Case Analysis: Fiat and Fairness – Why China can build cities overnight and India cannot

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Fiat and Fairness
Why China Can Build Cities Overnight and India Cannot

E xc e r p t e d fro m

Billions of Entrepreneurs:
How China and India are Reshaping Their Futures—and Yours
By

Tarun Khanna

Harvard Business Press
Boston, Massachusetts

ISBN-13: 978-1-4221-8058-7

8050BC

This document is authorized for use only by Yucheng Liu in Comparative Policy Process taught by Simone Bunse, Georgetown University from September 2015 to February 2016.

For the exclusive use of Y. Liu, 2015.

Copyright 2008 Harvard Business School Publishing Corporation
All rights reserved
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This chapter was originally published as chapter 4 of Billions of Entrepreneurs:
How China and India are Reshaping Their Futures—and Yours,
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This document is authorized for use only by Yucheng Liu in Comparative Policy Process taught by Simone Bunse, Georgetown University from September 2015 to February 2016.

For the exclusive use of Y. Liu, 2015.

Chapter Four

Fiat and Fairness
Why China Can Build Cities Overnight and India Cannot

Shanghai and Mumbai are the respective commercial capitals of China and
India. Each city features a stretch of waterfront—the Bund in Shanghai and
Marine Drive in Mumbai—as the defining architectural feature of the urban
landscape. Old colonial buildings, remnants of a bygone era, ring each waterfront. Beyond their crescent-shaped waterfronts, however, the two cities
could not be more different. A comparison of their origins and development
reveals the opposing sets of priorities China and India hold regarding public
and private property rights. Different priorities led to different policies
that shaped the different physical environments in which billions of people
now live. As with statecraft and access to information, an understanding of
property rights in China and India is as crucial for Westerners as it is for the
Chinese and Indians who wish to work together.
Visitors to Shanghai are immediately struck by the gleaming district of
Pudong, which has emerged in just over a decade as the highlight of the
city’s strategy to accommodate its eighteen billion residents. Pudong was
mainly farmland until 1990 when the Chinese government decided to set up
a Special Economic Zone there. Today Pudong epitomizes the government’s
massive effort to rebrand Shanghai from the Paris of the East, as the city was
once known, to its Manhattan. Pudong now boasts more skyscrapers than
Manhattan, and some say that its Lujiazui financial district, host to several
hundred multinationals, puts London’s Canary Wharf to shame. Pudong
has become a “must see” phenomenon. Its landmarks, the Jin Mao Tower,
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For the exclusive use of Y. Liu, 2015.

Oriental Pearl TV, the Broadcast Tower, and Shanghai Maglev Line, among
others, are modern marvels.
How did this happen? First, the idea of creating Pudong was not a matter of
public debate but came from the very top of the CCP hierarchy, more specifically, from Deng Xiaoping himself. Such an “agreement” would be harder to
reach in a heterogeneous society like India where leaders who represent a multitude of ethnic, religious, and socioeconomic interests, are often at odds on all
public policy matters. Second, even if there had been opposition to the idea, it
would have been difficult to publicize without a free press or other organs of
civil society independent of the Party. Nor could the judiciary, also beholden
to the Party, have adjudicated disputes fairly. But perhaps most importantly,
once the decision had been made in Beijing, virtually nothing could have
prevented the Chinese government from carrying out its agenda.
In contrast, the prestige of Mumbai’s nouveau riche Cuffe Parade development has been marred by the presence of Machimaar Village, a malodorous,
albeit colorful, fishing community that has shared real estate with skyscraper’s
upscale homes for some thirty years. During that time any city politicians or
administrators daring to suggest a redevelopment plan that would clear Macchimaar Village or any other shantytowns in Mumbai have been ensnared in
political turmoil. A vicious cycle of slum clearance and rebuilding has gone on
for decades. If a political party legitimizes a certain slum one year, the other
party outlaws it the next election cycle. As a result, slum dwellers and average Mumbaikaars (residents of Mumbai) alike suffer. Clearly the city can make
no tangible gains under its paralytic politic system.
Pudong is a visible example of what the CCP’s fiat authority can accomplish. With public infrastructure projects ongoing throughout the nation,
China has shown that, at least in the early stages, a country can have economic growth without embracing individual property rights. But can the
rights of the state permanently trump those of individuals? To what extent
can national development be an altar on which personal freedoms are sacrificed? Are those who decry the loss of personal freedom too easily silenced?
Or is it a worthwhile bargain to gain material wealth at the cost of submitting to the control of a political authority that gets things done? Mumbai’s
mess illustrates how private rights and public interests can collide. Is it right
for a nation to invariably err on the side of individual rights, even at severe
costs to the public?
But this is not all. No sensible planner could interpret Mumbai’s situation as
a mere result of theoretical debates about public versus private interests. Institutional inefficiency—resulting from well-intentioned constraints on the government, like the free press, judicial processes, and civil society—has checked
and balanced India into paralysis. Are private rights truly protected? In India,
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one never knows whether the rich or the poor, the foreign or the local, the
administrator or the politician will win a battle of disputed property rights.

