Why Can’t Demolish Xiangtang? / Sheng Hong

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On October 18, I saw a notice picture in my circle of friends, entitled “Notice of the people’s government of Cuicun Town, Changping District, Beijing on demolition within a time limit”. The notification object is “Xiangtang village committee”, and the time of signing is “October 15, 2019”, but it is said that it was posted on October 17. The content is to require the village to demolish all the houses by October 18, otherwise the town government will forcibly demolish them. It shocked me. Because I have long heard reputation of Xiangtang. I went to see it several times more than ten years ago, and I also considered buying a house there. Xiangtang is backed by mountains and faces a river. It’s a pleasant environment. It’s an hour and a half drive from there to Beijing city. People on duty seem to be a little far away, but it’s suitable for retirees. My impression is that the area is very large, divided into western style villas and Chinese style quadrangles. Now there are more than 3800 households and tens of thousands of people. It is said that many celebrities from the performing arts and cultural circles live here. Xiangtang is also famous because it is a unique mode of rural collective land development. Zhang Wenshan, the leader of Xiangtang, leads Xiangtang people to prosperity. It is so wonderful that residents forget their becoming older and benefits the people around. Can it be demolished with a “notice” from the town government?

Of course not. First of all, the entity is problematic. What’s the problem? Because Cui Village government is a government. Why doesn’t the government have the power to dismantle? Because the human society created the government not for demolishing the house, but to protect the house from being demolished. Only in very rare cases, the house encroaches on other people’s or public land, can it be corrected through due process of law. In a formal term, the government system is used to provide public goods. The primary public goods are to protect the safety of citizens’ property and life. The nature of the government is clearly stipulated in the constitution of our country. Article 10 stipulates that “land in rural and suburban areas,…  belongs to the collective; the homestead, private plot and private hills also belong to the collective. ” Article 13 stipulates that “citizens’ lawful private property shall not be infringed upon.” Article 39 stipulates that “citizens’ houses shall not be infringed upon.” The protection of all these civil rights, land rights, property rights and housing rights, is the obligation of the government at the same time. Specific to the State Council of the highest administrative organ, the first function stipulated in the constitution is to “stipulate administrative measures, formulate administrative regulations, and issue decisions and orders in accordance with the Constitution and laws”. According to the constitution, can it issue a “notice” infringing citizens’ land rights, property rights and housing rights?

It is obvious that the government of Cuicun town cannot issue the “notice” of dismantling, otherwise it violates the primary function of the government stipulated in the constitution. It is said that the development of Xiangtang cultural new village was approved by the people’s Congress of Changping County in 1998. As a subordinate government of Changping County, Cuicun town obviously has no right to deny the decision of the superior government. If it can, the government structure of the country will collapse. It is also said that the government of Cuicun town has always supported the development of Xiangtang new village, with the official seal on the property certificate. This means that the land right and house property right of Xiangtang new village are protected by it. If, twenty years later, the same government subject posts a notice to demolish the same real estate, that is, to deny its previous decision, then its current decision can also be denied by its own later decision, and this “decision” will be invalid. And what’s more, it denies itself to be a government subject. Because the government should maintain the order of transactions, any breach of contract between two citizens must be stopped; it cannot breach the contract itself, or it will not be the government. According to the standard of the unanimous rule, the contract is superior to the constitution, and the mistake to violate contract is greater than the unconstitutional. Therefore, even if the original decision is wrong, a government must bear the consequences of the original decision.

