Erasing the Past - Redux

A few years back, I wrote about the phenomenon of politically-driven historical amnesia, on the 20th anniversary of the Tiananmen Square massacre. Well, we're at that date again, and I'm currently in Pakistan, in the middle of some tense political times for this country (and have witnessed plenty of amnesia in this country about its previous sins). While not quite as engineered as the situation in China re: Tiananmen (I mean...what is?), its interesting to see how this idea travels. In the U.S., it definitely occurs as well. Everybody does it. Via the powers of blog flashback, here are some more detailed thoughts on the matter.

Dreams of 1984 (Or, Lieberman Is a Donkey, Step Off My Internet Access)

The past week has been full of distractions, some sad (Celtics losing to the LA Lakers in a nail biting game 7), some depressing (the continued spewing of oil in the Gulf and associated congressional testimonies implying criminal negligence on the part of BP which led the CEO of BP partner Anadarko Petroleum Corp. to Blast BP's 'Reckless Decisions And Actions' ) and some just downright ugly (Robbie Findley being called for a handball inside the 6-yard box when replays from multiple angles incontrovertibly showed the ball hitting only Findley's face).

Yet, even as the gladiators fought hard to entertain the mob--and did they ever--the new and very significant powers being envisaged by our "friendly" politicians on Capital Hill were not completely obscured. The latest reach for power comes from our lovably loquacious party-switching Joe Lieberman, the former running mate of Al-"I took the initiatives in creating the internet"-Gore and current chair of the Homeland Security committee. Senator Lieberman (along with Sen. Susan Collins, a Republican from Maine, and Democratic Sen. Tom Carper of Delaware) sponsored a bill on Thursday that proposes to give the president the authority "to seize control of or even shut down portions of the Internet."

New Property Rights Laws in the People's Republic of China (came into effect in 2007) -- Translated into English

POSTED: 6/7/2010 UPDATED: 6/8/2010

The original post was too long for Blogger and was cutting off all posts that came before it, so we at There Is No Spoon have decided to divide it into five sections, corresponding with the natural organization of the original document.

Disclaimer: the following document is an UNOFFICIAL English translation of the Property Rights Laws in the People's Republic of China that went into effect in May of 2007. This document and all concepts represented herein have no legal binding in the People's Republic of China, nor in the United States of America. We are providing this information as an educational resource only.

Normally I would just upload a PDF to a technical document like this, but due to the importance of the material that follows and to the dearth of relevant results when searching Google or Bing for "Property Rights in China," I thought it would be more prudent and beneficial to all if I just posted the entire text as a separate HTML post so that all search engines will be able to pick it up in all of its glory. What follows is an English translation of China's newly minted Property Rights that set off the fast and furious Real Estate Bizarre currently underway in the Peoples Republic of China. I am in the process of analyzing this information as part of my series on the historical and cultural differences of real estate in the United States and China, but I thought I would share while I gather more information since so few people interested in the the magic of China Miracle realize how new this real estate fad is to this communist country. Up until now, an English translation of the new laws was hard to come by. Enjoy!

A full English translation of the 2007 Property Rights Law of the People's Republic of China "signed" into law on March 16th, 2007 follows:

Property Rights Law of the People's Republic of China
Promulgation date: March 16, 2007
Effective date: October 1, 2007
Department: National People’s Congress
Order of the President of the People’s Republic of China (No. 62)
The Property Rights Law of the People’s Republic of China, adopted at the 5th Session of the 10th National People's Congress of the People’s Republic of China on March 16, 2007, is hereby promulgated and shall come into effect on October 1, 2007.
Hu Jintao
President of the People’s Republic of China
March 16, 2007
(click "read more" to see Table of Contents with links to the 5 parts)

CONTENTS

Part I: GENERAL PROVISIONS

Chapter I Fundamental Principle
Chapter II Establishment, Modification, Transfer and Lapse of Property Rights
Section I Real Property Registry
Section II Movable Property Delivery
Section III Miscellaneous
Chapter III Protection of Property Rights

