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How Local Officials in China Used Threats, Forgeries to Grab Land

Li Shen and Zhu Yishi
Friday, 10 Jun 2011 | 1:16 AM ET

It's become an old story in modern China: Local government officials get rich quick by ignoring property laws and grabbing land rights from hapless farmers. The shenanigans go unpunished and perhaps unnoticed beyond the borders of the village, district or county they're supposed to serve.

Apartment buildings in Liaoning Province, China.
Jerry Driendl | The Image Bank | Getty Images
Apartment buildings in Liaoning Province, China.

In some cases, though, regulators catch wind of wrongdoing and nail local officials responsible for illegal land requisitions. And that's what happened in Hebei Province to Xianghe County Magistrate Zhang Guijin and several other local officials.

Zhang is likely to be sacked after an investigation team from the Hebei Province Department of Land & Resources and Beijing Bureau of State Land Supervision recently found sufficient evidence that he orchestrated a farmland grab in the county, 45 kilometers east of Beijing, in behalf of high-value property development.

The bureau actually started probing the local officials and their real estate deal-making, which began in 2008, after receiving a complaint last year from 30 farmers.

Zhang and his colleagues might have felt on top of the world as recently as January, when they sponsored an eye-popping 120 receptions for visiting groups of investors from around the globe. They met guests including Sichuan furniture makers and Canadian education center operators.

Local officials started planning a big development push in 2007, when they invited international researchers and designers to draft details for nine agricultural parks, according to a county document obtained by Caixin.

The biggest group of these visitors of late included major property developers hungry for land in Xianghe, which is relatively close to Beijing and has benefited from the capital's recent real estate boom.

According to the county government website, local officials in March met executives from Beijing Construction Engineering Group to discuss plans for a local business district, as well as a team from China Fortune Land Development for a canal development and renovation project.

County Deputy Magistrate Wang Jiansheng said the government would court potential investors while targeting major companies and consortiums. The county was especially interested in luring corporate headquarters and national research institutes, he said.

Investigators found none of these grand plans could have been contemplated if not for the government's takeover of some 267 hectares of cropland. Farmers were illegally denied land-lease rights, and local officials changed the zoning to allow construction, according an official Xinhua News Agency report in mid-May.

Beijing land bureau officials had spent two months in 2010 investigating Zhang and other officials, but kept their findings under wraps and took no action, Ren Hongchang, the bureau's vice commissioner told Xinhua on May 24.

Crafty Scheme

Farmers affected by the land grab told Xinhua that county officials had ordered them in 2008 to sign land-leasing agreements or face severe penalties. They were threatened with fines, or were told that licenses for their sideline businesses, such as grain milling and raising chickens, could be suspended.

Some farmers refused to turn over the land. For that reason, six months later, more than 70 government-hired men with hoes and forklifts suddenly arrived in one of the farmers' villages and destroyed about 8.7 hectares of crops, Xinhua reported.

The next year, late at night, strangers came to the homes of several resistant farmers in another village and pressed them to sign lease agreements.

"They always have ways to make you sign a land-lease agreement," farmer Cai Yonglong told Xinhua. "If you have relatives working at local government agencies, hospitals or schools, these relatives are instructed to go back to the village to do the persuasion work. The relatives risk losing their jobs if they fail to accomplish the task."

These tactics helped the county government build a stock of land in the name of leasing, and then fail to compensate the farmers who controlled the land rights, Xinhua reported.

Since all land in China is state-owned, farmers raise crops by means of land-use rights. They can lease this land for income, but it cannot be sold to a developer unless first requisitioned by a government and approved for development.

County officials apparently paved the way for changing the land's zoning from agricultural to commercial by leasing tracts from farmers and then forging documents to change the land's legal status, Xinhua said. After the switch, the land could be auctioned at a premium to property developers.

For example, the county government won lease deals for about 10 hectares with 104 families in the village of Xietun, agreeing to pay them no more than 2 yuan per square meter in 2009, according to Xinhua. A few months later, the land was sold to Beijing Vantone Real Estate for 900 yuan per square meter, which then built high-priced villas. Sales began last November.

Developers in on the Game?

Developers Aware?

Property developers halted projects in Xianghe after provincial officials got involved, although several property executives told Caixin they had legally obtained the land at government auctions and had no idea that county officials were breaking the law.

Yet it's commonly known in Beijing's real estate circles that Xianghe officials used "unconventional" means to obtain land. Developers who cut deals with the county were apparently willing to take the risk.

One industry insider told Caixin that county officials were apparently motivated to try land grabs after seeing big developers turn their attention toward Xianghe. Local government documents show, for exampled, the nation's largest developer by market value China Vanke had partnered with the property unit of state-controlled China Minmetals for a Xianghe project in 2007.

Other big developers such as Shanghai Greenland, Beijing Capital Land and Guangzhou R&F Properties have invested heavily in the county as well.

In an effort to protect farmland and prevent illegal land requisitions, the central government's Ministry of Land and Resources monitors land usage from space with satellites. But a source familiar with the system said developers can be tipped off about the annual satellite visits, halt construction before the bird passes overhead, and resume work afterward.

A developer with projects in Shijiazhuang, Hebei's capital, told Caixin that mature trees have been hastily replanted to mask construction sites before a satellite scan, then later removed.

The land bureau's Ren said Xianghe officials now face severe punishment. On May 23, Hebei authorities announced that Zhang and eight other local officials had received administrative demerits. In addition, Zhang and the county's land bureau chief Zhou Chunhua are expected to be removed from office.

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