China’s Land System

In this paper, Dwight H. Perkins discusses how the development of Chinese real estate markets has generated tensions between different segments of the population and between the government and private property owners. In some coastal cities where residential housing markets are well developed, affluent residents can purchase their homes in the private market. City dwellers whose incomes are low typically purchase apartments from their work units and receive large subsidies. According to Perkins, both groups have experienced significant improvements in living space from the recent housing reform.

However, private property ownership is not available to rural-to-urban migrants who cannot register as city residents under the current household registration (or hukou) system and are not entitled to government services and subsidies. Perkins estimates that about 400 million people will migrate to cities over the next two decades, and their exclusion from home ownership needs to be addressed.

In addition, Perkins is concerned about the lack of legal and political support for enforcing private property rights in China. Although the Chinese legal system has been gradually professionalized, court decisions are still influenced by the Communist Party and the government. More importantly, court rulings must be enforced by the central and local governments. Given the heavy reliance of local public finance on land revenues, enforcement of private leasehold rights, such as paying adequate compensation to leaseholders when their land is taken for public use, might face strong bureaucratic resistance.

This paper was presented at the Lincoln Institute’s annual Land Policy Conference in 2008 and is Chapter 4 of the book Property Rights and Land Policies.