State-run Xinhua news agency reported that local governments generated a total of $233 billion from the sale of 209,000 hectares of land in 2009, half of which was sold to real estate developers - a 36.7 per cent year on year increase.
The rebound in China's property market began in the second quarter of 2009 when average housing prices soared 23.5 per cent from the previous year, according to data from the National Bureau of Statistics (NBS).
The NBS also said that housing prices in 70 cities, both large and medium-sized, rose by 7.8 per cent in December 2009 from a year earlier, recording the fastest increase in 18 months.
Bao Zonghua, a former chief of the ministry of housing and urban-rural development policy research center, told Xinhua that under the current distribution regime, land sale revenues go to local governments, giving them an incentive to sell land to commercial housing developers and to shy away from reining in housing prices.
'Incentive to sell'
But aside from selling land, local Chinese governments are also seizing it for development, which has prompted the National People's Congress (NPC), China's highest legislative body, to draft new laws in order to quell possible unrest.
The proposed land laws, released on Friday over the state council's website, say that developers must gain 90 per cent approval from all residents to relocate before their property is taken.
Those forced to move would be given the right to return, but in a new building. Sometimes, many residents are sent to cities located several kilometers from where they once lived.
The laws would also make it illegal for developers and local governments to use coercive means, such as shutting of water or electricity supply, which have been common practices in land seizures across China in the past.
As rapid urban development continues to fuel the property boom in China, land seizures are regarded as one of the bigggest source of unrest in the country.
To curb growing discontent over the seizures, China's state council announced the major overhaul of land laws in hopes of slowing the process of home demolitions and giving home-owners greater compensation for their land.
Numerous cases have shown violent resistance in the past where ordinary people took matters into their own hands.
One incident that shocked the nation was the story of Tang Fuzhen, a 47-year-old Sichuan province resident who set herself on fire in November over the planned demolition of her husband's business. She died less than three weeks later.
China's National People's Congress (NPC), the country's highest legislative body, has given the state council the authority to enact the laws afte public comments are taken into account.
Five prominent law scholars from Peking University called for the abolition of a statute in December that allows local officials to seize land if a different use for it is deemed in the public interest.