Eminent Domain in the United States and China: Comparing the Practice Across Countries

Regardless of which side of the Pacific individuals reside on, the idea of the government taking property and uprooting citizens tends to evoke a considerable amount of backlash. In examining the eminent domain practices of the United States and China, this paper will provide a framework for evaluating and improving the peculiar processes of each country. The first two sections will, respectively, explore the legal framework of eminent domain in the U.S. and China. The third section will analyze the implications of both systems in light of two themes: (1) balancing the interests of stakeholders and (2) the role of public input and due process. Lastly, the conclusion section will examine the weaknesses of each system and suggest that the practices of both countries can be made more fair and efficacious by incorporating specific strengths of the other.

Eminent Domain in the United States

The “Takings Clause” of the Fifth Amendment bestows upon the government a constitutional right to take private property for “public use” as long as “just compensation” is provided.1 Although “just compensation” has typically been interpreted to be the fair market value of the property (as appraised by an independent third party), the definition of “public use” remains fluid. The scope of the government’s eminent domain power and broad interpretation of “public use” has been debated since the 1800s.2 But Kelo v. City of New London3 sparked an unprecedented amount of public attention on the topic when the Supreme Court held that a city could constitutionally seize private property for commercial development. Unbeknownst to many, the holding in Kelo is consistent with the Court’s “longstanding policy of judicial deference to legislative judgements in this field.”4 Specifically, the Court conducts a rational basis review and examines whether the use of eminent domain is rationally related to a conceivable public benefit.5

In theory, the Court’s hands-off approach should grant legislatures discretion to effectuate local endeavors. But in the context of state courts adjudicating suits brought against local governments, the lack of a concrete standard also gives state court judges a tremendous amount of power to engage in judicial fact finding.6 In Ohio, Norwood, Ohio v. Horney7 held that “an economic or financial benefit alone is insufficient to satisfy the public use requirement…the courts owe no deference to a legislative finding that the proposed taking will provide financial benefit to a community.” But in New York, Goldstein v. N.Y. State Urban Dev. Corp.8 ruled that “[a]ny such limitation upon the sovereign power of eminent domain as it has come to be defined in the urban renewal context is a matter for the legislature, not the courts.” Both decisions remain binding because the Supreme Court has allowed states to independently determine the scope of “public use.”

Eminent Domain in China

Unlike the emphasis on private property rights in the United States, in China, citizens do not have absolute legal rights to land.9 As a post-communist state, China has developed a dual land ownership program: urban land is state owned, and rural land is collectively owned by the village, which the government oversees.10 According to the Chinese Constitution, citizens obtain use rights to rural land by signing a fixed thirty-year contract where they promise not to alter the agricultural use of the land.11 This, along with other provisions of the Constitution aimed at preserving agricultural land and preventing “construction,” render the private transfer of rural land-use rights legally impossible.12

The Constitution stipulates that land conversion can only occur through “requisition,” China’s version of eminent domain.13 Although requisition is formally limited to public interest purposes, Shitong Qiao notes that in reality, “legal rules are either ignored or relaxed…[and] rarely preclude local governments from requisitioning rural land for industrial or commercial development.”14 This is partially because “public interest” does not have an explicit definition—it is frequently construed broadly to encompass an array of economic, cultural, and national defense construction projects.15 Thus, absent rare cases of intervention from the central government, local governments have full and final authority over eminent domain.16 Fang Ye argues that to local governments, eminent domain is all but an everyday “internal administrative act” that need not be publically disclosed nor scrutinized.17

Today, despite the Chinese government’s vigorous efforts to censor the protests, violent “mass incidents” that result from eminent domain are not uncommon.18 Zhu Keliang contends that the outcries by rural farmers primarily stem from the notion that, although the law formally calls for “reasonable compensation” to relocate affected individuals, the lack of oversight enables corrupt local officials to abuse procedural processes to defraud farmers of their compensation.19 In examining Shanghai’s massive subway development project, Mitchell Landsberg argues that with proper compensation, citizens actually do not mind being uprooted because they genuinely believe that development realizes a greater good for the province.20 This sentiment aligns with Chinese society’s emphasis on collectivism.

The Underlying Themes Behind the Practices

(1) Balancing the Interests of Stakeholders

Although the local governments in both the U.S. and China are the formal guardians responsible for balancing the interests of stakeholders affected by eminent domain, the reality is much more nuanced. China’s obsession with economic development and urbanization, combined with the virtual nonexistence of real property rights, creates a realm where the interests of politically weak farmers, the primary victims of eminent domain, are constantly sacrificed for the “greater good” of economic development.21 While economic development may benefit the government and developers, the political system in China provides no incentive for local governments to ensure that rural farmers receive reasonable compensation for the land taken. Instead, the “internal administrative act” of eminent domain has become a profit-making tool for local governments.22 Consequently, many farmers receive only a fraction of their land’s fair market value.23

In the U.S., the Supreme Court has held that since courts and judges are generally unfamiliar with local issues, they should defer to the legislature to balance the interests of stakeholders.24 However, the Court’s reluctance to explicitly define the scope of “public use” creates a power imbalance in which state courts are allowed to invalidate legislative findings of fact by applying a heightened level of scrutiny.25 By refusing to defer to local governments, using judicial balancing tests, and conducting de novo review, some state courts effectively strip legislatures of their ability to balance the interests of stakeholders. This is problematic because it creates a counter-majoritarian difficulty where provisions enacted by democratically elected officials are struck down by judges in state courts. In theory, local governments are granted the right and discretion to pass measures to further public welfare because they are elected to represent the people. But in this light, the lack of a hard rule from the Court inadvertently enables judges to substitute in their own values and arbitrarily encroach on the balancing rights of local governments.

