Land is an important production factor and asset, and the land administration one of the important government functions. Under the market economy system, land constitutes an important part of the whole market system. Since China's reform and opening up, significant changes have taken place in China's land market. The marketization of land has become the focus of attention both at home and abroad. This chapter will present an in-depth analysis on various aspects concerning the marketization of land such as the supply and demand situation in China's land market, the way land is utilized, the rules applied in the operation of land market, the intermediary service sector and the way land is administered, etc.

Ⅰ. The Process of Marketization of Land in Retrospect

(I )Development of China's Land Market Administration System

China's marketization of land originated from the reforms in the land use system at the end of 1980s. From the land lease under government approval in Shanghai and the first auction of land use right in Shenzhen to the following modifications made by the Constitution of the People's Republic of China on land lease and transfer, the system of no compensation and no time limit in supply of land was terminated, and land began to enter the market as a commodity. The Land Administration Law promulgated in 1986 has provided a land use pattern combined with administrative allocation and lease with compensation, and brought about an initial outline of establishing land market. The revolution on supply of land started in 1987 and lasted for over a decade and experienced three climaxes: the first one during the period from the end of the Seventh Five-year Plan to Eighth Five-year Plan, the second during the period of the Ninth Five-year Plan and the third after the Tenth Five-year Plan especially in 2001.

In November 1987, the State Council approved the decision to conduct the pilot reform in land use in Shenzhen, Shanghai, Tianjin, GuangZhou, Xiamen and Fuzhou. Shenzhen Economic Special Zone was the earliest city in China having realized the value of land. On December 1, 1987, Shenzhen made its find selling of land use right with 8,588 square meters for 50 years by public auction. 44 enterprises with corporate qualifications in Shenzhen competed vigorously for the land, one of which won the competition by paying 5,250,000 yuan. In Shenzhen, land use right entered the market as assets for the first time in China's history and initiated the selling of right to use state-owned lands by tender and auction. After that, in April 1988, the National People's Congress made modifications to the Constitution of the People's Republic of China, adding the provisions that land use right may be transferred according to the provisions of the law, while at the same time deleting the provision that land cannot be used for lease. In line with the modified the Constitution of the People's Republic of China, the State Council issued the Interim Regulations on Assignment and Transfer of Right to Use State-owned Land in Urban Areas, explicitly stipulating that land use right may be transferred by ways of contract, tender and auction. From without compensation to with compensation, without a time limit to with a time limit, and without mobility to with mobility, China's system of land use met its first climax. During the period of the Ninth Five-year Plan, the reform in system of land use was further deepened, from the principle of dynamic balance of cultivated land put forward in 1996 to the permanent policies in strengthening land administration (No. 11 Document of the Central Committee of the CPC in 1997), together with freezing the employment of cultivated land for construction works, revising the Land Administration Law of the People' s Republic of China in all respects, amending mid editing the general plans for the utilization of land and establishing the control system in usages of land. All these significant reforms in system of land use paved the way for the establishment and improvement of land market. Modifications to the Constitution of the People' s Republic of China and formation and implementation of the Provisional Regulations not only helped to restore the original commodity nature of the state-owned land assets at the levels of law and regulation, but also marked that the land administration had started its process of commercialization. Based oi1 the advice and suggestions collected from all walks of life, the Fourth Session of the Standing Committee of Ninth National People's Congress held on August 29, 1998 promulgated the revised law: Administration Law of the People' s Republic of China. According to this Law, the State Council issued the Regulations on the Implementation of Land Administration Law on December 27 in the same year. With the establishment of land market, lands in most cities and regions are being transferred in the way of paying compensation to the government.

In the wake of the establishment of market economy system, the principle of allocating land resources and determining land prices by the market is gradually set up. In regions with a well-developed market economy such as Guangdong, Jiangsu and Zhejiang, an active exploration was started in establishing land market, such as the land purchasing reserve system in Hangzhou and the physical market building in Guangdong. The tender and auction system for use of operative land was established in Guangdong and Zhejiang Provinces, which became a trend in reforming the land use system in these areas. The outline of land market establishment is gradually emerging. These activities gained the full support from the Ministry of Land and Resources. In 1998, the Ministry of Land and Resources issued the Circular on Further Promoting the Assignment of Right of State-owned Land by Tender and Auction. The bold promotion by the local governments and the active guidance by the Ministry of Land and Resources jointly contributed to the second climax in land market establishment.

