Land-use rights revised
( 2002-09-16 10:59 ) (1 )

China is expected to announce later this year a detailed version of new land-use policies geared to line up with World Trade Organization (WTO) requirements and "to foster fair and equal treatment of both domestic and overseas enterprises."

Cheng Xuping, an expert with the Chinese Academy of Land and Resources Economics, disclosed the new move on Sunday.

It took a team led by Cheng over half a year to complete their work. "We are now waiting for final approval from the State Council," he said.

According to Cheng, no major revisions have been made, except that government intervention in the transfer of land-use rights is to be revoked and that more fields will open to foreign funds.

But what is likely to cause the most controversy is the actual promotion of equal treatment of domestic and foreign enterprises in land use, said Cheng.

"It will force both Chinese and foreign parties to pay the price for the development of order in the land market in China in the short run," he said.

On the one hand, the regulations will force Chinese enterprises to compete with powerful foreign counterparts in a more "transparent and fair" land market, without the government protection they previously enjoyed.

"I expect some of them may go bankrupt if they fail to be competitive," said Cheng.

According to the revised version, all land-use rights transactions for profit, such as tourism, recreation and real estate development, will require public listing, bidding or auction.

The essential base prices will be kept secret for the sake of fair competition and government officials found to have improperly disclosed them will be punished.

No government official should interfere with the fair process of public competition for land-use rights, according to the revised regulations.

On the other hand, "equal treatment" also means that foreign parties will have to say goodbye to many preferential policies.

Old land-use policies stamped by the central government stipulated that foreign enterprises could acquire use rights for State-owned land "by paying compensation fees to the government or directly from those holding the rights at an appropriate price." But the old policies did not give details about the specific operation procedures involved.

Therefore, it has not been rare that local governments in China, in desperate need of overseas capital, have offered excessive preferential policies in land use, the most common ones being tax waivers and extended periods of preferential treatment.

The new version will establish a more clearly defined framework, said Cheng, refusing to go into detail before the final approval by the State Council.

But foreign enterprises have nothing to fear, said Yue Xiaowu, director of the Property Division of the Land Use Management Department of the Ministry of Land and Resources.

"The abolition of some preferential policies is nothing more than an essential improvement in China's investment environment," he said. "Nothing is more valuable than a set of transparent, fair and consistent game rules governing the market, that is free from government intervention."