China embraces property rights

BEIJING -- Communist China is changing its constitution to embrace the most basic tenet of capitalism -- protecting private property rights for the first time since the 1949 revolution.\nChina's parliament is meeting in an annual session starting Friday to endorse the change, already approved by Communist Party leaders who tout privatization as a way to continue the country's economic revolution and help tens of millions of poor Chinese.\nIt will bring China's legal framework in line with its market-oriented ambitions by providing a constitutional guarantee for entrepreneurs, once considered the enemy of communism but now pivotal in generating jobs and wealth.\n"Since private businesses have been playing an increasingly important role in China's economy, their demand for legitimate protection has also increased," said Wang Hongling, of the Institute of Economics at the Chinese Academy of Social Sciences, a government think tank.\n"The amendment," he said, "will offer private businessmen a guarantee to their property safety and make them free of worry."\nThe very notion would be unthinkable to many of the communist revolutionaries who, led by Mao Zedong, waged war against what they branded an unfair system that punished most people and elevated a greedy elite. The Chinese words for communism -- "gongchan zhuyi" -- literally means "ideology of sharing property."\nBut because the legislature, the National People's Congress, exists mainly to carry out the will of the party leadership, its expected move is considered more of the icing on an already-existing cake rather than anything truly new.\n"It signals a kind of a victory for people who believe that the state should give more respect to private property. Legally speaking, I don't think it'll change much," said Donald C. Clarke, a professor at the University of Washington's School of Law in Seattle.\n"All I think it will affect is the tone of policy-making," he said. "It's another piece of rhetorical ammunition for people who think the state should compensate more."\nThe change mandates "private property obtained legally shall not be violated" and will be "on an equal footing with public property."\nWith time, the law will be adapted to business practices such as trading real estate, stocks or bonds and other activities which are already done in China -- often without legal protections.\nOne benefit for entrepreneurs might be an easier time getting loans from state banks, which now lend almost exclusively to state-run companies. With their private property protected, businesses could use it as collateral to get loans.\n"The recognition means that private enterprises will be given a level playing field in competition with state-owned enterprises," said Joseph Cheng, a political scientist at City University of Hong Kong. "How well the policy will be implemented, we'll have to wait and see."\nThe change could also satisfy entrepreneurs who complain foreign businesses in China now have regulations in place to protect their investments. For people like Zhou Wei, a manager at the Aokang Group, China's second-largest shoemaking company, the constitutional amendment is imperative.\n"It protects the confidence of the private businessmen so that they can pursue and create wealth," Zhou said. "As private businessmen, we feel it is a natural progression for the government. It is in the interests of most of the people in China."\nAokang employs over 5,000 people and produces 10 million pairs of shoes a year. It owns 2,000 chain stores in China and has set up branches in the United States, Japan, Italy, Spain and Germany.\nBeijing resident Zhan Wenzhao said the amendment would promote investment.\n"For me, a small homeowner, I am not too excited over the news," Zhan said. But, he added, "It is now clear that, as an owner, I have rights and I will use (the) law to protect myself if my rights are infringed in future."\nAfter the communist revolution, China briefly allowed private enterprise, but it was banned again by the late 1950s. In 1999, the constitution was amended to declare private business an "important component" of the economy, not just a "complement" to state industry.\nThe proposed amendment also pays homage to Jiang Zemin, the former president who invited capitalists into the party. Before retiring, Jiang launched a huge campaign for his awkwardly named ideology, the "three represents," which encouraged the party to represent entrepreneurs, as well as the working class.