On January 3, 2008 the State Council issued the Circular of the State Council on Promoting Efficient and Intensive Land Use ( No.3  of the State Council, the Circular). The Circular calls for strict reviews of planning and standards for land use. It also puts forward specific rules aiming to reduce the amount of idle lands and better implement economic mechanisms for a more efficient use of land.
Under the Circular, all types of planning related to land use must be consistent with the overall land-use plan, and may not exceed the scale approved by the government. The government will strictly control the scale of urban land use. The Circular requires relevant authorities to promptly revise the technical urban planning standards, per capita land-use standards, and other urban planning control standards. Wide roads, large squares, and green belts that exceed actual need are prohibited.
The Circular emphasizes that the market plays a fundamental role in acquiring land resources. In most cases, no land user may obtain land-use rights without paying a fee. Even for land that in the past could be acquired for free through government allocations, the state land authority will, in the future, impel a gradual reformation to require the land user to pay a fee for its use of land for the following purposes: government offices, infrastructure projects such as transportation, energy, water conservation, municipal infrastructure projects, or various public utilities.
Consistent with the Measures for Land Reserve Administration issued by several departments of the central government in November 2007, the Circular states that municipal or county-level land resource administrations will be responsible for transferring land from the land reserves that have undergone preliminary development to land users. The Circular also provides that before transferring a piece of land, government authorities must specify the basic conditions for the use of the land, including the volume rate of construction, ratio of green space, and construction density, all of which may not be altered without government approval. A land user may only obtain the landuse rights certificate after paying the government the full price of the land.
Certain pieces of land must be publicly transferred through invitations to tender, auctions, or listings. These pieces of land include industrial land; land used for business purposes such as commerce, tourism/entertainment, and commodity housing; and any lot in which more than two potential users have expressed interest.
As for residential land, the Circular restates that the government will not supply land to develop houses. A land transfer contract or land allocation decision for residential land must specify conditions such as the minimum floor area ratio, the number of apartments per unit of land area, and the types of residential apartments. At least 70 percent of a residential piece of land must be used for (a) rent-controlled housing, (b) economically affordable housing, (c) price-controlled housing, or (d) commodity housing with a floor area of less than 90 square meters.
In addition, the Circular specifies a few measures to promote more efficient land use. In essence, if someone owns the land-use rights of a piece of land without developing it for a period of time, such a land user will either lose its land-use rights or pay hefty fees. Specifically, if a lot has not been developed for two years, and if the government can lawfully regain it for free, the government will reclaim it for other uses. If the lot has been unused for one to two years, the government will collect an additional fee equal to 20 percent of the land’s original price from the owner of the land-use rights. In addition, the government will soon promulgate rules to collect additional fees from the land user based on the increased value, resulting from rising land prices, of an idle piece of land, particularly land intended for real estate development.
The Circular encourages the development and utilization of spaces both above and below ground. If the land user increases the land-use efficiency and raises the floor area ratio of a piece of industrial land without changing the approved purpose of the land or adversely affecting the approved plan for the land’s use, the government will no longer collect additional fees for such an increase in area. If the floor area of workshops built on a new piece of industrial land exceeds the approved floor area ratio, the government will not collect additional fees from the land user. These measures are expected to benefit quite a few manufacturing enterprises.