Uniform Registration Reinforces Protection of Real Rights

By staff reporter HOU RUILI

A major step towards reform of China’s property management took place on March 1, 2015, with the State Council’s issuance of the provisional regulations on real estate registration.

China’s modern market system has been gradually perfected over 30 or more years of opening-up and reform. The market economy operates on the basis of innumerable transactions. Explicitly defined real rights, therefore, are a prerequisite to promoting its development. As fixed assets account for two thirds or more of China’s national wealth, the protection of rights over fixed assets has been a point of focus for both policymakers and the public alike.

Blanket Property Registration

“The [real estate registration] system is nothing new. Land tenure was established in the Han Dynasty (202 BC - AD 220) and carried on throughout later dynasties,” researcher at the Institute of Law of Chinese Academy of Social Sciences Sun Xianzhong said. “The Ming Dynasty (1368-1644) established the Fish-scale Inventory system, which mapped farmlands, ponds and hills, specifying their size and ownership.”

In feudal times, rights over real assets, lands and homes were defined solely according to covenants privately signed between individual parties, so disputes were frequent. Based on extensive, thorough state surveys, the Fish-scale Inventory constituted a milestone in China’s real property management in presenting a full and clear picture of the country’s real estates.

During the first 30 years of the PRC when the planned economy was in force, land, homes, forests, grassland, and seas were filed with and administered by different government departments. This created registration anomalies to the extent that a large number of properties in China’s vast rural areas were not documented.

The Property Law of China, effective since October 1, 2007, stipulates, “The state applies a uniform registration system over real properties. The scope of unitary registration, registering institutions, and registering methods is stipulated by laws and administrative regulations.” The recently unveiled Provisional Regulations are in line with this law.

Under the Provisional Regulations, the Ministry of Land and Resources will collaborate with other departments to establish a platform for the management of registration information that covers all registered entries, and which can be shared in real time. Input will come from registration authorities at the national, provincial, municipal, and county levels, and connect with information approved by the housing, agricultural, forestry, and maritime regulators, according to their transactions. Information on the platform is to be accessible also to public security, civil affairs, finance, taxation, industrial and commercial, auditing and statistics authorities, as well as to the Ministry of Land and Resources. The right to make enquiries regarding such information will moreover be confined to rights holders and other interested parties, in addition to the government.

Better Management

The Provisional Regulations entail full-ranging, detailed legal protection of citizens’ properties. They also form a database indispensible for the administration and taxation of fixed assets, including land, houses and natural resources.

“To manage efficiently such a magnitude of real estate requires accurate knowledge of it at the national level. The uniform registration system lays down the groundwork for appropriate government management of real properties,” vice dean of School of Public Administration and Policy, Renmin University of China, Yan Jinming said.

For instance, the pooling and sharing of real estate information gives the government a better understanding of citizens’ housing conditions. This, in turn, enables better planning of the housing sector and, where necessary, regulatory policies targeted at the housing market. Nationwide uniform registration, however, only sets the stage for government regulation. Their execution relies on financial, land, and taxation policies, among others.

Real estate has featured prominently in several corruption crackdowns in recent years. One was the case of Cai Bin, an urban management official in Guangdong, whom investigations revealed to be the owner of two dozen houses. Similarly former Shenmu Rural Commercial Bank executive Gong Aiai of Shaanxi province was investigated and prosecuted after investigations revealed that she held four hukou (household registration documents), one in Beijing and three in Shenmu County, which she used to obtain two identity cards and purchase expensive real estate, including 20 properties worth RMB one billion in Beijing. These crimes, however, pale into insignificance when compared to those of police officer Shen Bo of Ningbo, Zhejiang Province, who owned 69 homes, and a village cadre in Wenzhou of the same province who accumulated 132 residential properties in the high-end metropolis of Shanghai. The absence of a nationwide registration system was at the core of corruption cases involving massive real estate portfolios.

Such a system, through pooling and sharing information at different government levels, makes public servants’ possessions transparent, so facilitating supervision and investigation by disciplinary and juridical authorities. Once a corruption case is filed, prosecutors can immediately locate evidence in the registration system.

The system also establishes a solid legal basis for the sound management of property rights over natural resources and appropriate regulation of their use. The Decision of the Central Committee of the Communist Party of China on Some Major Issues Concerning Comprehensively Deepening Reform, adopted at the Third Plenary Session of the 18th Central Committee of the CPC in 2013, states, “We will carry out unified registration of natural ecological spaces such as rivers, forests, mountain ranges, grasslands, undeveloped land, tidal land, etc., to establish a natural resource property rights system wherein property rights and responsibilities are clearly defined and characterized by effective oversight.”

Law professor Cheng Xiao of Tsinghua University believes that uniform registration of fixed assets can help in this regard. “It contributes to a clear definition of national resource property rights, and to better administration of public natural resources, particularly those that are state-owned, so preventing loss of state assets. The rampant corruption observed in certain provinces of rich natural resources, notably Shanxi, is to a large extent attributable to the lax system applicable to property rights over them,” said Cheng, who is also a member of the expert panel of real estate registration work of the Ministry of Land and Resources.

The Provisional Regulations can also better protect connubial rights and interests. Before registering for marriage at the local office of civil affairs administration a couple can, by mutual consent, make enquiries through the registration information platform about the status of real properties under either party’s name. The archive covers properties in all cities connected to the platform. It also includes details of all transactions, in addition to the price, so helping to prevent marriage fraud.

Key Livelihood Rights

In the course of establishing and improving its market economy, China has laid greater emphasis on civil rights, among which individual property rights are a key element.

The General Principles of the Civil Law of the People’s Republic of China, enacted in 1986, states that it “shall adjust property relationships and personal relationships between civil subjects of equal status, that is, between citizens, between legal persons, and between citizens and legal persons.” The 2004 amendment to the Constitution stipulates that “citizens’ lawful private property is inviolable.” The Property Law, promulgated in 2007, sanctioned for the first time in the PRC’s history equal protection of state and private properties, so laying down the cornerstone of China’s Civil Code.

An expert group has completed a draft of the Civil Code, but the final version and its legislation are still five to eight years away. The Civil Code covers citizens’ fundamental rights of subsistence, development, signing of contracts, employment, choice of residence, and home purchases, according to Sun Xianzhong. It is therefore significant for both citizens and the state.

Sun’s study shows that, of the 156 articles of the General Principles of the Civil Law, no more than 10 are functional at present. It can hence be described as having been “eviscerated.” “The framework remains, but new laws have superseded regulations on specific systems, such as economic agreements, property rights, intellectual property, legal persons, and foreign trade and investment. This statute must therefore be modified again and again,” Sun said.

Legal protection of civil rights is critical to China’s goal of achieving rule of law. As Zhang Xunxiang, researcher at Shanxi Provincial Academy of Social Sciences, sees it, “The decree on real assets registration, the Property Law and the Civil Law are all reflections of China’s social and economic development. When society progresses and becomes wealthier, citizens’ aspirations also grow, so calling for better civil law and civil protection, and vice versa.

“In the early years of China’s opening-up and reform, private property was an inchoate concept. There were consequently no laws either to define or defend it. Today, as the country advances towards establishing rule of law, it is protected by laws that prescribe specific and concrete measures. Legislation on real estate registration constitutes another guardian of real rights. It is expected to unleash greater creativity among Chinese people and more dynamic economic development,” Zhang said.