Part II: OWNERSHIP

Chapter IV General Stipulations
Chapter V State Ownership, Collective Ownership and Individual Ownership
Chapter VI Building Distinction Ownership of the Owner
Chapter VII Neighborhood Relationship
Chapter VIII Joint Ownership
Chapter IX Special Regulations Pertaining to Attainment of the Ownership

Part III: USUFRUCTUARY RIGHTS

Chapter X General Stipulations
Chapter XI Right to Land Contractual Management
Chapter XII Right to the use of the Construction Land
Chapter XIII Right to the use of the Residential Housing Land
Chapter XIV Easement on Land

Part IV: SECURITY INTEREST IN PROPERTY RIGHTS

Chapter XV General Stipulations
Chapter XVI Mortgage Right
Section I General Mortgage Right
Section II Maximum Mortgage Right
Chapter XVII Right of Pledge
Section I Pledge of Movable Property
Section II Pledge Rights
Chapter XVIII Lien

Part V: POSSESSION

Chapter XIX Possession

Real Estate in China vs. the United States: How Two Giants Spar (Part I)

This is part 1 of a multi-part post (probably 3), in which I will discuss the very different roles real-estate has played traditionally in both China and the United States. I will later discuss the global impact of what appears to be a severely overheated real-estate market in China and how the binary stop-go control system of China’s communist leadership is largely incapable (even less so than the US government) of effectively dealing with this segment of its economy, which unlike many other segments that are directly controlled by the State, is much more difficult to manage from a central location. I posit that, as China continues to take on the semblance of a fully capitalist system, with a rapidly growing middle-class modeled after the US economy, they are inevitably going to face a conundrum: to protect their new, thriving, economy by adopting more democratic principles of government; or protect their present form of government at the very large cost of their impressive economic progress, whereby to reestablish totalitarian control over the people, they will inevitably be forced to squash the new found visceral freedoms of its burgeoning middle class. I will argue that the myopic nature of a centrally managed system of government makes it nearly impossible to gauge the ripple effects (and the echoes of those ripples) of an economy as large and widespread as China’s. More importantly to the rest of the world, I will also make the case that the lack of understanding of property rights on the part of the Chinese government threatens not only that particular economy but all others that do substantial business with them (i.e. the entire world). Most of us are familiar with the the expression: "If the U.S. economy sneezes, the the rest of the world catches a cold." Well, for better or worse, there is a new germ in town and the medicine to deal with that germ is not well-known. China does not do things like the United States, and lest we all get too eager to welcome another giant into the room to compete with the current alpha male, it might serve us well to remember that the style of government in the United States is integrally connected to a powerful set of checks and balances that simply do not exist in China. Moreover, China's publicly stated desire to build a middle-class by allowing private ownership of real-estate is not only at odds with the central tenets of communism but also, more specifically, with the enduring power of the Communist Party in China. Nonetheless, to address such an important topic with such a wide brush does the subject no justice, and so I will focus this post and those that follow on the significance of real-estate in both countries and economies and how the development of both may effect us all moving forward.

Before we delve into the intricacies of the changing real-estate landscape in China, it will serve readers well to become familiar with or review the inner workings of the real-estate in the United States. The reason for focusing first on the US real-estate market (which comprises roughly 12% of GDP in the world's largest economy) is three-fold: first, China has recently attempted to adopt (at least in principle) the real-estate-based economic model of the United States (and Japan) without implementing property taxes (which might change in the very near to intermediate future); secondly, because unlike the multi-faceted control system of the U.S. and Japan, China’s centralized, top-down, stop-go system is unsuitable for effectively reaching and slowing all parts of their country's economy with equanimity; and lastly, because, while China seems to be trying to emulate the United States in the way of growing a large middle-class through real-estate ownership, China does not seem to fully realize that the real-estate market in the United States functions (cough-cough) as well as it does largely in part because the US is run via democracy.

