China Issues New Regulation for Public Bidding on Land Use

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Last updated at: (Beijing Time) Thursday, May 16, 2002

China Issues New Regulation for Public Bidding on Land Use

The Ministry of Land and Resources issued a regulation yesterday requiring public bidding on land use to be carried out in a uniform way.

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The Ministry of Land and Resources issued a regulation yesterday requiring public bidding on land use to be carried out in a uniform way.

"After the new regulation becomes effective on July 1, investors should no longer find our land bidding procedure puzzling," said Wang Shouzhi, deputy director of the Department of Land Utilization Management under the ministry.

During a four-year pilot phase to mobilize local governments to transfer use right of State-owned land through public bidding, the ministry allowed different regions to design their own bidding procedures under the country's Land Law and the Law of Urban Real Estate Management.

But because the procedure varied from one region to another, investors were constantly having to adapt.

Wang said the new regulation would stipulate every step of a "valid" public bidding and would be especially welcomed by foreign investors because it mirrors rules used in the world market.

"Now that China is a member of the World Trade Organization, foreign investors should find the Chinese market similar to the world market instead of a strange one filled with confusing stipulations," he said.

All Chinese administrative regions, except the Tibet Autonomous Region, have tried transferring use right of State-owned land through public bidding since the ministry recommended the practice in 1999.

The Tibet Autonomous Region has not adopted the practice because the ''comparably poorer natural and economic conditions there have attracted insufficient interested real estate developers.''

The use right of 10,387 hectares of State-owned lands were transferred through public bidding nationwide between 1999 and 2001, involving 95.2 billion yuan (US$11.5 billion).

Large number of foreigners participated in the bidding

There are no statistics about how many foreign investors have participated in such a bidding, but the number is quite large, said Yue Xiaowu, director of the department's Property Division.

Yue said the ministry reviewed foreign investors' complaints during the pilot phase. In addition to the disparity in bidding procedures among the various regions, many foreign investors complained about the procedure's lack of transparency in general.

But the regulation ensures fairness by requiring bidding information to be released 20 days beforehand, providing the same references to all qualified bidders, making collective decisions and publishing bidding results for the public.

Besides, the public bidding will be automatically stopped if there are less than three bidders for a single piece of land.

"This, combined with the establishment of a collective decision mechanism, makes major contributions to stopping individuals from manipulating the bidding," Yue said.

"All local officials found to have imposed unfair influence on the bidding process will be punished."

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