Conversely, if Cuicun town government does something that violates the Constitution and the constitutional rights of citizens, and its superior does not correct and punish it, the superior government will commit the same mistake or crime; if the central government does not correct it, it will be equivalent to the central government’s same violation of the constitutional rights of the citizens. If the Cuicun town government promised to protect the real estate of Xiangtang village 20 years ago, but neither the superior government nor the central government knew about it, and after knowing it 20 years later, they believed that the promise 20 years ago was illegal, they should also bear the responsibility of the former 20-year commitment, that is, to protect the property safety of Xiangtang cultural village residents. If the judicial ruling finds that the commitment violates the constitution, Cuicun town government who made the commitment shall also be punished and required to compensate for all the losses caused by the wrong commitment; if Cuicun town government cannot fully compensate, the higher government and even the central government shall bear the liability for compensation, for China is a unitary country, the local government is only the subordinate organ of the central government; instead of the citizens who were promised and made the purchase decision undertake. It is an ancient Chinese tradition that people who have the power to punish but do not punish mistakes or crimes are equivalent to committing the same mistakes or crimes. When Dong Hu wrote down “Zhao Dun killed the monarch”, Zhao Dun argued that he did not kill the monarch; Dong Hu said that Zhao Dun “fled not to leave the country, returned not to punish the rebel”, who else ?

Some people may say that the Cuicun town government is based on the urban and rural planning law, is it against the law? We know that the legal system is a structure, with both superior law and subordinate law; there are major principles and minor principles. The lower law obeys the upper law, and the big principles govern the small principles. Obviously, the urban and rural planning law is subordinate law while the Constitution is the superior law. The minor principle of urban and rural planning law cannot violate the major principle of citizens’ constitutional rights, otherwise it should enter the constitutional review process; in specific cases, it cannot conflict with the constitutional principles, otherwise, the judicial organ will decide that the law is invalid in this case. In fact, the urban and rural planning law more or less reflects the wrong understanding of planning, thinking that government planning is better than market allocation of resources on land. This not only violates the basic principle of “market economy” stipulated in the constitution, but also ignores the constitutional rights such as “land right”, “property right” and “housing right”. This is also inconsistent with the CPC’s proposition. The principle of “market plays a decisive role in resource allocation” put forward by the Communist Party of China also applies to the allocation of land resources. Since the market is the main mechanism to allocate land resources, the legal effect of the government and its planning will not be superior to the market mechanism and its premise of property rights.

Since ancient times, in addition to political centers and military fortresses, the formation of towns is mainly determined by the market. The factors that affect their distribution and scale include local resources, surrounding demand, position in trade routes, culture, security and natural environment. As long as there is a market, these factors will be digested by the market as market signals. As long as individuals can freely choose, they will make rational choices under the guidance of market signals, and many people will make similar choices, which will form a crowd gathering in a certain place. The market network externality brought by agglomeration, that is, the faster growth of economic benefits brought by the growth of human agglomeration, is the basic mechanism of the formation of cities and towns. The formation process of this town is beyond the grasp of human reason, just as the commodity structure and price system of the whole society are beyond the grasp of human reason. How can the government plan be better than the market? The planned economy has made China the second poorest country in the world. The economic miracle brought about by four decades of market-oriented reform is a clear proof that market system is superior to planned economy. Goods can’t be planned yet. How can cities plan?

In fact, as long as we look at the urban planning over the past years, we know that this so-called “planning” has its own problems. For example, some research points out that “the will of the chief leader governs the urban planning”; “the authority of power is far greater than the authority of knowledge”; and the lack of public participation in the planning process (Baidu knows that “the existing problems in China’s urban planning at this stage”, May 16, 2017). As a result, planning is not only lack of rich knowledge and long-term vision of urban development, but also lack of pure motivation to consider the greatest welfare of urban people. For example, in the planning, “government land and large-scale public facilities are over occupied”, followed by “excessive luxury of public building facilities standard”, followed by “too high construction density of common residential area”, and “lack of urban public service function” (prospective industrial planning, “analysis of current situation and existing problems of urban planning development in China”, November 14, 2017). Due to the inability to make accurate expectations for the future, planning is generally lagging behind. For example, the planning of a provincial capital city in the nineties of the last century to plan the second ring side as an industrial area has become very inappropriate after ten years of rapid development of the city; another example of planning mistakes I know is that there is no planning catering function in the headquarters base in Beijing, and bosses need to walk a long distance to dinner.