Although much of what I am purporting is theoretical in nature and likely will not work itself out in the real-world for many years, it is nonetheless worth considering the possible ramifications of a country adopting an economic system from another country whose political governance is not only contra-stance to its own, but is indelibly linked to a history of oppression and harsh rule and law changes. The United States, for all of its ails, was conceived through hundreds of years of subtle, evolving, organic and natural "progress" that is inextricably tied to the democratic constitution that makes all of its citizens equal in a way that is not possible in communist China. A government that is truly of the people can only be modified in a significant way by the people and through an extremely resistant process (consider, for example, Byrd Rule), whereas with a totalitarian regime, he who giveth can taketh away. For better or worse, these facts leave those who invest in real-estate in the United States and those with similar investments in China with very different levels of risk. The individuals governing China seem to want the best of both worlds for themselves without reconciling that to get the “best of both worlds” they must relinquish some of their control and establish a system that more or less runs itself. For capitalism to work, every individual that belongs to the relevant society must believe that they not only have the ability to achieve capital appreciation, but that the appreciated capital is safe from confiscation and government interference. (*Side note to readers questioning the assertions being made here regarding variant liberties of the US vs. China: this post will not even be accessible from Chinese IP addresses--indeed, a few months back when Google stopped filtering its results in mainland China, we at nospoonblog.com learned that, like most uncensored content on the web, our blog was (is now again) blocked. In fact, it was impossible not to know it was blocked since, on the day Google announced it had stopped filtering results, the traffic on our blog--specifically for FB's post on Tiananmen Square--increased by a whopping 520% in one day, and then abruptly returned to our average once Google announced that they had been forced to resume filtering and were pulling out of the country.)

I suspect we will see a lot of discontinuity in policymaking over the next few years, especially in the Western World, amid lots of panicking and last ditch efforts to save the world from financial Armageddon II. Meanwhile, during the same time-period, Beijing has grown increasingly worried--and rightfully so--about signs of overheating, and after trying unsuccessfully to pare growth carefully, it has given up the scalpel and brought out the sledgehammer.
This is very significant, because private property in China is a very new concept and it is growing into a very significant portion of China's economy. To underestimate the significant unknowns involved in a country/culture that is thousands of years in the making, is a grave mistake. Indeed, the history of financial cycles itself has changed dramatically during the past 200 years. During this relatively short time period economists have begun to think of the ups and subsequent downs as part of the same process (as opposed to viewing them as emergent consequences of external shocks, such as war or famine). For those interested in learning more about modern thinking on the subject, the Luwig Von Mises Insitute has an excellent article on the business cycle in general and how the subordinate cycle of credit expansion and contraction effects it. This is super relevant to the subject of this post because the birth and growth of the United States, and of its private real estate sector, largely coincides with the inflection point that marks the changing views of the financial cycle. One of the first published acknowledgements of credit cycles in relation to their impact on the greater economy was the 1838 edition of the Encyclopedia Americana where under Credit it states: “The history of every industrious and commercial community, under a stable government, will present successive alternate periods of credit and distrust, following each other with a good deal of regularity.” Clearly this is true in the United States, but we are witnessing more and more evidence that a similar ebb and flow is beginning to make its way east with China experiencing its own periods of credit lust followed by distrust. The two key differences being 1) the fluid complexity of the U.S. political and economic system incorporates self-governing checks and balances that do not exist in China, which allows the US economy to be a living, organic creature that is not so much controlled, but rather guided; 2) due to the self-governing aspects of the US system it is very difficult (though not impossible) to successfully blame a single governing body, institution, or other entity for the ails that may result from the credit contractions that inevitably occur.

