A Rural-Urban Crossroads in Chinese Law: Qiao Shitong on the Development and Future of Chinese Eminent Domain
Shitong Qiao is Professor of Law and the Ken Young-Gak Yun and Jinah Park Yun Research Scholar at Duke Law School. Professor Qiao is an expert on property and urban law with a focus on comparative law and China. He was a tenured professor at the University of Hong Kong, a Law and Public Affairs (LAPA) fellow at Princeton University, and the inaugural Jerome A. Cohen Visiting Professor of Law at NYU. His first monograph, Chinese Small Property: The Co-Evolution of Law and Social Norms, explores the relationship between law and market transition, and has won multiple prizes in the U.S. and Asia. He is working on his second monograph, The Authoritarian Commons, which explores the relationship between law and social transformation. He has also been working on the first comprehensive examination of judicial review of eminent domain in China based on both qualitative and quantitative data.
In this interview, Professor Qiao discusses his view of the Chinese eminent domain system, the impact of reforms to China’s Land Administration Law, and recent innovations in Chinese eminent domain procedures such as invited takings (模拟拆迁).
Construction of residential buildings in Dalian. Photo: Wikimedia Commons
By: Marc Chien
This interview has been edited for clarity and length.
What are your thoughts on the current state of eminent domain in China? How do you feel it has changed over the years?
From a big picture view, the principles of eminent domain in China have mostly stayed the same. All exercises of eminent domain in China generally follow principles of public interest, just compensation, and adhering to administrative procedures, similar to the due process requirement in the U.S. Takings in China were greatly accelerated in the 1990s and 2000s, in the context of rapid industrialization and urbanization.
China has a dual-land system, under which land in the urban areas is owned by the state, and villagers collectively own rural land. Urban land use rights have been made transferable but not rural land use rights, which are supposed to be used for agricultural and related purposes.
At its core, the process of urbanization is also a process of eminent domain, where any developer who wants to develop must purchase land use rights from local governments, and local governments obtain their land by taking it from farmers and then converting that rural land to urban land before selling it to developers.
One key moment in the process of acceleration was the 1994 Tax Reform, which resulted in many previous revenue streams of local governments from taxes being redirected to the central government.
This left local governments with little funding, and scrambling to find alternative sources to fund their operations, before settling on the solution of expropriating land from villagers. After this shift occurred, the central government decided to support local government expropriation in 1998 by granting 100 percent (from 70 percent) of land sale revenue to local governments.
With this shift from taxes to “land financing,” funding government operations and institutions, including schools, through expropriation and subsequent sales of land, the reliance of local governments on eminent domain was complete.
At the same time, there have always been voices among both scholars and citizens speaking out against the reliance of local governments on expropriation, and the injustices inherent in the process.
For example, scholars have criticized the economic difference in value between rural and urban land, as the value of urban land could be up to one hundred times greater than its rural classification at the time of its sale to urban developers.
This advocacy contributed to the 2019 revision to China’s Land Administration Law, which removed the original restriction on developers purchasing land directly from farmers in a significant reform of China’s dual-land system.
Even though the legal prohibition on developers buying directly from farmers has been removed, local governments remain uninterested in building a market for these developers and promoting the transfer of farmers’ rights, due to their continued reliance on expropriation for funding. Legally, local governments continue to hold power through land use regulation and the possibility of using zoning to control development and the land market by default.
Without local governments’ cooperation, it is challenging, if not impossible, to build a legal system that supports a market of rural land transactions, including a well-functioning land registration system. If local governments cannot find an alternative source of revenue to the expropriation-based land sales system, it is hard to imagine any fundamental improvement of China’s eminent domain system.
Throughout China’s ongoing efforts to reform its eminent domain system and the dual land ownership system, there are three concerns: efficiency of land use, social stability (which can be jeopardized by conflicts caused by eminent domain), and preservation of arable land for food self-sufficiency. These three concerns have stayed unchanged, and will continue to influence the direction of China’s eminent domain reforms.
How have courts participated in China’s use of eminent domain?
My empirical study reveals for the first time that Chinese courts focus on eminent domain procedures while rarely supporting claims based on public interest or just compensation. Procedural rules are determinate and therefore easier to enforce than substantial standards of public interest and just compensation.
