Land Market Reform Advances, But Calls for Fair Play

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Last updated at: (Beijing Time) Tuesday, June 25, 2002

Land Market Reform Advances, But Calls for Fair Play

Building a regulated land market is the only way to make the best use of the country's land resources, Minister of Land and Resources Tian Fengshan said Monday.

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Building a regulated land market is the only way to make the best use of the country's land resources, Minister of Land and Resources Tian Fengshan said Monday.

"After 14 years of effort, China has made remarkable progress towards this goal by establishing a new paid system to transfer the right to the use of State-owned land,'' said Tian, the day before this year's National Day of Land.

The establishment of the market has effected some profound changes in the country's economic life, securing appreciation of State-owned land property, the minister said.

Before 1987, the only way to get a piece of land for business activity was to apply to the government, and wait for the land to be allocated.

But now, interested parties can refer to local-government circulars for satisfactory land pieces, and then bid for them.

By the end of 2001, over 90 per cent of the country's provinces and autonomous regions had established a system of public bidding for the use rights to available land pieces.

And a total of 49.2 billion yuan (US$5.9 billion) has been collected from public bidding for land-use rights.

Land use unter market mechanism

Dedicated to enhancing public awareness of the need to protect the country's limited land resources, the National Day of Land was designated in 1991, and has been given different themes each year to tackle heated problems in the field.

This year's theme is "regulating the land market for economic development.''

"Realizing the value of land through the market mechanism, as well as keeping the operation of this mechanism on a healthy track, has become essential for the country as it seeks to maintain its fast economic growth pace,'' said Tian.

Land parcels are the most important State-owned assets valued at 25 trillion yuan (US$3.019 trillion), more than triple the total value of other State-owned properties.

The Chinese Constitution stipulates that urban land belongs to the State, whereas the collectives are entitled to rural land and suburban land around cities.

And according to the Constitute, user can only be accessed to the right to use the land for development, but private ownership of land resources are prohibited.

Besides using the land-market mechanism to increase the value of State-owned land property, local governments can modify local economic development through the adjustment of land supply.

In more than half of the country's municipalities and counties, the government has become the only supplier of land property by buying land-use rights from individuals, businesses and institutions.

The government has privilege over other parties to buy land for reserve. The prices the government pays, as well as the prices at which it sells the land pieces later, are based on standard land prices the ministry sets according to the specific geological, social and economic conditions of the land pieces.

Li Yuan, vice-minister of land and resources in charge of the land market, said this land reserve practice, an important trait of the Chinese land market, also helps increase the value of State-owned land properties.

"It is after the adoption of the land-reserve practice that local governments begin to take part in the preparation of land pieces for construction,'' Li said.

That is, when land pieces are put out for bid, they no longer lack infrastructure facilities; nor are potential buyers confronted with the headache of residents' resettlement.

Although the transfer cost of such prepared land is higher than that of the unprepared, development parties generally prefer the former because of lower risk.

"It thereby effectively improves the investment environment as well,'' said Li.

Recent history of the nation's land reform since 1988

n1988: The National People's Congress (NPC), China's top legislature, passed an amendment to the Constitution stating "the right to the use of land can be transferred in accordance with the law."

n1994: The State Council, China's cabinet, held a conference on the reform of the country's land utilization system, advocating for the concept of "land property management."

n1997: The Central Committee of the Communist Party of China issued a document that said land could be managed as property, in addition to being administrated as a natural resource.

n2001: The No 15 document from the State Council delineated the framework of the real estate market, stipulating important practices in the transfer of rights in the use of State-owned land, such as in public bidding.

n2002: Earlier this year, the No 11 decree of the Ministry of Land and Resources stipulated a unified process for public bidding for land transfers, which has become the most extensively used method to sell the use rights of State-owned land.

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