Therefore, the correct positioning of planning should not be higher than the market, but only the auxiliary means of the market. Professor Barry Cullingworth, the author of Town and Country Planning in the UK, pointed out that “planning operates in an economic system with” market rationality “(Southeast University Press, 2011, p. 1). The specific purpose of planning is to” promote land development through private and corporate “to ensure the protection of private property rights while serving the public interest”, Thus “planning can be defined as the process by which governments resolve land-use disputes” (p. 2). This puts the planning in an appropriate position to assist the market, and takes the protection of property rights as the premise. The correct planning view is to regard the planning right as a lower level public power for the protection of land property rights, which is only referential rather than mandatory. This is a cautious attitude to admit that people’s rationality is limited, and there are many defects in the planning prepared by people. I have participated in some planning works. My experience is that the best planning is based on the market mechanism, but it can only be used as a reference, because people’s prediction ability is far from enough. The most practical value is the planning of urban infrastructure, because it needs to be buried underground in advance. Other planning contents, such as population scale and industrial distribution, should not be set hard, otherwise they will be bounded by their own decisions.

In fact, if we think that only the government’s approval can build houses, there will be no Chinese miracle since the reform and opening up. The rapid economic growth brought by market-oriented reform is reflected in the rapid urban growth in space. But its speed is far beyond the foresight of the government, the construction of urban infrastructure and the growth of planned housing. A large number of migrant workers have caused excessive demand for housing. The rural collective in or on the edge of the city respond quickly, build a large number of housing to meet the demand, provide housing for the “out of plan” influx of population, and silently solve the urban expansion Can’t keep up with the demand for cities. This is the so-called “village in the city”. The houses above are all so-called “houses with small property rights”. Although there are such and such problems in urban villages, and the main reason is that the government does not provide public services for them, if there is no urban village, just waiting for the government’s “planning” and “approval”, the city will not be able to accommodate so many labor forces from other places, nor can it talk about rapid economic development. Because of the common existence of villages in the city and the low rent, the wage cost is also greatly reduced. This is particularly important at the beginning of China’s economic take-off, and it cannot be ignored now.

According to the official data of Shenzhen City quoted by Yangcheng Evening News, as of December 2011, the number of small property houses in Shenzhen reached 379400, with a building area of 405 million square meters, 49.27% of the total building area of Shenzhen city. Even by 2018, the permanent population of Shenzhen is about 21.8 million (Sohu Good Case, “how many people are there in Shenzhen?” , September 26, 2018), while 11 million of them live in the village in the city (Li Yujia, “how to keep the low rent line for tenants from the ‘Shenzhen sample'”, China economic network, November 22, 2017). In other words, urban villages provide housing for half of Shenzhen’s permanent residents, and most of them are migrant workers. It can be seen that villages in the city have made great contribution to the economic development of Shenzhen. In other cities, the population of villages in the city is mostly about 30-50%. Even in Beijing, there are about 332 villages in the city in 2011, and about 20% of people live in them. Zhongguancun Science and Technology Park, which is famous all over the country, would not have developed so fast without the nearby Tangjialing providing cheap accommodation for its young scientific and technological personnel. According to the Rushi Financial Research Institute, in 2018, the number of small property houses was about 7.3 billion square meters, accounting for 24% of the total urban housing area, providing housing conditions for about 200 million people.

Therefore, the institutional reason for China’s miracle is that the market has played a decisive role in the allocation of both commodity production and land. The administrative departments of the government declare that “small property rights are illegal”, while they are unable or unwilling to prevent the construction of small property houses. If a behavior has a good result and is stable for a long time, it can be judged that it follows the natural law. And the best human law is just a parody of natural law. Bounded rational human can only peep into the essence of natural law through individual cases. If we turn a blind eye to the revelation of the Chinese miracle by nature and insist that our humble knowledge is higher than the natural law, it is a fatal conceit. Xiangtang cultural new village shows us the result of a natural law. Its value is far from the market value of real estate. The neighborhood relationship, community ecology, courtyard aesthetics, cultural atmosphere and service structure formed in it are what sociologists call “social capital” (later also attracted the attention of the economic circle), whose value is more than ten times of the real estate value. Because it’s market-oriented, it’s not built, it’s growing. It’s like an organic life. To tear it down is like killing a life.

