China's Paradoxical Reforms on Land and Real Estate Property Markets

Real estate property has arguably been the most contested issue during China’s transformation towards a market economy. It touches the very heart of China’s socialist doctrine: the state/collective ownership of land. This paper analyses the evolutions of land and real estate property laws in contemporary China including their outcomes and implications for overseas investors. Real estate property fixed on land has been mostly privatised during China’s unprecedented process of urbanisation along with its market economy reforms. Driven by the dual tropes of market economy and urbanisation, China’s government has reformed laws to ‘marketise’ real estate property for investment, ownership and transaction and the reforms have differentiated implications for different social groups. There are constantly new winners and losers. The drivers of and impediments to these reforms are identified including the inherent political paradoxes embedded within them: state/collective ownership of land vs. market transaction of land use right; state ownership of land vs. private ownership of real estate property fixed on the land. The paper argues that these paradoxes are challenging China’s socialist system of public ownership and the continuing legitimacy of the Communist Party of China (CPC). Leaving them unresolved may provoke a pessimistic tenor to China’s buoyant expectations of growth in its developing market economy. However, judging from the historic tracks of China’ reforms towards a market economy and its current dilemma, China is very likely to further reform its laws on land and real estate property in a manner ‘with Chinese characteristics’.