Even before it took power, the Chinese Communist Party under Mao Zedong established its legitimacy in the countryside through land-to-tiller, mass-mobilization policies intended to break the economic and social control enjoyed by rural elites. The Party redistributed farmland from landlords to peasants in a process frequently marked by violence.
After the People’s Republic of China was established in 1949, the Communist Party continued to pursue socialist transformation through mass-mobilization campaigns, during which both rural land and urban property was transferred from private to public ownership. By the end of the 1950s, the Party’s efforts at land collectivization had placed all rural land under the control of agricultural cooperatives, which included production teams, brigades and communes. In urban areas, city dwellers’ lives were increasingly regimented within a system of “work units” (or danwei), which assigned members with housing in newly constructed housing blocks or former private dwellings that had been subdivided.
Although one goal of Maoist mass mobilization was to spur China’s economic transformation, it ultimately failed to deliver on this promise and resulted in disastrous consequences for the economy and the Chinese people, millions of whom died during the most destructive campaigns.42 Another consequence of the relentless focus on mass mobilization was the relative lack of development in legal rights and institutions. Soon after Mao’s death in 1976, Deng Xiaoping took steps to undo the legacy of class struggle by introducing a new policy of “reform and opening up” that promoted market reforms and a basic legal framework in hopes of stimulating China’s economic development.
The revival of markets and the reintroduction of the notion of legal rights would have significant consequences for land and housing policies in China. The 1982 Constitution declared for the first time that the state owned all urban land and that rural and suburban land were to be held by “collectives.”The term “collective” was not defined, and that vagueness is a key source of conflict in the current eviction crisis in the countryside. Generally, the “collective” is controlled by a village committee. However, a concession that was granted shortly after 1982 still exists today: people could retain land-use rights, which meant they did not own the land but could use it for a fixed period of time. That period is 30 years in the countryside46 and 70 years for urban residential use. The market reforms of the late 1970s and early 1980s also introduced the “household responsibility system,” which allocated rights to use specific plots of farmland to rural households – rather than a production team – and initiated an agricultural boom. Such land continues to be collectively owned. While rural households are allowed to use the land for farming purposes under this system, they are generally not allowed to engage in construction on the land or sell the land use rights for the purpose of urban construction.
The creation of urban land-use rights allowed a private real estate market to emerge. By 1985, the state began allowing private companies from Hong Kong and foreign joint ventures to lease land. In the 1990s, state enterprises began privatizing employee flats, selling them at a subsidized rate to tenants. By 1998, state firms had stopped providing flats to urban employees and begun paying housing allowances instead – marking the beginning of the dismantling of the danwei system. A frenzy of real estate activity had begun. Because of chronic housing shortages in Chinese cities – a legacy of inefficient state planning – property values skyrocketed. Since the state owned all urban land, the burgeoning real estate market did not benefit the original urban resident-homeowners. Instead, developers lobbied local officials to sell them land-use rights at a discount to market prices, often by offering to build roads or other municipal projects in exchange. Officials, eager to spur growth in a political system that now rewarded growth above almost all else, generally cooperated – even though their grants or allocations of urban land use rights to developers generally necessitated the eviction of existing residents, both homeowners and tenants , in order to “clear” the land use rights that had been sold. The process was frequently marked by bribes and kickbacks, as a series of high-profile corruption cases made clear. The basic dynamics of this process remain in place to this day.
Between 1991 and 2003, more than a half-million families in Beijing alone were evicted from their homes. In the process, according to one study, private homeowners were cheated out of more than US$4.5 billion in compensation, and tenants received more than US$7 billion less than they should have been paid under government regulations.
In the countryside, peasants were – and continue to be – less well-off when it came to compensation, compared to those whose homes are on urban land. According to one study, rural and suburban evictees between 1979 and 2005 received compensation equal to only 5 percent of the total amount that developers paid the government for their land. According to another study by the prominent Chinese Academy of Social Sciences scholar Yu Jianrong, local authorities expropriated more than 16.5 million acres of land in the countryside between 1990 and 2010, paying an estimated total compensation about 2 trillion yuan (about US$314.8 billion) below the land’s market value to those forced from their homes and farms.
This is mainly a matter of policy. Rural and suburban land owned by collectives must, with few exceptions, be used for agriculture, but when this land is converted to state ownership there are far fewer limits on how it can be used. As a result, land values can increase sharply, especially in rapidly urbanizing areas around growing cities. By contrast, current Chinese law calculates compensation for rural and suburban evictees using a formula that relies heavily on the original agricultural value of their land, not the much higher price that developers are willing to pay to use it for non-agricultural purposes. When developers eager to build new apartment complexes, shopping malls, or factories purchase rights to use this land from local authorities, still only a fraction of the payments are passed on to the farmers losing their plots. With the small amount of compensation they receive – and with urbanization happening so quickly around them – farmers are often priced out of the community they have lived in their whole lives.
THE IMPACT OF THE 2008 BEIJING OLYMPICS
Several cities that have hosted the Olympic Games have come under fire for violating housing rights.58 Beijing was no exception: Chinese and international human rights activists documented hundreds of cases of forced eviction amid preparations for the 2008 Olympic Games in Beijing. Many who had supported Beijing’s bid to host the Olympics had argued that international attention in advance of the event would deter such abuses, but, in fact, violations continued and accelerated as the Games approached. The widespread housing rights violations that occurred in the run-up to the Olympics in Beijing were not an isolated event, but they offered a glimpse into the larger story of housing rights violations in China as the country developed.
