Early Twentieth Century Shanghai as a Test Case for Hernando de Soto Polar’s View of Property Law

Peruvian economist Hernando de Soto created a sensation in the past 40 years with his program for altering the property systems of developing countries.  Presidents Ronald Reagan, George H. W. Bush, and Bill Clinton showered him with praise.  The World Bank and several governments hired him.  De Soto argued that governments should reach out to people who hold property informally and induce them to undergo formal judicial procedures that recognize informal proofs of ownership and grant legal title.

By looking at how formal property regimes were extended to less formal ones in early twentieth century Shanghai, we can learn something about how well de Soto’s prescription works in practice.  Several foreign powers established registries of title deeds and courts of law in Shanghai.  They required participation by Chinese residents in new judicial processes in order to transfer their property rights or confirm them in the face of dispute.  These processes recognized the older, indigenous proofs of ownership, but also introduced new documents and required the use of lawyers.