The earliest property transaction can be seen on a Western Zhou bronze vessel called “He”. In the third month of the lunar calendar in 919 BC, a person named Jubo mortgaged 1,300 mu of land to a person named Qiu Wei in two installments in exchange for several luxury items worth 100 strings of shells, including two pieces of jade, a deerskin shawl, and a floral apron.
In the thirty-second year of King Li of the Zhou Dynasty, another land sale transaction occurred. The process of this transaction was also engraved on a bronze vessel. This time, it recorded King Li purchasing land for the expansion of the royal palace from a person named Ge Cong without immediately paying. Ge Cong was worried that King Li would default on the payment, so King Li sent someone to reassure Ge Cong, saying, “Don’t worry, I will definitely pay as agreed. If I default, let the heavens punish me with exile.” This was a strong oath. The amount King Li spent on purchasing the land was not recorded in the inscription. However, Li Kaizhou mentioned that the existence of land purchases and sales indicated the embryonic form of the real estate market at that time.
During the Sui and Tang Dynasties, there was a person named Dou Yi who was born in Shaanxi. He lost his parents at a young age and lived with his uncle. His uncle was a government official living in Chang’an City. Dou Yi first earned some money through businesses like selling shoes and trees, accumulating a fortune of 800,000 coins, and then ventured into the real estate industry. At that time, there was an abandoned sewage pool in the west market of Chang’an, covering an area of over ten mu, which had been idle for seven or eight years with no buyers. Dou Yi bought it, filled it, built 20 shops on it, and rented them to Persian merchants for business, earning thousands of coins in rent daily.
Later, Dou Yi heard that the current Grand Commandant Li Cheng enjoyed playing polo, so he spent 700,000 coins to purchase a piece of land, and then spent 300,000 coins to build a polo field on it, which he gifted to Li Cheng. Li Cheng was very pleased and became close friends with Dou Yi, always willing to help him. With such a powerful ally, Dou Yi quickly rose to become the wealthiest man in Chang’an before the age of 40, earning the nickname “Dou Half-City.” Besides developers like Dou Yi, there were also some amateur developers in ancient times, such as government officials, retired cadres, and even the government itself acting as developers. For example, during the Northern Song Dynasty, there was a specialized agency under the central government called the “Bureau of Completing the Capital City,” which was originally responsible for constructing city walls and palaces. However, as the city walls were nearly complete and the palaces were luxurious enough, the agency shifted its focus to revenue generation for the central treasury. How did they generate revenue? The Bureau of Completing the Capital City would request permission from the court and allocate large plots of land to them. They would build residential buildings and shops on them, some of which were sold to the common people, while others were leased, making significant contributions to the national treasury. There were no professional developers in ancient times. The most essential requirement for being a developer was money. Buying land, purchasing building materials, hiring workers, and managing relationships all required money. Particularly, buying land required sufficient liquidity. If funds were insufficient, developers had to seek loans from peers or borrow from banks. Although there were no banks in ancient times, there were money shops, but these establishments were generally small in scale. Even if there were some large national chain money shops, they did not engage in developer business; instead, they lent money to other bosses. Historical records include two examples of property mortgage loans: one from the Liang Dynasty during the Southern and Northern Dynasties, where Prince Xiang Xun let someone use a house deed to obtain a loan, with a maximum loan amount of only a few thousand coins; and another from a wealthy man named Qiu Zhong in Shan Yin County during the Jiaqing period of the Ming Dynasty, who was lent up to 15,000 wen at most. This amount of money was not even enough for a lavish meal, let alone real estate development.
Until the period of the Republic of China, foreign banks came to China one after another to carry out business, enabling developers to obtain large loans. Therefore, professional developers in China only emerged during the Republic of China period. In ancient times, developers would be punished if they hoarded land excessively.
Taking the Tang Dynasty as an example, during the reign of Emperor Xuanzong of Tang, there was a land policy that stated: “For those who are allocated residential land, one mu is given for every three good citizens below, with an additional mu for every three citizens, and one mu is given for every five poor citizens, with an additional mu for every five citizens… All land buyers must not exceed this standard.” This means that the government allocated residential land to the common people, and the size of the allocated land depended on the household level and the household population. If it was a commoner household, one mu of residential land was allocated for every three people; if it was a poor household, one mu of residential land was allocated for every five people. In addition, common people could also purchase residential land, but the purchased area was limited and could not exceed the government’s specified quota. What was the government’s specified quota? When common households purchased land, they could only buy a maximum of one mu for every three people; if it was a poor household purchasing land, they could only buy one mu for every five people. In the Tang Dynasty, merchants were also considered poor people, even wealthy merchants were considered as such. When a poor merchant wanted to buy land, even if it was a large family of over a hundred people, they could only purchase up to 20 mu of land. By developing with this 20 mu of land, they would run out of resources within one or two years. And what would happen if they bought land in excess of the quota?
