It is state owned land ownership system in China. In China, you could only buy the rights to rent the land, and the land is still owned by the state. Usually, if the land is used for the residence buildings, it could be rent for 70 years. If the land is used for the commercial buildings, it could be rent for only 40 years.
Since the land is monopolized by the government, there are a lot of problems coming out. The government buys the land from the peasants very cheap, and then sells to the developer about ten more times through bidding. All the developers have to buy the land from the government. Under this condition, although the central government wants to lower the property price, it is still going up very fast. Since the land income covers about 1/3 to 1/2 in the local government finance.
During the transaction, the government usually forces the peasants or the residents to leave, and compensate them a little. Especially the peasants, they don’t have the skill to live in the city, but now they were forced to become a citizen, and they only have the money to live on about three to five years in the cities. It is naturally that there are a lot of conflicts during the moving. Recently it is much better, since the central government doesn’t allow the moving by force, but it still happens in some places.
Some dare peasants begin to save themselves. They build houses on their own land, and then sell to other people directly. Since they don’t need to pay tax and the house is not licensed, it is very cheap. And since more and more citizens in the cities could not afford the property price, they take the risk to buy the unlicensed house.
Personally I believe all the problem comes from the monopoly. Since the government is the only legal supplier of land, the property price will have to go up and up, especially when the RMB is increasing too. When will it be ended? People usually say in Beijing, the property price will not go down until the Olympic Games in 2008 and the in Shanghai, the property price will not go down until the World Expo in 2010. Who knows?
Friday, September 28, 2007
The Land Ownership System in China
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