Certain legal issues about allocated land in China

                                            By Jason Tian

China has a unique legal system on its land administration (for an overview of China land system, please refer to an overview on China land law, for more).  In respect of foreign investment in China, construction land is mostly concerned. Under current legal framework, there are basically two ways of obtaining construction land, namely, granting and allocation. Granted land is usually obtained through auction, tendering, listing or by agreement, and land user shall pay the land grant fee up front. Allocated land is obtained by land users without paying any consideration for using the land except for paying cost for certain demolition and relocation. While allocated land is now strictly restricted to limited usages prescribed by the State Land Administration Ministry (“SLAM”), in reality, there are vast allocated lands in use, a legacy of China’s old state planned economy, where most construction lands were allocated. Land has been frequently used as capital contribution in Sino-foreign equity or contractual joint ventures. Therefore, foreign investors shall be cautious if allocated land is involved therein. Based on our experience and research, we summarize current rules regarding the use of allocated land in terms of its utilization, transfer, pledge, leasing and expropriation.

For details please refer to the PDF file here:

Certain legal issues on allocated land in China