Back to statute law. Xiangtang villagers question that the “urban and rural planning law” on which Cuicun town government’s “notice” is based was passed in 2007, and the “urban and rural planning regulations of Beijing” was just passed in March 2019, while Xiangtang new village was sold in 1999, and the later regulations, not to mention the constitutionality or legality, can restrict the behavior before the enactment of the law? According to basic jurisprudence, this is clearly not possible. If it can, there is no rule of law. Because in a society ruled by law, people can only act according to known laws. If the later laws can control people’s previous behaviors, people will be at a loss, which means there is no law that can be expected. Moreover, Article 93 of China’s legislative law stipulates that “laws, administrative regulations, local regulations, autonomous regulations, special regulations and rules shall not be retroactive to the past, except for the special provisions made to better protect the rights and interests of citizens, legal persons and other organizations.” This article obviously applies to the “notice” of Cuicun town government. The urban and rural planning law formulated in 2007 and the urban and rural planning regulations of Beijing formulated in 2019 cannot trace back to the behavior in 1999. Only when the later law is more beneficial to Xiangtang residents can be considered.

To say at very least, even if the urban and rural planning law can be applied, Article 65 quoted by Cuicun town government in the “notice” is that “if the rural construction planning license is not obtained in accordance with the law or the construction is not carried out in accordance with the provisions of the rural construction planning license, the people’s government of the township shall order to stop the construction and make corrections within a time limit; if the rectification is not made within the time limit, it can be dismantled.” Obviously, it refers to the projects under construction, but not the projects that have been built 20 years ago. The premise of “demolition” is to face the “order” of “stop construction and correct within a time limit”, but “overdue the time limit”, while Xiangtang project has neither “order” nor “overdue”. And “demolition” is not “must”, but “may”. For projects that cannot be demolished, Article 64 stipulates that “confiscation of physical objects or illegal income may be imposed with a fine of less than 10% of the construction project cost.” Even if this article applies, the “illegal income” of the institution selling Xiangtang real estate shall be confiscated and a fine shall be imposed. The target of punishment is Xiangtang village committee and Cuicun town government, which has nothing to do with the buyer of house (land).

In fact, China’s land legal system has been improved. Recently, the new “land management law” has deleted the clause that “construction land must use state-owned land”, which means that rural collective land can directly enter the construction land market. This is a good thing, let the small property right house, which a lot of people worried for many years, can be protected by law . But why does the case like Xiangtang village happen? If we notice that Xihongmen town, Daxing District, Beijing, which drove out migrated people in the end of 2017, was one of the pilot towns for rural collective land to enter the market at that time, we can understand that there are utilitarian considerations of the town government. Before the drive-out, it had used 1000 yuan a year to forcibly exchange land from many residents, but there were many people who were unwilling to comply, so it had the drive motivation. As we all know, the value of a property depends not only on its physical characteristics and use value, but also on its degree of protection. For a long time, the house with small property rights has not been protected by the government, and there are legal and policy risks, so its price is relatively low. If the rural collective land can enter the market, the real estate built on it will appreciate as a result of protection, which is a huge benefit coveted. At this time, the town government wants to play the role of “rural collective”.

This also involves the legal definition of “rural collective”. In legal theory, since the township is a “government”, it is not a “rural collective”; if it is a rural collective, it cannot use government power. It was clear. The actual “rural collective” should refer to “village” or “natural village”. The government is a public authority to provide public goods, while the rural collective is an economic subject in the market. It must not have public power, otherwise it cannot be an equal economic subject. Although the newly adopted land management law correctly defines “rural collective” as “village collective economic organization or villagers committee” at first, it also recognizes “township (town) rural collective economic organization” as a special case as “rural collective”, but it should be noted that this refers to “economic organization” rather than the government. But this will cause some ambiguity, many township governments use this ambiguity to invade the rural collective land. This requires the legislative body or Supreme Court judicial interpretation to strictly limit the “rural collective” to villages and natural villages. Otherwise, the benefits brought by the amendment of the land management law to the “rural collective” will be usurped by the township government, and the negative results will be ten times of the forced occupation of the county government.

