New Chinese Constitution Amendment Moves To
Protect Private Property, Rights
Members of China's National People's Congress, the Chinese
government's legislative arm, have formally introduced
an amendment to the Chinese constitution which will give
private property and private property rights the same
legal status as state-owned property.
Jiang Zemin, the former president until March 2003, has
moved for this for a long time, and has long asked that
the Chinese Communist Party, admit private capitalists
as party members. The proposals are part of Jiang's theory,
widely known as the "Three Represents", which
seeks to re-align the interests of the Chinese Communist
Party with the newly emergent Chinese middle class. The
most significant single move would be the amendment guaranteeing
private property rights.
The proposed amendment has been under discussion for
years, but has been delayed by internal debate in the
Chinese government and Chinese Communist Party. When the
People's Republic of China was established in 1949, it
moved quickly to nationalize the economy, putting all
property under the ownership of the state. In most cases,
businesses and property were nationalized without recompensation
to the original owners. In some situations, private business
owners were jailed or even executed for "exploiting"
the population. This policy reached its height during
the Cultural Revolution (1966-1976), when the Chinese
Communist Party positioned itself as the "dictatorship
of the proletariat" (factory workers, farmers and
soldiers), effectively turning upside down the traditional
Chinese values which put scholars and officials at the
top of Chinese society, and put the "proletariat"
fairly low on the social ladder.
The situation began to reverse itself when China started
reforms in 1978. Some private ownership was allowed beginning
in the countryside. Later, state-owned companies were
encouraged to sell their assets, such as housing, to their
employees and former employees. The Chinese goverment
has been successful in getting Chinese to buy their own
homes, and in many Chinese major cities, private home
ownership is more than 60 percent.
For privately owned businesses, however, getting funding
is very difficult. Most are family-owned businesses, depending
on family relations to pool their investments. Since China's
four
major banks are owned by the state, they continue
to show preferential treatment to state-owned enterprises,
even though the Chinese government is actively grooming
them for foreign IPOs. A domestic bond market does not
exist. Others, especially in high technology and bioinformatics,
get funding through foreign venture capital firms which
take their companies public outside China. But, without
legal private property protection, it's difficult.
The strongest opposition to the new amendments protecting
private property have come from within the Chinese Communist
Party. While outsiders see the reforms as driving rapid
growth for the Chinese economy, many, especially older
Chinese, see the growing gap between rich and poor as
a return to pre-1949 China and its values. They see the
newer policies under Jiang Zemin favoring the urban middle
class as a sell-out of the original Communist party values
which favored the proletariat.
But, all sides agree on one thing. So far, China's economic
reforms have been around the edges. If they are to continue,
the Chinese government and Communist Party will have to
push reform at the core, especially with a revamping of
the Chinese legal system.
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