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 PART 2
Crooks line their
pockets
By Miao Ye
Part 1:
Investing in misery
HONG
KONG - Although graft and violence have long prevailed
in China's domestic housing estate industry, recent
tragedies caused by forcible relocations have hit the
headlines and become a headache for Beijing's rulers.
Local authorities, many of whom have covert vested
interests, are reluctant to budge, however, despite the
central government's increasing concern.
For
instance,
on the morning of September 15, a forcibly
relocated peasant named Zhu Zhengliang from the
landlocked Central China province of Anhui, burned
himself grievously at Tiananmen Square in vehement
protest against Anhui's relocation-compensation policy.
It was the second suicide protest in three weeks. On
August 21, 39-year-old Wang Biao burst into a relocation
office in Nanjing, the capital of Eastern China's
Jiangsu province, and took his life in front of the
bureaucrats for taking his abode and making his family
homeless.
Usurping cheap land by forcible
relocation and evading relevant laws and regulations by
bribing officials have been shortcuts to earning huge
profits for many Chinese developers. Central government
property management ordinances issued months ago to
protect owners' rights have simply been ignored, and
although knowledge of the regulations may have aroused
abused property owners, they have failed to stop or slow
the rising trend toward violence.
That is
because forcible eviction is so lucrative. While land
for a housing estate worth, say, 100 million yuan (US$12
million) in fact usually costs the developer no more
than 10 million yuan, many developers contrive to save
even that amount by driving out the residents with
force, according to a veteran estate planner in Beijing.
For instance, on July 18, a gang of 20 bully boys
carrying "big sticks" launched a dawn raid on households
in Beijing's Xicheng District, causing mass destruction
and injuring many. Before leaving, they threatened:
"This is what you pay for staying here. Get your ass out
of here the soonest, or wait for our visit next time!"
According to statistics by the Beijing High
People's Court, all municipal courts yearly received
only a few hundred property-related reports before 1992,
when the housing market took off. By 1999, that figure
had climbed to 8,103, to more than 10,000 in 2000, and
more than 15,000 in 2001. Yet the court rulings rarely
seem to favor the victims. By late August, the State
Bureau for Letters and Calls, the top authority
instituted to collect public opinion, received 11,641
petitions of dispute over relocation, a year-on-year
growth of 50 percent, and 5,360 complainants, up 47
percent, as released by Zhu Ying, a researcher with the
bureau. And the figure is expected to continue to climb.
China Economic Times, a semi-official newspaper
sponsored by the Development Research Center of the
State Council, recently highlighted serious abuse in
Beijing's redevelopment plans. According to the paper,
the phase-three relocation of the China World Trade
Center alone has claimed six lives and caused dozens of
injuries.
In fact, local governments have been
strongly implicated in several major cases of land abuse
recently investigated by the Ministry of Land and
Resources. In most cases, the main reason leading to
forcible relocation is the resettlers' refusal to move
because they are not being compensated. Stories are rife
of residents being brutalized by police acting at the
behest of developers to drive them out of project areas.
Theoretically speaking, negotiation over
compensation should be bilateral, between residents and
real-estate developers. However, local governments often
intervene, taking back the land-use rights of residents
at a set price and then selling those rights to
developers. If anything goes wrong, complaints pour over
on local governments, making them the scapegoats
although only the developers are lining their pockets.
Public wrath against forcible relocation has
grown, pushing the authorities to address the issue.
Guangzhou, Guangdong province's capital city and one of
South China's largest property markets, is finding it
necessary to carry out extensive resettlement. The
municipal government is well aware of the problem of
unscrupulous developers and has pledged not to dispatch
police in forcible relocations and to reduce government
involvement.
Recently, Beijing authorities have
also set out to regulate the redevelopment process and
have vowed to crack down on forcible and unlawful
practices. For the first time ever, two suspects were
arrested recently for forcible relocation cases. Vice
Premier Zeng Peiyan also vowed during his recent
inspection tour to several provinces to eliminate
forcible resettlement.
However, despite the
authorities' redoubled efforts to eradicate violent
demolition, the outlook is hardly optimistic, due to
local governments' defiance of Beijing. Government media
reports on relocation abuses have been blocked in
Shanghai, Jiangxi and other areas in the name of
regional interest.
