Eminent domain in China: Rule of law in the making?

Author: Chun Peng, Oxford University

Accompanying China’s miraculous economic growth over the past decades have been its equally impressive urban regeneration and expansion.

This is characterised by the ever-modernising city landscape and a record-breaking rise in urbanisation rates from less than 20 per cent to over 40 per cent within 22 years. But the other side of the story is not as bright and encouraging: in urban China, take Shanghai as an example, over one million households lost their homes due to urban redevelopment between 1995 and 2008. In the rural area, approximately 100 million mu of cultivated land was taken by the state for urban construction from 1986 to 2006, roughly equal to one-fourth of the total area making up the UK. About 120 million Chinese peasants, nearly twice the whole of the UK’s population, have been displaced to date. The resultant pressing problems and unnerving prospects have already become internationally known.

This has inflamed the indignation of many whose primary concern lies in the protection of human rights and private property in China. Others worry that the fast shrinkage of cultivated land in China will undermine the food security for one-fifth of the world’s population, which is now raised by just 7 per cent of the total arable land on the planet. A third anxiety is rooted in the question of whether the increasing mass protests against compulsory land takings have opened Pandora’s Box for the legitimacy and stability of the current regime.

Whatever grave practical consequences large-scale land expropriation has had in China, it should be noted that it takes place under an increasingly sophisticated legal system, regulating the power of eminent domain — that is, the compulsory, compensated, expropriation of private property by the state — to prevent encroachment of private properties, loss of valuable arable land and the disturbance of social stability. But in light of the reality, these legal efforts turn out to be largely in vain.

A straightforward and popular explanation to this legal failure is that China’s eminent domain law is still undeveloped compared with those in Western developed countries. For instance, the ‘public interest’ prerequisite is vaguely defined, the due process of acquisition has not been erected and compensation standards remain unfairly low. But this still struggles to explain why Chinese eminent domain law fails to trammel the abusive use of the power. A comparison with or a transplant of foreign law inevitably falls short of offering an answer to this. The underlying logic of the legal failure can only be exposed if we place the law in its socio-political context.

First of all, haunted by its historical legacy which blindly prioritises collective interests over individual rights, the once revolutionary party-state nowadays still regards land acquisition primarily as a political campaign to drive the mass in order to achieve its policies. The legalisation of eminent domain power is yet to make a substantial mark on the mentality of the leadership.

Secondly, the conflict between different policy goals further dampens the effort in bringing the power under control. Despite the growing emphasis on cultivated land preservation and respect to human rights, the all-power imperative of industrialisation, urbanisation and ultimately modernisation seems to defy any counter-balancing measures.

Lastly, as a result of fiscal and administrative decentralisation in the 1980s, the regime is constantly vexed with fragmented authority between the central and local states. Especially since the 1994 tax-sharing reform, the central government has taken a larger share of the budgetary revenue, leaving the local states in a financial deficit and creating a strong incentive for them to seek extra-budgetary revenue to invest for economic growth, provide public goods and maintain social stability. Moreover, as most of the decision-making power concerning eminent domain has been handed downward to the local players, it is becoming more difficult for the central party-state to hold the huge bureaucracy accountable to prevent localism and corruption, which in effect undergird much of the abusive acquisition.

To sum up, through the prism of the evolving and struggling eminent domain law, the progress, challenges and setbacks along China’s way of subjecting the party-state to the rule of law will be revealed and analysed. It is apparent that without an abandonment of its revolutionary mentality, a streamlining of its competing policies and an overhaul of its accountability mechanism, a robust and effective legal system will remain an air castle in the People’s Republic.

Chun Peng is studying a Doctor of Philosophy in Law at Oxford University and is a delegate at ANU Asia Pacific Week 2011.