REUTERS A woman walks past trees reflected on a lake in front of a construction site of a residential compound on a hazy day in Wuhan, Hubei province, China March 2015.

Has China Restored Private Land Ownership?

The Implications of Beijing's New Policy

Last March, at a press conference after China’s annual National People’s Congress, Premier Li Keqiang made a remarkable—and remarkably unheralded—announcement: full private ownership of land has been restored in China’s cities. Needless to say, he did not use those exact words. But the import of his statement was the same. Here’s how it happened and why it’s important, both economically and as a bellwether of political change.

When the Chinese Communist Party assumed control over mainland China in 1949, it did not follow Russia’s Bolsheviks in immediately abolishing the private ownership of land. In the countryside, a violent land reform movement brought a change in owners, but not in the ownership regime itself; full collectivization did not occur until the late 1950s. In the cities, both owners and the ownership regime, at least for residential property, were initially left untouched. Over the years, however, government policies chipped away at the rights of landowners until, by the end of the Mao Zedong era, private ownership existed in name only. With the promulgation of a new constitution in 1982, all urban land was declared state-owned. Since then, state ownership of urban land has been considered a pillar of Chinese socialism.

If the first 30 years of the People’s Republic saw the gradual erosion of private ownership and the growth of state ownership, the last 20 years have seen the opposite trend. By the late 1980s, the state was looking for ways to marketize land use and raise money, and so—in a process that began experimentally in 1988 and was formalized in law in 1994—it began selling long-term leases to urban land, known as land-use rights (LURs). LURs for residential use could last for up to 70 years; for commercial use, 40 years; and for all other uses, 50 years. Buyers, made a one-time payment up front, and the land would revert to the state at the end of the term. Beijing could thus accomplish its goals of marketization and fund-raising, while

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