Of course, the “benefits” seen by township governments are not necessarily good. Take Xiangtang for example. If Cuicun town government demolishes the existing Xiangtang new village and builds a new residential community on this plot, new potential purchasers can only believe that their houses are only valid for 20 years due to Cuicun town government’s destruction of the commitment made 20 years ago. Secondly, the house owners of Xiangtang village hold the land certificates issued by Beijing Municipal Planning Bureau and Changping District government. Even if their house is demolished as violated construction, they still hold the land rights of the Xiangtang new village, and other people have no rights to use the land without their permission. If the government of Cuicun town forcibly builds houses and sells them after demolishing Xiangtang new village, it is selling a kind of goods with serious legal defects. At any time, landowners can demand their rights through judicial proceedings, and new buyers will be restless. Finally, the illegal demolition of Cuicun town government will lead to the reputation of return kindness with ingratitude, and many people will not want to live here because of disgust. This will make the property depreciate greatly. As for the more valuable “social capital”, it cannot be recovered in a year or two. By contrast, the preservation of Xiangtang cultural new village preserves the existing economic interests, social capital, reform reputation and government legitimacy of Cuicun town government. Which is better or worse is known at a glance.

When we combed the relevant laws, we found that there were layers of legal armour outside Xiangtang new village. If you want to tear down the incense hall, you must first break the armor. The damaged of the legal armor is not a hole, but the whole legal system. The legal system is a set of social contracts, which is not only reflected in the legal provisions, but also based on the trust of the people. Confucius said that a government, “cannot be established if there is no trust of the people.” Just as the establishment of credit needs to be carried out through the persistent act of keeping faith, and the destruction of credit only needs one breach of contract; a case of government’s violation of social contract will destroy the legal system. If Cuicun town government demolishes Xiangtang new village in spite of constitutional and legal constraints, it will challenge the entire legal system; if its behavior is not stopped by the higher government, the entire legal system will be seriously damaged. Those short-sighted township governments will follow suit, and I don’t know how many “Xiangtangs” will be damaged, which will provoke a large-scale social unrest nationwide. During the Warring States period, the Wei state would rather exchange one fugitive with ten cities, in order to “the law established and the punishment carried out “. It is more important to maintain the law and punish the illegal than the valuable wealth of cities. Does the Cuicun town government think that the rule of law is not as good as the ruined Xiangtang?

In this sense, if Xiangtang is really demolished, the loss of Cuicun town government is far greater than that of Xiangtang owners, and the loss of the central government and the ruling party is far greater than that of Cuicun town government. Because the Constitution and laws are formulated under the leadership of the ruling party and the central government. Their credibility depends not only on the correctness of these legal provisions, but also on the implementation of the Constitution and laws. In this regard, the understanding of the CPC is very clear. The Fourth Plenary Session of the 18th Central Committee of the Communist Party of China emphasizes “governing the country according to the Constitution” and “administration according to law”, emphasizes that “the vitality of the law lies in the implementation”, takes “ensuring the inviolability of citizens’ personal rights, property rights, basic political rights and other rights” as one of the key points in the implementation of the rule of law, and requires that “observing the law and handling affairs in accordance with the law as an important part of investigating cadres”, which has quite strong operability. If, five years later, the oath of the Communist Party of China cannot be implemented in a township government, its leadership as the ruling party will be greatly doubted; if the central government cannot protect citizens’ constitutional rights, it will also bear the consequences of failing to fulfill the Constitution– the supreme social contract principle. That is, the general mistrust of the domestic people and the deep doubts of the international community, that is, the shaking of the foundation of political legitimacy.

