China
Why China’s growing cities do not threaten farmland
Author: John Gibson, University of Waikato
China recently announced strict controls to stop big cities expanding on to neighbouring farmland. The Minister for Land and Resources Jiang Daming justified these controls by claiming that good farmland has been ‘eaten by steel and cement’. To safeguard food security, land on the outskirts of cities will be classified as ‘permanent basic farmland’ that can be used only for cultivation.
These controls are to apply first to big cities like Beijing, Shanghai and Guangzhou. Attempts to restrict the growth of big cities are long-standing features of China’s urban policy.
Yet these restrictions likely will do more harm than good.
Housing prices in China’s biggest cities are extremely high relative to incomes, and restricting land supply will drive them even higher. For example, the price per square metre of apartments in Beijing is more than four times that of Chongqing, and the price-to-income ratio is over twice as high. It is variation in land prices, rather than construction costs, that accounts for these differences in house prices.
High house prices, and other distortions due to a restricted land supply, may choke off the expected benefits from allowing big cities to expand. China has more to gain from concentrating economic activity than is the case for developed countries. A legacy of China’s history of central planning and migration controls is that it has too many small cities.
It is also unclear whether or not China has a shortage of farmland.
China is increasingly open to importing land-intensive products, as shown by its recent free trade agreements with food exporters like Australia and New Zealand. Even ignoring trade, studies based on satellite remote sensing show that China’s cultivated land area in fact increased (by 2 per cent) in the two decades prior to 2000. These same methods also show that urban area expands by only 3 per cent for every 10 per cent increase in city GDP. This ratio is much less than it is elsewhere, indicating the dense nature of China’s cities.
Much of this evidence is ignored in policy discussions that suggest urbanisation in China relies excessively on land conversion, which is causing inefficient urban sprawl.
My recent paper, co-authored with Chao Li and Geua Boe-Gibson, estimates rates of area expansion for an almost national sample of 225 urban agglomerations in China from 1993 to 2012.
City area in China is measured in three ways. The first is to use administrative data on the built-up urban districts (shiqu) of prefectural cities reported in City Statistical Yearbooks. Such estimates may be too low since local level governments may undertake land conversions to help finance their budget but not report this to higher levels of government who may be setting limits on land conversion.
The other two methods use satellite-detected night time lights, with different thresholds of brightness (in percentiles of the maximum light detected) to distinguish urban from non-urban areas. Compared to other remote sensing data, night time lights tend to make cities look too large, especially if a low brightness threshold is used, but the relative error is small for large cities.
Over the two decades from 1993 to 2012 the average annual rate of expansion in land area of these agglomerations was 8 per cent according to night lights, implying a doubling time of nine years. In contrast, expansion rates appear to be just 5 per cent (15 year doubling time) if data from City Yearbooks is used. The gap in expansion rates between the administrative data and the remote sensing estimates is even larger once city GDP and registered population are factored in.
A clear pattern emerges of a slowdown in the rate of expansion of these agglomerations. The second decade from 2003–2012 has annual expansion rates that are from 6–8 percentage points lower than the first decade. If local GDP and population are factored in, the annual expansion rates are even lower — by between 6–10 percentage points. Even the built-up area estimates from the City Yearbook data show a significant slowing in expansion rates.
When city GDP and registered population is taken into account, it seems that — as previous studies have found — a 10 per cent rise in city GDP is associated with a 3 per cent increase in city area, and local population growth has no significant effect. There is no evidence to suggest there is a shift over time in the driving forces of urban expansion that causes an inefficient sprawl beyond what is driven by economic growth.
The increasing land area of the agglomerations reflects China’s urban population’s demand for living space, along with the land needed for commercial and industrial development. Since the rate of urban area expansion appears to be already slowing down, artificial restrictions that prevent big cities from expanding on to nearby farmland are neither necessary nor desirable.
John Gibson is Professor of Economics at the Waikato School of Management, University of Waikato.
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Why China’s growing cities do not threaten farmland
China
New Publication: A Guide for Foreign Investors on Navigating China’s New Company Law
The sixth revision of China’s Company Law is the most extensive amendment in history, impacting foreign invested enterprises with stricter rules on capital injection and corporate governance. Most FIEs must align with the New Company Law by July 1, 2024, with a deadline of December 31, 2024 for adjustments. Contact Dezan Shira & Associates for assistance.
The sixth revision of China’s Company Law represents the most extensive amendment in its history. From stricter capital injection rules to enhanced corporate governance, the changes introduced in the New Company Law have far-reaching implications for businesses, including foreign invested enterprises (FIEs) operating in or entering the China market.
Since January 1, 2020, the Company Law has governed both wholly foreign-owned enterprises (WFOEs) and joint ventures (JVs), following the enactment of the Foreign Investment Law (FIL). Most FIEs must align with the provisions of the New Company Law from July 1, 2024, while those established before January 1, 2020 have bit more time for adjustments due to the five-year grace period provided by the FIL. The final deadline for their alignment is December 31, 2024.
In this publication, we guide foreign investors through the implications of the New Company Law for existing and new FIEs and relevant stakeholders. We begin with an overview of the revision’s background and objectives, followed by a summary of key changes. Our in-depth analysis, from a foreign stakeholder perspective, illuminates the practical implications. Lastly, we explore tax impacts alongside the revisions, demonstrating how the New Company Law may shape future business transactions and arrangements.
If you or your company require assistance with Company Law adjustments in China, please do not hesitate to contact Dezan Shira & Associates. For more information, feel free to reach us via email at china@dezshira.com.
This article is republished from China Briefing. Read the rest of the original article.
