What does this mean?…China Approves Property Law


Richard Moore

Original source URL:

March 16, 2007

China Approves Property Law, Strengthening Its Middle Class

BEIJING, Friday, March 16 ‹ After more than a quarter-century of market-oriented
economic policies and record-setting growth, China on Friday enacted its first 
law to protect private property explicitly.

The measure, which was delayed a year ago amid vocal opposition from resurgent 
socialist intellectuals and old-line, left-leaning members of the ruling 
Communist Party, is viewed by its supporters as building a new and more secure 
legal foundation for private entrepreneurs and the country¹s urban middle-class 
home and car owners.

But delays in pushing it through the Communist Party¹s generally pliant 
legislative arm, the National People¹s Congress, and a ban on news media 
discussion of the proposal, raise questions about the underlying intentions and 
the governing style of President Hu Jintao and Prime Minister Wen Jiabao, 
experts say.

Despite a high level of interest among intellectuals and businessmen and the 
unexpected decision last year to withdraw the measure from the legislative 
agenda at the last minute, neither leader has spoken about the matter publicly.

Mr. Wen¹s two-hour address to the nation on the opening day of the annual 
two-week legislative session last week did not mention property rights.

The measure could not pass the legislature, which acts under the party¹s 
authority, without the active support of the top leadership. Yet the conspicuous
silence of Mr. Hu and Mr. Wen appears to be a form of tribute to the influence 
of current and former officials and leading scholars who argue that China¹s 
economic policies have fueled corruption and enriched the elite at the expense 
of the poor and the environment.

³My own view is that the leftist voices that have emerged are not going to 
disappear because we have a property law,² said Zhu Xueqin, a historian and 
government expert who supports the law. ³On the contrary, they are stronger now 
than they have been in some time.²

The leadership did not so much overcome opposition to the property law as forbid
it. Unlike in 2005, when leaders invited broad discussion about property rights,
the latest drafts of the law were not widely circulated. Several left-leaning 
scholars, who favor preserving some elements of China¹s eroded socialist system,
said they had come under pressure from their universities to stay silent.

When one financial magazine, Caijing, defied the Propaganda Department¹s ban on 
reporting on the matter and published a cover story last week, it was ordered to
halt distribution and reprint the issue without the offending article, people 
associated with the magazine said.

While the law¹s final wording ‹ and the nature of any compromises necessary to 
build a consensus to pass it ‹ remain unclear, many mainstream scholars and 
business people have welcomed it.

Several said they also approved of the way Mr. Hu and Mr. Wen had handled the 

³I think the low-key approach was the best way to get this law passed,² said Mao
Shoulong, a public policy expert at People¹s University in Beijing. ³The point 
is to enact a new law, not to pick a fight.²

Mr. Zhu agreed. ³Their style is to say less and do more,² he said.

But the leadership¹s strategy did not resolve the underlying tensions. Hundreds 
of scholars and retired officials signed a petition against the law, which they 
said ³overturns the basic system of socialism.²

The petition claimed the law did too little to distinguish between private 
property gained legally through hard work and public property that falls into 
private hands through corruption. They also argued that China could not give 
state-owned property and private property the same legal status and still call 
itself socialist.

Supporters of the law dispute the assertion that it will protect the ill-gotten 
gains of corruption, arguing that it will protect only legal property. In the 
past, Chinese have bought and sold property freely, but doing so in a legal 
vacuum. Supporters say they hope the law strengthens the rights of property 
holders, especially middle-class homeowners.

China¹s urban middle class has fueled a real estate boom, even though all land 
is owned by the state and purchasers trade only the right to use property on the
land for up to 70 years. The disposition of property after that term expires is 
one of many unsettled issues.

But proponents of the law tend to remain quiet on the broader complaint that 
China¹s pretense of socialism has become more and more hollow. Leftists do not 
seem likely to give up their offensive.

They scored an important victory recently when online petitions and an intensive
campaign in the state-run news media appear to have prompted a leading American 
private equity company, the Carlyle Group, to scale back its planned investment 
in one of China¹s largest construction machinery manufacturers, Xugong Group. 
The investment had become a test of China¹s willingness to sell majority stakes 
in core industrial companies to foreign investors.

Amid this tussle, Mr. Hu and Mr. Wen appear to have sought a middle ground. In 
public statements, Mr. Hu has promoted a ³harmonious society² that does a better
job of distributing wealth equitably and alleviates some of the excesses of 
pollution and corruption that have accompanied rapid growth.

Mr. Wen has focused mainly on lifting rural incomes and increasing social 
spending. Those approaches have addressed some concerns of people on the left. 
But in practice, the two leaders have also sought to keep faith with business 
leaders and the rising middle class. Under their leadership, state-run banks 
have sold shares to foreign investors and overhauled bank management systems 
with the help of foreign consultants.

As well as approving the property law, the legislature revised a corporate tax, 
ending an advantage foreign investors enjoyed over local companies for more than
two decades.

Mr. Wen and Mr. Hu have so far steered relatively small amounts of government 
revenue into the country¹s rudimentary social welfare system. And they continue 
to invest heavily in infrastructure and industrial expansion, helping the 
economy expand even faster than in the 1990s.

Those measures, along with the property law, suggest that they will not casually
abandon the pro-growth policies that have made China a leading economic power.

Copyright 2007 The New York Times Company

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