Pudong: Why the Chinese Can Build Cities Overnight
Pudong was always just a river away from Nanjing Road, the commercial
center of old Shanghai. But an old Chinese saying reflected the lack of regard most people had for this marshy farmland: “One would rather have a
bed in Puxi [west of the river] than a house in Pudong.” This is no longer
true. Today there are five tunnels and five bridges connecting Puxi to
Pudong, with many more links planned.
The city’s development journey started in the mid-1980’s with a proposal by
Chinese American architect Lin Tongyan, but the plan stalled until Deng
Xiaoping launched his famous Southern Tour in 1992, an effort to allay postTiananmen fears and recommit China to economic reforms. For Deng, a consummate bridge player, Shanghai was a key card in his plan to develop China.1
In April 1990 the Chinese government designated Pudong as the “dragon head”
to lead the development of all coastal cities in the larger Yangtze Delta area.
Beijing’s political will was matched by its generous financial commitments—
grants, low-interest loans, and relocation expenses for affected factories and
their workers.2 Unusually, Beijing also let Pudong retain revenues above those
usually allowed. Further, as a measure of how important it was to Beijing,
Pudong received an elevated status in the government hierarchy. Asked if
Pudong was part of Shanghai, the deputy director of the Pudong Academy of
Development, Wang Guoxing, said that although they had hoped to be independent of the Shanghai municipal government and to deal with the central
government directly, they had failed. Yet Pudong attained, and still retains, a
higher status than other districts of Greater Shanghai.
Zhu Rongji, then Shanghai’s mayor, was told to attract foreign governments and international financial institutions able to supplement the project’s
funding by providing long-term, low-interest loans. To accomplish this, Zhu
was given unprecedented powers and became known as the “one-chop man”
for his dedication to cutting the red tape in the city’s approval processes. In
1996 Lujiazui was selected as the first district in China where foreign banks
could conduct business in local currency. Of course foreign banks had to
commit to Lujiazui if they wanted a license.3
Meanwhile, state-owned development companies were admonished to
think of innovative ways of financing their parts of the Pudong project. The
municipal authorities created a land market by selling rights only land use
to approved development companies. This served as collateral to get loans.
The government gained revenues from the resulting real estate developments
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by charging transaction fees and real estate taxes. A host of incentives were
offered to make Pudong the destination of choice for foreigners, including reduced income taxes for Sino-foreign joint ventures, tax exemptions for foreign
investments in infrastructure in the first five profit-making years, and a 50 percent tax reduction for five years after that.4 The Shanghai municipal government even granted residency permits to anyone from outside Shanghai who
bought an apartment in Pudong worth at least Rmb 500,000 ($60,200).
The result? Today, Pudong’s economic output nearly equals the total output of Shanghai ten years ago, and from an area of thirty square kilometers
in 1990 the district burgeoned to 100 square kilometers by 2004. During the
same period Pudong’s GDP rose from RMB 6 billion ($1.1 billion) to RMB
140 billion ($17 billion). More than nine thousand foreign companies entered
Pudong, including more than 180 Fortune 500 companies, and the Lujiazui
financial district alone hosted 150 Chinese and foreign financial organizations. This success is infectious; for example, the city of Jiading, northwest
of Shanghai, is trying to develop an auto specialty corridor. Despite a 26 billion
RMB ($3.1 billion) price tag, the governments of Shanghai and Jaiding are intent on building a state-of-the art stadium to lure Formula One racing. Do
they hope to break even with the venture? That concern seems to have been
lost in the rush to acquire this Western symbol of prosperity.
What about Pudong’s three hundred thousand displaced farmers? Under the
Sunshine Relocation Policy they were methodically and incrementally moved
to previously prepared accommodations and received some cash compensation
based on the acreage they lost. Although not large sums by today’s standards,
they were considered significant a decade ago. Many young farmers took jobs
in Pudong’s new factories and moved their families out of the district. The
older farmers took on miscellaneous jobs. Many of them became local officials,
entrepreneurs, or salaried workers in nearby factories. Observers pointed out
that most displaced farmers were better off, even if they became janitors in the
offices built on what had been their land. Finally, the plan identified distressed
households in need of government assistance. In the case of Pudong, where relocation methods were exemplary, it’s hard to find much dissent. This is not
true for other development-related moves in China that I discuss later.

Machimaar Village and Street People with Cell Phones: Why
Mumbai Cannot Be Shanghai
The fishermen were here first . . . when Bombay was a dumbbell-shaped island
tapering, at the center, to a narrow shining strand beyond which could be seen
the finest and largest natural harbor in Asia.
—Midnight’s Children, Salman Rushdie5

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In the 1960s and 1970s Cuffe Parade, at the southernmost tip of Bombay,
was the destination for the nouveau riche in India. Manicured apartment
complexes were inhabited by the city’s socially prominent, while upscale
bakeries, selling French bread and lemon tarts, sat between the skyscrapers.
But an eyesore encroached on this luxurious landscape. The fisherfolk of
Machimaar Village displayed hundreds of square feet of prawns and fish in
sidewalk stalls beside the hovels they called homes, commandeering what
could have been a prime beach for the glitterati.
It is somewhat embarrassing to remember the many days I walked past
Machimmar Village on my way to my daily tennis games. Dressed in tennis
whites, I was blissfully oblivious to the vast disparity between my life of privilege and the poverty of the mothers I passed along the way carrying baskets
of fish and squirming naked children. How preposterous it was that a poor
village could coexist with Bombay’s premier real estate and that it could be
only a matter of time, at least in my mind, before one of them (read Machimaar Village) would have to go. Yet nearly three decades later, both Cuffe
Parade and Machimaar Village are unchanged. While Cuffe Parade remains
one of the country’s most expensive real estates, home to the rich and famous, thousands of fisherfolk still make their living by casting their nets
from Macchimaar Village into the waters of the Arabian Sea.
In 2007 I reenacted my boyhood stroll past the fishing village. Ramnath, a
wizened sixty-year-old, claimed to have lived in the village for forty years, and
had retired, sort of. His son still fished daily, his wife took the catch to the
local market, and he helped out by cleaning and drying the fish. Although
Ramnath’s family earned just Rs. 10,000 per month (about $250), they managed to make ends meet. How? As part of the “informal sector” they paid no
taxes, they ate what they caught, they paid no rent for their makeshift home,
and they put nothing aside for a future that seemed impossibly utopian to
plan for given their day-to-day existence.
“Why don’t you move away?” I asked Ramnath.6
“Why would we? We have the best view in the city!” he replied. Indeed,
they overlooked the same seashore and cityscape as some of the best-heeled
citizens of Mumbai. “And,” he added, tongue-firmly-in-cheek, “we have the
Ambanis as our neighbors.” The Ambani family is India’s first family of the
nouveau riche. Its founder, Dhirubhai, built a fortune in petrochemicals, and
his two heirs, Mukesh and Anil, independently launched their own multibillion-dollar business conglomerates. During my conversation with Ramnath
we were joined by a young mother named Usha, carrying a baby on her hip.
“This is a great place,” she told me. “I hope I can settle here. I’m moving
here from a coastal village in Maharashtra where things are pretty bad. I
hope I can get into the dhandha.” Dhandha is Hindi for “trade” and refers to
the fishing trade.
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I asked, “Don’t the rich people try to move you out?”
“Not anymore,” replied Ramnath. “At election time people come around
pretending to do things. But we can’t trust anyone. If they offer us something, I’m sure they’ll not follow through once election season is over, and
then where would we be?”
These descendants of the Koli tribe (koli in Marathi, the local language,
means both spider and fisherman; both capture their prey with nets) were
exactly the way I remembered them two decades ago. Time has stood still in
Machimaar Village. Indeed, the Koli have witnessed the handing of Mumbai
from the Gujarat Sultans to the Portuguese, and then from the Portuguese
to the British in the form of the dowry of Catherine of Braganza to Charles
II, and finally from the British to independent Indians.
How is it that the Kolis have not been removed as part of some urban renewal scheme, as they surely would have been in China? Historically Indian
law has protected their habitat as a matter of principle. In the 1990s the
Supreme Court restricted land reclamation and the removal of fisherfolk
when it implemented Coastal Regulatory Zones. Justice Jeevan Reddy of the
Supreme Court, while upholding the Monsoon Trawl Ban, expressed the
court’s view of development:
. . . public interest cannot be determined only by looking at the quantum of
fish caught in a year. . . . The government is perfectly justified in saying
that it is under obligation to protect the economic interest of the traditional
fisherpeople and to ensure that they are not deprived of their slender means
of livelihood. Whether one calls it distributive justice or development with
a human face, the ultimate truth is that the object of all development is
the human being. There can be no development for the sake of development.
Priorities ought not be inverted nor true perspective lost in the quest for
more production.7
The law spells it out: “the object of all development is the human being.”
Unlike China, where laws allowed Pudong to be built overnight, India puts a
priority on “development with a human face.” True, Cuffe Parade’s wealthy
residence associations have periodically urged the city government to demolish the shanties. Occasionally demolitions follow such entreaties, but the
ramshackle homes are always rebuilt. Although the rich could force their
politicians’ hands and bribe their way to a fish-free nirvana, the reality is that
the rich rarely vote. In contrast the residents of Machimaar Village do vote,
and the politicians, the ultimate homo economicus, respond to those votes by
protecting the property rights of the poor. Further, the symbolism of uprooting a poor fisherwoman to cater to elites enjoying Cuffe Parade’s posh facilities would generate political heat in socialist India.
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For the exclusive use of Y. Liu, 2015.

