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Debating China's Property Rights Law
Li Tu
3/23/2007



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On March 8, 2007, officials reviewed the draft law on property rights [1] that has been hotly debated among many in Chinese society. This legislation is at the top of the agenda among the Fifth Session of the Tenth National People's Congress (NPC) in Beijing. The controversial draft law has even managed to attain worldwide attention.

From its inception in the 1990's to public opinion and hearings for special legislative debate and now awaiting deliberation for the eighth time by the Standing Committee of the NPC, this draft law has gone through 13 years. It has come to be the most reviewed draft law in the legislative history of the National People's Congress.

The property rights law has attracted much debate both inside and outside China. With huge portions of state-owned properties being embezzled in an environment of rampant corruption at all levels, many believe that passing this law will protect these illegally acquired assets. While the interests of small private enterprises, or the properties of ordinary individuals will not enjoy protection.

Some scholars think that passing the property rights law is a necessary step that China's market economy must take to break away from a privileged monopoly.

Has China Reached "the Most Dangerous Moment"?

Shortly before the opening of this recent congressional convening (Fifth Session of the Tenth National People's Congress), a collection of signatures by 3,724 people opposing new round of deliberation on China's draft law on property rights were presented. These included the names of nearly 30 retired officials with ranks above deputy minister, 10 more retired army generals and 52 professors from the central party school.

One of the initiators of the cosigned letter is the former director of the National Bureau of Statistics, Li Chengrui, who believes that the future and fate of China have now truly reached "a most dangerous moment."

Especially after witnessing the embezzlement of a large portion of state-owned properties, Li says that privatization has only led to even more severe social polarization.

He points out that as there is corruption of officials at all levels, so social justice cannot be guaranteed. Therefore, these same properties "are just as much involved in the property rights law that they are forcefully trying to pass".

This cosigned open letter criticized corrupt dealings in the privatization process of state-owned enterprises in China, saying that the privatization in China has already caused severe polarization between the rich and the poor, leading to serious social problems. It urged the Standing Committee of the NPC to suspend the review of the draft law and stop the unfair privatization process. A retired cadre in Liaoning Province said, "I am very worried. Do we really know the truth of the matter? Exactly how many people have profited illegally? If we protect the properties of these people, then the loss for our country will be huge."

Opposed to Protection of Private Property with Chinese Characteristics

According to Voice of America—the official international broadcasting service of the US government—even critics of the draft law don't disagree with the fundamental principles it embodies; specifically: that property ownership shouldn't be violated.

Instead, they are opposed to the draft law with Chinese characteristics that serves those who have underhandedly seized the country's wealth during the reformation of the past 20 years. The critics point to high-ranking authority officials who have used their power to attain wealth; partnering with business men to acquire assets that once belonged to the state.

Xiong Zhaokuan, a civil enterpriser from southern China, used the words "original criminal" to describe this new type of capitalists who have accumulated wealth through illegal means. "It mostly refers to those speculators, smugglers, and tax evaders," explained Xiong.

"Their first round of amassing wealth, or primitive accumulation of capital, was by relying on these illegal methods. Within China they are known as original criminals. Some believe that we should investigate these original criminals; while others think that they may be canceled once for all. At the moment, the second opinion dominates."

A Product of Compromise for Strong Social Benefits

Some economists believe that China should maintain a system based on the national economy. In China's current severely corrupted environment, they argue that privatization merely allows convenience to officials' intent on stealing the national's wealth.

Economy Professor Xu Dianqing from the University of Western Ontario, says that China's economic reformation has touched upon many systemic problems. He believes that if there isn't an overall reformation on both political and social systems, privatization will not effectively cure corruption.

The famous Chinese economist, He Qinglian who now resides in the U.S., believes that this is a product of compromise to the strong social benefits these individuals once enjoyed. While the system appears to have been reformed, these groups still hold significant sway in crafting legislation.

Beneficial to Eliminating Monopoly by Special Powers

Some scholars, including Professor Hu Xingdow from the Beijing University of Technology, think that if this property rights law were to pass, it would symbolize China's market economy taking a big step forward.

Hu believes many corruption problems were caused by there being no clear rules on land and property rights, blurring the lines of public and private properties and a mixing of business and institutional power. He says that if this law could pass, it would quite effectively prevent such problems from occurring in the future.

Yet some experts think that China is more complicated than this characterization suggests. They believe the current controversy over the property rights law has gone beyond the just laws and principles; expanding to the territory of idealism and social problems.

Note: [1] The draft law defines and governs matters relating to owners' rights of immovable and movable property.

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