China Briefing is written and produced by Dezan Shira & Associates. The practice assists foreign investors into China and has done since 1992 through offices in Beijing, Tianjin, Dalian, Qingdao, Shanghai, Hangzhou, Ningbo, Suzhou, Guangzhou, Dongguan, Zhongshan, Shenzhen, and Hong Kong. Please contact the firm for assistance in China at china@dezshira.com.
China
Lingang New Area in Shanghai Opens First Cross-Border Data Service Center to Streamline Data Export Process
The Lingang New Area in Shanghai has launched China’s first Cross-Border Data Service Center to facilitate data export for companies in Shanghai. The center will help with applications, data catalogs, and management, aiming to provide legal and safe cross-border data transfer mechanisms.
The Lingang New Area in Shanghai’s Pilot Free Trade Zone has launched a new cross-border data service center to provide administrative and consulting services to companies in Shanghai that need to export data out of China. The service center will help facilitate data export by accepting applications from companies for data export projects and is tasked with formulating and implementing data catalogs to facilitate data export in the area. The Shanghai cross-border data service center will provide services to companies across the whole city.
The Lingang New Area in the Shanghai Pilot Free Trade Zone has launched China’s first Cross-Border Data Service Center (the “service center”). The service center, which is jointly operated by the Cybersecurity Administration of China (CAC) and the local government, aims to further facilitate legal, safe, and convenient cross-border data transfer (CBDT) mechanisms for companies.
The service center will not only serve companies in the Lingang New Area but is also open to companies across Shanghai, and will act as an administrative service center specializing in CBDT.
In January 2024, the local government showcased a set of trial measures for the “classified and hierarchical” management of CBDT in the Lingang New Area. The measures, which have not yet been released to the public, seek to facilitate CBDT from the area by dividing data for cross-border transfer into three different risk categories: core, important, and general data.
The local government also pledged to release two data catalogs: a “general data” catalog, which will include types of data that can be transferred freely out of the Lingang New Area, and an “important data” catalog, which will be subject to restrictions. According to Zong Liang, an evaluation expert at the service center, the first draft of the general data catalog has been completed and is being submitted to the relevant superior departments for review.
In March 2024, the CAC released the final version of a set of regulations significantly facilitating CBDT for companies in the country. The new regulations increase the limits on the volume of PI that a company can handle before it is required to undergo additional compliance procedures, provide exemptions from the compliance procedures, and clarify the handling of important data.
Also in March, China released a new set of technical standards stipulating the rules for classifying three different types of data – core, important, and general data. Importantly, the standards provide guidelines for regulators and companies to identify what is considered “important” data. This means they will act as a reference for companies and regulators when assessing the types of data that can be exported, including FTZs such as the Lingang New Area.
This article is republished from China Briefing. Read the rest of the original article.
China Briefing is written and produced by Dezan Shira & Associates. The practice assists foreign investors into China and has done since 1992 through offices in Beijing, Tianjin, Dalian, Qingdao, Shanghai, Hangzhou, Ningbo, Suzhou, Guangzhou, Dongguan, Zhongshan, Shenzhen, and Hong Kong. Please contact the firm for assistance in China at china@dezshira.com.
China
A Concise Guide to the Verification Letter of Invitation Requirement in the China Visa Process
The application procedures for business visas to China have been simplified, with most foreigners now able to apply for an M/F visa using only an invitation letter from a Chinese company. Some countries are eligible for visa-free entry. However, a Verification Letter of Invitation may still be needed in certain cases. Consult the local Chinese embassy for confirmation.
In light of recent developments, the application procedures for business visas to China have undergone substantial simplification. Most foreigners can now apply for an M/F visa using only the invitation letter issued by a Chinese company. Additionally, citizens of certain countries are eligible to enter China without a visa and stay for up to 144 hours or even 15 days.
However, it’s important to note that some applicants may still need to apply for a “Verification Letter of Invitation (邀请核实单)” when applying for an M/F visa to China. In this article, we will introduce what a Verification Letter of Invitation is, who needs to apply for it, and the potential risks.
It’s important to note that in most cases, the invitation letter provided by the inviting unit (whether a public entity or a company) is sufficient for M/F visa applications. The Verification Letter for Invitation is only required when the Chinese embassies or consulates in certain countries specifically ask for the document.
Meanwhile, it is also essential to note that obtaining a Verification Letter for Invitation does not guarantee visa approval. The final decision on granting a visa rests with the Chinese embassy abroad, based on the specific circumstances of the applicant.
Based on current information, foreign applicants in Sri Lanka and most Middle East countries – such as Turkey, Iran, Afghanistan, Syria, Pakistan, and so on – need to submit a Verification Letter for Invitation when they apply for a visa to China.
That said, a Verification Letter for Invitation might not be required in a few Middle East countries, such as Saudi Arabia. Therefore, we suggest that foreign applicants consult with their the local Chinese embassy or consulate to confirm in advance.
This article is republished from China Briefing. Read the rest of the original article.
China Briefing is written and produced by Dezan Shira & Associates. The practice assists foreign investors into China and has done since 1992 through offices in Beijing, Tianjin, Dalian, Qingdao, Shanghai, Hangzhou, Ningbo, Suzhou, Guangzhou, Dongguan, Zhongshan, Shenzhen, and Hong Kong. Please contact the firm for assistance in China at china@dezshira.com.
- New Publication: A Guide for Foreign Investors on Navigating China’s New Company Law
- Lingang New Area in Shanghai Opens First Cross-Border Data Service Center to Streamline Data Export Process
- A Concise Guide to the Verification Letter of Invitation Requirement in the China Visa Process
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