Who should own the good earth of China

When Hu Jintao took China's helm in 2003, his goal became social harmony. No wonder. Riots and protests, mostly by peasants, are up tenfold in 10 years. The Communist Party is now even citing Confucius to try to instill moral standards.

Indeed, quotes from the ancient Chinese sage, who was once reviled by the communists, are useful in reminding leaders of the virtue in taking care of society's downtrodden - especially Chinese farmers who can till farmland only under a government lease but whose lands increasingly are taken willy-nilly by corrupt officials for development.

Over the past week, during the annual meeting of the National People's Congress, party leaders once again flinched at really helping those farmers. They could have had this rubber-stamp legislature pass the one reform that would most lift up the seven in 10 Chinese who live in the countryside - almost all of whom eke out a living far below the richer lifestyles in China's cities.

The reform has been in the works for years. It's a draft law that would grant land ownership to farmers, allowing them to buy and sell land in a free market. Such a law would put legal meat on a 2004 amendment to China's Constitution that only vaguely calls for protecting property rights.

Passing a law that would turn 700-900 million Chinese peasants into land capitalists isn't easy for the party's remaining die-hard Marxists, who still dream of a socialist paradise. They have raised an ideological ruckus over the draft law. The party, too, faced with fading popularity, believes its power resides in hanging onto government ownership of land.

Nor would it be easy to quickly reorganize rural life so fundamentally in a country that has nearly 22 per cent of the world's population but less than 10 percent of its arable land. Feeding 1.2 billion Chinese requires a certain stability.

That said, the lack of property rights lies at the heart of not only rising rural instability and violence, but also in whether China's economic competitiveness will continue and whether legal conditions can be created for a host of rights.

Private investments and the rule of law would be better fostered if rural Chinese had secure ownership of land, the hardest asset on Earth. This form of capital is the bedrock for wealth creation. (Communism failed because of Marx's wrong idea that labor creates wealth more than does private capital invested in land, technology, and ideas.)

By owning land, farmers can borrow against it to invest in agricultural improvements that raise productivity. As it stands now, Chinese farmers produce a fraction of what their counterparts do in the West.

Party leaders, after 25 years of pushing pell-mell economic growth, have lately put forth a plan called "building a new socialist countryside." It will redistribute some $1 trillion of China's industrial wealth to rural education and healthcare, in hopes of calming peasant unrest. They also plan new regulations to properly compensate farmers whose lands are taken for industrial use.

These are palliatives, however, in a socialist system out of kilter with China's growing market economy. Confucius would question whether the party deserves the "mandate of heaven" in ruling today's China.