Using government reports, the COHRE estimated that some 1.5 million people were displaced from their homes in the run-up to the Olympics in Beijing between 2000 and 2008. Not all of these people were evicted as a direct result of construction projects for the Olympic Games.59 However, the figure did not include large numbers of migrant workers living in temporary housing who were forced to leave the city. Though it is difficult to ascertain how many of these evictions violated international standards, COHRE documented widespread housing rights abuses and violations of domestic law by the Beijing municipal government and the Beijing Organizing Committee for the Olympic Games (BOCOG).
COHRE demonstrated that BOCOG and city authorities used harassment, repression, imprisonment and violence against housing rights activists. Evictions were often carried out without due process, adequate compensation, or legal recourse. Many displaced residents received no compensation at all, or compensation so meagre that they were forced to relocate far from employment opportunities, schools or health care facilities.
COHRE also found that local authorities often used the Olympics as an excuse to accelerate evictions for projects unrelated to the Games, pressuring residents to sign agreements surrendering their property and accusing those who resisted of being unpatriotic. Officials often spray-painted buildings with slogans imploring residents to support the Olympics and offered rewards to people who agreed to move out early. Words such as “beautification” were employed to link evictions and demolitions across the city to the state’s effort to host a successful Olympics showcasing Beijing’s arrival as a world-class city. In one traditional alleyway slated for demolition to make way for a project unrelated to the Games, for example, COHRE investigators found a wall painted with the slogan: “Demolish Quickly. Welcome the Olympics. Switch to a New Look.”
EMPHASIS ON ECONOMIC GROWTH ABOVE ALL ELSE
Urbanization and economic growth do not have to result in forced evictions. On the contrary, such evictions are often the product of flawed government policies, lack of political will and a failure by governments to enact and enforce the prohibition against forced evictions that is a requirement under international law. In China, a set of specific policies and systemic weaknesses have fuelled the problem in recent years. These include the Party bureaucracy’s emphasis on growth and stability above all else in evaluating officials for promotion; the heavy reliance of local governments on land sales for financing operations and stimulus projects; the lack of independent judicial and administrative agencies to protect residents and adjudicate disputes and appeals; and a political and legal environment that allows and encourages authorities to punish other efforts by residents to assert their rights, including peaceful protests.
With few exceptions, government officials in China are appointed to their posts. The ruling Communist Party controls these appointments, and the Organization Department of its Central Committee is charged with managing the process. It does so through the use of lists covering more than 30 million state positions, and a system that controls the appointment of the leaders of all administrative agencies and organs from the township level up. The department regularly evaluates the performance of these officials, and uses these reviews to determine future assignments.
A variety of factors are reportedly considered in these evaluations, including: ideological purity; the opinion of superiors, colleagues and subordinates; success at keeping population growth within limits; environmental protection; worker safety; and social stability, as measured by the ability to defuse protests and prevent grievances from reaching higher levels. But there is strong evidence that these reviews value macroeconomic performance above all other criteria and put little emphasis on the specific means by which officials achieve growth. At the provincial level, more than half the score that provincial officials could earn is based on economic growth. Studies have also shown promotions are more likely, and demotions less likely, among officials in provinces with higher economic growth rates.
Land provides the main source of revenue for local governments. The governments derive land revenue in two ways. As regulator, the government can collect taxes and surcharges on land appreciation and from development projects. But more importantly, as a proprietor, the government can rent out government-built structures and collect revenue from direct land- lease sales. Because revenue from selling land leases falls outside the formal State budgetary system, all the proceeds go into local government coffers. With so much money to be made from land-lease sales and development, many municipal government agencies operate their own development companies to reap benefits at as many stages as they can. In 1995, for example, Beijing established hundreds of these development companies. In Shanghai, district governments hold premium land in the centre of the city and the Shanghai municipal government allows these districts to control land use, including the right to make urban development plans, approve development projects and negotiate deals with developers. These districts are allowed to retain up to 85 percent of the revenue from land-lease sales.
Local officials rely on the profits from land-lease sales to make up for huge budget shortfalls – created in part when Beijing reformed the tax system in 1994 and most tax revenue started going to the central government. In 2009, total income from land sales was 1.424 trillion yuan (US$223.8 billion), up 43.2 percent compared with 2008. This amounts to about 46 percent of the total national income for local financial administrations during the same period, according to a 2010 report by Chinese academics. The same report attributed the rise in eviction conflicts to this increasing dependence on land-lease sales and the failure of higher level officials to intervene.
Beijing’s response to the 2008 global economic crisis put even more pressure on local finances. The central government enacted a 4 trillion yuan (US$628.5 billion) stimulus package, providing 1.2 trillion yuan (US$188.6 billion) and leaving local governments to supply much of the rest. At the same time, the government called on banks to “unleash a blast of credit to power the Chinese economy to recovery” and Chinese banks issued 17.5 trillion yuan (US$2.7 trillion) of new local currency loans in 2009 and 2010, almost one- quarter of the economy’s total output for that period. The loosening of credit allowed local governments to take out loans at an “unprecedented scale.” But local governments could barely cover operational expenses let alone invest in even more projects, so they sank deeper into debt. The central government has struggled to rein in lending ever since the economy resumed normal growth in 2009. Because local authorities rely on their ability to sell land leases in order to reduce their debt burden, they increasingly find their interests aligned with those of real estate developers.
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