The Great China Land Grab


The Wangs* look harassed, tired and shell shocked. For months they have been crammed into their adult daughter’s one-room apartment in southern Shanghai, following their forced eviction from the family home.

1500 kilometres north in Beijing, Texan Tim Hilbert laments the forced demolition of his restaurant. These common experiences typify the brutality of a widespread land grab unfolding in China’s major cities, raising serious questions about the wisdom of investing in the People’s Republic and making a mockery of the government’s oft-repeated assertion that China "is a country ruled by law."

The Wangs’ former home sat in an inner-city district nestled under Shanghai’s mighty Nanpu Bridge. Formerly an industrial zone, much of the area has being flattened to house the Shanghai Expo in 2010. The working class residential neighbourhoods surrounding the Expo site — including the Wangs’ — have suddenly become prime real estate, coveted by local developers like the Zhongfu Group for luxury apartment blocks.

"As far back as 2005 we were encouraged to leave with the promise of another apartment in Nanhui, near Pudong airport [Shanghai’s main international airport]," recalls Mr Wang. "At that time the new apartments were still under construction and covered in scaffolding, so we couldn’t even look at them."

After most residents rejected the offer to move to Nanhui, 25 kilometres from the city centre, the Zhongfu Group resorted to more forceful tactics. "They paid migrant workers [from the countryside]to walk around the area, ten or twelve to a group, with metal bars," claims Mr Wang. "Sometimes seven or eight men at a time would come to our apartment," his wife adds.

The intimidation ceased for a time after residents complained to authorities. But with the Expo looming, in late 2008 the pressure returned with a vengeance. One night Mr Wang visited the bathroom to find their electricity lines had been severed in the dead of night. The consequent loss of heating was a major issue in a city where winter temperatures regularly fall below zero. After the elderly couple again complained to authorities, a Zhongfu Group employee paid a visit when Mrs Wang was at home alone, threatening to "prevent them complaining again."

Shortly after, the Wangs’ windows were smashed and their apartment was broken into. Kitchen implements were stolen and the stove removed so the couple could no longer cook. Similar tactics were employed across the suburb.

"When we reported our things stolen the police came and recorded our names, but did nothing," Mr Wang claims. "Before leaving they said, ‘You should move to avoid this kind of thing.’"

"We had the feeling the police and developers were working hand-in-glove," Mrs Wang adds bitterly. "Our sense was, as long as no-one was killed, the developers could do whatever they wanted."

By early this year the Wangs were mentally and physically exhausted, and finally agreed to move to the still unfinished apartment in Nanhui. Since February they have been staying with their daughter in her tiny studio, awaiting completion of their new home. They say their old building was literally knocked down around them as they removed the last of their frugal possessions.

The Wangs’ ordeal is typical of the predicament facing many urban residents as China’s real estate market booms. For decades the Chinese state provided housing, meaning property rights were simply not an issue for most people. The Wangs’ neighbourhood comprised public housing, and residents were without contracts or specified legal rights, leaving them defenceless when developers came knocking.

Even in situations where legal protections are theoretically in place, the reality is that individuals are powerless to oppose developers working in cahoots with authorities. The recent experience of American Tim Hilbert in Beijing is a case in point.

In July 2007, Hilbert opened his Texas Roadhouse on Super Bar Street, one of the seedier bar strips in the capital’s northeast. On 12 May this year, businesses in the area were issued a notice from their landlord, a company known as Seven Colours, and another from the local Chaoyang District Government, informing them the area was slated for redevelopment. They were given just 19 days to vacate their premises, in blatant violation of their leases.

"The government notice said we had to negotiate with the landlord for compensation, but the landlord actually refused to meet," Hilbert explains in his considered Texan drawl, sipping a coffee in the remaining branch of his Texan restaurant near Beijing’s US embassy. "Instead they hired three teams of security guards. These guys marched up and down the street, trying to be as ominous as they could, glaring at business owners, prospective customers, and our staff." Windows were smashed and one business owner was allegedly assaulted.

In an echo of the Wangs’ experience, the bar street businesses were offered a new location on what Hilbert describes as "a barren piece of land with no construction started, outside the East Fifth Ring Road." Like the Wangs’ new home, this represented a move from near the city centre to a far-flung area on the fringes of the metropolis. No bar or restaurant aimed at the expat market could possibly survive in such a location. In addition, business owners had to pay six months’ rent and a deposit upfront to secure a place in the new site, which would not be ready for four months. No one took the offer seriously.

Water and power to the bar strip were cut on 2 June. As various business owners caved in to intimidation and accepted poor compensatory offers, Hilbert became the last business left standing in a landscape of rubble. Seven Colours initiated legal proceedings to force him out.

"The documentation supporting the landlord’s claim was a three-quarter page letter saying, ‘We have an urgent project for this piece of land so we need to cancel this lease,’" says Hilbert of the legal case against him. "The document did not state what the project was, there was no plan or timeline, nor did it provide arguments about what the urgency was. And the document was undated." Hilbert was not allowed to have a copy of the letter or access to court transcripts.

By 26 August Hilbert had been informed by the court that Seven Colours could legally cancel his lease without negotiating compensation in advance. In reality this meant demolition. The Texan was able to remove one van’s worth of furnishings before authorities turned up on Friday 28 August to enforce the court ruling. "There were about 30 policemen, including some SWAT team guys, numerous moving vehicles, a fire truck, an ambulance, and court people." The Wall Street Journal was on hand to document the show of force and ensuing destruction.

Hilbert estimates he has lost around RMB 4.5 million (around AU$755,000) he invested in the business, plus another RMB 300,00-400,000 (AU$50,000-67,000) in equipment removed before the building was demolished. He has yet to have his rental deposit returned, let alone receive any compensation.

While the Wangs and Tim Hilbert come from vastly different backgrounds, their experiences at the hands of developers have followed distinctly similar patterns. When asked if they were shocked by the violent tactics employed by the Zhongfu Group, the Wangs reply, "Not really — we’ve heard of this kind of thing before." Their daughter adds that she has colleagues who have endured similar intimidation from other developers around Shanghai. Of his battle in Beijing, Tim Hilbert comments, "I have now been to about 18 different government offices, some of them multiple times. At many of them I was in a sea of Chinese people experiencing the same problem."

There have also been multiple reports of forced evictions in China’s urban centres in the international press, particularly in the lead up to the 2008 Beijing Olympics. More surprisingly, the English-language Chinese state press recently reported protests in Beijing against forced relocations around the new China Central Television building in the capital’s CBD. Earlier this month, the Sydney Morning Herald carried a story about a Chinese-Australian couple whose private hydro-electric power project in China’s northeast was threatened with destruction if they didn’t hand a stake in the business to local cadres.

In short, there is considerable evidence to suggest a systematic land grab is taking place in China’s key urban centres, with developers supported by courts, police and local government in often violent attempts to force residents and small businesses from their homes and commercial properties with little or no compensation. Investors, it seems, have no guarantee their property or investments will be protected. More seriously, local communities are being destroyed and residents forcibly relocated to peripheral areas to make way for upmarket housing and state-sponsored showcase projects.

While much of the day-to-day corruption in China relates to the excesses of local authorities, it defies belief that the central government is not aware of the land grab underpinning major transformations in China’s biggest cities. The question is how deep the financial involvement of the authorities goes, and how far up the government hierarchy complicity in the violence and intimidation extends.

*Real names withheld at the request of the family.

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