Let Shanghai Stop Begging for a Golden Rice Bowl | Looking Back at Shanghai Research, This Important Reform

In the early 1980s, many cities in China faced the problem of insufficient funds for infrastructure construction. To solve this difficult problem, the Central Committee of the Communist Party of China and the State Council drew on the experience of foreign countries and Hong Kong at that time, determined to utilize urban land, and requested Shanghai to pilot it.

After the leaders of the Central Committee of the Communist Party of China and the State Council conducted research in Shanghai, He Chunlin, the director of the State Council Special Economic Zone Office, was dispatched to Shanghai for in-depth investigation and research. With the support of the Central Committee of the Communist Party of China and the State Council, Shanghai has taken the lead in launching pilot explorations and reforms of the urban land use system nationwide.

"Holding a golden rice bowl to beg for food"

During the "Seventh Five Year Plan" period, the local financial resources available for infrastructure and technological transformation in Shanghai were only 12 billion yuan, while the cumulative funds required for various transformations and constructions reached 45 billion yuan. Where does the money come from? The traditional approach to solving infrastructure construction funds is to borrow, with local governments borrowing from the central government and the state borrowing from foreign countries. A foreign friend suggested that urban land is very valuable. Instead of using land for construction, borrowing money is like holding a golden rice bowl to beg for a living.

The Central Committee of the Communist Party of China and the State Council hope that Shanghai can create experience in utilizing foreign investment for renovation and construction, and lead the country. Wang Daohan, an advisor to the former municipal government, organized a special investigation and research at the end of 1985 to expand the utilization of foreign investment and accelerate the revitalization of Shanghai.

In May 1986, in accordance with the instructions of the Central Secretariat to "learn from Hong Kong and learn from Hong Kong", Shanghai organized the establishment of the Shanghai Hong Kong Economic Comparison Research Group, which conducted strategic research on land use and other topics. Shanghai has realized through research that Hong Kong, which is lacking in natural resources, can develop rapidly and is closely related to the land leasing system. This is an important channel for Hong Kong to raise financial funds, as well as an important means of developing land resources, accelerating municipal construction, and promoting economic prosperity.

The research group draws inspiration from the land leasing system in Hong Kong and proposes a preliminary idea and framework for the reform of the land use system in Shanghai: under the condition of unchanged ownership, lease the land use right for a certain period of time, fully recognize the land use right as a factor of production, treat it as a commodity, and allow circulation, transfer, and other legally compliant business activities. In June, the Standing Committee of the Shanghai Municipal Party Committee decided to change the system of free and indefinite use of state-owned land and establish a limited year lease system for land according to the plan.

In order to closely examine the operational details of Hong Kong's land leasing system, in August 1986, the Municipal Party Committee and Municipal Government dispatched an 11 person inspection team consisting of former Deputy Secretary of the Municipal Party Committee, Zeng Qinghong, as an advisor, and Deputy Secretary General of the Municipal Government, Xia Keqiang, as the team leader. Personnel from departments such as the Planning, Land, Planning Commission, and Academy of Social Sciences visited Hong Kong to conduct investigations on topics such as "land leasing and real estate management" and "port construction and free port policies". Through understanding, discussion, and research, an outline for reporting to the Municipal Party Committee was determined.

The Municipal Party Committee and Government have realized that in Shanghai, where every inch of land is precious, in order to change the situation of "begging for a golden rice bowl", it is necessary to implement a system of paid use, transfer, and transfer of land use rights. On November 4th, after being studied and decided by the Standing Committee of the Municipal Party Committee, the Shanghai Municipal Government approved the establishment of the Shanghai Land Lease Leadership Group, with Vice Mayor Ni Tianzeng as the group leader and an office under it. The specific responsibilities of the organization and coordination of land leasing were provided, and the establishment of leadership and administrative institutions provided organizational support for the reform pilot.

On November 23, 1986, the person in charge of the Municipal Land Lease Leading Group reported to the then Vice Premier of the State Council, Tian Jiyun, on the trial implementation of the Measures for Renting Land Use Rights in Shanghai, and requested the central government to approve Shanghai as a pilot area for renting land use rights, allowing land tenants to freely transfer and rent out land, gradually forming a real estate market. With the approval of the Central Committee of the Communist Party of China and the State Council, the Municipal Party Committee and Municipal Government began to vigorously promote the pilot reform work.

Implemented after central research

In November 1986, General Secretary of the Communist Party of China Hu Yaobang came to Shanghai for research and inspection. During this period, the leaders of the Municipal Party Committee reported to Hu Yaobang on the idea of piloting the rental of land use rights. Hu Yaobang expressed support for the trial implementation of this reform in Shanghai. On December 15th, the Municipal Land Lease Leading Group held its first meeting and believed that the central leadership's agreement to pilot land leasing in Shanghai is of great significance in promoting Shanghai's reform and opening up, strengthening urban construction and economic development. It is a highly political, economic, and policy oriented reform, and we must work together to do a good job in the pilot work. After the meeting, the Municipal Renting Office began drafting the "Measures" and "Pilot Work Plan", and began the preliminary comparison and selection of pilot plots.

Afterwards, the Central Committee of the Communist Party of China and the State Council sent He Chunlin, the Director of the Special Economic Zone Office of the State Council, to Shanghai for investigation and research. After understanding the preparations for the pilot work of land leasing in Shanghai, they believed that Shenzhen, Guangzhou, Tianjin and other places were all brewing land leasing, but the depth of the preparation work was not as deep as that of Shanghai. After returning to Beijing, the Special Administrative Region Office of the State Council proposed on July 7th to pilot the paid transfer of land use rights in Shanghai, Tianjin, Guangzhou, Shenzhen and other places in the "Suggestions on Selecting Several Points for Trial Implementation" submitted to the central government. Former Vice Premier of the State Council Gu Mu and Yao Yilin successively issued instructions in the report agreeing to pilot projects. On July 16th, the executive meeting of the State Council clearly pointed out that "paid land use is a very important issue, and this path must be taken. The relationship between developing the real estate industry and not following this path in urban construction cannot be straightened out", and demanded that paid land use be implemented first in coastal open cities and development zones.