I fear that the financial high that many involved in China's economy are experiencing will soon reach a level of intoxication too powerful for those same individuals to feel the ground beneath their feet. Indeed, the credit boom that has been building in China during the past decade is looking more like a tsunami than anything we've seen in the U.S. Some might ask, "who cares? What does that have to do with us?" It has everything to do with all of us. Long gone are the days when nations effect only their own economy and perhaps their most proximate neighbors. Globalism is no longer a buzzword: It is real, it is powerful, and it is here to stay. We need only look at the domino-effect that the small country of Greece (with a GDP of $356 Billion) is having on Europe and the rest of the world to begin to see the potentially catastrophic ramifications of the world's third largest economy (China with a GDP of $4.3 Trillion) slowing or expanding "too rapidly," a phrase whose meaning in relation to China we do not really have the tools to measure. We are in unchartered waters regarding the intricate interconnectedness of global economies. Meanwhile, the rules, laws, and politics of these countries do not have the equivalent international reach as do their economies, which in turn creates an intriguing albeit awkward intimacy. Thus far, such a relationship, with both countries' inextricably connected mutual interests, seem to be inspiring diplomacy and stability. Still, it is important to note that although some economic ties have been strained during the past several years due to the global financial mess through which we currently find ourselves muddling, we have not witnessed (and hopefully never will!) a situation where a political leader of either country has attempted to dictate or mandate policies or laws of the other directly.

... that concludes Part 1. Part II of this post will focus almost entirely on the very particular nature of property rights in the United States. For those who cannot wait, I urge you to pick up a copy of James W. Ely, Jr.'s thoughtful book on the topic The Guardian of Every other Right: a Constitutional History of Property Rights.

WSJ Reports "China's Property Market Freezes Up"

If we didn't already know that China's top-down stop-go economic policies weren't dangerous already the Wall Street Journal gives us evidence. (side note, I've been working on a detailed post about this issue over the past two weeks and will try to get it up later today or tomorrow.)

From the WSJ article: "Government policy changes have thrown China's booming property market into a period of paralysis that some industry executives say will last for several months, weighing on global growth prospects already battered by the turmoil in Europe."

"A rebound in China's property market has been central to the nation's rapid recovery from the financial crisis, but surging housing prices had led to increasingly open discontent from middle-class families in major cities. After months of indecision, Beijing in mid-April announced a package of policies intended to blow the froth out of the market by restricting speculative purchases."

[...]

"China's economic growth was already widely expected to slow in coming months, as the impact of last year's stimulus policies fade. Some forecasters, seeing weaker prospects in a key industry, are now further marking down their numbers for this year. China International Capital Corp. now expects the economy to expand 9.5% in 2010 as a whole, rather than the 10.5% it previously forecast."

My initial take on the matter is that first of all, with the rest of the world dealing with very low inflation and in some places deflation, 10% economic growth for the largest exporter seems not only unsustainable, but also very dangerous. There have already been talks about China manipulating its currency in order to hold up its competitive advantage in manufacturing and exports. If this is true, we are already looking at a squeeze to its burgeoning middle-class before its really clear that the country truly has a middle class. On the other hand, as is also widely reported, China's savings rate, historically around 40%, has edged up over the past several years to 50% of GDP. Clearly the only individuals saving 50% of their earnings are those wealthy enough to do so. Nonetheless, it is an indication of the incredible cushion China has built to protect itself should the economy spiral into a free-fall. I suppose the question then becomes, how long can that cushion support them if cheap exports go to the wayside? (more to follow)

Interview with Eric Spott About Economies Around the World

Awesome interview on BNN with Eric Sprott, chairman and CEO, Sprott Asset Management explaining his view and research concerning the World's biggest economies (China, US, and Europe) talking specifically about the Flash Crash that I wrote about a few weeks ago. He's a very articulate speaker and really does a good job bringing some very complicated topics down to earth. A Must watch!

http://watch.bnn.ca/#clip304447

Chinese Artists Imprisoned -- Please Share

An artist friend of mine whom I met at the Vermont Studio Center Residency Program just sent this to me. I find it to be quite disturbing and encourage you to spread the word and, if you are so inclined, to write to the appropriate ambassadors (contact information below).

--
Dear Friends,

I recently came across a catalogue for an exhibition called “Embracing the Uncarved Wood,” which Artistsfeatures some amazing hand-carved sculptural reliefs by a group of deaf sculptors from China. I read that these artists had formed a collective called the “True Words Workshop,” where they lived and worked together under the direction of two hearing teachers, Zhou Ning and Xiao Yixia, who are graduates of the Shandong Art Institute.