(2) Public Input and Due Process

The diverse structures of government in the U.S. and China render the amounts of public input and due process available for citizens drastically different. In China, the near-absolute power of local governments, weak private property rights, and lack of judicial remedies make public input and access to legal recourse for takings prohibitively difficult. But considering how the Chinese government values economic development and collectivism over individual rights, the omission of public input does yield unique benefits. In particular, it enables the government to efficiently conduct mass-scale takings and effectuate economic development at unprecedented rates.26 However, the downside is that two million rural residents lose their land each year.27 This is especially problematic for generational farmers because the negative impacts of widespread under-compensation for property are exacerbated by increasing land costs in China.

Consistent with the emphasis on individualism, Alan Greenberger contends that zoning in the U.S. is meant to be a collaborative and inclusive endeavor that provides access to citizens.28 In addition to hearings, constitutional procedures and protections in place allow citizens to make legal challenges to the government’s exercise of eminent domain. First, some state courts ignore the rational basis approach in Kelo in favor of entertaining individuals’ narrow interpretations of “public use” that preclude economic development.29 In essence, this heightened scrutiny affords citizens an extra layer of protection against the government. Second, partially because the government recognizes that appraisal is an art and not a science, individuals can legally challenge the valuation of the property in question.30 However, the problem is that many victims of eminent domain cannot afford to hire a lawyer to contest the initial valuation.31

How Can Eminent Domain be Made More Fair & Efficacious?

The drastically different eminent domain practices in the U.S. and China illustrate how no single system is perfect. More importantly, the strengths of each system suggest ways in which the weaknesses of its counterpart can be reasonably improved to make the overarching practices more fair and efficacious. Although China’s system is extremely efficient, in the absence of redress, displaced farmers receive grossly inadequate compensation.32 Adopting the U.S.’s model of independent appraisals will make takings more fair for individuals by mitigating corruption and providing citizens with the reasonable compensation that they are legally entitled to. This thereby returns them closer to the status quo ante. According to Paul Robinson, when citizens begin perceiving a legal system as just, it influences societal norms and increases eminent domain’s moral credibility, which in turn can control the number of “mass incidents” in China.33

The U.S. and China have both delegated the important task of balancing the interests of stakeholders to local governments. However, this remains a half-hearted endeavor in the U.S. The Supreme Court’s reluctance to define “public use” inadvertently empowers state court judges to balance the interests of stakeholders in play by substituting in their own values. To solve this counter-majoritarian dilemma, the U.S. can adopt China’s approach of minimal oversight by, as Ilya Somin notes, pressuring the Court to set a hard rule for “public use” that includes broad blight exceptions.34 The purpose of this is not necessarily to promote the use of eminent domain. Rather, it is to recognize that there are cases where eminent domain is genuinely desired and justified. In those cases, democratically elected local officials—not state court judges—ought to have the decision-making power.35 Having broad blight exceptions provide municipalities with the flexibility necessary to promote economic development while simultaneously maintaining a healthy level of judicial oversight over potential abuses of power. The post-Kelo events support this proposition because they demonstrate that there are many democratic means and political processes available for legal recourse, such as voting local officials out of office and enacting reforms that limit the scope of takings.36 This makes eminent domain more efficacious and transparent because it allows municipalities to elect representatives who embody the community’s views on development. In effect, governments will be better able to plan for the future—furthering the fundamental objective of land use controls.

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Endnotes

1. U.S. Const. amend. V.
2. Wendell E. Pritchett, Beyond Kelo: Thinking About Urban Development in the 21st Century, p.898-900 (2006).
3. 545 U.S. 469 (2005).
4. Ellickson p.904.
5. Pritchett p.902 (2006).
6. Ellickson p.920.
7. 110 Ohio St. 3d 353.
8. 921 N.E.2d 164 (2009).
9. Shitong Qiao, The Politics of Chinese Land: Partial Reform, Vested Interests and Small Property, p.75 (2016).
10. Id. at 75-77.
11. Shitong Qiao, The Evolution of Relational Property Rights: A Case of Chinese Rural Land Reform, p.119 (2015).
12. Id. at 120.
13. Id.
14. Id. at 120-21.
15. Fang Ye, Analysis of Chinese Law: Eminent Domain Powers Versus Real Property Rights (2013).
16. Id.
17. Id.
18. Zhu Keliang, Land Reform Efforts in China (2012).
19. Id.
20. Mitchell Landsberg, Shanghai’s Subway System Moving Ahead at Full Throttle (2007).
21. Ilya Somin, The Conflict Over Takings and Property Rights in China and Its Parallels With That in the United States (2014).
22. Ye (2013).
23. Keliang (2012).
24. Ellickson p.904.
25. See Norwood.
26. Qiao, p.103 (2016).
27. Keliang (2012).
28. Alan Greenberger.
29. See Norwood.
30. Pritchett, January 31 Lecture.
31. Id.
32. Keliang (2012).
33. Paul H. Robinson, Criminal Law Case Studies and Controversies, p.100-05 (2016).
34. Ellickson p.918-19.
35. Pritchett, January 31 Lecture.
36. Week Three Part I PowerPoint.