Confusion over property rights is causing considerable commotion in China. The latest dispute concerns the ownership of villas built on rural land classified as "collectively owned" and sold to individuals. In April, 85 out of 144 villas built on property owned by a township on the outskirts of Beijing were torn down, and the rest were confiscated by authorities. Three people involved in the construction and sale of the houses were taken into custody.

    In June, the Ministry of Construction issued a document titled "Notice of Risk in Purchasing Newly Built Houses and Apartments." This notice made it clear that "urban residents should not purchase houses built on collective land." It specified that people who do not belong to a collective are not eligible to purchase houses or claim property rights on land owned by the collective.

    In the same month, the Beijing Bureau of State Land and Resources said it had launched an investigation into illegal construction in the capital, and would put an end to the issuing of property rights by entities other than the proper authorities.

    (In China, all land is either state-owned or collectively-owned. The concept of property rights does not imply full ownership, merely the right to use the land. At issue here is the right of rural authorities in charge of collectively-owned land to sell property rights to that land.)

    It is not correct policy to totally deny the rights of people who have purchased houses built on suburban land. Instead, the healthy development of this trend should be encouraged and legal procedures developed to manage it. Houses that have been built without going through proper planning, inspection and approval procedures should not simply be demolished; rather they should be allowed to go through inspections and have necessary corrections made.

    Land developers could be charged a fee for land use, as could those who purchase homes built on suburban land. These fees could go the villagers, the collective owners of the land, and be handled in a democratic fashion. The government could institute a land use tax to pay for administration, and issue property rights certificates to the purchasers.

    In the future, houses should be allowed to be built on collective land, with purchasers receiving certificates issued by the state government to ensure their full property rights.

    Urban residents will thus be encouraged to purchase properties in suburban and rural areas. This will challenge the current household registration system, which classifies residents as urban or rural, and help break down the urban-rural separation that has resulted from this current classification of land.

    For a long time China's modernization has been limited to the cities. As a result, some foreigners have commented that Chinese cities are like Europe whereas the countryside resembles Africa. How can the situation be improved?

    One method is to learn from the United States, Europe and other developed countries, which allow two-way exchange between urban and rural areas. Apart from allowing rural people to come to the cities to live and work freely, they also allow urban people to buy property or do business in the countryside. In the end, poor people stay in the cities and enjoy inexpensive rented houses, and rich people stay in the countryside, living in villas where their quality of life is enhanced. This raises living standards in the countryside, as infrastructure is improved to accommodate the new residents, including schools, hospitals, etc.

    If attention is paid to the protection of farmland and the natural environment, China's countryside can become a beautiful garden. Consequently, property prices in the cities can be reduced, traffic jams will be relieved, service industries can develop in the rural areas, and the nation's wealth gap will be reduced.

    The policy regarding housing built on collective land will affect China's development strategy. Should the urban-rural separation be maintained, or should urban-rural integration, interaction and balanced development be the goal? Should the existing land use system be continued -- with most of the benefits going to the government and the losses to the farmers -- or should land reforms be implemented to allow better use of collective land and greater circulation of wealth and benefits?

    China needs more innovative concepts to implement wise development strategy. In a recent speech at the Central Party School, President Hu Jintao mentioned the need to "emancipate our minds." In order to emancipate our minds and break down the urban-rural barrier, the legalization of housing built on collective land would be a good place to start.