I wanted to learn more so I Googled them and what I’ve found out is extremely disturbing. Two years ago, Zhou Ning was arrested and last March he was sentenced to five years in prison. Both Zhou Ning and Xiao Yixia had already been subjected to repeated harassment, having been evicted from their house and having been arrested and imprisoned several times before. Their defense lawyer, Li Subin, who specializes in human rights cases, has suffered as well: his law firm has been closed down.

Apparently these two artists are practitioners of Falun Gong, a sort of philosophical mix of qi gong, Buddhism, Taoism and Confucianism. The Chinese government has outlawed it, along with many other non-approved belief systems. Amnesty International has condemned China’s treatment of Falun Gong prisoners, as has our own government.

I hear about political prisoners all the time, but since Zhou Ning is a fellow artist, I feel particularly connected to his case. I am asking you to take a moment to write letters or emails to the following people. Compose your own or, if it makes it easier, you can use what I’ve drafted below.

And please forward this to as many artists [and concerned individuals] as you can.

---------------------------------------------

Ambassador Jon Huntsman
United States Embassy
Number 55 An Jia Lou Lu
Beijing, China 100600
Email: AmCitBeijing@state.gov

Charlotte Oldham-Moore, Staff Director
Congressional Executive Commission on China
243 Ford House Office Building
Washington, DC 20515
Email: charlotte.oldham-moore@mail.house.gov (with a cc to the Director of the Prisoner database: steve.marshall@mail.house.gov )

Vanessa Jalet, Executive Assistant to Linda Downs
College Art Association
275 Seventh Avenue, 18th Floor
New York, NY 10001
Email: vjalet@collegeart.org (with a cc to Paul Jaskot, President, Board of Directors: pjaskot@depaul.edu)

Erasing the Past

Today marks the 20th anniversary of the tragic events in Tiananmen Square in China. I remember watching the chaos on TV. I will never forget the image of "Tank Man" defying all rationality and standing his ground in an act of bravery and defiance I'm not sure we'll ever witness so publicly again. To this day, nobody knows what happened to him. Some suggest he was executed by the Chinese government. Others say he is still alive, hiding somewhere in China. He acted on the 5th, a day after the government cracked down violently against a massive non-violent protest, composed of many students, that had been going on since mid-April 1989. I won't rehash the whole story, but the short version is, people were mourning the death of a somewhat progressive leader and desired both economic and political reforms by the Chinese government. Over a million gathered in Tiananmen. On June 4th, 1989, the Chinese government instructed a violent military response, including firing into the crowds at the unarmed, young, idealistic masses. Nobody knows the final toll, given the control of such info in China (there is also suspicion that the Chinese government burned many of the bodies to destroy evidence), but the estimates range from several hundred dead, all the way up to several thousand.

It was a horrible event that many of us will never forget. However, that is not quite the subject of my post, nor is China, per se. What I find most alarming about Tiananmen is the massive level of amnesia about the event in China. China is not the first country to attempt this kind of whitewashing of the past. Others have attempted it as well - and succeeded quite brilliantly. While I refer to Tiananmen the most here, know that you can substitute a number of other cases in its place. For instance, there is the false belief in a historically non-interventionist US foreign policy, back from the early days (see Kagan's Dangerous Nation as a good counter - yes, really, Kagan). Americans also frequently forget "idealist" Woodrow Wilson was a staunch racist, and his efforts to keep Japan out of Versailles probably helped encourage their militarism later. We forget the Gulf of Tonkin incident, used to escalate the Vietnam War, was always a manipulation of the facts. We forget the whole 1953 US-backed coup in Iran that deposed a popular democratic leader for a brutal dictator whose harshness helped lead to the 1979 Revolution. We frequently forget about our role in strengthening militant Islam (whatever you want to call it...I'm tired of coming up with/reading different terms!) with our outright backing of the most extremist elements in Afghanistan in the 1980s. Completely forgotten facts, all withheld from the public discourse, all conveniently allowed to be forgotten. This happens elsewhere, too. Let's see...Turkey and the Armenian genocide during World War I. Pakistanis forget the cult of personality set up by national hero Zulfikar Ali Bhutto, along with his role in launching the horrific civil war that led to Bangladesh. Indians forget the completely arbitrary and undemocratic nature of Kashmir "choosing" to be part of India. Israelis forget the many acts of terrorism practiced by the Stern Gang, Irgun, and others, including the bombing of the King David Hotel and the Deir Yassin massacre. Russia today tends to forget the many horrifc acts of violence it perpetrated on Chechnya in the mid-1990s. Point being, this happens a lot, and governments are actually quite successful.