According to Tang Dynasty laws: “For those who exceed the land acquisition limit, they will be punished with ten strokes.” This means that if someone buys land beyond the specified quota, they will be punished, with ten strokes for each mu exceeded. Although ancient developers were not as sophisticated as modern developers, the environment and policies were not very favorable to them, but they still had the upper hand in demolition issues. For example, Dou Yi knew he wanted to engage in real estate development, so he had to have connections, and he thus aligned himself with the current Grand Marshal. The process of demolition in ancient times was more violent because under the heavens, all land belonged to the king, and the country could use any land it wanted. Of course, in ancient times, there were also some democratic monarchs. For instance, in the sixth year of the Yuanfeng period of the Northern Song Dynasty (1083 AD), when expanding the outer city of Kaifeng, the planned new city wall would occupy the residences of 120 households, and Emperor Shenzong of Song ordered Kaifeng Prefecture to formulate a demolition compensation plan. Kaifeng Prefecture reported that a total compensation of twenty thousand and six hundred guan was needed, and on average, each household could receive at least 171 guan in compensation.
Taxes such as deed tax, property tax, or real estate tax are not something created recently or purely adopted from elsewhere. As early as the Eastern Jin Dynasty, deed tax was collected, known as “sangu,” which was the first documented deed tax in China. Subsequently, nearly all dynasties had deed taxes. During the early Tang Dynasty, Wei Zheng and others clarified the essence of property tax: “Its essence lies in exploitation” – at that time, “exploitation” did not have the negative connotation it does today, but rather meant “increasing fiscal revenue.” In terms of tax rates, the tax rate in the Eastern Jin Dynasty was 4%, in the Sui and Tang Dynasties it was 5%, in the Song Dynasty it was 4%, and in the Yuan, Ming, and Qing Dynasties, it was generally 3%. Our current deed tax for large properties is also 3%. In the year 1595, Matteo Ricci bought a house near Xuanwumen in Beijing. Having traveled to Italy, Portugal, and India, where there was no concept of “deed tax,” he did not go through the necessary procedures with the relevant authorities. “Da Ming Lu” stipulated: “Anyone who buys land or houses without paying deed tax shall be fined fifty strokes and half the price of the land or house shall be confiscated by the government.” Fortunately, with the help of someone higher up, Matteo Ricci entrusted an official from the Ministry of Revenue and eventually paid a considerable amount of overdue taxes. In comparison, the tax type of “property tax” emerged relatively late and inconsistently. In the year 783 AD, Emperor Dezong of the Tang Dynasty imposed property tax on citizens who owned properties within the city of Chang’an, known as “jianjia tax,” which was levied based on the grade and structure of the houses. High-class houses had to pay two thousand wen per room per year, medium-class houses one thousand wen, and low-class houses five hundred wen.
This led to public grievances, and in the same year, in the deep autumn, fifty thousand soldiers revolted, with the slogan being “do not tax your jianjia.” Under pressure, in 784 AD, Emperor Dezong abolished this tax, meaning that China’s first formal property tax was active for only half a year before being discontinued. In the Five Dynasties and Ten Kingdoms period, every generation of emperors from the Liang, Tang, Jin, Han, and Zhou dynasties had imposed property taxes, but due to the troubles caused by the “jianjia tax,” it was renamed “wushui tax.” Property tax was not a permanent tax in the Northern Song Dynasty. In the Southern Song Dynasty, due to military financial difficulties, property tax was collected twice a year from urban and rural residents. In the Yuan Dynasty, the tax was no longer called “jianjia tax” or “wushui tax” but was renamed “chanqian,” levying a certain amount of rice or converting it into a certain amount of money based on the land area. During the Ming Dynasty, property tax was not regularly imposed, and there was a short period of small-scale collection in the Jiangsu and Zhejiang regions, known as “fanglangqian.” In the Qing Dynasty, property tax was also not a regular tax and was often collected temporarily. For example, in 1676, due to financial tension from using troops against Wu Sangui, the court decreed to “tax all market houses in the country,” stipulating that “regardless of the number of inner rooms, only consider the storefronts and structure, taxing two qian of silver per room, with the tax ceasing after one year.” In the end, only storefronts were taxed, and the two qian tax amount was equivalent to the price of two dou of rice or seven jin of sugar, which was not much. In short, whether it was jianjia tax, wushui tax, land money, chanqian, or house donation, they were all straightforward property taxes. However, they were different from the property taxes commonly practiced internationally – they were not for demand regulation but purely for revenue collection. Nevertheless, property tax could not become a permanent tax in China because it was purely burdensome and heavy, easily exacerbating conflicts, leading directly to people not being able to afford food, and potentially causing large-scale peasant movements. Therefore, it was difficult to sustain its collection.
0 Comments