China Aviation Law
30Nov/10Off

China’s Agricultural Land Use Policy: The growing tension between food security and economic growth.

This is the first draft of my Seattle Journal Of Environmental Law comment. While I have tried to stay true to the evidence, it is still a working paper. I'd appreciate any comments.

Casey DuBose

China's New Rice Bowl

Solving the problem of feeding around one billion people must be continually designated as a high priority in running the country well and maintaining peace.” State Council, 2009.

In 2007, the Chinese Communist Party (CCP) capped 30 years of economic liberalization with a revolutionary land law. This law, the Property Law of the People’s Republic of China, granted the private acquisition of land-use to both foreign and domestic private parties. Starting in 2008, agricultural collectives, which traditionally had limited ability to individually transfer their land use from agricultural to urban or industrial, began to contract their rights to non-agricultural developer, under a similarly revolutionary policy statement - Decision on Certain Issues Concerning the Advancement of Rural Reform and Development. These laws had the aim to help flatten the economic disparity between the increasing rich urban population and the increasingly marginalized peasant agricultural class. Their goal was to spur the development of modern agriculture and promote the construction of a “new socialist countryside.”

Unfortunately, the last 30 years of economic growth has taken a hard environmental and social toll on that countryside. Spurred by a great flood of cheap, migratory labor leaving the agricultural areas, and years of industrial development, agricultural land has been converted to residential, commercial and industrial land at an unprecedented rate.

This conversion, which has been accomplished through both legal and illegal means, has effected China's grain security, contributed to increased agricultural pollution, and created large groups of landless migratory workers. Existing laws have provided a framework to limit the conversion of agricultural land, but their language and enforcement is inadequate. Indeed, changes such as the 2008 Decision have inadvertently exacerbated a growing problem of agricultural land destruction. With available arable land at an all-time low and an ever-increased rate of conversion, the Chinese government must make the conservation and regulation of agricultural land a high priority.

Faced with this host of legal, environmental, economic and social problems, China has recently taken strong policy and administrative measures to stem the tide of agricultural land destruction. Recent policy statements by the State council, administrative regulations, and high-profile cases against domestic corporations are the beginnings of a crackdown on illegal use of agricultural land.

While some have argued that these changes are only a temporary crackdown and will not bring lasting solutions to China agricultural problems. I will argue these recent actions represent a shift from unregulated growth to a new era of agricultural modernization and environmental protection.

Continued after the break

6Oct/10Off

Aviation Business Between Mainland And Taiwan To Enjoy Exemption from Enterprise Income Tax

2010092900151

In a move to motivate tourist and business travel between Taiwan and China, the CAAC and the Ministry of Finance have announced policies to increase cross-straight traffic.

The CAAC announced that the it will increase the alloted slots to Taiwanese airlines.

The Taiwan Affairs Office of China's State Council announced earlier Wednesday the increase in the number of flights across the Taiwan Strait, including an additional 14 flights to Shanghai, four to Beijing, four to Shenzhen, 11 to Xiamen and Fuzhou, two to Qingdao and one to Changsha.

Source: http://focustaiwan.tw/ShowNews/WebNews_Detail.aspx?Type=aALL&ID=201009290015

Similarly, the Ministry of Finance has announced certain tax benefits to direct traffic. These benefits will include exemption on enterprise tax and certain retroactive tax benefits for airlines from June 2009.

According to this new rule, from 25 June 2009, incomes of Taiwan airline companies received in the Chinese Mainland from their direct aviation business between the Chinese Mainland and Taiwan shall be exempt from business tax. Any business tax that should not be collected but has already been paid by any Taiwan airline company from 25 June 2009 to the date of receiving this document shall offset its business tax payable afterwards; if the business tax that has been collected is more than the business tax payable for the remaining period within 2010, the excessive tax payment shall be refunded.

Source: http://blawg.lehmanlaw.com/wordpress/?p=626

For the text of the policy statement from the Ministry of Finance see: http://www.e-to-china.com/tariff_changes/Policy_Focus/2010/0928/86874.html

This is good news to an industry that has seen double digit over the last year.