On November 29, 1987, with the approval of the State Council, the Shanghai Municipal Government officially issued the "Shanghai Municipal Measures for the Paid Transfer of Land Use Rights" to both domestic and international audiences, issued by the then Mayor of Shanghai, Jiang Zemin. The Measures took over a year to complete and was the first local administrative regulation in China to allow state-owned land use rights to enter commercial circulation, formulated by local governments. In April 1988, the National People's Congress passed the Amendment to the Constitution, which stipulated that "land use rights can be transferred in accordance with legal provisions.". In December, the Land Administration Law of the People's Republic of China also stipulated that the right to use state-owned land and collectively owned land can be transferred in accordance with the law. This means that the country's constitution and laws recognize the commodity nature of land use rights, which is a fundamental change in China's land use system. The "Measures" formulated by Shanghai play a leading role in the reform to achieve this historic breakthrough.

On November 29, 1987, the Shanghai Municipal Government issued the "Shanghai Municipal Measures for Paid Transfer of Land Use Rights"

On March 22, 1988, Shanghai launched the No. 26 plot of Hongqiao Economic and Technological Development Zone through international bidding, covering an area of 1.29 hectares. The land was used as a hotel, office building, and apartment. All leasing work was carried out in accordance with international practices. On July 8th, six companies from Japan, the United States, Hong Kong, and other countries officially participated in the bidding process. Under the supervision of the notary office, after being reviewed and approved by the award and evaluation committee, it was finally announced that Sun's Enterprise Co., Ltd., operated by Japanese overseas Chinese Sun Zhongli, obtained the 50 year use right of this land for $28.05 million. After construction, the two buildings of Sun Square, which rose from the ground on plot 26, were rented out at an average price of $3000 per square meter.

After two years of experience, Shanghai Kaixin has set a precedent in the history of China for the first time in which regulations and regulatory documents were used as guarantees to successfully transfer land use rights through international bidding, marking the beginning of a fundamental transformation of China's land use system.

In August 1988, Sun Corporation of Japan, which obtained the right to use plot 26 of Hongqiao, held a signing ceremony with Shanghai

Structural topping of Sun Square Building

The "Golden Touch" of Old District Renovation

In 1990, the State Council issued the Provisional Regulations on the Transfer and Transfer of Urban State owned Land Use Rights in the People's Republic of China and the Provisional Measures for the Administration of Foreign Investment in the Development and Operation of Large tracts of Land, providing a basis for further deepening the reform of the land use system in Shanghai.

In 1992, Deng Xiaoping's Southern Tour brought spring breeze to the land leasing in Shanghai. Shanghai began to explore new ways to accelerate the renovation of old areas through land leasing, which became the first bold measure in the country at that time and was called the "golden touch" of old area renovation by experts and scholars.

The former "Xiajiaojiao" and Shanghai shantytown - located in the Dapu Bridge area of the former Luwan District, have more than 1300 households and more than 20 units. The area is densely populated with dangerous sheds and simple houses, with extremely poor living conditions. Residents have a strong demand for renovation, but the renovation requires huge relocation and construction costs, and it is impossible to implement the renovation in the short term solely relying on regional financial resources.

After several twists and turns, the former Luwan District Government found Hong Kong China Overseas Development Co., Ltd. After multiple rounds of negotiations, the land was leased in January 1992, and Hong Kong China Overseas Development Co., Ltd. invested 23 million US dollars to acquire this plot of land. This opened the way for attracting foreign investment to renovate old areas since the reform and opening up, and is known as the "first piece on the sea".

The Xiesan plot, formerly known as the "Longxu Gully" in Shanghai, is filled with low and low shantytowns

The relocation work of the Xiesan plot was initiated in March 1992, and the relocation and resettlement of residents was completed in just six months. In September, the first piece of land in the city was leased and handed over to the developer. By transferring land use rights for a fee, we helped residents on the original plot bid farewell to shantytowns and move into new homes, and built four 31 story high-end foreign exchange commodity residential buildings on the Xiesan plot. At the same time, the district government used the transfer fee to transform the shantytowns on Xietu Road into street gardens, widened Xujiahui Road, and improved urban transportation and environment. The Xiesan plot has become a modern commercial and residential area that integrates ecology, catering, entertainment, and leisure.

The successful leasing of the Xiesan plot has led Shanghai to explore a new way of transforming hazardous, shantytowns, simple houses, and "three waste" factories through land leasing, utilizing the advantage of land grading in the central urban area. This will achieve a win-win situation in which the urban area will change its appearance, residents will improve their living conditions, and developers will receive investment returns. Afterwards, the renovation of old areas through land leasing was fully carried out in various districts, marking the beginning of a large-scale renovation of old areas in Shanghai.

The Haihua Garden built on the Xiesan plot is currently undergoing sales promotion

Under the leadership of the Central Committee of the Communist Party of China and the State Council, the pilot reform of the land use system in Shanghai has achieved unprecedented breakthroughs, breaking through China's long-standing single track model of land administrative allocation and free and indefinite use, activating the inherent economic value of land as the most important factor of production, and enabling the effective allocation of state-owned land resources in cities under an open, fair, and just market mechanism. It has made important contributions to promoting urban housing system reform, urban economic system reform, and urban land use system reform, and has made pioneering explorations for the establishment of land factor markets and the formation of socialist market economy systems.