China: property rights
Source Eubulides
Date 03/12/28/22:24

[New York Times]
December 23, 2003
China Moves to Protect Property, but the Fine Print Has a Caveat

SHENZHEN, China, Dec. 22 - China's national legislature moved to amend the
Constitution on Monday to protect private property rights, the first time
the Communist Party has formally protected private wealth since taking
power 55 years ago.

The change, expected to be enacted early next year, is a milestone in
China's 25-year economic reform effort. It marks a victory for advocates
of China's emerging class of entrepreneurs, who have argued for years that
the Marxist Constitution discriminates against them and gives leeway to
the police and the courts to seize their property according to party

The amendment, subjected to a prolonged debate behind closed doors during
the past six months, says that "private property obtained legally shall
not be violated," at least nominally putting it on the same footing as
public property, which the Constitution now deems "sacred and inviolable."

But the wording of the amendment made public on Monday differs in crucial
ways from a simpler version put forward by supporters of more fundamental
changes to the Constitution. By including the phrase "obtained legally,"
the amendment still makes the legal system, controlled by the Communist
Party, the arbiter of property rights.

Officials are determined to avoid the rush to privatization that occurred
in Russia in the early 1990's, when entrepreneurs assumed ownership of
valuable properties in sales that were later considered flawed.

Corruption is rampant in China and some intellectuals and government
leaders have long warned against steps that would make it easier for
well-connected people to take control of public property and treat it as
their own.

The watered-down amendment also seems geared to give the state continued
sway over wealthy businessmen who fall out of favor.

Local and national authorities often confiscate land and money of people
they consider threatening or disobedient, generally arguing that they lost
their rights because they violated a law or regulation while accumulating
their property.

Sheng Hong, director of the Unirule Economic Institute in Beijing, said
the amendment as unveiled by the legislature on Monday is crucial for
economic development, but also shows the continued unease about the level
of corruption in Chinese society.

"This change should give private property holders more clarity and
long-term predictability," Mr. Sheng said in a telephone interview. "But
the phrase `obtained legally' really stands out. It is clearly meant to
ensure that corrupt income does not become legal income."

The amendment is the latest in a series of steps that the party has taken
to end formal discrimination against private businessmen and make a claim
to represent them on equal terms with peasants and workers.

Last year, entrepreneurs were officially allowed to join the party for the
first time, and they now constitute a tiny fraction of the party's
membership roll of 66 million.

The changes do not have a direct impact on China's peasant class. Farm
land is still owned and controlled by the state and leased to farmers.

Both the amendment to protect private property and the decision to open
the party to businessmen is part of the legacy of Jiang Zemin, who retired
as China's president and Communist Party chief in favor of Hu Jintao in a
transition that began a year ago. Mr. Jiang remains China's military

Mr. Jiang sought to update the party's core ideology to reflect major
changes in the economy, which now depends far more on private
entrepreneurs, peasant farmers and foreign investors than state companies.

Reflecting that contribution as well as his continuing influence over
party affairs, the legislature on Monday also moved to enshrine Mr.
Jiang's theory of the "Three Represents" alongside "Marxism, Mao Zedong
Thought and the Theories of Deng Xiaoping" as the guiding ideologies of
the state as written in the Constitution.

The Three Represents maintains that the ruling party should represent
advanced production forces, advanced cultural forces and the "overwhelming
majority of Chinese people."

It is a recognition, although a convoluted and vaguely worded one, that
China is no longer primarily an egalitarian state and that it recognizes
that capitalist-style development is essential to the survival of the
Communist Party.

The Chinese Constitution, unlike the American, is effectively subordinate
to the ruling party and is easy for leaders to amend at will. The latest
changes do not include any measures clearly associated with Mr. Hu, who
was once viewed as open to considering more ambitious legal reforms, like
setting up a constitutional court or guaranteeing broader democratic

Debate on those topics in the state-controlled media was firmly shut down
over the summer months, and the legislature does not appear to be
considering measures that go beyond the theories and reforms promoted by
Mr. Jiang.

China's economy has been expanding at an annual pace of nearly 10 percent
for the past 20 years, creating, in cities like Shanghai and Guangzhou, an
elite of wealthy tycoons and an emerging middle class, many of whom own
homes and cars. The amendment on private property is a belated attempt by
the party to catch up to that reality.

The current Constitution says that the state "protects the legitimate
rights and interests of individuals and the private economy." The
amendment would back private property explicitly.

Entrepreneurs and legal experts say the amendment now needs to be followed
by more detailed changes in laws and regulations clarifying real estate
rights and the rules for stock and bond holdings. Chinese already buy and
sell property freely, but they often do so in a legal vacuum.

The amendment could also make it easier for private businessmen to get
loans from state banks. They now lend almost exclusively to companies that
have at least some state ownership, forcing the private sector to seek
other sources of financing.

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