13Sep/10Off

Land Use Right in China and Long-Term Ground Leases – 中国的土地使用权与外国的长期土地租约

Chinese Eviction Notice

Land Use Right in China and Long-Term Ground Leases

While granted land use rights (LUR) in China are analogous to long-term ground leases (LGL) used in the United States, the United Kingdom and Hong Kong, they ultimately have fundamental differences. Unlike LGL, LUR are restricted in use, term, transferability and origin.

There are a few similarities between LUR and LGL. Both separate the ownership of the land from the ownership of the buildings constructed on the land. In the case of LUR, the government retains ownership of the land, while the party has term-limited ownership of the improvements on the land. Gregory M. Stein, Mortgage Law in China: Comparing Theory and Practice, 72 Mo. L. Rev. 1315, 1352 (2007). In the case of LGL, the lessor retains ownership of the land, while the party has term- limited leasehold ownership of the ground and improvements. 31 C.J.S. Estates § 197 (2010). In both cases, the use is limited to a specific period of time. With LUR, the term is determined by the use of the property - between 30 and 70 years. Dale A. Whitman, Chinese Mortgage Law: An American Perspective, 15 Colum. J. Asian L. 35, 38 (2001). The term of LGL is determined by the contracting parties and are generally between 50 and 99 years in length. Peter A. Sarasek, Commercial Real Estate Lending: Mortgages and Beyond, in 543 PLI Course Handbook, Commercial Real Estate Financing 2006: What Borrowers & Lenders Need to Know Now 177, 186 (2007).

Aside from the above similarities, LUR and LGL have some fundamental differences. In general, LUR are significantly restricted by the Chinese government. LGL can be acquired from one of many kinds of lessors - be it a private party, corporation, charitable organization or government entity. Pamela L. Westhoff, Ground Lease Financing: A Framework for Ground Lessor Considerations, in 535 PLI Course Handbook, Commercial Real Estate Financing 2007: What Borrowers & Lenders Need to Know Now 279, 283 (2007). In contrast, LUR may only be granted by the Chinese government. Whitman at 38. LUR are limited to certain kinds of use and development. Id. LUR must be developed within a fixed amount of time or risk forfeiture. Stein at 1352. Finally, under Chinese law, LUR are not considered leases, and not subject to landlord-tenant law. Whitman at 38.

The holder of a land use right has limited rights of transferability. The holder may not register the right until it has been paid in full. Stein at 1322. The right cannot be held for speculation and may not be transferred until it has been developed. Patrick A. Randolf Jr., The New Chinese Property Law, Probate and Property, Oct. 21, 2007, at 16. Finally, “in some parts of China, the purchaser apparently may not use borrowed funds for the acquisition of a land use right.” Stein at 1323. However, it should be noted that after the land has been developed, the holder gains ownership rights that are similar to LGL. The right can be transferred, leased, and mortgaged without state approval, and if the right is revoked, the holder is entitled to compensation. Whitman at 38.

Finally, LUR and LGL differ in their financing and use. LGL are often a financing vehicle for land developers. Stein at 1352. They provide the lessee or developer with a way to avoid up-front land acquisition costs. Id. In contrast, the holder of LUR must pay the entire fee in advance of development. Id. “The developer must incur the capital expense of acquiring the land use right in its entirety at the beginning of the construction process.” Id.

This has created an uncertain market for credit securities based on LUR. One author has suggested that LUR may see a steep decline in value as they approach the end of their term. Whitman at 39. This is very similar to LGL which also see steep declines in value as they approach their termination date. Id. However, as many of the LUR have yet to approach that point, the legal community remains speculative as to the government's future response. Id. In the meantime, the Chinese government has created some rules to govern the leasing, mortgaging and sale of LUR. Patrick Randolph, Ownership with Chinese Characteristics: Private Property Rights and Land Reform in the PRC, Cong.-Exec. Comm. on China Issues Roundtable, Feb. 3, 2003, http://www.cecc.gov/pages/roundtables/020303/randolph.php (last visited Aug. 15, 2010). These rules strictly control how much may be lended against the value of the land and restrict leases to no more than 20 years. Id.

