Property Rights, Land Values and Urban Development
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Property Rights, Land Values and Urban Development

Betterment and Compensation in China

Li Tian

This book presents an analysis of betterment and compensation issues under the Land Use Rights (LURs) System in China since 1988. The topic originates from the observation of widening inequity and increasing uncertainty associated with the failure of government to adequately address betterment and compensation issues. An analytical framework of institutions and property rights is employed to examine socio-economic impacts under the LURs system, in particular, the role of the state is analyzed to explore the effects of government intervention in land markets.
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Chapter 9: Conclusion

Li Tian


This book has three main elements, as follows. The framework of the New Institutional Economics was adopted to analyse the property rights in land under the LURs system. In particular, the role of the state in the land market was examined to explore the impacts of government intervention on land markets. This book reveals that the state has taken advantage of the ambiguous property rights in land, somewhat ignoring issues of betterment and worsenment, to achieve wide discretion in development control in pursuit of the objective of rapid urban growth. Moreover, constrained by the high cost of measures such as establishing an integrated GIS system, and improving valuation and management skills, issues of capturing betterment and compensating worsenment have not been high on the agenda of the government. The analysis of property rights evolution indicates that an imprecise property rights system might be a second-best institution under the transitional period in China when the cost of well-defined property rights is too high to afford. Moreover, it provides some evidence that property rights in land have been moving towards more precise definition, consistent with the economic theories that consider clearly defined property rights to be essential for economic growth. In order to establish a fairer and more efficient land market, however, further institutional changes and clarification of property rights in land are inevitable.

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