ABSTRACT
This chapter examines the system of property rights in land dictated by the Constitution and laws in China. It then explores the origin of privatisation of land use rights (LURs), or leasehold interests on state-owned land, and examines the current practices of government land sales that are crucial to land supply. The process of land market development and local government monopoly is examined and explained by the three-level analytical framework that analyses incentives and property rights at the different levels. The chapter focuses on the first stage of the land market, which featured the application of the pay-for-use principle to land, establishment of the land administration bureaucracy and legalisation of market land sales. The land market has a unique three-tier structure, that is, primary, secondary and tertiary land markets. The main features of the land market at this stage are market expansion, transitional open market disposal and market building.
