China Aviation Law
16Apr/10Off

Unequal Treaties and Property Law in China

***So, this semester I'm researching property law in China for my research job. This is one of my memos. The story of the treaty ports is a very interesting time in China. I'm excited to get to Shanghai this summer and see some of the old city. Sorry for the weird citation system, but the bluebook is a very ugly and inflexible system.***

Unequal Treaties and Property Law

By the summer of 1842, the British had defeated the Chinese at the mouth of the Yangzi River and occupied the city of Shanghai. 10 The Cambridge History of China 206 (Denis Twitchett & John K. Fairbank eds., 1978) [hereinafter Cambridge]. In August, the British fleet, led by Major-General Henry Pottinger were preparing to invade the Ming dynasty capitol of Nanjing. Id. at 207. On that threat, the Qing dynasty emperor dispatched an envoy to end the hostilities. Id. at 210. Out of this meeting came what was later to be called by the Chinese the first “unequal treaty” with the west – The Treaty of Nanking. Id. at 211.

The Treaty of Nanking [Nanjing] opened the doors of the Chinese empire to the western world. It ceded the Port of Hong Kong to the British Empire and opened five ports to British merchants – Guangzhou, Xiamen, Fuzhou, Ningbo, and Shanghai. Treaty of Nanking, U.K. - China, art. 2, Aug. 29 1842, reprinted in 1 Treaties, Conventions, Ect., Between China and Foreign States, at 352 (photo. reprint AMS Press, Inc. 1973) (1917) [hereinafter Nanking].

One of the immediate questions settlers faced, was how were they to move in? How would a British subject acquire real property? In this essay, I will review the effect that the opening of property had on the real estate/property system and land laws/regulations in China.

Treaty of Nanking (1842)

The Treaty of Nanking was designed to protect British merchants and to provide security for trade with China. Cambridge at 216. To this end, the treaty provided the British subjects with a number of rights. It established a system of consular jurisdiction over British nationals. Id. at 217. It provided reciprocal protection so that subjects could “enjoy full security and protection for their persons and property within the Dominions of the other [state]”. Id. It also allowed merchants to “trade 'with whatever persons they please', as opposed to trading with an official monopoly”. Id.

While the Treaty of Nanking allowed British subjects to resided in the treaty ports “without molestation or restraint,” the treaty provided little specific guidance. Nanking art. 2, at 352. Indeed, in November of 1842 the British formally prohibited trade with any of the treaty ports until there were established consuls. Cambridge at 223. Throughout the year following the Treaty of Nanking, the Chinese and British negotiated the details of the opening of the treaty ports. Id. at 218. These negotiations led to the a supplementary treaty between the two governments – the Treaty at the Bogue.

The Treaty at the Bogue (8 Oct 1843)

The Treaty at the Bogue stated that the treaty ports were to be “thrown open.”Treaty at the Bogue, U.K. - China, art. 5, Aug. 29 1842, reprinted in 1 Treaties, Conventions, Ect., Between China and Foreign States, at 391 (photo. reprint AMS Press, Inc. 1973) (1917) [hereinafter Bogue]. To facilitate this goal the treaty provided much more detail on the settlement and acquisition of land in the five ports. British subjects were allowed reside in the treaty ports “without molestation or restraint”. Id. art. 7 at 392. The rent was to be “fairly and equitably arranged for, according to the rates prevailing amongst the people, without exaction on either side”. Id. All houses built or rented were to reported annually to the local Chinese officers and the British Consul. Id. However, the total number of houses could be limited by the Chinese government. Id.

While opening the doors to the treaty ports, the treaty also tightly restricted foreign expansion into other areas of China. Foreign occupants were specifically restricted to the treaty ports. Merchants could only trade with the five treaty ports - under penalty of seizure by the Chinese. Id. art. 4 at 392. Residents of the ports could not travel to the surrounding countryside, except for short distances. Id. art. 6 at 392.

These two treaties allowed for British to acquire land, but Chinese government was still hesitant to directly sell land to the barbarians. Chen Yu, Land, Title Deed, and Urban Transformation: Foreigners’ Acquisition of Real Property in Xiamen (1841–1945) 4 (Chinese Cities in Transition: the Next Generation of Urban Research, July 7–9, 2005), available at http://mumford.albany.edu/chinanet/shanghai2005/chenyu_ch.doc [Hereinafter Chen]. The result was rent-in-perpertuity system (永租制) that allowed the foreign government to acquire property, while maintaining China's claim to territorial sovereignty. Id. In practice, the leasing government would pay a initial land value (地价), which would be followed by annual rent or tax (地税) paid to the Chinese Government. Id. As such, the 23 acres on which the British built their consulate at Shanghai was not purchased, but leased-in-perpetuity for a lump sum of money. 1 Hosea Ballou Morse, The International Relations of the Chinese Empire, 347 (1910) [hereinafter Hosea].