Machimaar Village’s saga is not an isolated one. Whenever I drive from
the airport toward South Mumbai, to Cuffe Parade, I pass Dharavi on the
right-hand side, a 175 hectare of swampy land that is home to nearly one
million people and is reportedly Asia’s largest slum. The stench emanating
from the open sewers is unbearable, yet the inhabitants of Dharavi manage
a vibrant, informal economy that generates $500 million in goods and services annually. Schools, clinics, shops, and bakeries gainfully employ thousands of people in the Dharavi slum. Gods and politicians are everywhere;
temples and mosques easily coexist, and pockets of the slum are divided
among strongholds of various political parties and slumlords who lay down
the law, mafia style. Like Machimaar Village, Dharavi is a landmark, a symbol, even a force of nature.
Successive governments have tried to redevelop Dharavi by converting
parts of the slum into legal properties. The catch, of course, is that the slum
dwellers are not recognized or given legal status and therefore have no right to
the properties. Rather than fight the move in the courts, the disenfranchised often simply pick up and reestablish down the street, carrying television sets, bicycles, motorcycles, cell phones, and reconstructing their makeshift structures.
As if to underscore the enormous differences between Indian and Chinese
urban reform, in 2003 the management consulting firm McKinsey and Company published Vision Mumbai, a report that laid out a to-do list for the
“Shanghaization” of Mumbai. One of McKinsey’s face-lift suggestions was
amending government regulations to allow the construction of taller skyscrapers,8 a move that undoubtedly would have entailed clearing several
slums where 50 percent of Mumbai’s population made their homes. No
sooner was the report issued than it became a lightning rod for criticism from
environmentalists, former bureaucrats, academics, and activists. The media
suggested that the only redeeming feature of Vision Mumbai was that it was
prepared gratis by a firm known for its exorbitant rates. The fiery reaction
to the report demonstrated that for most Indians, changing infrastructure
for the sake of national development was an abstract and unwelcome concept. The people could not embrace massive change when it conflicted
with personal well-being, and no leader emerged with the political imagination needed to make the case for public interest.
These attitudes are not changing. In 2005 Vilasrao Deshmukh, the chief
minister of the state of Maharashtra (of which Mumbai is the capital),
embarked on a grand project to rid “akha Mumbai” (in Marathi, the local
language, “all of Mumbai”) of slums. Bulldozers demolished twenty-five
hundred shanties and displaced about a million people. Then Deshmukh
was put in his place. He received a phone call from Sonia Gandhi, the national president of the Congress Party and reputedly the power behind
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Prime Minister Manmohan Singh, asking him to back off. He did. Another
Congress Party member stated, “Mumbai can never be Shanghai,” and it
became politically suicidal to use the term Shanghaization in India.
So how does urban renewal happen in India? One thriving example can be
found south of Delhi, where in the last two decades farmland has given way to
urban development. Here, a private-sector entrepreneur has achieved—albeit
much more slowly—what the state achieved in Shanghai. K. P. Singh, the head
of Delhi’s DLF Group, has transformed fragmented holdings of agricultural
land into a modern metropolis.
DLF is arguably India’s leading real estate development company, and K. P.
has built DLF into a real estate and construction group with revenues of about
Rs. 150 billion ($35 billion) and, in 2007 a market capitalization greater than
$30 billion. He is now one of the world’s wealthiest men.9 Equally extraordinary
is K. P.’s transformation of vast acres of undeveloped land into one of the most
modern places in India, Gurgaon. This city bordering south Delhi is now famous for its sleek office towers, shopping malls, multiplexes with state-of-the-art
projection systems, upscale homes and condominiums, and even a world-class
golf course. How did K. P. accomplish this in India’s paralytic political climate?
I spoke with him at his office in the DLF Building, located in the heart of
Delhi’s business district. In the manner of a headmaster chiding his young
tutelage, he said, “A lot of you young people don’t know that DLF has been
around for many years. You think Gurgaon just sprung up from nowhere.
Raghuvendra Singh started DLF in 1946, before partition.”
I told K. P. that twenty years ago my parents moved south of Delhi to
what was then the village of Gurgaon. Friends and family derided the move
saying, “There’s nothing there. You’re moving to the sticks.” Now it’s a
bustling community, a desirable address. K. P.’s eyes glistened. “Most of
South Delhi was developed by DLF. People don’t know that.”
That afternoon in his office, I learned just how far back K. P.’s history with
DLF stretched. In 1954, he married the eldest daughter of DLF’s founder,
Raghuvendra Singh. He explained how his association with the family business coincided with India’s changing land policies, reminding me that in
1957 the government passed the Delhi Development Act, making land development a concern of the state. K. P. waved his hand dismissively. “The socialist way of thinking came into play in the early 1960s. You see, in the first ten
years after independence the urban development policy was very good—
DLF was doing well. There were major incentives to private developers, and
most of South Delhi was developed then.” He shook his head. “But since
1961, there was a socialist shift and a total elimination of private sectors in
urban development. This was the start of a plethora of fly-by-night developers operating under state patronage. Of course state patronage is a loosely
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defined term. Sixty percent of Delhi is unauthorized.” Throughout the
1960s DLF made few gains. When K. P. joined the company in 1971, it was
ripe for change.
In the sixties, DLF receded. We just did not want to do business under these
circumstances. But then, in 1971, wanting to do something new, I joined DLF.
Hungry for business, I started to lobby the government and build alliances. It
has taken me thirty years. During Rajiv’s [Prime Minister Rajiv Gandhi] time
things started to look up. Rajiv saw the potential to business when the state
got out of the business of being in business. Under him things started to
change on the policy front, and I had already started to acquire land. So the
timing was good.
You know these three and a half thousand acres on which DLF sits? The
government did not just hand it to me and say “go build.” I began acquiring
the land in the late 1970s. I negotiated day and night with seven hundred families who each owned four or five acres of land. Remember we are talking
about a heterogeneous society. If brothers owning land were hostile to one another, we had to negotiate with them; if the daughter had a stake and lived in
a village a hundred miles out of Delhi, we had to get her on board. To earn
their trust, I dressed like a farmer, went to their houses evening after evening,
when the farmers come home from the day’s work. I had to make sure we got
the records straightened.
K. P. Singh sighed, as if still recovering from the effort of those negotiations. I thought about farmers in northern India, the very people who use the
tractors made by Mahindra and Mahindra. Unlike the American hobbyist
who buys a brand-new vehicle, the Indian farmer typically has a tractor that
is in disrepair, second- or thirdhand, polluting, and noisy. In my mind’s eye I
saw the farmer perched on his tractor, his skin dry and parched from
spending all day in the sun, dressed in a turban and loose-fitting garments.
“You see, assemblage of land remains the biggest problem in developing
it,” K. P. explained. “Unlike in other countries, I can’t run a bull-dozer over
the occupants. If one of them goes to court, I’ll be in litigation for the rest
of my life.”
“Were you ever in court?” I asked. “And how did you convince the farmers?”
I thought of the women on the farms, the saris they wear draped over their
heads as protection from the sun as they haul bricks on a construction site,
work in the fields, of course carry babies on their hips, prepare meals, and care
for the home. I thought of their dignity, the colored bangles on their arms, nose
rings and earrings, and I wondered if it had been difficult for K. P. to convince
them to give up their land. K. P. leaned back in his chair, smiling with pride, to
tell me he’d acquired most of DLF land without any major litigation, and on
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credit. “I took a loan from one farmer and then promptly used it to buy additional land. The farmers became my bankers and I became the bank for them.
It was literally all about trust. At the end of each month, my guys would
deliver the interest to these farmers personally. That kind of thing doesn’t happen nowadays.”
This, I thought, was truly incredible. Much like contemporary U.S. businesses that consolidate so-called fragmented industries, K. P. bought out the
farmers to do things with the large properties that an individual farmer
could not. Today DLF continues to operate in much the same way. Brokers
sometimes represent unknown buyers and sellers, and often brokers don’t
know one another’s identities. That way K. P. can buy land at less than what
it’s worth. The full market value of the land is high because of government
distortions that constrict effective land supply: the Urban Land (Ceiling and
Regulation) Act,10 rent control, a very high stamp duty preventing efficient
property transfers, and blocks of sarkaari zameen (government institutions
holding prime real estate) that cannot be used for anything.
DLF’s story is portrayed throughout India as a massive entrepreneurial
feat. But some people question India’s big developers, claiming that they
profit unduly from the opacity of the land market and are complicit in perpetuating such opacity. As Pratap Bhanu Mehta, a leading political scientist
in India, says, “No one quite knows how the large builders acquire land from
the government. No detailed public records exist. How can some builders
who are supposedly bankrupt continue to live in such affluence? There is
widespread suspicion of a nexus made of the mafia, the media, builders, and
politicians. What is good however is that the judiciary does poke holes
through this once in a while.”
It is important, however, to keep efficiency and accountability conceptually distinct. The Chinese government is efficient, even if not accountable
and transparent. A privately held company, as DLF was until recently, is not
accountable either, at least in the sense of a public corporation, but it does
get the job done. In India the DLFs must compensate for a state that resists
development for fear of treading on individual property rights.

