What Will China Do When Land Use Rights Begin to Expire? The Evolution toward Rule of Law in Real Estate

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Date Published 2015
Primary Author Gregory M. Stein
Other Authors
Theme Property Rights and Registration
Country China


China's recent economic success is largely based on the vitality of its real estate market. But China does not permit free simple ownership; rather, property developers build on land they have the right to use for seventy years or less. The government has not yet answered three critical questions it soon will face: Does the holder of a land use right have the right to renew it? If so, will the government charge for that renewal? And if so, how much? In predicting how the Chinese government will act, it is instructive to observe the past government behavior. First, the government tries mightily to avoid social unrest and upheaval. Second, the government refrains from being the first party to act, preferring to endorse successful private sector experiments. Third, individual government officials and the government itself are important participants in the real estate market. If we assume these features will remain true, it becomes possible to predict how China will respond as large numbers of land use rights begins to approach their expiration dates. This Article discusses the renewability of the Chinese land use right; describes the government's options when land use rights expire; examines how the government has behaved in the past in an effort to forecast how it will answer these renewability questions; and places the resolution of these important issues in the broader context of the uneven movement toward rule of law in China.

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