This rent-in-perpetuity system of property in China created two styles of land acquisition in the treaty ports – concessions and settlements. Ching-Lin Hsia, Studies in Chinese Diplomatic History 48 (The Commercial Press) (1933) [hereinafter Hsia]. A concession was land held by a foreign power under the rent-in-perpetuity system. Id. A foreign government would first lease large areas of land from the Chinese government. Id. Then, in turn, the foreign government would sublease land to foreign residents. Id.

In contrast, the residents of “settlements” dealt directly with the Chinese owners to acquire land. Id. at 49. Thus, the deeds were not between governments, but rather, between a foreign purchaser and a Chinese landowner. Id.

Shanghai was an example of an international settlement. The site of the settlement was selected as residence for foreigners; however, the land was not leased to a controlling foreign power. Id. at 48. Instead, it was acquired by individual deals with Chinese landowners, which were then registered with the Chinese authorities Id. at 49.

Foreigners had a choice of either using existing traditional Chinese deeds in their transactions or a modified foreign title deed. Chen at 5. The traditional Chinese deed usually consisted of two parts – a deed of sale (契)and a deed-end (契 尾). T. T. Meadows, Remarks on the Acquisition, Tenure, and Alienation of Real Property in China; Accompanied by a Deed of Sale, 18 The Chinese Repository 571, 579 (1849) [hereinafter Meadows]. The deed of sale was granted by the seller. Id. It was printed on durable coarse brown paper and kept as evidence of ownership of the property. Id. The deed-end was acquired from the Superintendent of Finance with the payment of an alienation and registration fee. Id. While these two documents were legally sufficient to convey the property, often the purchaser would request any previous deeds that the seller had in their possession. Id. In the case of a foreign purchaser, the deeds were also then sent to the Foreign Consul for registration. Chen at 6.

The Start of Settlement

The treaty ports were opened in sequence - “Canton [Guangzhou] on 27 July 1843; Amoy [Xiamen], 2 November; Shanghai, 17 November; Ningpo [Ningbo], 1 January 1844; and Foochow [Fuzhou] in June 1844.” Cambridge at 224. Over the first decade, the settlements of Guangzhou and Shanghai developed a major foreign occupancy, while the other settlements were small outposts with no more than 30 foreign residents. Id. at 227. Shanghai, for example, by the mid-1850's, “grew to some seventy firms and over three hundred foreign residents, not counting families, with eight consulates and thirty-six Protestant missionaries”. Id. It was in this quickly growing city that the first land conflicts and administration regulations developed.

As foreign settlers entered Shanghai, the British consul quickly found that it had no power to levy taxes on non-British Subjects for the maintenance of public roads and jetties. Hosea at 350-51. As a result, in 1845, the first land regulations were established between the British and the Chinese. Id. These regulations granted certain extraterritorial authority over the residents and standardized the title-deed registration system. Id. Under the regulation, three land renters were elected to a Committee of Roads and Jetties which levied taxes to maintain the public areas. Id. Non-British subjects were allowed to acquire land, with consent of the British consul, if they observed the land regulations. John T. Pratt, The International Settlement and French Concession at Shanghai, 19 Brit. Y.B. Int'l L. 1, 2, (1938).

This quickly created a conflict between the land regulation and the treaties that the Chinese had signed with the French and American governments. Id. at 2. An American wishing to acquire land in Shanghai under the 1845 regulation would have to register it with the British consul. This conflict was resolved in 1854, with the passage by all three treaty powers in Shanghai of a multilateral land regulation. Id. at 3. This regulation would become a model for land regulations in other settlements in the other treaty ports. Id.

The drafters of 1845 Land Regulations expected that through the gradual foreign acquisition of land the native Chinese would be excluded from the settlement. Id. at 2. To this end, the regulation prohibited native inhabitants from selling or renting land to other Chinese and prohibited foreigners from “building houses for renting to, or for the use of Chinese.” Hosea at 354 (quoting Land Regulations of 1845, art. 16). Due to civil unrest and the unique political scheme in Shanghai, that expectation of the 1845 regulation was quickly shown to be misguided.

