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China is a socialist country and all land in China belongs to Chinese citizens as a whole. Article 10 of the 1982 Constitution upholds the Chinese land policy that reflects the traditional view of socialism - land of the country must be owned by the country (State) or its agricultural Collectives. State-owned enterprises or other organizations, which cannot own land themselves, may use land with permission from the State.
With the development of the Chinese economy and increasing economic reforms, the need for both residential and commercial space has grown rapidly. This emerging real estate demand led to an amendment to the Constitution o f the People’s Republic o f China in 1988. Under this amendment, private investors may obtain land use rights from the government and the holder can retransfer these land use rights to a third party subject to certain conditions. This article extensively discusses this important amendment, the current system of land use rights in China and its application to the booming Chinese private real estate market.