Chinese courts also choose to focus on eminent domain procedures to confine their own power of judicial review for the purpose of self-preservation in an authoritarian state that empowers the courts to monitor and control local governments but also does not want them to become too powerful.
For example, Chinese courts can help ensure that governments follow necessary procedures in first announcing their expropriation of land in an affected area to the public, and depositing the funds necessary to compensate condemnees. On the other hand, things like the public interest requirement for eminent domain remain very murky, and despite efforts by scholars, it seems that using public interest as a way to enforce judicial authority and limit eminent domain remains a largely futile effort.
The compensation requirement is not of much help in the judicial process either. In the transformation of rural to urban land, the “pie” of economic value becomes many times greater, and an enduring question is how to divide that “pie” between the original rural owners and urban developers. The spirit of related Chinese law is to leave condemnees in as good a position as they were in before the taking, but that does not provide much guidance on how to divide the bigger pie.
Another challenge to judicial review of eminent domain is that Chinese local governments expropriate land not under the name of eminent domain or expropriation, but land reform schemes such as Chongqing’s land ticket system or Shandong’s village consolidation system in 2020.
This results in what I call “expropriation in the name of rights.” Chinese courts are not of much help in addressing such atypical takings (something similar to regulatory takings in the U.S. context) as their power is limited to reviewing explicit takings.
What do you think of recent developments like the default of some of China’s top property developers and innovations like invited takings? How do you think they will affect China’s use of eminent domain?
Addressing the first point, developers are definitely still crucial to China’s overall eminent domain system. In China, developers and local governments function as allies in building the city and implementing developments.
With the recent decline of China’s property developers like Evergrande, the impact could move either way. First, the negative effects of the property crash could make developers less eager to purchase land from the government, and therefore slow development and consequently the pace of eminent domain.
On the other hand, historically, Chinese local governments are willing to “buy peace with money,” giving extra compensation to condemnees to persuade them not to protest or petition. This strategy depends on how deep a local government’s pocket is.
Historically, the more money a city has had, the more it is sheltered from the negative effects of eminent domain, whereas in less developed areas, demolition of homes for redevelopment have led to drastic consequences such as suicide and self-immolation. That is to say, if local governments become poor, they may become less likely to “buy peace with money,” which could mean more coercion and violence.
In regard to innovations like invited takings, many of these have taken place in China’s more developed regions like Shanghai and Shenzhen, where there is a large demand for urban renewal that is also hampered by the persistent problem of holdouts.
Invited takings was a clever invention of the Shanghai government to move past the problem of holdouts. With invited takings, the typical process is informal and totally transparent. The government is required to secure the approval of two rounds of supermajorities, made up of inhabitants of the affected areas, before it is even entitled to begin eminent domain.
On the surface, invited takings may seem to be a direct limit on the government’s eminent domain power. However, in exchange, the government is able to overcome a pervasive holdout problem.
Nevertheless, it remains to be seen how innovations like invited takings will affect the Chinese eminent domain system on a larger scale, and whether it will cause local governments to shift their priorities in terms of expropriations and land sales.
Readers interested in this topic can refer to the following articles.
On China’s land finance system: Qiao, Shitong. "The politics of Chinese land: Partial reform, vested interests, and small property." Colum. J. Asian L. 29 (2015): 70.
On judicial review of eminent domain in China: Mao, Wenzheng, and Shitong Qiao. "Legal Doctrine and Judicial Review of Eminent Domain in China." Law & Social Inquiry 46.3 (2021): 826-859.
On atypical/regulatory takings in China: Qiao, Shitong. "Expropriation in the Name of Rights: Transferable Development Rights (TDRs), the Bundle of Sticks and Chinese Politics." NYUJL & Liberty 13 (2019): 1.
On the collective action problem in urban renewal and its possible solutions in China: Qiao, Shitong. "Fragmented Laws, Contingent Choices: The Tragicomedy of the Village Commons in China." Duke J. Comp. & Int'l L. 29 (2018): 235.
Marc Chien is a second-year student at Columbia Law School and a Staff member of the Columbia Journal of Transnational Law. He graduated from Vassar College in 2020.