While LUR and LGL share some similarities, LUR are considerably more restricted by the Chinese government than LGL are restricted by their respective countries. Unlike LGL, LUR are restricted in use, term, transferability and origin. While LGL can defer land acquisition costs for developers, LUR present a heavy initial financial investment for developers in China. Finally, while there are some similarities, LUR are not leases, not subject to landlord-tenant laws, and ultimately, very different from LGL.

9Aug/10Off

Land Regulation in the Taiping Heavenly Kingdom 太平天国的物权法

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The Land regulations of the Taiping Rebellion were a significant departure from the Chinese tradition. Jen Yu-wen, The Taiping Revolutionary Movement 143 (Yale University Press 1973). They proposed a utopian scheme which distributed land equally between men and women, abolished traditional taxes, and removed the traditional landlord-tenant relationship. However, the administration and reality of the land regulation was far from the ideology of the Heavenly Kingdom.

The Ideology

The roots of the Land Regulation policy in the Taiping Heavenly Kingdom lie in the biblical teaching that all people on the earth are brothers and sisters. Id. at 144. Therefore, the citizens of the kingdom were members of one large family. Id. As members of a family with a common purpose (to establish a heaven on earth), the citizens were required to share both the land and its production. Id.

The Taipings believed that men and women were equal and land was to be equally divided between the male and the female members of the kingdom. Id. To do this, the land was first classified in one of nine categories according to the amount of grain it produced. Id. at 143. After which, each adult was to receive one Mu (aprx. 0.1647 acre) of first-quality land and every child under the age of sixteen would receive 1/2 a Mu. Id. at 143-44. This policy stood in stark contrast to the policies of earlier Chinese dynasties which gave women little to no rights to own land. Id. at 143.

The Taiping Land regulations also created a new system of taxes, which eliminated all traditional taxes. Id. at 144. Instead, the farmer would withhold a portion of the harvest for personal use and transfer the remainder of the farm produce to the state treasury. Id. Unfortunately, this simple system proved difficult to enforce and easy to abuse, because it was difficult to measure a farm’s total production and to define how much should be set aside for family use. Id.

The ideological purpose of land administration was summed up in this statement from the land regulations: ‘Cultivating land in common, eating rice in common, clothing ourselves in common, and using money in common, the people of every place will share equally and there will be no person who is not fully fed and warmly dressed.’ Id.

The Practice

“To implement the radical land policy would have required time and security, which the Taipings never had.” 10 The Cambridge History of China 293 (Denis Twitchett & John K. Fairbank eds., 1978) [hereinafter Cambridge].

The actual land policy during the Taiping rebellion’s eleven year run suggests that there was very little change to the status quo. Jen at 145. A review of the documentation from title deeds, taxation notices, and other proclamation from the Taiping government, suggest that very little changed from the previous system. Id. The central government instructed generals and provincial leaders to notify the people “to pay land taxes as before following the old system.” Id. “Private ownership of all kinds of land (which was protected by the Taiping government as well), classification of land, various other forms of ownership, the amount of land for private ownership (no matter how vast), taxation records (old or new), personnel in the administration (reinstatement of old officials and clerks whenever possible), methods and procedures in collecting taxes, and even the style of penmanship in the documents – all remained unchanged.” Id.

However, there was one large exception to this rule. The rate of taxation saw a significant change from the Manchu rates. Id. While the central government did not fix a set tax rate, the provinces and prefectures, acting autonomously, set rates which were generally lower than the Manchu rates. Id.

While never truly implementing the Taiping ideology, the rebellion did have some positive effects on the people in areas not devastated by war. Cambridge at 294. The lower tax rates plus the presence of a new rebel administration (and accompanying troops), “hardened tenants’ determination to resist extortionate rents, and in some cases landlords have to content themselves with partial payments.” Additionally, with the lower taxes and new administration, the economy and trade within the Taiping areas was better regulated and more honestly administered. Id.

