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A problem of calculating compensation

By Liu Shinan (China Daily)
Updated: 2010-12-22 08:06

Finally the "nail household" that has blocked the construction of a vitally important arterial road in Beijing for four years is gone.

Last Friday, the house owner moved from the site soon after the construction company informed him that the compensation money had been remitted into his bank account. The workers tore the house down overnight.

Five years ago, Beijing's urban construction authorities decided to build a road linking the Fifth-Ring Road and the Huilongguan sub-district, a northern suburb where large residential communities concentrate, in a bid to alleviate traffic congestion in the northern part of the city.

When completed, the road is expected to help divert about 40 percent of the traffic off the Badaling Expressway, a highway notorious for frequent gridlocks.

The construction of Lincui Road began in 2007 with the removal of local village houses at compensation agreements reached between the villagers and the government. But one house continued to stand in the way as its owner refused to move. The road is almost completed but has to narrow into one lane to round the house, leaving the passage clogged daily during rush hours.

Questioned by angry road users, the local government said construction stalled because the house owner, Xu by surname, asked for 5.8 million yuan ($871,000) in compensation, several times higher than the 1.8 million yuan the government offered.

Now that the deadlock has been settled, a question naturally surfaces in everybody's mind: "How much did the government pay?"

Neither Xu nor the relevant government department would reveal the amount. There is obviously some tacit agreement between the two sides.

The government should not hide the truth. The public has the right to know if the sum was reasonable. If it was exactly or close to the amount requested by Xu, the deal constitutes unfairness to his fellow villagers who had moved for much smaller compensation. And the authorities have no right to use taxpayers' money to appease someone who has severely harmed the public interest because of his or her greed.

If the compensation was really that high, the case has conveyed a ridiculous message: In cases of government requisition of land, whoever blocks the project the longest gets the largest compensation. What kind of message does this send for the future?

During the country's development and improvement in the public's living conditions, the government needs to undertake projects for infrastructure construction - building highways, revamping shanty towns or setting up industrial zones, for instance. The need for land arises and occupants of the land have to be relocated. The occupants certainly need to be compensated.

The compensation is for the dismantlement or loss of their property on that piece of land. There should be no compensation for the land, because all land belongs to the country, that is, the whole population of the nation.

Therefore, the problem is calculating the loss. The government, on behalf of the nation, retrieves the land by paying the occupant for the loss on the basis of the principle of "exchange at equal value". The calculation of this "value" should be reasonable. It should neither be as small as the government tries to minimize by taking advantage of its strong position, nor as large as the occupant tries to maximize by taking the land hostage for ransom. There must be a reasonable standard.

This, however, still cannot be the final solution. The occupant may well insist that he or she does not want the equal exchange by saying that "I simply don't want to move because I like this location (For instance, the location helps kids in schooling)".

Therefore, the calculation of the loss should include inconvenience and loss of the intangible benefit. Besides these factors, there should be no more considerations.

One argument some residents of "nail households" hold is that real estate prices have soared to astronomical figures and therefore compensation should be raised accordingly. They are wrong.

The thing that has gained value during their holding of the land is the land itself, rather than their houses or property. They have no claim to that increment of value.

Holding State-owned land against public interests in anticipation of a mammoth "compensation" is holding the public interest hostage to a dirty ransom. In such cases, the government has the right to dismantle "nail houses" by force.

Of course, what is said here does not include cases in which some local governments sell land to "developers" for profit.

Such cases are not rare nationwide. And this accounts for the coexistence of illegal "forced dismantlement" of residential houses and the sometimes yielding to unreasonably greedy demand for compensation.

The author is assistant editor-in-chief of China Daily. He can be reached at liushinan@chinadaily.com.cn.