Owning land is, as everything else, a bit unclear in China. It doesn’t matter if domestic or foreign owned company, neither one may own land outright; instead they own land use rights. Allocated land use rights or granted land use rights. The easiest way to explain the two types are to compare them with western common law concepts, allocated land use rights are in some way similar to leaseholds, and granted land use rights are in some ways similar to life estates.
Allocated land use rights can be reclaimed by the government at any time. They are usually provided by the government for an indefinite period (usually to state-owned entities) and cannot be pledged, mortgaged, leased, or transferred by the user.
Granted land use rights are provided by the government in exchange for a grant fee, and carry the rights to pledge, mortgage, lease, and transfer within the term of the grant. Land is granted for a fixed term – generally 70 years for residential use, 50 years for industrial use, and 40 years for commercial and other use. The term is renewable in theory, although no foreign investor has been in China long enough to find out how this works in practice. Unlike the usual case in Western nations, Granted land must be used for the specific purpose for which it was granted.
As with everything else related to China there are much more to say about land rights for foreign entities in China, but lets start with this, now we know there are allocated land use rights and granted land use rights. A good start and the next chapter will follow soon when I feel inspired to write more about this not so exciting topic.