Published : 2024-12-01

On December 1, 1987, the first land auction in the history of the People's Republic of China (PRC) was held in Shenzhen.

After the founding of PRC, all land was owned by the state and uniformly allocated for use without payment.

The 1982 Constitution of the PRC also clearly stipulated that no organisation or individual could encroach upon, buy, sell, lease, or illegally transfer land in other forms.

At the time China was promoting the Reform and Opening-up, and as one of the first Special Economic Zones, Shenzhen needed a large amount of funds for development.

Therefore, it drew on the experience of Hong Kong and adopted the suggestion of Hong Kong businessman Fok Ying-tung (霍英東) to separate land ownership from usage rights.

Land usage rights entered the market as a special commodity, and once the usage rights were obtained through market forms such as agreements, tenders, and auctions, one could own the usage and earnings rights within the contract period and freely transfer, lease, or mortgage them.

On the day of the auction, the first piece of land auctioned was a 50-year residential land usage right for an area of 8,588 square metres.

With the auctioneer Liu Jiasheng (劉佳勝) striking the final gavel, Shenzhen Special Economic Zone Real Estate Development Co. successfully bid for it at a price of 5.25 million CNY. The entire process took only 17 minutes, but it set a precedent.

By April 12, 1988, based on Shenzhen's suggestions, the National People's Congress amended the constitution to state that "land usage rights may be transferred in accordance with legal provisions."

The Land Administration Law of the PRC was also amended accordingly, with new provisions stating "the usage rights of state-owned land and collectively owned land can be transferred according to law" and "the state implements a paid usage system for state-owned land according to law."