The Similarities with PRC

The Taiping Rebellion played a part in the mythology of the Chinese Communist Revolution. Howard L. Boorman, Mao Tse-tung as Historian, 28 The China Quarterly 82, 93 (1966). Mao saw the past 110 years as a history of imperialist oppression populated by great revolutionary moments. Id. He categorized that time as a “national revolutionary struggle,” which was aimed at national reform and independence. Id. Within that struggle were certain rebellions against the imperialist powers, which included the Taiping Rebellion, Boxer uprising, and the 1911 revolution. Id.

The Chinese communists labeled the Taiping rebellion as a “peasant revolutionary war.” Id. From the Taiping rebellion, the communists drew many parallels to their revolution including, unrest among the peasants, the decline of a dynasty, the impact of foreign greed, and a leader with a magnetic personality. Max Mark, Chinese Communism, 13 The Journal of Politics 232, 233 (1951). With these similarities, the Chinese Communists were able to pull from the existing folklore of the revolution and weave it into their own propaganda. Id. at 235.

Yet, the details of the Taiping ideology stand at great odds with the communist interpretation. The life of a peasant and his wretched condition was not something to idealized in Taiping society. Ren at 144. One punishment for wicked or delinquent officials was “degradation to the status of peasants.” The Taiping leaders believed that the poor state of the peasant was the will of the Almighty God. Id. In the Taiping rebellion the fight was not between the proletariat farmer and the bourgeois imperialist landowner, but instead between the new Chinese “heaven on earth” and the Manchu rulers. Id.

18Jun/10Off

Land Reform in Taiwan 台湾农地改革

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***(This is a brief review I wrote for my professor. The Taiwanese economic turnaround was a real miracle. They went from 700% inflation to 8% in just a few years)***

After the KMT government took control of Taiwan, it sought to implement the 1930 Land Law. Chen Cheng, Land Reform in China 21 (China Publishing Company 1961). However, the Land Law only contained general principles of land reform. Id. Therefore, beginning in 1949, the KMT government promulgated a number of regulations, which aimed to implement Sun Yat Sen's vision of land regulation Id. at 22.

The first regulation was the “Regulations Governing the Lease of Private Farm Lands in the Taiwan Province.” Id. This regulation had three essential goals, reducing rental rates, protecting the tenant's rights, and clarifying the landlord's rights and remedies. Id. The regulation provided that the rents the tenant had to pay to the landlord could not exceed 37.5% of the total annual yield of principle crop. Id. at 23. Before the regulations, only about one in ten tenants had written contracts with their landlords. Id. at 10. Without a written contract, the landlord would often raise rental rates or break their lease at will. Id. Thus, the regulations aimed to stem this problem my requiring that all contracts were to be in writing and no shorter that six years. Id. at 23. Finally, the regulations clarified the landlord's rights and remedies by providing that rents were to be paid on time and contracts which were in arrears for two years could be canceled. Id.

The second wave of land regulation came in 1951 when the KMT government started selling public lands to tenant farmers. Peter Chen-main Wang, A Bastion Created, A Regime Reformed, An Economy Reengineered, 1949-1970, in Taiwan: a new history 320, 324 (Murray A. Rubinstein ed., M.E. Sharpe 2007). This public land was land acquired by the government from the Japanese nationals and Japanese administration after the conclusion of World War II. Id. During this period, the KMT sold nearly a fifty of the arable land in Taiwan to landless tenant-farmers. Id.

This policy paved the way for the implementation of the Land-to-the-Tiller Act which was promulgated in 1953. Chen at 71. The act's goal was to abolish land tenancy by limiting the amount of land a landlord could own. To that end, the act required that the government purchase all tenant-cultivated land in excess of a prescribed retention limit. Id. The government purchased land was then “resold to Taiwanese tillers at a price of 2.5 times the value of the main crops.” Wang at 324.

These policies had a tremendous effect in Taiwan. From 1949 to 1952, number of tenant families dropped from 39 percent to 11 percent and average income of the tenant farmer rose 81 percent. Id. at 325.