the average annual output value for the preced-ing three years if the above-mentioned statutory standards are insuffi-cient to maintain the affected farmer’s original living standards.81 Thisproduction value-based measurement has long been held to be inad-equate, and often amounted to “government gains, farmer’s pains.”

Currently, Chinese lawmakers are deliberating on a new draftRegulation on Rural Expropriation, as well as amendments to the LandAdministration Law.82 Song Dahan, the director of the legislative affairsoffice of the State Council, admits that problems do exist with respect torural land expropriation, stating that: “The expropriation proceduresneed to be improved. The compensation mechanism is flawed: thestandards are way too low and rigid. For those whose land has beenexpropriated, the guarantee for their long-term livelihood is insufficient.The forcible and illegal seizure of farmers’ land threatens socialstability.”83 It is reported that the draft amendments propose that com-pensation take more factors into account, including rural residences,relocation allowance, and social security fees.

79 See Merrill and Smith, Oxford Introduction to US Law, p. 250.80 Article 47 of LAL.81 Ibid. The English translation is taken from Valerie JaffeeWashburn, “Regular Takings or

Regulatory Takings?: Land Expropriation in Rural China,” Pacific Rim Law and PolicyJournal, 20(1) (2011), 72–124.

82 See Caixin Online, “Beijing Sets Five-year Target for Laying out Land Use Rights,” availableat: http://english.caixin.com/2013-02-01/100488774.html, accessed August 3, 2013.

83 See Song Dahn, “Explanations on the Proposed Amendments of Land AdministrationLaw,” available at: www.npc.gov.cn/huiyi/lfzt/tdglfxza/node_19554.htm; “China toAmend Land Administration Law,” available at: http://english.cri.cn/7146/2012/12/25/191s740201.htm, accessed August 7, 2013.

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Procedural due processThe expropriation procedures under the 2011 Expropriation Regulations aremore transparent, and thus increase government accountability. It has beenargued that using the word “expropriation” to replace the word “demolition”(which was used in the earlier 2001 Demolition Regulations) illustrates thenew emphasis on due process.84 In this writer’s view, the procedural safe-guards provided are the biggest breakthrough in the 2011 ExpropriationRegulations. The 2011 Expropriation Regulations carefully set out the pro-cedures to notify property owners and solicit opinions. Local governmentsare now obliged to comply with a mandatory review process before theyexpropriate. The first step is for the government authority to report itsproposed expropriation and compensation plan to the city council after across-department examination. The plan must be published so that thepublic has an opportunity to provide feedback. The period for public feed-back should not be less than thirty days. After this period has lapsed, thepublic’s comments and the comments by the city council need to beincorporated into a revised plan. Interestingly, perhaps in view of avoidingvexing social unrest, the local government needs to be cautious and conducta social stability risk assessment before it reaches a final decision on whetherto go aheadwith the expropriation. In order to further protect the interests ofthe property owners affected, the government must deposit the full amountof the proposed compensation into a special purpose bank account. It cannotuse these funds for any purpose other than the planned expropriation.

The 2011 Expropriation Regulations require that public hearings mustbe conducted if a majority of the expropriated residents complain ofinadequacies or irregularities in the expropriation and compensationplan. Once adopted, the expropriation decision must be published, in atimely fashion, in an announcement that provides details of the expro-priation and compensation plan. Moreover, if there is no compensationagreement reached, the local government can still exercise the power toexpropriate, but subject to a “compensate first, demolish later” proce-dure, meaning compensation must be rendered before the local govern-ment can commence relocation and demolition.

Finally, from the work flow chart in Figure 3.1 one can see that thecourts are given the power and the duty to revisit the whole expropria-tion process and to determine whether it was legal, and in the public

84 See Tu Siyi, “From Demolition to Expropriation: Problems, Solutions and Difficulties inChina,” Wuhan University Law Review (法学评论), 3 (2010), 49–61.



interest. If the court issues an enforcement order, it must notify boththe government and the affected parties of its decision. It may evenmake recommendations to the government as to how it can ensurethat the expropriation and compensation proceed smoothly. TheSupreme People’s Court (SPC) has been gradually restricting the

No expropriationdecision if it failsthe examination

The local government (“LG”) coordinates a cross-department examination to ensure that the proposedexpropriation plan conforms to land planning and public utility through public consultation and scientific verification.

Housing expropriation department drafts acompensation plan and the LG organizes relevant

local authorities, such as Land Department, FinanceOffice, for deliberation

The LG publishes the expropriationcompensation plan and conducts a publicconsultation for no less than thirty days.

The plan is revised to reflectpublic opinions.

LG creates a special bankaccount for compensation.

Those to be expropriated select a property appraisal institution.

To appeal the decision, theexpropriated may choose to either

apply for administrativereview or institute a lawsuit

against the decision.

LG finalizes and publishesthe expropriation decision.

If more than 50% of those to be expropriated object to the plan, LG to organize a public hearing on the matter. The plan needs to be revised to take into

account opinions expressed in the hearing.

If reported toorisky in view ofsocial stability,plan shall besuspended.

LG conducts riskassessment ofsocial stability

Those to be expropriated apply to the property

appraisal expert committee for final

assessment.

The expropriated may stillinstitute a lawsuit againstcompensation decision

made by the LG.

If those expropriated fail to move out at thedesignated time, LG may apply for enforcement of

the decision.

If such anagreement cannot

be reached, LG maymake compensationdecision and put in

on notice.

An expropriation and compensationagreement shall be signed off by the

LG and those to be expropriated.

Having collected all monetary compensation, theexpropriated move out at the specified time under

agreement.

If the expropriation affects a substantial number of people,

the decision should be discussed and made by the Standing

Committee of the City Council.