Tiananmen comes to mind because today is the 20th anniversary, of course. I was chatting with a friend in China who gave me some of the run-down on what has been happening (lot of internet sites have been blocked [this blog has apparently been blocked, too - how about that], Tiananmen Square has been shut down). Besides remembering vividly those images from my childhood, I also have walked through the space. I will say it was an incredibly eerie feeling...mostly because I was there during a relatively festive time, Chinese New Year/Spring Festival. People were out, flying kites, smiling and laughing. There were few security guards out. It seemed like a joyful place. Of course, I couldn't help but recall what happened at each spot. When we passed the Monument to the People's Heroes, I recalled that the protests had started there. As we neared the front of the square, I looked back at the massive area and visualized it being full with a million people, wanting reforms. As we crossed towards the Forbidden City/Imperial Palace, I thought to myself, Tank Man stood his ground right here. So much blood had been spilled in the area we had walked around...but nobody seemed to care. Maybe there was a peace about the whole incident?

No, not exactly. Nobody wanted to remember. Few children born after 1989 had any idea about the scale of the event. History books in China mention the the massacre with maybe a line or two, and generally as student unrest stabilized by the government. Current university students have difficulty identifying the iconic Tank Man photo. The state has effectively censored what happened. Google in China does not list results if you do a search for the event. The media is largely forbidden from reporting about what happened in those days in 1989.

Thus, not only do many not even know about the event, the efforts to clamp down have created a climate of fear amongst those who do remember what happened. There is no doubt they are afraid of speaking out. This type of climate almost certainly has played a role in a more apolitical generation of young Chinese. Can we doubt that their parents, remembering June 4th and the aftermath, steered them away from politics in order to protect them?

The Chinese government's violent response against the protesters on June 4th was, of course, a sign of cowardice and weakness. Their efforts to expunge the event from Chinese history makes that point even more clear. They are doing what others have. This is why the Bolsheviks shot Czar Nicholas and his whole family - eliminate evidence of the past. This is why the US government classifies incriminating documents, and why the press sometimes partakes in self-censorship - avoid discussing uncomfortable facts that illustrate your fallibility. And while we're at it, let's not spend too much time discussing either the genocide of the Native Americans or slavery and post-slavery Jim Crow. This is why Stalin was literally taken out of everything in the Soviet Union for many years after his death (films, artwork, you name it - pretty incredible). This is why Japanese textbooks don't give much space to the atrocities they committed from their invasion of China in 1937, up to the end of World War II.

Why should we care? Because this matters. Orwell rings so true today - who controls the past controls the future, who controls the present controls the past. If governments are able to largely erase ugly moments in their history, at least domestically, that is a frightening aspect. Part of a country's strength is its ability to see its flaws and (ideally) learn and progress from them. If countries simply censor out their missteps, they could easily repeat these mistakes, or even regress from them towards worse actions in the future. It is truly a sign of weakness to not only hide from your sins, but to actively attempt to create a climate where those sins are largely not up for discussion at home. This is definitely the case with China and the Tiananmen massacre in 1989, but is true of so many other countries as well. These actions don't increase stability, they merely stunt evolution and forward progress.

So what can we do? Remember...remember and discuss and write and talk and challenge others to not hide from these sore spots. Always keep in mind that its not about just one country (here, China), its about most countries. While some seem to forget June 4th, I sure as hell won't. I hope you won't, either. And while we're at it, I won't forget September 11, 1973; August 19, 1953; April 9, 1948; and a whole lot of other dates and events. History is political...if we don't fight to preserve it, we could lose it. The consequences would be frightening.