Table Of ContentLand, Property and
Construction
in the People's
Republic of
China
Anthony Walker
A study sponsored by
Levett & Bailey
Land, Property and
Construction
in the People's
Republic of
China
Land, Property and
Construction
in the People's
Republic of
China
Anthony Walker
Professor of Surveying
University of Hong Kong
A study sponsored by
Levett & Bailey Chartered Surveyors
Hong Kong
Hong Kong University Press
# * * * i» ft fd
Hong Kong University Press
The University of Hong Kong
Pokfulam Road, Hong Kong
© Hong Kong University Press, 1991
Reprinted 1993, 1997
All rights reserved. No portion of this publication may be
reproduced or transmitted in any form or by any means,
electronic or mechanical, including photocopy, recording,
or any information storage or retrieval system, without
permission in writing from the Publisher.
ISBN 962 209 270 5
Printed in Hong Kong by Caritas Printing Training Centre
CONTENTS
List of Illustrations vii
List of Tables viii
Preface ix
Levett and Bailey, The Sponsor xi
Chapter One: China in Perspective 1
Introduction 1
The Open-door Policy 7
Policy Conflicts 7
Government Administration 9
Macroeconomic Aspects 9
Urbanization 13
Foreign Investment Joint Ventures 14
The Economic Zones 17
Examples of Joint Ventures 18
Conflicting Objectives 26
The Banks and Project Finance 26
Banks 26
Financing 29
The Stock Market 31
Taxation 33
Chapter Two: Land and Property 35
A Property Market? 35
The Official View 38
Negotiation, Tender and Auction 44
Real Estate Development Companies 48
The Deals 49
The Early Stages 49
Their Locations 51
Housing 55
The Administrative and Legal Structure 57
Taxation of Land Transactions 59
VI Contents
Documentation and Conditions 59
The Present Position 61
Chapter Three: Construction 65
Indigenous Projects 67
Design Institutes 69
Preparatory Offices 73
Construction Companies 73
The Cost 77
Joint Venture Projects 79
The Approval Procedure 81
Designing the Project 81
Constructing the Project 87
Build-Operate-Transfer 90
Resources 90
Labour 90
Bonuses 91
Materials and Plant 92
Contracts and Costs 94
Contracts 94
Speed, Quality and Costs 94
Legislation 98
Appendices 101
1. Provisional Regulations on the Granting and Transferring of Land
Use Rights over the State-owned Land in the Cities and Towns
(1990) 101
2. Provisional Measures for the Administration of Foreign Investors
to Develop and Operate Plots of Land (1990) 111
3. Details of a selection of sales of land-use rights 116
4. Tender documents for a site in Guangzhou Economic and Techno
logical Development District 120
5. Development conditions for a lot in Shanghai Hongqiao Economic
and Technological Development Zone 125
6. Regulations for the Transfer of Land Use Rights for Valuable
Consideration in Shanghai City (1987) 128
Index 139
ILLUSTRATIONS
Chapter One
1.1 China, facts and figures 2
1.2 Provinces, cities and investment zones 3
1.3 Population by residence 4
1.4 Inflation 11
1.5 Financial institutions 27
Chapter Two
2.1 The structure of the land market 47
Chapter Three
3.1 Construction output as % of GDP 66
3.2 Total labour force in the construction industry 66
3.3 The Shanghai municipality design and construction hierarchy 72
3.4 An example of organization structure for a construction project 80
3.5 Investment and capital construction approval procedures 82
3.6 The interaction of foreign specialist contractors 89
TABLES
Chapter One
1.1 Quality of life indicators 5
1.2 China's world ranking as producer of major industrial products 6
1.3 Composition of National Income 10
1.4 Macroeconomic indicators 10
1.5 China's trading partners 13
1.6 Extent of joint ventures 16
1.7 Designated areas for foreign investment 18
1.8 Examples of joint venture projects 19
Chapter Two
2.1 Some economic indicators for the SEZs 52
2.2 Examples of land-use rights granted in Shenzhen SEZ 53
2.3 Examples of land-use rights granted in GETDD 56
Chapter Three
3.1 An example of the Standard Schedule of Rates 70
3.2 Qualified employees required for different categories of
design institute 74
3.3 The projects that different categories of design institute
are allowed to design 75
3.4 Unit cost of completed buildings through capital construction 78
3.5 International construction prices 96
PREFACE
China's struggle to develop its economy and improve the material well being of
its population has been in progress since the end of the Cultural Revolution and has
gathered momentum since 1980. Important facets of China's 'modernization'
have been the reform of land policies, the improvement of efficiency of the
construction industry and the attraction of foreign investment.
These three aspects are closely linked in providing the infrastructure and
building assets required by mature and progressive economies. China has a long
way to go to, but it is clear that the role of land and construction in this process is
fully understood. Translating this understanding into reality, however, requires a
level of application that is often difficult to achieve.
The reorientation that has taken place in China's communist state to allow the
acceptance of the principles of paying for the right to use land, profit making by
construction companies and earning of bonuses by workers, has been dramatic. So
has the attraction of foreign investors to joint ventures with Chinese companies.
The reform of land and construction policies has allowed these companies to
provide the infrastructure and buildings needed for their businesses, which have
contributed substantially to improving China's economy.
My observations of these processes made me believe that they should be
documented as major landmarks in the redirection of the world's most populous
country. The impact on the world's economy, if China succeeds with its moderni
zation programme, will be immense and, should a property market emerge, it will
have a dramatic effect on the world's property industry.
This book therefore aims to describe the events that have taken place in the
modernization of the land and construction aspects of the economy of China and
to record the present stage of development. Two aspects of its treatment of the topic
are particularly significant.
Firstly, land and construction are dealt with in the same study. Too frequently
they are considered to be separate components of the economy. This is patently
unsound. Land, buildings and infrastructure development are inseparable, each
depends on the other for economic and social viability. To achieve more rapid
development, China still needs to recognize this principle and reflect it in its
economic, political and administrative structures; although, encouragingly, it has
been recognized in the drafting of some recent regulations.
Secondly, the study deals with the domestic aspects of both land and construc
tion whilst also covering aspects relating to foreign joint ventures. Its orientation
is the reform of the land management system and the structure and nature of the
indigenous construction industry. Chinese foreign joint ventures are then dealt