The Power of Rivers
Yet another challenge both China and India face is tapping into the power of
their rivers. The Yangtze River in China and the Narmada River in India have
been mythologized for centuries by poets and writers in their respective
countries. The Yangtze, which originates in the Qinghai-Tibetan Plateau,
also known as the Roof of the World, runs 6,380 kilometers eastward across
mainland China before it pours into the East China Sea, passing through
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land inhabited by four hundred million people. The Narmada River, which
rises on Amarkantak Hill in the state of Madhya Pradesh, passes through the
Marble Rocks at Jabalpur and the valley between the Vindhya and Satpura
ranges, and continues through the states of Madhya Pradesh, Maharashtra,
and Gujarat. Finally, eight hundred miles later the Narmada pours into the
Arabian Sea at the Bharuch District of Gujarat. Hindus, some of whom consider the Narmada even holier than the Ganges, believe the river sprang
from the body of Lord Shiva and that the mere sight of its beauty will purify
the soul.
Plans to engineer dams great enough to harness the natural power of these
immense rivers have long histories of contention. In China the idea dates back
to Sun Yat-sen, who estimated the Yangtze could power all the country’s
railways, electricity lines, and factories. India first considered damming the
Narmada in 1901, when the British Raj established the First Irrigation Commission of India, but it was only after independence that the project gained
momentum.
Despite countless studies and commissions, construction of dams in both
countries was suspended for decades. By the late 1980s Chinese efforts to
tame the Yangtze had to contend with a new global political economy. India’s
proposed Narmada Dam came under increasing attack from engineering and
environmental experts as well as the public. Big dams had become unfashionable, if not completely taboo, among development professionals; and environmentalists and activists argued that the human and environmental costs,
displacement, and degradation far outweighed any benefits.
Each nation responded to its dam controversy in a manner consistent
with the ethos of its decision-making process: China by fiat authority and
India by democratic dissent.
China’s most enduring and outspoken critic of damming the Yangtze was
Wangli Huang, the late professor of hydrology at Tsinghua University. By
the 1950s Huang had conducted years of research on the Yangtze and determined the dangers of a building design that did not consider potential sedimentation problems. For daring to criticize the CCP, Mao sent Huang to a
labor camp in 1958, and during the subsequent Cultural Revolution even the
professor’s children were pressured to denounce him. Still the project remained just a matter of study. In the late 1980s Dai Qing, a trained missile
engineer who worked with Chinese military intelligence before becoming a
journalist, published a scathing political critique called Yangtze, Yangtze.
Nevertheless, in 1989 two feasibility studies, one by the Chinese and the
other by the Canadian International Development Agency and the World
Bank, concluded that a dam more than 550 feet tall would be technically, economically, socially, and environmentally sound. The project was sanctioned by
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the National People’s Conference in 1992, and soon after that the Fifth Plenary
Session of the Seventh National People’s Congress approved a resolution to
proceed with the Three Gorges project with a vote of 1,767 to 177, with 664
abstaining—indicative of legislative dissent by Chinese standards, where most
resolutions pass nearly unanimously. In 1994 the project officially got under
way, and in 1995 the resettlement of about 1.5 million people began.
International opposition to the building project soon translated into financial hurdles. In 1996 the World Bank and the U.S. Export-Import Bank
declined to provide assistance, citing environmental concerns. But in January
1997 the State Planning Commission approved the issuance of 1 billion yuan
($121 million) in corporate bonds for financing further construction. In
March 1997 Chongqing was upgraded to a municipality, a move to ease resettlement and expedite the project. Over the course of the project, allegations
of corruption and fraud surfaced. Many observers feared that substandard
materials were being used, ultimately risking the lives of millions.
In 1999, after some high-profile construction accidents at the site, Premier
Zhu Rongji, the man responsible for Shanghai’s redevelopment and an advocate for higher construction standards, sounded caution. In 2000, while addressing the Ninth Plenary Session of the Three Gorges Project Construction
Committee (TGPCC), which was under the State Council, Zhu urged the
builders to step up environmental protection and ecological construction in
the dam area and improve the resettlement of local people. Observers saw the
premier’s comments as a response to the increasing corruption scandals that
had engulfed the project. He emphasized that builders bore a “mountain of
responsibility on their heads.” The premier’s comments were widely reported
in the press.11
China’s official media reported in 2003 that the reservoir at Three Gorges
was deep enough for the dam’s turbines to begin generating hydroelectric
power.12 But that same year a report published by an international nongovernmental organization pointed out several problems. Compensation to
the resettled population had fallen short, promised jobs no longer existed,
police used excessive force to mute protests, and embezzlement of construction funds was continuing.13
The Three Gorges Dam finished ahead of schedule in 2006. Officials
stated that when its twenty-six turbines become operational in 2009, the
dam will have a capacity of more than eighteen thousand megawatts. However, unlike the model relocation program for the farmers of Pudong, the
damming of the Yangtze will not end happily. An estimated one million
people will have been relocated from their homes and more than twelve
hundred towns and villages will be submerged under the rising waters of
the new dam.
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As for India’s plans to dam the Narmada River, initial work on the project
started in 1961, but controversy surrounding the sharing of water and costs
between the three concerned states stalled construction for nearly twenty
years. Not until the 1980s, when the sheer scale of the dam became public,
did the project once again acquire notoriety. Taming the Narmada and its
tributaries involved building 30 big dams, 135 medium dams, and 3,000 small
dams. Today the Narmada Valley Dam controversy has split the nation in
two. Some quote Nehru’s famous lines describing dams as “temples of modern India”; others, digging deeper, have found that Nehru also called dams
“a disease of gigantism.”14
Unlike China, however, India can tolerate controversy. Medha Patkar
came on the scene in 1985 as a student studying the fate of communities
threatened with submersion. She, along with her group, Narmada Bachao Andolan (Movement to Save the Narmada), is effectively the Mother Teresa of
dam dwellers. Arguing that building the dam violates the fundamental rights
of the people who will be displaced, Patkar has succeeded in internationalizing the issue. She served on the World Commission on Dams, an independent body sponsored by the World Bank to review the performance of large
dams and make recommendations for future planning of water and energy
projects. Patkar’s Andolan single-handedly changed the World Bank’s perspective on large dam projects across the world.
While the World Bank waffled and Patkar agitated, the Ministry of Environments and Forests provided the project with a conditional clearance in
1987. Five years later the World Bank commissioned a study of the project
to be conducted by an independent team led by Bradford Morse. The socalled Morse Report concluded that the project overstated its benefits
and underestimated its environmental and human costs, and suggested that
the bank take a fresh look at it. The government of India refused to accept
the findings of the Morse Report. This provoked Patkar’s movement to file
public interest litigation in 1994.15 In response, the courts halted work on the
project in 1995.
The court did a complete turnaround in October 2000 when the majority
of the judges of the Indian Supreme Court cleared the way for the construction of the Sardar Sarovar Dam, one of the biggest dams to be built on the
river. Patkar responded, “The Supreme Court, thus, has betrayed the tribal
and peasant communities in the country at large and specifically, those in the
Narmada Valley. Judiciary in this country is clearly under various political
pressures and probably cannot act with the law honestly, can’t decide on
merit of the case alone.”16 Supreme Court rulings in 2005 stated that raising
the height of the dam above 360 feet was illegal until families that were temporarily and permanently affected by the construction were relocated.
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By March 2006, however, authorities had allowed the addition of 33 feet
to the height of the Sardar Sarovar Dam. In protest, Patkar went on an indefinite hunger strike outside the house of the ruling party’s leader. Such
fasts in India are associated with Mahatma Gandhi’s fasts in protest of various aspects of British rule and have a moral aura to them. Other protesters
fasting with Patkar told the press that they were there because their land
stood to be submerged by the additional height of the dam and they had not
been offered any compensation for it. Patkar was eventually arrested.
Two months are a long time on the Indian political scene. In June 2006
Patkar was somewhat vindicated when the state government of Madhya
Pradesh issued an order to stop construction of the Maheshwar Project, another of the dams slated to be built on the Narmada. The state ministry
announced that work on the dam would not continue until a comprehensive
rehabilitation plan was created.
That dam was supposed to have been completed in 1995.