Aside from conflicts between
owners and property management companies, this big-stick
intimidation is escalating. Recently two homeowners in
Tiantong Garden in Beijing were hospitalized with
serious injuries after being beaten violently. The
incident, widely reported in the press, is believed to
have links to the property company's revenge against
owners seeking to protect their rights. Beijing,
Shanghai and Guangzhou have witnessed many similar
bloody incidents, and numerous small cities have as
well.
Intimidation is encouraged by the fact
that by and large, developers are backed by powerful
connections with local authorities and the media, and
some unscrupulous property tycoons have formed de facto
alliances and even hold important government positions
themselves. In essence, the industry is protected by
governments and media.
A recent incident in
Beijing's Tiantong Yuan, an economy housing complex for
local residents, is a case in point. On moving in,
residents found that the housing fell considerably short
of expected standards. However, the property management
company ordered guards to beat the residents when they
lodged complaints.
Informed sources say Tian
Zaiwei, an investor of Tiantong Yuan, enjoys an
extraordinarily close relationship with the current
Minister of Construction, Wang Guangtao. Moreover, Tian
himself is also part of the establishment. He is deputy
commissioner of the Heilongjiang provincial committee of
Revolutionary Committee of the Chinese Kuomintang,
deputy director of Ha'erbin Comprehensive Development
Center and general manager of the city's Comprehensive
Development and Construction Company.
Many
similar cases have successfully dodged investigations
thanks to pressure from authorities and cover-up by
media. China's property industry illustrates to the
utmost what the "power economy" is all about.
For example, the boss of Vanke Company Ltd, a
leading developer in Shenzhen, is Wangshi, the offspring
of a former top officer in Beijing. The developers of
Silver Lake Villa in the same city include the daughter
of the former President of Yang Shangkun; the son of
Wangzhen, a veteran party leader; husband of Wang Liman,
secretary general of Shenzhen municipal party committee;
and the offspring of former secretary generals such as
Li Youwei and Lihao.
In Shanghai, mainland news
media detected many local scandals after publicity
surrounding the arrest of tycoon Zhou Zhengyi, who was
sued in May in a lost class action for denying statutory
compensations to resettlers, then was found to be
implicated in substantial problem loans, false
registered capital and stock price manipulation, and
finally held in custody pending trial.
The
Shanghai government has disavowed complicity in illicit
land utilization and said the reports are distorted.
Nonetheless, according to the Shanghai Administration of
Housing and Land Resources, the municipal authorities by
March 2003 had sold 479 land "usufructs," or rights to
the product of another's property since July 1, 2001,
the date from which all transactions of local lands for
business use would be concluded through auction.
Yet, an investigation into the official notice
of land usufruct transfers found only 57 tracts had been
auctioned by May 30, 2003, which means that the other
422, or 84 percent, were privy transactions.
The
unusual ties between realty developers and the Shanghai
authorities have been spotlighted by China Business
Post, which reported that many indigenous high-ranking
officers and even their family members held shares in
Zhou's real estate projects.
Under the wing of
the government, however developers, are often protected
by the press. They bribe journalists to write regular
ads to hype properties, an industry insider in Beijing
pointed out. And, whether there are bribes or not,
economically, newspapers are very much dependent on
property advertisement. Statistics show, for instance,
that the property sector contributes almost 35 percent
to the ad revenue of the Guangzhou Daily, which boasts
the largest property ads and total ad income among all
papers in the region. Ads can run as high as 500,000
yuan (US$60,000) for provincial papers, while national
ads can run as high as 2 million yuan.
In a bid
to appease developers, the mass media thus often simply
shelve news of property malpractice. According to an
insider, for fear of irritating their prominent clients,
several mainstream media refused to report the case of
the Guangzhou-based R&F Island Garden last year,
where complaining owners were beaten by security guards
of the property management company.
Chaotic development of the sector
has sparked political, economic and social problems in
succession. Despite the state's continuing efforts to
initiate remedial measures,the ailing sector seems far
from getting better. The domino effect, once the realty
market collapses, could spill over and consequently
trigger the demise of an already ramshackle banking
sector unless Beijing adopts an iron fist, instead of a
velvet glove against prominent figures it is often very
close - too close - to.
Next: Banks menaced
(Copyright 2003
Asia Times Online Co, Ltd. All rights reserved. Please
contact content@atimes.com for
information on our sales and syndication
policies.)
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