During the Taiping rebellion, the international settlement in Shanghai remained neutral territory and by 1854, thousands of refugees had fled into the settlement for protection. Id at 354. Faced with growing administrative challenges and to accommodate the influx of Chinese residents, the foreign powers removed the prohibitions on Chinese leaseholders from the 1854 Land Regulations. Id. However, the foreign government did not afford the Chinese the same voice in the elected committee as the foreign landowners. Chinese residents would have to apply to a foreign Consul for approval of any land lease. Id. Because the Chinese were not citizens of any treaty power, a Chinese subject was required to apply through his landlord thus did not retain the right to vote in committee meetings. Id.

Land Regulation of 1854

The Land Regulation of 1854 was a model that many of the other treaty ports followed. It outlined the procedure and process of purchasing land, assessed an annual tax on the land, and created an elected committee which oversaw the maintenance of the public facilities in Shanghai.

The Land Regulation of 1854 defined the process of acquiring land in China. The foreign purchaser would first have to apply to the Consul of his nation, or if none was appointed, to the consul of a friendly power. Land Regulations of 1854, art. 2, North China Herald (Shanghai), July 8, 1854, at 3. The application would specify the plan, location, boundaries and measurements of the land to be purchased. Id. The Consul would in turn check for any prior impediments on the land from third parties or other foreigners. Id. If there were no impediments, the buyer could then settle the price and conditions of sale with the Chinese landowner. Id. art 3. A copy of the agreement of deed of sale would then be sent to the Consul and Intendant of Circuit (Chinese government position) for examination. Id. If the sale was regular, the copy of the deed would be returned to the purchaser and the money could then be paid. Id. On completion of the sale, the Intendant of Circuit would issue a deed in triplicate and send notice to the Consular representatives of England, France, and the United States. Id. art. 4.

The regulation assessed an Annual Rent or Land Tax to the Chinese Government. Id. art. 7. The amount was calculated by land area at a rate of 1500 cash per mou. which was due on the 15th of December. Id. If a landowner defaulted on the tax, the Chinese could request enforcement by the Consul. Id.

The regulation also established a committee to control the assessment of taxes for the maintenance of public facilities. At an annual meeting of the renters of the land, the renters were to appoint the committee and assess any necessary taxes. Id. art. 10. The committee, which had three or more members, would have the power to levy rates, apply funds, and sue for enforcement against defaulters. Id.

Defeat in the Second Opium War and Subsequent Regulations

Following defeat in the Second Opium War, the Chinese signed the Treaty of Tientsin [Tianjin]. This treaty opened many more ports to trade, and foreigners were allowed access to China's interior. Treaty of Tientsin, U.K. - China, art. 9-11, June 26, 1858, reprinted in 1 Treaties, Conventions, Ect., Between China and Foreign States, at 407-08 (photo. reprint AMS Press, Inc. 1973) (1917). Specifically, the ports of Niuzhuang, Dengzhou [Yantai] , Taiwan, Chaozhou, and Qiongzhou [Hainan] were opened to trade. Id. art. 11 at 408.

With that opening, the treaty also included some of the broadest language giving foreigners access to China. Foreigners had the “right of residence, of buying and renting houses, of leasing land therein, and the building of Churches, Hospitals and Cemeteries.” Id. Additionally, “British subjects, whether at the Ports or at other places, desiring to build or open Houses, Warehouses, Churches, Hospitals, or Burial-grounds, shall make their agreement for the land or buildings they require, as the rates prevailing among the people, equitably, and without exactions on either side.” Id. art. 12

The end of the Second Opium war also brought about a redrafting of the land regulations in Shanghai. This time they were not drafted in concert with the Chinese authorities, but unilaterally by the Municipal Council in Shanghai. J.H. Haan, Origin and Development of the Political System in the Shanghai International Settlement, 22 Journal of the Hong Kong Branch of the Royal Asiatic Society 31, 35 (1982). The draft did not change much of the process of land acquisition, but rather focused on clarifying political procedure for the Municipal Council and providing better authority to the council for enforcement. Id. Aside from the addition and amendment of various byelaws through the next years, the regulations remained largely unchanged until the territory was returned China in 1943. Id.

*** I didn't put much of a conclusion. I'm up for any comments or suggestions. ***