A Tale of Two Other Singhs: How Individual Can India’s
Individual Property Rights Be?
My first impression of Surat Singh, a lawyer in the Indian Supreme Court,
was how different he appeared from the Boston Brahmins and legal pundits
to whom I had become so accustomed. There was no tweed jacket, no bow
tie, no glasses, and no tan briefcase in hand. When I contacted him on the
phone, he’d described himself as a “short, arrogant guy with a loud laugh.”
Because he’d participated in several high-profile cases in India, and held
masters of law degrees from Delhi and Oxford Universities, and a doctorate
in law from Harvard, I’d asked him to guide me through the thicket of
Indian property law. On his suggestion, we met in the lobby of the Park
Royal Hotel in south Delhi.
Dr. Singh’s most discernable accoutrement was a small hand towel that
doubled as a handkerchief. He accentuated the urgency of what he had to
say by periodically leaning across the coffee table and dabbing the perspiration off his nose and forehead. The only break he took was when he glanced
askew at his companion, a Delhi real estate broker, looking for authentication of what he had just said. I merely took notes during this virtuoso performance, occasionally posing a question.
Dr. Singh’s story began, not quite at the beginning of how property
rights came into being in India, but rather at how they evolved immediately
after independence when a number of constitutional articles specified the
fundamental status of property rights in India. Any Indian was guaranteed
by law to be able to own property.17 There were caveats, of course. Under
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Article 31, for example, no one can be deprived of their property except by
law, but the law is required to set compensation or principles on which such
compensation is to be paid. At this point, Dr. Singh alerted me that despite
the “sacrosanct” place of property rights in the Indian Constitution, the two
most important institutions of Indian democracy—the judiciary and legislature—soon found themselves at loggerheads over the status of those rights.
“You have to understand the socialist ideology and land reform background,” warned Dr. Singh.18 He explained that property rights law in independent India arose in the context of an overwhelming desire for equitable
land reform in the aftermath of the exploitative zamindari (land tenure) system, under which the propertied few, the zamindars, had lorded over the
masses. “There was an unavoidable tension between citizens’ right to property and the government policy of fashioning an egalitarian society.” At the
time, Nehru’s Congress Party particularly wanted the government to be able
to acquire (preferably without compensation) and control private assets (read
as land and some businesses) for public good. Soon after independence, several land reforms were passed. Zamindari was abolished, ceilings were fixed
on land holdings, cultivating tenants secured permanent rights, and in some
states the law regulated the share of the landlord. No sooner had these laws
been enacted, however, than differences between the judiciary and the legislature on the question of property rights became apparent. Behind this tension were several prominent cases in which the legislature continued to demand powers to appropriate private property, and the judiciary continued to
question the right of the legislature to do so.
At first the legislature seemed vindicated. In the First Amendment to the
Indian Constitution, enacted in 1951, the judiciary permitted the government
to acquire estates—a term broadly defined to cover almost all agricultural
land and, in particular, properties owned by zamindars and other revenue
farmers—in the public interest. Another part of the amendment (termed the
Ninth Schedule) declared that none of the laws related to several agrarian
reforms could become invalid on the grounds that they violated fundamental
property rights embodied in the constitution. When landowners continued to
petition courts on grounds that appropriation of their land violated their
rights, the Supreme Court, in two well-known cases, rejected the argument
and confirmed Parliament’s right to amend the constitution. A minority of
dissenting judges continually questioned that parliamentary right. However,
Nehru’s towering personality and charisma, and the idealism of the first years
of independent India, contributed to the legislature’s upper hand until his
death in 1964.
The tussle between the judiciary and the legislature over the question of
property rights eventually culminated in their being relegated to a weaker
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statutory right. Property rights were no longer fundamental and so were vulnerable to legislative whims. Dr. Singh emphasized one of the most severe
consequences of this: “The problem was that in removing the right to property as a ‘fundamental right’, no citizen has the right to approach the Supreme
Court under Article 32 [which allows a redress of any violation of fundamental rights]. And with it goes the possibility of speedy adjudication.”
Over the years each act of judicial activism in favor of individual property
rights prompted Parliament to simply amend the constitution. One such
case was Golakhnath v. the Union of India. Golakhnath was a well-known
priest and religious personality who had owned an estate that had largely
been declared “surplus” under the Punjab Security of Land Tenures Act of
1953.19 The Golakhnath family petitioned the Supreme Court, claiming that
their rights to acquire and hold property had been violated.
Eleven Supreme Court judges heard the Golakhnath case in 1966. Chief
Justice Subha Rao, who had acquired a reputation of favoring individuals’
right to property over the government’s right to acquire it, stated that Parliament could not meddle with individuals’ fundamental rights. He suggested
that there was an inviolable basic structure to the constitution and that fundamental property rights were part of that sacrosanct portion, making them
immune to legislative maneuvering.
“Mrs. Gandhi was furious,” Dr. Singh exploded as he mimicked Indira
Gandhi’s rage. “She said that the Supreme Court does not really know the real
situation in India. The property is concentrated in the hands of the few and
the masses are suffering.” Bold judicial activism ran afoul of the political establishment’s then-populist policies. Even though the Golaknath judgment
would not affect any previously enacted land-related amendments, it had
set off alarm bells in Parliament. To make matters worse, within just a few
weeks of the Golakhnath verdict, the Congress Party incurred heavy losses
in the parliamentary elections.
Meanwhile Parliament had a new battleground on which to flex its muscles.
Reiterating its socialist suspicion of concentrations of wealth, the legislature
went after princely families who had exerted their power over the populace
through the end of British rule; the so-called privy purses offered to those families in return for their recognizing the sovereignty of the Union of India; and
the banks, deemed instruments through which economic power could be concentrated to the detriment of the common people. Overnight, and without
compensation, estates were taken and banks nationalized. But the Supreme
Court once again upheld property rights and struck down the parliamentary
order. Further, the court ruled 10 to 1 that the nationalized banks had not determined compensation properly. The Parliament reacted with equal ferocity.
Two amendments in 1971 authorized the Parliament to amend any part of the
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constitution and removed from judicial purview the right to question compensation paid to property owners.
Another case involved an individual petitioning the Supreme Court to
preserve his estate (Keshavananda Bharati v. the State of Kerala) but also spoke
to the extent of Parliament’s power to amend the constitution. The verdict
was split. “Six voted along what I call British lines. That is, they took the
view that elected parliamentarians are the voice of the people, and this
voice can move to acquire property. Six voted along what I call American
lines, that is, embracing the view that the powers of government should
be heavily constrained and individual right to property was paramount.
The last, Justice H. R. Khanna, took a courageous stand. He said that some
basic rights in the constitution are indeed above laws. But he said there is a
separate issue of whether the right to property, until this time thought of as
part of Basic Rights, was in fact one. He decided it wasn’t.”
So, concluded Dr. Singh, “the operation was successful, but the patient
was dead.” As it stands today the right to property is not a part of the inviolable basic structure.
“But India is a land of paradoxes,” he also advised. In 1978, the Supreme
Court focused on the scope of Article 21, which says that “no person shall
be deprived of his life or personal liberty except according to procedure established by law.” It interpreted “liberty” expansively, including the right to
live with human dignity. And it insisted on reasonable, just, and fair procedures, and ruled against arbitrary action, preferring instead the American
“due process” clause.
Thus what Parliament took away in 1978 by deleting Article 31 (right to
property) from the list of fundamental rights, it brought back through judicial interpretation under Article 21 (right to life and liberty). The net result
is that the right to property can be protected as a fundamental right. “But
whether it is America or India, there is no free lunch. One has to be extremely resourceful because it costs property to protect your property
rights, even in democracy,” warned Dr. Singh humorously. Thus property
rights in India are unclear because of the very institutions meant to guarantee them. This includes not just the courts and the legislatures but also bureaucracies. The role of the latter is apparent in another Singh story—a story
both incredible and true.
I ran into the second Mr. Singh in Vasant Vihar, an upscale Delhi residential area. The former CEO of British Oxygen in India, this Mr. Singh
rents the upper half of his two-story house to an American journalist and
his Indian wife. Unable to save much in the cash-poor, perk-rich era of his
working life, the Singhs use the rental income from the house to maintain
a comfortable way of life. So it came as a surprise when Mr. Singh received
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a letter from the court saying that his house would be seized by the court,
apparently because he had not paid back a loan on which the house was
listed as collateral.
“I had never put up the house for anything. We don’t need any loans,
thanks to the house,” he assured me. After some investigating, Mr. Singh unearthed a bizarre scandal. From the records kept by the Delhi Development
Authority (DDA), a government body that oversees all urban development
projects in Delhi, his neighbor had acquired a copy of all legal papers pertaining to the house and used the house as collateral to take out a loan on which
he neglected to repay. The notorious DDA had required copies of the papers
during a pro forma change of the house’s status. “How the neighbor got access to these papers, who was complicit in DDA, I don’t quite know, but I
suspect even the bank was involved,” explained Mr. Singh.
The discovery pushed the eighty-three-year-old into high gear. “You see,
first, I contacted my brother—a well-known Supreme Court lawyer—and he
assured me that that the matter would be solved, because the city does maintain proper records on homes, it takes a while to unearth them, but they have
them and with his contacts, we didn’t need to oil any palms. Plus, I keep Xeroxes of everything. When the local court did not respond, my lawyer-brother
threatened to take the matter to the high court, and that is how we got a hearing. Eventually we won the case. What I still don’t get is how the bugger had
the guts to forge the deed and how the bank failed to verify ownership. He still
greets me in the park like nothing happened.”
A series of mild and hilarious English curses, reminiscent of his British
education and British bosses, followed.

