Recent Changes to Regulations on Industrial Land
April 02, 2007 | BY
clpstaff &clp articles &Industrial land is subject to a new set of regulations in terms of granting procedures, granting prices, urban land use tax and requirements governing the conditions of using industrial land.
By Dr. Philip Zhang, Boss & Young
Private ownership of land does not exist in China. Land in urban areas is owned by the state, i.e. "state-owned land". Neither an individual nor any business enterprise, whether Chinese or foreign, may acquire, own or transfer land outright. Instead, they may acquire the right to use a parcel of land (i.e. the land use right) from the state for a statutory period of time based on an agreement with the competent land bureaus. There are mainly two ways to acquire land use rights from the state, i.e. allocation (划拨) and grant(出让).
According to the Land Administration Law ("土地管理法") of China of 2004, land use rights are allocated by the state only for specific purposes, such as public utilities, military bases and highways. The rights to allocated land are strictly regulated and not commercially transferable unless expressly approved by the land authorities at county level1.
A common way to acquire land use right for industrial purposes is to conclude a land use right grant contract with a land bureau at county level for a fixed term within the statutory requirements, which may be renewed upon expiration. If a parcel of land was originally farm land, it must be converted into construction land in line with the "master land use plan" and expropriated by the government prior to land use rights being granted2.
COMPETITIVE PROCEDURES
Until August 31 2006 when the Circular on Relevant Issues in Relation to Strengthening Control over Land ("国务院关于加强土地调控有关问题的通知") was issued by the State Council (Circular No. 31), land use rights to industrial land could be legally granted by agreement (i.e.
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