Chinese Premier Wen Jiabao admitted at the Summer Davos forum in Tianjin that problems rising from demolition and resettlement relate to China's fiscal taxation system, which allows governments to cash in from the collective land acquisition. The governments, by acquiring land at a low price, sell it at many times higher. Farmers' houses and land are forced to be demolished or destroyed. In front of the powerful state and government, they have no way but to accept the obvious unfair compensation, sometimes along with threatening and physical harm.

The Premier said China must solve the problem systematically. Shen Kui, a law professor in Peking University, said law-makers plan to legalize collective land acquisition and compensation. This January, the law office of State Council issued Collection of state-owned land, housing and compensation Ordinance (draft) to speed up the amendment of the out-dated demolition regulation. However, the draft only applies to the acquisition?of the state-owned land, leaving farmers who helplessly demand their rights and interest on the collective land nowhere to seek justice.

Since last year, cases of farmers burning themselves to resist forced demolition prompt some scholars, including Shen Kui, to file to the law-making body, advising to consider over the legitimacy of the demolition regulations.

Though the draft yet to be passed into law, Shen denies the regulation aborted. He explained that the law office is taking the acquisition of collective land and compensation into consideration, which is equally important and even more urgent. Ma Huaide, the vice president of China University of Political Science and Law expressed that it takes time to make an effective law to counter the resistance and reluctance of local governments to follow the new regulation.

Ma Huaide explained the urgency of making law on collective law acquisition. The majority of land acquisition and demolition occur on collective land, which has no detailed regulation to govern the acquisition and protect the farmers, as available urban land (state-owned) becomes less and less and the urbanization expands towards suburbs and countryside. Yang Zaiming, a lawyer specializing in demolition and resettlement, said half of the dispute relates to collective land acquisition. In China, urban land is owned by the state, but the collective land belongs to farmers. "By acquisition, the state turns farmers' property to its own. Therefore, it is necessary to make a strict law on acquisition procedures and compensation," said Ma.

Public interests? How to define it?

The standing committee of National People's Congress rules in 2004 that the country can acquire the land by giving compensation for the public interests, though the implementation regulations of the law remain unchanged since 1998.

But how to define "public interests?" For whatever purpose, local governments are adept to find plausible excuses in disguise of "cause in the benefits of the people."

Professor Shen said many local governments believe to bulldoze down urban village accords with public interests, similar to old city rebuilding projects, which acquire houses on the state-owned land. "Of course, some of them may slump into slums if not to rebuild it. But does it apply to every case? Does it really meet the majority's benefit and interests?"

Ma said for the public interests, the public must participate?in drawing up the acquisition and compensation standards, and all the procedures and standards must go to details, and protect the farmers who lost their land.

Compensation? How?

But?in raising the compensation standard, the government has to spend more, a heavier burden to meet the financial need of urbanization.

The compensation standard is the biggest problem to legalize acquisition. At present, the compensation falls into three categories, land compensation fee, compensations for the land fixtures and seedlings, but only the latter two goes to the hand of farmers.

Shen said before being?nationalized, the collective land has actually no market value, so can't be compensated at market price. But if to compensate by the standard of acquisition of state-owned land and housing, then the appreciated value of the land is yet to discuss its ownship, because the value appreciation is pushed by governmental or developers' investment. If all the gains goes to the pockets of the owner, i.e. farmers, then it's not fair to the investors.

"Land finance," the biggest obstacle of law-making

Local governments profit immensely from taxing from land acquisition. If they refuse to concede profits, they can still shift the raised cost to tax payers even if raising the compensation. Then the land price can't be brought down, so is the housing price.

Government rakes in large amounts of land premium at acquisition. Usually they sell one mu to property developers at several million yuan when they merely compensate the owners at most 60,000 yuan. The price disparity is the profit governments get from the farmers.

And the governments claim they need money for urbanization, which cannot be covered by central governments. They rely on selling land to keep the cities flourishing and expanding, but many farmers are leaving out the benefit of urbanization.

?"To overcome the biggest obstacle, we need the central government's political courage," said professor Shen.