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    China Business
     Mar 14, 2007
Page 1 of 2
China's rough ideological transition
By Wu Zhong, China Editor

HONG KONG - China's program of economic reform and opening up to the world has never gone smoothly. Every major move has been met with strong opposition from orthodox Communist Party ideologues and Marxist scholars. Progress has been made only after a hard struggle between the reformists and the conservatives, or "leftists" as the latter are called in China.

Although the voices against reform and opening up to the

international community get weaker and weaker with the passage of time, they nevertheless try to make themselves heard at every opportunity.

A good example of the ongoing ideological struggle occurred two years ago when a Marxist law professor at Peking University voiced opposition to China's first legislation aimed at protecting real-property rights. "Real property" here refers to tangible property in general, including real estate and movable property.

China's sweeping reforms, started by Deng Xiaoping in 1979, have largely transformed the country's Stalinist-style command economy into a free-wheeling market-oriented one, with the private sector playing an increasingly important role in the country's economy.

According to a 2006 blue paper on non-public economy by the All-China Federation of Industry and Commerce, a non-governmental chamber of commerce composed of private industrialists and business people, the private sector was contributing 50% of China's gross domestic product (GDP) by the end of 2005. If foreign investors are taken into account, the contribution to the national economy by the private sector in the broader sense amounted to 65%.

And the private sector has become a major source of tax revenue for the state. According to the blue paper, taxes paid by the private sector at the end of 2005 exceeded those of the state-owned enterprises. In some regions, 70-80% of the local governments' revenues came from the private sector.

For this reason it is only logical to call for legislation to protect private businesses and private property. Thus, in March 2004, the National People's Congress (NPC), China's parliament, revised the constitution to include a new clause: "Citizens' legal private property is inviolable." This marked China's departure from socialism with the constitutional recognition and protection of private property.

Since China has largely adopted a continental legal system, with such a revision it is natural and necessary to enact relevant laws to back up the new clause in the constitution. Hence the passage of a real-rights law is a must.

China already has laws on intellectual-property rights in force. With a law on real-property rights, legal protection of private property would be more complete as both tangible and intangible properties would be under legal protection.

In fact, as early as 1998, the Standing Committee of the NPC had already set up a nine-member team to oversee the drafting of a real-property law. After the constitutional revision, a draft real-property law was ready to be scrutinized and passed by the NPC in its annual session in March 2006.

However, in August 2005, Gong Xiantian, a Peking University law professor and Communist Party member who had studied in the former socialist Yugoslavia, submitted an open petition to the NPC Standing Committee saying that the draft real-rights law "violates the principles of the constitution". His petition was supported by about 200 scholars and retired officials.

Gong said the essence of the draft law was to protect the real rights of the extremely rich minority, though in form it sounded as if everyone's rights would be protected. "It equally protects a rich man's limousine and a beggar's rod," he said sarcastically.

Furthermore, he slammed the draft law for not copying another clause in the constitution stipulating that "state property is inviolable", saying that if legislated and implemented, the law could cause more state-asset losses.

Such an argument is absurd and not worth refuting. State-asset losses are largely caused by collusion between corrupt officials and business people, not because of a lack of legal protection. In fact, there are legal stipulations to protect state assets and deal with such criminal offenses.

As an analogy, no one can say Hong Kong is short on legal protection of the banking industry if a bank gets robbed.

Gong obviously based his criticism on an ideological argument instead of a legal point of view. As such, he acted in a way that defeated his own purpose. The draft law is an elaboration of a new clause in the constitution, and any criticism must focus on whether it deviates from the spirit of the constitution. Failing to do this, his criticism becomes pointless.

Nevertheless, perhaps Gong's bluff about "state-asset losses" touched a sensitive political nerve; NPC chairman Wu Bangguo 

Continued 1 2 

Hu Jintao's reform tightrope (Jun 129, '06)


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