China's great leap forward on property

Of all the steps that China has taken away from its Communist past since reforms began nearly 30 years ago, few have boasted the symbolic power of the law that parliament is due to pass next Friday.

The Property Law, for the first time since the 1949 Chinese revolution, offers comprehensive legal protection to private property. Quite a move from a ruling party whose name literally means "The China Collective Property Party."

It couches that protection, though, in language that often seems more solicitous of state property – a sign of the subject's sensitivity. "This is a very loaded text politically," says one Western diplomat. "It says a lot about the current balance and trends of the regime."

It has taken 14 years of controversy and seven readings to bring the draft law to Friday's vote in the National People's Congress (NPC). Those are measures of the caution that the government has felt obliged to show in the face of vocal opposition from critics who call the law a betrayal of China's socialist principles.

"It is incompatible with the founding principles of the New China," complains Gong Xiantian, a law professor at Peking University who wrote an open letter of protest against the law. "We had eliminated exploitation and established collective ownership, and after 50 years now we are going back. This is an ideological struggle."

It is a struggle Professor Gong and his sympathizers appear to have lost. Introducing the new law last Thursday, NPC Vice Chairman Wang Zhaoguo went so far as to describe "effective protection of private property" as "what the (Communist) Party stands for."

In doing so, he aligned his party squarely with the burgeoning ranks of urban, middle-class consumers who own their apartments, often a car, and perhaps a small business.

"This law means that an ordinary home buyer can be sure that his children and grandchildren will still be able to live in the apartment he buys," says Li Datong, an enthusiastically reformist political analyst. "Before, he could not be certain."

"People's living standards have improved in general, and they urgently require effective protection of their own lawful property accumulated through hard work," argued Mr. Wang as he presented the Property Law to the NPC. Such protection, he added, is "the general aspiration and urgent demand of the people."

By casting the law in this light Wang was seeking to counter criticism from opponents that it benefits only China's super-rich by legalizing the dubious deals through which many of them got their start in business – buying state property at rock-bottom prices.

Pressured by that sort of argument, the legislation's drafters introduced several amendments "of tremendous practical significance," Wang insisted, to "strengthen protection of socialist public property" and defend it from questionable privatization.

But the law is clearly not limited to the houses and cars that Chinese city-dwellers regard as necessities, in the same light as their parents once viewed wristwatches, bicycles, and sewing machines. Protection of private property extends to the "means of production" – a recognition of reality in a country where private enterprise now accounts for nearly two-thirds of GDP.

It does not, however, extend to agricultural land, which remains collectively owned by peasant villages and not immune to seizures by developers, which have provoked thousands of sometimes violent protests in recent years.

Denying farmers the right to own their land, argues one European diplomat, "is a great missed opportunity and a demonstration of [President] Hu Jintao's lack of courage."

The law leaves the current system, whereby farmers rent their land for 30-year periods, untouched. Peasants can sublet their assigned land to neighbors, but may not sell it nor borrow against it on a mortgage so as to invest in machinery or other equipment. Reforming that system was clearly too radical a prospect for a cautious government that had enough trouble with the law as it was.

In putting their free-market reformist right foot forward, the authorities had to dress their move up in a good deal of leftist language about "improving the Chinese-style socialist property system" and how "the State-owned economic sector is the leading force" so as to placate opponents of the Property Law.

In its careful shuffle along the reformist path, the government is also putting its left foot forward at this NPC, promising more spending on education and healthcare, and major legislation in the coming months to strengthen labor rights and social-security protection.

Brandishing his goal of a "harmonious society" beset by less of the envy and social conflict that scars today's China, President Hu seems guided more than anything else by the search for "the proper balance between the need for further and deeper economic reforms and at the same time the need to go much further in terms of social protection" says the Western diplomat.

Even though he does not agree with them, Mr. Li welcomes the law's opponents as "an important counterbalance to power in China.

"The result of their opposition could be seen as a warning to the government that in the future it should pay more attention to social fairness and less to economic efficiency," he says.

While the law's drafters say in private they were disappointed to have been obliged to amend their original proposals for political reasons, and critics say they regret not having been able to block the law, "improvements always come step by step," Li adds.

"It was a compromise" he says. "But history advances by compromise."