It will also directly worsen the current economic situation. Modern economy depends on investment, and investment depends on long-term stable expectation. What guarantees it is the constitution; it is not only the correctness of the written expression of the constitution, but also the credibility of the principles of the constitution. If destroying the credibility of the Constitution through Xiangtang case, it will further slow down investors all over the country and even overseas, and make the investment that has been in a downturn worse. If many villages and towns across the country follow the example of Cuicun and demolish the so-called “small property houses” on a large scale, a large number of real estate that can be mortgaged will be eliminated in a short time, resulting in deflation. When people lose valuable property, the “middle class” will become “low class”, which will greatly reduce consumer spending. When a large number of “Xiangtang” disappeared, the huge suburban market disappeared at the same time. It is “Xiangtang” that brings the demand for goods and services to the surrounding rural residents, and also brings the development of the pension industry. Once they disappear, the surrounding market will no longer exist, and it is impossible to recover quickly in the short term. According to the statistical average of China in 2018 [note], if Xiangtang has 10000 people, the service demand of 170 million yuan and about 2680 jobs will be reduced. If we demolish 10000 Xiangtangs across the country, we will reduce GDP by 1.7 trillion and jobs by 26.8 million. In the bleak economic autumn, do you still want to dismantle it?

So far, a lot of similar events have taken place. I would like to say a few more words about the Xiangtang incident, which is really related to my good feeling for Xiangtang, but not only that. Because once the bad law is opened, how many villages and towns across the country will follow it. It’s not only about killing one life, it’s not just a metaphor. Every time the community that people regard as their home is forcibly demolished, there will inevitably be loss of life. We have made incomplete statistics on the forced demolition events disclosed by the media. From 2003 to August 2014, there were 182 cases of malignant demolition, including 484 casualties, 162 deaths and 322 injuries. A few days ago, I heard that Taoyuan government agency community in Nanqiao town, Hainan Province was forcibly demolished and an owner jumped from a building and died. In this Xiangtang case, we already know that some people have written a letter of bequeath and swore to live and die with the house. We can foresee how many lives will be lost as the tide of demolishing spreads across the country. Up to now, we have to talk about “the right to housing” and “the right to life”. The inviolability of a house clearly includes not only the inability to intrude without permission, but also the inability to tear down a house when the occupant has no other choice. The housing right is highly related to the right to life. A house is the outer body of a person. The demolition of the house is tantamount to an invasion of life. Should the lowly district planning power be higher than the housing right and the life right?

On top of the Constitution, there is Dao. We needn’t go to heaven to find Dao, “Dao is in mind”. Mencius said, “Everyone has a mind that can’t bear people’s suffering. With such a mind to govern people, it is easy to govern the world. “Respect for housing, pity for life, public governance can be handy. Don’t think you can do one or two bad things. As a matter of fact, we can count the number of good things, but cannot bear one bad thing. Mencius said, “Even for winning the world, I don’t want to do one unjust thing and kill one innocent.” If the existence of the government inevitably leads to the destruction of houses and the death of lives, is there the significance of the government? Therefore, I hope that the Xiangtang issue can be solved peacefully through the rule of law, without any damage to property and life. I suggest Xiangtang residents hire law professors, senior lawyers and retired judges to form a legal advisory group, hire the most professional law firms, and file administrative reconsideration and administrative litigation against the legality of the “notice” of Cuicun town government. I also hope that if the Cuicun town government thinks its action is legal, it can form a legal team to accept the challenge. But before they fight, they have to answer such questions first. Can their “notice” stand the examination of the Constitution, the Legislative Law, the Urban and Rural Planning Law and the “mind which can’t bear people’s suffering”?

[Note] The “statistical average” here refers to the per capita consumption of cities and towns, the proportion of tertiary industry in GDP, and the per capita GDP.

October 31, 2019 in Fivewoods Studio

First published in FT Chinese on November 6, 2019, entitled “Economic and legal issues in Xiangtang’s” houses with small property rights”.

Author: flourishflood

Economist, Confucianist

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