This story hit my Inbox yesterday, first with news that the new eviction rules would be forthcoming. Several major papers (foreign and domestic) reported on the new development. Here’s a basic description from The Guardian:

The draft rules, issued today by the state council ? China’s cabinet ? would ban developers and demolition crews from forcing people out through violence or by shutting off water and electricity. They would also demand that compensation be set at market price and that where homes are judged “old and dangerous”, 90% of residents would have to agree to projects. Demolitions would be halted if occupants brought lawsuits. At present, they can go ahead even when challenged.

Most China watchers are already aware of how important, and sensitive, this issue is in terms of politics and social stability. Each year there are tens of thousands of episodes of unrest in the PRC, from your basic peaceful protests to full-blown riots involving lots of folks. The top two reasons why this happens relate to land ownership/compensation and environment/pollution.

When people are either thrown off their land or given inadequate compensation, this does not have a huge effect on the economy. Neither does it result in millions of people becoming homeless. This is not primarily an economic issue, but rather a sociopolitical one.

Evictions of this nature, particularly when the situation pits a poor tenant and a rich developer, are incredibly symbolic. The phenomenon highlights the imbalances in the economy, the ever-widening income gap, and the shortcomings of China’s ongoing economic development. In short, improper evictions are an embarrassment for a government that has historically promised to uphold socialist principles.

But forget the mumbo jumbo about econ and politics. The Associated Press report highlighted the fact that improper evictions lead to some very troubling outcomes, and that the government passed the new law “in an attempt to calm a passionate issue that has sparked growing violence and even prompted some protesters to set themselves on fire.” Keep in mind that these stories have flooded the media for several years now, even though local governments countrywide have attempted to stifle the flow of information and cover up abuses.

No wonder that the new rules, which are revisions to the Regulations on Demolishing Urban Housing, were pushed by some high-level folks. Beida law professors are well represented in the news that I’ve read, and the AP article explains that:

Five law professors from China’s top Peking University then took a rare public stand, asking the National People’s Congress Standing Committee to change a regulation they said encouraged abusive tactics by developers and led to “mass incidents” and “extreme events.” Meetings with legislative officials from the State Council followed.

The story is never that simple, of course, but the interplay between academia and government on an issue like this is quite interesting nonetheless. The Guardian and China Daily also note the actions of these law professors, so I guess this is the accepted narrative.

For the average layman out there, you can think of the new rules as shifting power away from property developers (and local governments) and giving tenants more rights with respect to eviction and compensation. The New York Times put it this way:

[T]he regulation would represent an important shift in the government’s attitude toward the rights of individual property owners. Homeowners would be entitled to obtain market price compensation for their dwellings on state-owned land and be allowed to file suit, if necessary, to forestall demolition.

China Daily has a pretty good run down of some of the proposed changes, including the following:

The new draft version stipulates that the government can only confiscate houses for public interests and property owners should be paid the market value of the land and home as compensation.

The proposed law lists the seven items that constitute “public interests”, which the original regulations did not. The law allows the taking of land for national defense projects and important public projects, the reconstruction or improvement of old and dangerous buildings, the construction of necessary government offices, and other projects deemed necessary by law or the State Council.

Yeah, lots of wiggle room in that list, particularly the usual “catch-all” provision at the end. However, this is a vast improvement over the current approach.

Confiscations should be announced to the public at least 30 days in advance, during which public hearings should be held. If there are protests of the decision, the government must appeal to the higher level of government for ruling.

Some of the most egregious practices have occurred when local government cooperates with a developer. In many cases, the local government has a financial interest in moving the development forward. Giving tenants/protesters the ability to petition at a higher level of government has always been extremely important. Additionally, this general issue is not merely an eviction matter but also relates to State-level efforts to clean up corruption at the local level.

The confiscation of old and dangerous buildings to make improvements to their conditions will be permitted only if more than 90 percent of the residents agree to relocate.

Another important change is that those who disagree with confiscation can sue, and the government cannot force demolition or ask residents to move while the lawsuit is ongoing. The current regulation allows the government, or real estate developers with the permission of the government, to force demolition even if a lawsuit is going on.

Time is an extremely important factor in these cases, particularly when the media can be enlisted to drum up sympathy for tenants, which can then sometimes get government officials to take notice and act. If the process can be slowed down through court action, that could be significant. Whether the lawsuit itself can be successful is another story.

Whether the new law makes a real impact on the ground will depend on enforcement and the attitudes of local officials and judges. The new rules will make it harder for some of the more egregious instances to occur, but I have no doubt that a “creative” local official who stands to get rich if a project moves forward will be able to use the law’s vagueness and his local relationships with the courts and other officials to overcome tenant protests. Keep in mind also that these rules cover cities only, and a lot of these dodgy land transfers where the occupants get screwed take place in rural areas.

But let’s not be too cynical. This is one part of a long process that includes recognition of individual property rights, crackdowns on corrupt local officials, judicial reform, and restrictions on land transfers. This should not be seen as a magic bullet, but rather another very positive step towards real transparency and fairness.