Form and function in China’s urban land regime: The irrelevance of “ownership”

Abstract

China’s urban land is typically said to be owned by the state, with private parties “merely” permitted to own long-term use rights of up to seventy years. This regime has been praised by those who believe it embodies socialist values and criticized by those who believe it will hamper growth. This article argues that both views are mistaken; that the features of the long-term use rights are not significantly different from those attaching to full private fee simple ownership, and that the main features of China’s system are shared by other jurisdictions such as Hong Kong where the existence of a well functioning real estate market and satisfactory economic growth have never been doubted. In short, ownership is a sufficiently elastic concept that something called “state ownership” can easily accommodate any number of specific institutional arrangements that serve different functions. There is thus no substitute for a fine-grained analysis of the specific details of any particular land tenure regime before reaching conclusions about its economic effects.This article also offers support for the idea that property rights cannot be understood as simply exogenously imposed rules of the game that must be followed. The rules of the game reflect and affect wealth and influence, which can be put to the service of changing the rules themselves. Although governments can attempt to create institutions, whether and how they will actually function in society is difficult to control.