From Private Ownership to Party Ownership
and Back Again in China
To guide me through the thickets of Chinese property law, I turned to
Katherine Wilhelm, a lawyer in the Beijing office of a New York law firm.
She readily agreed to assist, saying “the whole question of what you do with
property rights in a fast-changing economy is a major issue.”20
Wilhelm began by explaining that private land ownership and transactions came to an end under Mao. In rural areas all land was acquired by the
government and placed under collectives. Every peasant received a rural
hukou, a license to live in a particular village. In cities almost all land became the property of the government. In line with its social agenda, the
CCP subsequently allocated land use rights, free of charge, to the danwei,
the state-owned work units around which urban social and economic life
was organized.21
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The constitution mandated that the danwei not transfer those rights.
Through the 1970s housing was almost completely socialized. City rents
were ridiculously low, and the danwei bore the lion’s share of housing costs,
which amounted to roughly a quarter of total labor costs for a typical stateowned enterprise.22 Thus the danwei and the hukou system, rather than the
market, allocated land and housing.
“The situation changed with the reforms in 1978,” continued Wilhelm.
Deng transformed moribund land around Shenzhen into an economic laboratory. This included the creation of the first market for land use rights and
housing. Deng allowed rent increases, sold public housing to private individuals, allowed commercial construction by private developers, and promised
to protect private property rights.23 Yet the state did not let go of its land. To
eliminate possible ambiguity, the 1982 constitution set the record straight by
declaring that all urban land belonged to the state and all rural land belonged
to collectives.
Further, classes of property rights were created as a way of managing the
transition. According to Wilhelm, “The state’s ownership rights were absolute; but agricultural collectives could have their land requisitioned by the
state in the public interest.”24 Foreign investors’ rights were also protected.25
Economic realities necessitated this. For example, it became a problem when
the only thing a Chinese partner was contributing to a Sino-foreign joint venture was land that ultimately belonged to the state, not the partner. A simple
chronological reading of land reform laws reveals that the contributions of
property made by the Chinese joint venture partners were not entirely legal;
they predated the land legislation of the 1980s that allowed legal transferability of land rights. Before the 1980s, most-state owned enterprises (which later
became partners in joint ventures) applied to the government to use land that
was not transferable and could not be leased or mortgaged.
Wilhelm emphasized that today there are two issues. “One is of scope
and one is of enforcement,” she said. Referring to the 1982 constitutional
amendment she added, “The problem of scope has gone away, as much can
be privately owned. But the problem of enforcement remains.” It is in the
mechanisms of enforcement that one can most clearly see the Chinese government’s stance on questions of individual versus collective rights.
One example is the problem of demolition and relocation that is part of
any urban redevelopment effort. Wilhelm explained how relocation often
plays out in China: “[R]elocation and demolition licenses are meant to be won
via public auctions, but everyone knows it’s largely done privately. If a developer has got a chai qian [demolition and relocation] license for where you live,
the city government puts up signs telling you exactly that. Then someone
from the local government will pay you a visit to estimate the value of your
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home. Sometimes these folks don’t let the appraisers in, so the appraisers
make estimates from standing outside the house.” She laughed at the absurdity. “It’s a black box, in that no one really knows how the compensation figure is determined. Some say it’s the cost of replacing the home—the cost of
the wood and steel, et cetera. But anyone knows that the intrinsic value of
material is hardly the way to arrive at compensation—they don’t take into account, for example, that the wood used in your house dates back to the Qing
era. Or location. As you know, in real estate location is everything. So compensation varies significantly.”
Indeed, some scholars have pointed out that the range of compensation
is wide, from more than $750,000 for a high official’s home, to between
$10,000 and $50,000 for some affected families, and finally, to nothing for residents who did not cooperate with the redevelopment process.26 Examples of
ad hoc and inadequate compensation abound. In one resettlement project in
Beijing that required the resettlement of 3,328 families, only 14 percent of
the families were paid, and compensation ranged from $12,500 to $50,000 instead of the expected $67,500 for each family. Further, 86 percent of the families were assigned to apartments in remote suburbs for which they paid
rent—even though one-third had owned their original houses.27
Wilhelm then explained the final punch in property compensation procedures: “Once you are told the amount [of compensation] you can either take
it or leave it. If you take it, you get paid from designated banks, and during this
stage, a significant amount of the money can ‘disappear.’ Sometimes they offer you alternative homes—but you may find that a few months into moving
to your new home you are asked to pay rent. Now if you refuse to leave, if you
become one of the nail-head families—what the Chinese call a dingzihu, basically a stubborn nail that needs to be hammered in—they harass you.”
I asked if she could clarify who constituted “they.” She elaborated: “They
are often developers who were formerly running state-owned construction
companies in the early 1990s. They can also be real estate firms run by the
sons and daughters of former high-ranking CCP leaders; here we call them
the Red Princes. The lines are not really clear. Essentially, private developers
exercise eminent domain rights of the state.”
In recent years scores of stories on the plight of urban Chinese residents
caught the government’s attention and resulted in a few resident-friendly
edicts. In March 2005 the Shanghai city government improved the management of relocations by forbidding resettlement companies from stopping
water or electricity supplies to force people off their property. Wilhelm acknowledged the change of heart. “It’s my sense that the forced nature of these
relocations has caught the government’s attention and has decreased. Now officers of the law must be present when the eviction process is taking place.”
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I wondered whether that made the relocation process more just. “Well,”
Wilhelm mused, “they have added more process, but the substance of the law
remains the same. In reality, you still can’t petition the courts on property
matters, the courts are not independent. Under Chinese law, the People’s
Supreme Court works as a ministerial-level organization, which makes it
equal, not superior, to the Ministry of Construction granting these licenses.
But people continue to petition the justice ministry under the age-old xinfang
petitioning system that is outdated and ineffectual.”
Why do people continue to petition and protest if the justice system offers no respite? Wilhelm had a ready response: “If a newspaper story or a
journalist reports on one of these forced relocations, they can sometimes get
a better deal and the government realizes that they can’t afford this to be a
destabilizing issue.”
Wilhelm’s explanation was echoed in my meeting with a Yale-educated expatriate lawyer in Beijing: “Street protests,” he assured me, “are really street theater. They are not really about whether it’s fair to tear down my home or not.
The owner knows that he can’t hold up the developer once the process is under
way. The best he can do is become inconvenient and extract some money or
concessions from the developer. So he does perform, and is better off as a result
of doing so. But doing something extreme like standing in front of the bulldozer can only earn him the right to be carted away by state police, that’s all.”

