Laws have to be revised to maintain harmony

Land and house are one of the most important components of subsistence for human beings. Many people invest a great part of their lifetime's savings to buy a house or an apartment. Land and house property have been perceived as an indispensable part of individual right, and therefore treated as a priority by governments across the world to protect people's fundamental interests and maintain social stability.

With China's rapid economic and social development, however, expropriation of land and houses has become inevitable, and the fast pace of industrialization has accelerated that process. This problem has been haunting not only the Chinese government, but also those in other developing countries. To tackle this problem, governments across the world follow three fundamental principles: due process of law; just compensation and requisition for public use.

Due process of law can be followed by issuing requisitioning or expropriation notice in advance, assessing the to-be-requisitioned property rationally, granting property owners the right to seek independent assessment and make counter-offers, holding public hearings to explain the necessity and rationality of requisitioning a property, and the government starting a suit in a local court in case property owners don't agree with it on compensation, with judges and/or a civil jury giving the final verdict.

Second, fairness of compensation must be reflected in the rights of not only property owners, but people like lessees too, who have some, if not equal, right to receive damages. Besides real estate, its attachments and intangible assets related to goodwill should also be included in the compensation list. For a concrete compensation amount, the two sides should discuss the matter and reach a fair market price under a stable, open and transparent commodity trading system.

Third, in legal terms, for public use or interest means a move that would benefit society as a whole or a much larger number of people. Property can be requisitioned to build or expand airports, roads, public libraries, educational or scientific research centers, or for environmental protection. In many countries' judicial practice, the keyword "public" could also mean requisitioning property owned by a few to transfer it to a much larger number of people. Such examples can be found in urban planning of some countries like reconstruction of old cities, development of residential communities' and supermarkets.

Though different countries have different situations, it cannot be denied that the above principles represent the basic logic of social equity and justice. And after 30 years of reform and opening up, very few in China today view these principles as capitalist patents.

One of the country's constitutional amendments stipulates that the State may requisition citizens' private property according to law on public interests, and should give appropriate compensations. This rule absorbs the spirit of the three principles in totality.

But we have to concede that real estate requisitions have been embroiled in controversy and led to chaotic disputes and clashes between local governments as the stronger side and common property owners as the weaker side. In their pursuit to make as much money as possible through requisitioning of people's property, local governments have neither followed international practice nor shown respect for the Constitution.

In highly developed countries with well-established social, economic and legal systems, disputes between property owners and governments revolve around whether expropriation is right. But in China, disputes are centered on compensation, which incidentally faces two deadly problems.

First, it is very difficult to reach a convincingly fair market price in China's immature real estate market. The housing market still lacks free transaction channels and effective market rules, because of certain monopoly interests, when it comes to fixing a fair market price.

Second, there is a huge difference between the mean price of expropriating real estate and the amount local governments get when they transfer the same to developers. The cost of land increases dozens of time again when these developers set astronomical amounts for the houses they build on them. And either the local governments or the developers can pocket the huge profit.

This situation cannot be changed without revising the existing laws and regulations. And revision is necessary to better protect people's rights in order to ensure social stability and order.

The author is a visiting law scholar with the Chinese Academy of Social Sciences.

(China Daily 12/22/2009 page9)