Adaptive Efficiency and Economic Development in China: The Definition and Enforcement of Property Rights

The current research on property rights definition and enforcement in China focuses more on informal property rights institutions. Some even suggest that formal property law institutions do not play any important role in China's economic development. Inadequate attention to the role of formal law on property rights in the existing literature is obviously inadequate to explain the fast rate of economic development from an institutional perspective. I argue that the development of property rights law requires considerable adaptation. Changing government policy and formal law on property rights has exerted some influence on decisions to establish business firms, to change decision-making in business firms, and to buy and sell real property. Government and people in China also spend more resources defining and enforcing property rights when the value of assets increases. Changing property rights regimes related to firms and the real estate market shows that formal law has, in fact, made a significant positive contribution to China's economic development.