On January 1, 2000, the Ministry of Land and Resources promulgated the Circular of the Ministry of Land and Resources on Establishing the Physical Land Market and Promoting the Standardized Transactions of Right of Land Use establishing and improving the administration system of land transaction and standardizing the operation of physical market. The Ministry of Land and Resources emphasized in its Circular that it would focus on establishing and improving the following systems during the process of consolidating and standardizing the orders of land market: firstly, controlling system on total supplies of land for construction purposes. According to the general plans for the utilization and the actual demands for each construction in different regions, total supplies of land for construction purposes will be strictly controlled. Secondly, centralized supplying system on urban lands for construction purposes. The urban governments centrally controlled the supply of newly-added lands for construction purposes. The newly-added lands for construction purposes were to be requisitioned and supplied by land administration departments of the urban governments in unified way, and the newly-added lands for construction purposes in districts directly under the city and in parks and areas of all kinds must be included in the supplying channels centralized by the urban governments. Thirdly, public transaction system of right of land use. Lands to be transferred must be made public to the society in the designated areas or by way of news media. Those required to be auctioned by way of tender must be subject to auction by open tender. When transferred by agreement, the results of such agreement must be publicized. Fourthly, the system of regular renewal and promulgation of standard land prices. In principle, the standard land prices are renewed every three years and regulated at appropriate time according to changes in the market. Fifthly, inquiry system for land registration. Except otherwise required by the state confidentiality, the results of land registration were subject to public inquiry in the society ensuring completeness of inquired information, promptness of examination and correctness of authentication. Sixthly, collective decision-making system. Those significant items involving administration of land assets, such as examination and approval of lands for construction purposes, disposal of land assets and determination of land prices must be subject to internal joint hearing, and relevant decisions must be made collectively.

In 2001, the State Council publicized the Circular on Strengthening the Administration of Land Assets(Decree No. 15), which made specific requirements focusing on strictly controlling total supplies of land for construction purposes, strictly performing the system of use of state-owned land with compensation, greatly promoting auction by open tender, strengthening the administration of transference of land use right, enhancing the administration of land assets and standardizing the examination and approval of land. A series of new measures in administration system of land assets were formulated with a view to strengthening the administration of land assets in the fields of resource and system. Systems of physical land market, standard prices of land and information publicity etc were established in many counties (cities) of China. Decree No. 15 of the Sate Council brought about the third climax in reforms of land use system. It further improved the land market mechanism and remarkably displayed the fundamental functions of allocation of land resources through market mechanism, meanwhile played an important role in standardizing the examination and approval of land and rectifying the market economy order.

The basic systems ensuring the standard operation of land market serve as important tools in standardizing land market order. Under the guidance of those land laws and regulations, the right of state-owned land resources quickly shifted from examination and approval to auction resulting in a further standardization of land market. Up to 2001, the promulgations of a series of local regulations and standard documents helped initially establish and improve the systems of controlling total supplies of land for construction purposes, centralized supplying of urban lands for construction purposes, public transaction of land use right, regular renewal and promulgation of standard land prices, public inquiry for land registration and collective decision-making.

(Ⅱ)Evolution of Land Use Policies for Foreign-Invested Enterprises in China

Lands used for foreign-invested enterprises were among the earliest lands used with compensation. The Law of the People' s Republic of China on Sino-Foreign Equity Joint Ventures promulgated in 1979 explicitly stipulates that the investment by Chinese party in a Sino-foreign joint-venture may take the form of land use right, and "where land use right is not taken as a part of the investment by Chinese peaty, the equity joint venture will pay the Chinese government fees for its use ; the Regulations for the Implementation of Law on Sino-Foreign Equity Joint Ventures further made it cleat- that sites applied by joint ventures for use can be granted by signing contracts with land administration departments, indicating the use of land, period of use and fees for such use. We can find similar provisions in the Law of the People' s Republic of China on Sino-Foreign Contractual Joint Ventures, the Regulations for the Implementation of Law on Sino-Foreign Contractual Joint Ventures and the Rules for the Implementation of Law on Sino-Foreign Contractual Joint Ventures. With the deepening of reforms in the land use system in China, the abovementioned laws made it clear that foreign-invested enterprises may be granted the right of land use according to the provisions of other regulations in China, apart from by way of paying fees for land use. In 1998, the new Land Administration Law provided in its Article 85 that : this law applies to the use of land by Sino-foreign equity joint ventures, Sino-foreign contractual joint ventures and foreign-capital enterprises. Whereas there are other provisions by law, those provisions prevail. After the promulgation of Decrees 55 and 56 in 1990, a great many of foreign-invested enterprises were granted lands by way of transfer. In August 1999, the Decree 73 issued by the General Office of the Sate Council made it clear that foreign-invested enterprises that were granted the right of land use no longer had to pay fees for the use of sites. According to the above-mentioned regulations, all the lands applied by foreign-invested enterprises for use will be granted with compensation. Among which, before the promulgations of Decree 55 and 56 of the Sate Council in 1990, foreign-invested enterprises got their lands with compensation mainly by way of signing contract of site use and paying fees for the use of lands ; after the promulgations of Decree 55 and 56, foreign-invested enterprises may get the right of land use by way of transfer. The Several Suggestions on Strengthening the Administration of Land Assets and Promoting the Reform and Development of State-owned Enterprises (Decree 433 [1999] issued by the Ministry of Land and Resources), promulgated in November 1999, explicitly provides that joint ventures or cooperative ventures established by state-owned enterprises and foreign investors, if complying with the provisions of Catalogue of Allocated Lands, may get their lands by way of allocation upon approval. The Catalogue of Allocated Lands promulgated in 2001 (Minister's Order 9 of the Ministry of Land and Resources) further explicitly stipulates the non-distinguishing of land users' identities. Those lands for construction purposes complying with this Catalogue of Allocated Lands, upon approval, may be granted their lands by way of allocation. Foreign-invested enterprises and other land users are equally treated with the same land use policies.

(China.org.cn November 7, 2003)