Twisting Fate of the Siheyuan
Not long after talking with Wilhelm I found myself walking Beijing’s maze of
narrow footpaths, the hutongs, where the boxy courtyard houses known as
siheyuan are still found. The courtyard garden served as an open-air living
room where family members met to converse. In feudal times the courtyard
dwellings were built according to the strict rules and hierarchies of feng shui;
for example, the gate was at the southeast corner, which was the Wind corner,
and the main building was on the north side, which was believed to belong to
Water, the element that quenches fire. A wall or curtain over the entrance kept
out evil spirits. The lord and lady of the house lived in the northern, sunny
main building and their children in the side chambers. The southern row on
the opposite side, those nearest to the entrance gate, was generally used as the
study, the reception room, and the servants’ dwelling.
In fact, Beijing’s siheyuan, with their strict rules and forms, closed to the
outside and open on the inside, are seen by some as an expression of the Chinese character. Regarded with nostalgia, the twisting fate of the siheyuan
pointedly embodies China’s changing property laws. Before 1949 the size and
grandeur of a siheyuan denoted the social and financial status of its owner.
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When Mao Zedong outlawed private property, all siheyuan became the property of the state. Unsurprisingly, Mao lived in a coveted courtyard house, as
do many of today’s Chinese Party leaders. During the Cultural Revolution
most Beijing siheyuan were owned by the local residence bureau, which could
allocate as many as a dozen families to live in one house; overcrowding and
poverty then caused the houses to deteriorate.
The most recent twist occurred in 2004, when the Beijing government
allowed foreigners to buy siheyuan. They have quickly become a trendy
piece of real estate. Billionaire media mogul Rupert Murdoch plunked
down $1.2 million for his property. Negotiations can involve as many as
thirty families claiming ownership of the previous cramped residence and
entitled to compensation for moving out. Less well known, however, is
that the official government policy is to return the siheyuan to their original pre-1949 owners. The catch is that many of the original owners’ descendants hold no property titles or papers to prove their claims.
As I walked toward the Forbidden City, its grandeur preserved as a historical anomaly, I thought about the last part of my conversation with Wilhelm.
How and why has the Chinese government gotten away with trampling private property rights during the last three decades? Wilhelm sounded a
prophecy and a warning: “When experiencing intense economic growth, it
appears that society as a whole is benefiting, and the problems are not immediately perceptible. But property rights are the foundation on which efficient markets are built. Currently uncertain property rights are just a part of
the larger ‘China risk packet,’ and so investors are able to justify it. But at
some point the Chinese government’s attempt to create a top-down market
for property won’t work. At some point the middle class is going to ask why
they cannot pass on their property to their children, why they can’t pass on
the wealth that for the first time in history they are being asked to create.”
Most scholars who study the link between property rights and economic
growth argue that the more clearly defined are the former, the greater the possibility of the latter. But in China economic growth has occurred without formal property rights of the sort familiar to and lauded by the West. Property
rights in India, too, are ill defined, overlapping, and ambiguous. Although in
China these ambiguities have not prevented the state from building a dam or
a city, in India the ambiguity of rights inevitably leads to an impasse. Indians
never know who will win a battle of disputed property rights. They only know
that the battle will play out against the setting of overburdened court systems,
free and noisy press, vibrant civil society, and of course India’s legislative and
electoral systems that laud the right of the individual and deplore development without a human face.

