The real estate development business in China is increasing at a feverish rate. Throughout most areas of Beijing, you are likely to witness some form of development taking place such, be it residential housing, or the construction of buildings for corporate and commercial use.
Article 13 of Constitution of the People’s Republic of China states the following:
“The State may, in the public interest and in accordance with law, expropriate or requisition private property for its use and shall make compensation for the private property expropriated or requisitioned.”
The above article outlines that the state may permit the destruction of private property if it falls within the public interest remit. However, new draft regulations appear to have been written which directly conflicts with Article 13.
No. 40 of the draft regulations states the following:
“to demolish housing for construction of non-public interest, the constructors, such as real estate developers, need to ask permission from related governments.”
If the new draft regulations came into effect without any revisions, it would appear to be going against the spirit of the Chinese constitution, whilst also opening up for the potential of thousands of residential housing to fall risk to real estate developers. As the regulations are still in draft format, China’s legislatures still have the ability to correct and amend such an anomaly.
The draft provisions have come under scrutiny from China’s academics.
Lehman, Lee & Xu will keep you updated with the end results of these draft provision.