Figure 3.1 Work flow chart of expropriation procedures under the 2011 Regulations

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power of local governments to enforce land expropriation decisions inthe wake of a number of violent, and even deadly, cases involving forcedevictions.

In 2011, the SPC issued the “Notice on Strictly ImplementingLaws, Regulations and Judicial Interpretations and Legally andProperly Handling Cases Concerning Expropriation, Demolition andRelocation” (the “Strict Implementation Notice”). In this StrictImplementation Notice, the SPC requested that district courts be carefulof issuing court eviction orders sought by developers if they wereopposed by local residents, and to suspend expropriations if peopleresorted to radical protests. The recent 2012 “Provisions of the SPC onSeveral Issues Concerning Handling the Cases of Application forEnforcing Expropriation Compensation Decisions of Housing onthe State-owned Lands by the People’s Courts” (the “EnforcementProvisions”) set out the factors that courts must take into accountwhen deciding whether or not to issue an enforcement order.85 Thecourt may refuse enforcement if it finds any of the following conditionsto be clearly present:

* absence of a factual or legal basis for the expropriation;* unfair compensation;* violation of the owners’ legitimate rights;* failure to guarantee owners’ living or business conditions;* administrative objectives and the public interest are harmed; and* ultra vires found in exercising government’s power.

Recently, in April 2013, the SPC issued a “Reply concerning ForcedDemolition of Unauthorized Building Works” to restrain itself, and alllevel of courts, from accepting applications from local governmentauthorities to enforce the forced demolition of unauthorized buildingworks.86 This is a clear signal that the Chinese courts have graduallyrefused to be a cause of social unrest resulting from forced evictionsand improper expropriations. This is a sign that the judiciary is

85 See Fa Shi (法释) No. 4 (2012), Provisions of the SPC on Several Issues ConcerningHandling the Cases of Application for Enforcing Expropriation CompensationDecisions of Housing on the State-owned Lands by the People’s Courts, issued by theSupreme People’s Court, March 26, 2012.

86 See Fa Shi (法释) No. 5 (2013), Reply concerning Forced Demolition of UnauthorizedBuilding Works, issued by the Supreme People’s Court, March 27, 2013.



rebalancing its position between a definer and a defender of propertyrights,87 given the change of circumstances and public conception ofproperty rights.

Conclusion

The 2011 Expropriation Regulations are a significant step toward theprotection of individual property rights. Many of the provisions intro-duced are much needed and therefore commendable. For example, the2011 Expropriation Regulations list the situations where land-takingfulfills the public interest requirement. It also strengthens the proceduralsafeguards against the superior bargaining power of developers and localgovernments in negotiating compensation for expropriations. This issignificant as it makes expropriations in urban China more costly. This ispartly due to the Chinese Communist Party’s increasing concern tomaintain social stability, in view of the sheer number of incidents causedby expropriation disputes. However, this writer believes that thesechanges arise largely because of the emergence of the middle class,which takes a stand on “my property, my destiny.”

However, the 2011 Expropriation Regulations are not applicable torural land expropriations. Many forced evictions and land disputes arestill taking place in rural areas. As highlighted previously, the root causeis the artificial differentiation of transferable urban land and non-trans-ferable rural land. As a result, it is not uncommon to have collusivealliances between the village collective, local government, and commer-cial developers. Currently, performance assessments of local governmentofficials place a heavy emphasis on factors such as GDP growth, fiscalrevenues, and urban infrastructure building. Although local govern-ments are enthusiastically promoting local economic development,land seizures contribute to rural land tenure insecurity. Peasants areprone to forced evictions with inadequate compensation and insufficientprovision of social security.

Expropriation is hated by many, particularly when governmentstrample on property rights by seizing individual property. Land tenureas an institution embodies a bundle of interactive public and private

87 The phrase depicting the twin roles played by the courts in land-taking as both a definerand a defender is borrowed from Jeremy Paul, “The Hidden Structure of Taking Laws,”South California Law Review, 64 (1991), 1415.

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rights. The question here is: how far should the government forbear fromfrustrating the owners’ expectations about what they can do with theirproperty? Turning this general question to the Chinese context, itappears that there is a trend toward property rights taking root inChina. The 2011 Expropriation Regulations are designed to constrainthe unfettered power exercised by local government to take urban land.In rural areas, the recent urban–rural coordinated development reformallows rural land to be rented out, or even sold to third parties, thusenabling the privatization of rural land-use rights. However, turninglocal policies into nationwide law takes time. Against this background,the NPC is reviewing the Land Administration Law, a prevailing statutedealing with land use and management.88 The proposed amendmentsaim to streamline the administrative review and civil litigation processfor expropriation disputes. In order to avoid the abuse of power, what isneeded is to make the expropriation process more transparent, and toallow the general public an easier means by which to seek redressthrough judicial channels.89 The draft amendment needs to standardizerural and urban procedures for land expropriation, to set compensationstandards, and to build proper channels for handling disputes.90

Separating urban from rural expropriations is no longer appropriate.However, from a legislative perspective, a piecemeal approach has beentaken so far. Therefore, the question remains as to whether the incre-mental introduction of reforms will be enough to satisfy rural villagers’demands for secure property rights.

88 According to a conversation with Professor Wang Weiguo on April 15, 2013, a leadingexpert in land law, the NPC is considering drafting a land law dealing with both urbanand rural land systems, which will supersede the Land Administration Law and otherrelevant land-related statutes.

89 In the so-called No.1 document, issued by the Communist Party’s Central Committee,an effort to map out rural land use rights in five years has been stated to protect farmers’interests.

90 Song Dahan, the director of the legislative affairs office of the State Council, admits thatproblems do exist in land expropriation in China.


Legal and institutional analysis of land expropriation in China

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