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billions of entrepreneurs

This document is authorized for use only by Yucheng Liu in Comparative Policy Process taught by Simone Bunse, Georgetown University from September 2015 to February 2016.

For the exclusive use of Y. Liu, 2015.

NOTES

Chapter 4
1. “Pudong Development: The Last Opportunity for Developing Shanghai,” New Capital Newspaper,
August 20, 2004.
2. By some estimates, these totaled $1.12 billion in the first five years. Compiled by Richard Holman,
“World Wire” column, Wall Street Journal (Eastern Edition), March 12, 1992.
3. Trish Saywell, “Pudong Rises to the Task,” Far Eastern Economic Review 163, no. 44 (2000): 56–58.
4. “Shanghai Announces Plans to Develop Pudong New Area,” East Asian Executive Reports, May
1990.
5. Salman Rushdie, Midnight’s Children (New York: Knopf, 1981), 105.
6. Ramnath, interview by research associate Namrata Arora, Machimaar Village, Mumbai, March
2007.
7. Harekrishna Debnath, “Charter of Demands of the Indian National Fishworkers’ Forum,”
Library of the Turtle, December 6–19, 2001, http://www.voiceoftheturtle.org/library/nff.php.
8. This would require amending Coastal Regulatory Zones and increasing the controversial Floor
Space Index.
9. DLF went public in June 2007 with a market capitalization of $22 billion.
10. The Urban Land (Ceiling and Regulation) Act of 1976 imposed a limit on the agglomeration of
vacant land in urban areas, regulates the acquisition of such vacant land, and controls the disposal of
vacant land. It was repealed by the Urban Land (Ceiling and Regulation) Repeal Act of 1999.
11. “Premier Zhu Rongji on Three Gorges Project Construction Quality,” People’s Daily Online, June
19, 2000, http://english.people.com.cn/english/200006/19/eng20000619_43308.html.
12. “China’s Dam Fills to Target,” BBC News Online, June 11, 2003, http://news.bbc.co.uk/2/hi/
asia-pacific/2977404.stm.
13. International Rivers Network (Yi Ming, primary author), “Human Rights Dammed Off at Three
Gorges: An Investigation of Resettlement and Human Rights Problems in the Three Gorges Dam
Project.” Report published January 2003, http://www.irn.org/pdf/threeg/3gcolor.pdf.
14. Sarvepalli Gopal, Jawaharlal Nehru: A Biography, vol. 3 (New Delhi: Oxford University Press, 1984).
“Nehru was now more aware than he had been in earlier years of the possible ‘disease of gigantism.’ He
had said to himself while surveying the large Bhakra-Nangal dam in 1956, ‘These are the new temples of
India where I worship.’ ”
15. In Indian law any civic-minded person can approach the courts, not just an aggrieved party.
16. Friends of River Narmada, (Medha Patkar, primary author), “Without Considering Basic Issues,
Supreme Court Surrenders to the Pressures by Power Holders. Unfettered Dam Construction and Displacement Allowed: Assault on People and Constitution,” Narmada Bachao Andolan press release, October 18,
2000, http://www.narmada.org/nba-press-releases/october-2000/sc.judgement.html.
17. Articles 19(1)(f ), 19(5), 31, 32, 39(b) and (c), 226 and 265 of the Indian Constitution accord the status of Fundamental Right on matters related to property.
18. Dr. Surat Singh, interview by author, New Delhi, March 2005.
19. The term surplus is used when private property is taken over for a public purpose. The meaning
of the word implies that this property “is providing a surplus for all members of society including the
person whose property is being taken albeit minus the loss of his property for which he should be compensated at least to maintain status quo.” See Jaivir Singh, (Un)Constituting Property: The Deconstruction of

23

This document is authorized for use only by Yucheng Liu in Comparative Policy Process taught by Simone Bunse, Georgetown University from September 2015 to February 2016.

For the exclusive use of Y. Liu, 2015.

Right to Property in India (New Delhi: Center for Study of Law and Governance, Jawaharlal Nehru
University, 2004).
20. Katherine Wilhelm, interview by research associate Vinati Dev, New York, March 2005. See also
K. Wilhelm, “Rethinking Property Rights in Urban China,” UCLA Journal of International Law and Foreign
Affairs, 9, no. 2, (fall/winter 2004: 19).
21. Chengri Ding, “Land Policy Reform in China: Assessment and Prospects,” Land Use Policy 20
issue 2, (2003): 109–120.
22. Songsu Choi, “A Housing Market in the Making: Zhu Rongji Jumpstarts China’s Stalled Housing
Reforms,” China Business Review, November 2, 1998, http://www.chinabusinessreview.com/public/
9811/choi.html.
23. Chengri Ding and Gerrit Knaap, “Urban Land Policy Reform in China,” Land Lines 15, no. 2 (April
2003), http://www.lincolninst.edu/pubs/PubDetail.aspx?pubid=793
24. Wilhelm, “Rethinking Property Rights in Urban China.
25. Chengri Ding, “Land Policy Reform in China: Assessment and Prospects,” Land Use Policy 20,
no. 2 (2003): 109–20.
26. Karl Moore and David Lewis, Foundations of Corporate Empire: Is History Repeating Itself? (London
Financial Times Prentice Hall, 2000).
27. Ke Fang, “Housing Relocation and Housing Property in Beijing,” China Lawyers 17, no. 5 (1999): 33–36.

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billions of entrepreneurs

This document is authorized for use only by Yucheng Liu in Comparative Policy Process taught by Simone Bunse, Georgetown University from September 2015 to February 2016.