The Costs of Complex Land Titles: Two Examples from China

Abstract

For thousands of years, Chinese customs and law typically have directed an owner of land, when transferring it, to retain a right to reclaim it in the future. Prior to the Communist Revolution of 1949, the pertinent rules were provided by the custom of dian, which emerged in ancient China and was formally recognized in legal codes as early as the Ming Dynasty (1368-1644). Dian provided the seller of a tract of land the option of buying the tract back many years later at the original sale price. When the seller died, this right of redemption descended to his heirs. Current Chinese policies also prohibit the outright sale of land. Since the 1980s, when China began to dismantle many of the collectivist policies characteristic of the Mao era, the government has authorized the conferral of land use rights on private individuals and entities. But Chinese law does not permit the national government, or a village collective, to transfer use-rights in perpetuity. Instead, a private land interest is limited to a fixed-term, for example, 40 years in the case of urban commercial land.