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VOLUME 7, NUMBER 2
Enforcing Takings Clauses in China
By CHENG Jie | Article | 7 Tsinghua China L. Rev. 191 (2015) | Download Full Article PDF

Introduction

Property rights are considered fundamental in constitutional jurisprudence and essential for economic development. However, China’s economic growth over the past 30 years has posed a special paradox to many theorists: for some, it is a mysterious phenomenon that China could continue rapid growth for a few decades without proper contract law until 1999 and without constitutional private property rights until after 2004. For others, the lack of property rights explains the social unrests arising from land-taking and the potential risk of non-sustainability of further development.

This does not mean that there is no property protection in China; both the Constitution and other relevant laws provide for property rights. However, it is the security of property rights taht is questioned. Not only do individuals find themselves vulnerable when government agencies (the State) take their property, but also collective organizations in rural areas fail to resist expropriation requests from the State. According to the original text of Article 10 of the 1982 Constitution, “The state may in the public interest take over land for its use in accordance with the law. No organization or individual may expropriate, buy, sell or lease land, or unlawfully transfer land in other ways. ” It was not until 2004 when the 20th and 22nd Amendment of the Constitution added compensation to the original clause.

Among other things, real property, especially land property rights are especially fragile because individuals are not considered landowners under the Chinese legal system. According to the 1982 Constitution, in urban areas, all land belongs to the state. In the rural areas, land belongs to the state or collective organizations. In both urban and rural areas, individuals only have a land-use right. What is more, collective organizations in rural areas cannot transfer ownership freely. They can only passively transfer their land ownership to the state when the latter expropriates the land. After the state expropriates the land from rural areas, individuals or private sectors can acquire land-use rights from the government or from the market. As a result, there is no spontaneous market for land price and the government will only compensate the collective landowners with the minimal government-set price. In other words, the government has a monopoly over prices for all land owned by the collective, which is highly distorted and below the actual market price.

Observers and experts have noticed the problems associated with land property rights in China. Many have proposed reforms to address the distortion. Among them, there are three main approaches: the most radical one is to privatize land ownership both in urban areas and in rural areas. Many economists believe that the property ownership is the ultimate reason for the distortion. However, due to the perceived conflict between privatization and socialism, this approach has not been officially endorsed.

The second approach is legalistic, which advocates to limit expropriation by a narrow interpretation of “public interests” in the law. This approach was endorsed by the 2004 Constitution Amendment; and the 2011 Regulations on Expropriation and Compensation of Real Property on State-owned Land in Urban Areas provides a list of projects that are considered to be within public interests.

The third approach is a constitutional due process of law approach. This approach requires the government to go through important bargaining and assessment procedures and to make the results public with due care. Up till now this approach has not been ratified by the Constitution. However, relevant ministerial procedures have been introduced to reflect the procedural requirements that emphasize fairness, neutrality and openness.

This article aims to examine the effectiveness of the third approach through a systematic analysis of over 200 court cases that involve Articles 46-49 of the Land Management Law, as amended in 2004. These articles were chosen for several reasons. Firstly, these articles are the de fecto due process of law provisions that restrict government land-taking actions substantively and procedurally. Secondly, these provisions are enforceable in China. Even if the Constitution is amended in the future, it is worthwhile to examine the enforcement of Land Management Law. Because Chinese courts generally do not apply constitutional provisions in their adjudications. Thirdly, Compared with the 2007 Property Law, the Land Management Law as revised in 2004 is more relevant for land taking control. The Property Law has only very limited impact on regulating land taking. This is because disputes between the government and individuals are considered as administrative disputes rather than civil disputes. Therefore, the Property Law does not apply in land taking cases. At the same time, a substantial body of court decisions that apply the provisions of the Land Management Law has developed, rendering the neglect of the enforcement and judicial role in land disputes less and less tenable.

It is worthwhile to elaborate on the four articles before we move on to the main contents of this paper. Property rights are considered exclusive in modern jurisprudence. The exclusiveness means that, without due process, government expropriation of land property is considered unjustified. This is reflected in the requirements of Articles 46-49 of Land Management Law. Among the four articles, three place procedural limits on land expropriation and one on compensation. Article 46 expressly requires that the expropriation be approved through legal procedures, and be announced by the people’s governments at or above the county level, which government entities are also to implement the expropriation. Article 47 provides for the computation of compensations for land, constructions and plants above the land and other relevant loss, including expected profit in the future. Article 48 provides for the publicity obligations of the local government once the plan for compensation and resettlement subsidies are decided. According to Article 48, the plan must be made available to the general public and the relevant government entities must “solicit comments and suggestions from the collective economic organizations, the land of which is expropriated, and the peasants.” Article 49 imposes another publicity obligation on collective organizations, which are asked to “make known to its members the income and expenses of the compensation received for land expropriation”. Therefore, the four articles as a whole serve the role of due process of law in the Chinese legal system.

This article will develop into the following three parts: Part I introduces the methodology and basic findings from the empirical study. Part II summarizes the judicial understanding of the ‘taking’s clauses’, and highlights various points of consistency and inconsistency with such an understanding. Part III then makes several observations regarding why the courts tend to interpret the takings provisions against certain types of land right holders, and regarding recent developments from the perspective of judicial policy. I will then conclude and discuss the policy implications of the judicial enforcement of the takings’ clauses in China.
 
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