Related stories

Call for Toilets in Business Venues to Open to Public Residential Property Market Opening to 'Outsiders' New law to Govern Defence-related Patents Rocky Route to Business Success China to Amend Personal Income Tax Law

Landmark Law Provide Equal Safeguards to Public, Private Property

Responses to the adoption of the law, in general, have been positive from home and abroad, with not a few foreign media describing it as a "landmark" or "milestone" in China's effort to develop a full-fledged market economy.

"This is a move in the right direction," Xinhua, the State news agency, quoted James Zimmerman, an attorney and president of the American Chamber of Commerce in Beijing, as saying. "It's a good sign for domestic and international companies that China is moving away from the point where the State owns everything."

While a "landmark" or "milestone," the PRC Property Law is also "record setting" in terms of the opposition that it faced and may still be facing. It took 14 long years of controversy and seven readings to bring the draft law to vote at the Fourth Session of the Tenth National People's Congress (NPC), China's highest legislature, testifying to the caution that the government felt obliged to show in the face of vocal opposition from critics who call the law a "betrayal" of China's socialist principles.

Equal Protection

Indeed, the Property Law is a "landmark" or "milestone" in that it is the most explicit attempt to legally protect private and personal wealth since China decided in the late 1970s to break away from the Soviet-style planned economy of egalitarianism. "China enshrined the concept of private property rights in its Constitution in 2004, but the new law begins the process of translating theory into practice," the US TIME Magazine commented. "Although many of the provisions laid out in the 247 articles of the 40-page bill are covered in current laws and regulations, this so-called basic law attempts to bring greater consistency, definition and assurance to the thorny issue of property rights."

Observers are quick to note that under the new law, "effective protection" extends to cover not only "means of livelihood'private housing, cars, bank savings and many others'but also the so-called "means of production" such as capital, factories and workshops, as well as intellectual property rights. In plain language, this amounts to recognition, in legal terms, of the private sector's rise since the start of the economic reforms. The private sector, including foreign investment, has reportedly grown to account for 65 percent of gross national product and now furnishes up to 70 percent of the tax revenues.

For ordinary Chinese citizens, this new law means a lot. Ordinary homebuyers, for example, can now be sure that their children and grandchildren will still be able to live in the apartment they own. Before the law was adopted, no one could be certain.

Under China's Constitution, land and all other natural resources are owned by the State. Users of land' developers, for example--may buy "land-use rights" from the government. The validity of the so-called "land-use rights" vary in length from sector to sector' 30 years for industries, 40 years for trade and commerce and 70 years for residential buildings. When a person buys a home, the money he or she spends pays for a residence but also the "cost of land-use." Here is the dilemma: the person owns the apartment but not the land on which the apartment is built. According to the Properly Law, the "land-use right" will automatically extend upon expiration of the 70-year period.

Under the Property Law, agricultural land remains owned by "rural collectives," in most cases by "villagers' committees" rural organizations of self-government chosen through direct election. An individual household farms a piece of land under a contract signed with the villagers' committee for a period of up to 30 years. Deng Xiaoping, the late paramount leader, promised to allow an extension of the right to cultivate collectively owned farmland upon expiration of the 30-year period. In practice, not a few local governments have been pursuing a policy that allows renewal of the "collectively owned land use right" for up to 50 years or even longer. "But a policy is a policy, after all," said farmer Wang Dongkai in Jurong County, Jiangsu Province. "It can be changed when governments are changed. We need a legal guarantee for our right to farm the land."

To address farmers' worries and misgivings, the law stipulates that "on the expiration of the term of a contract for a piece of farmland, grassland or forest land, the contractor of the right to contractual management of land may have the contract renewed in accordance with the relevant provisions of the State." In plain language, farmers like Wang Dongkai may use their contractual land as long as they wish, and they may pass the ‘‘right,” so to speak, to their children, grandchildren and even great grandchildren by renewing the contracts.

The law also moves to better protect farmers from land seizures, which have become a major source of unrest in the countryside. It requires that farmers whose land is appropriated for construction and other purposes must be sufficiently compensated. Even more important is that under the Property Law, governments and developers must ensure that their living standards are not lowered and their long-term livelihoods shall be guaranteed.

In addition to protecting farmers’ rights to manage collectively owned land, the Property Law aims to ensure implementation of the government’s policy that calls for exercising the ‘‘most stringent control” over the use of land for non-agricultural purposes. ‘‘China is a country with a huge population and insufficient cultivated land,” Wang Zhaoguo, a vice-chairman of the NPC and concurrently a member of the all-powerful Political Bureau of the ruling Communist Party of China (CPC), said when introducing the draft Property Law to the NPC deputies on March 8, 2007. ‘‘At present, the land retained for cultivation throughout the country only totals 122 million hectares, with only about 0.0933 hectares per head, accounting for one-third of the world average level.” He noted that by 2010, the amount of land retained for cultivation must be kept at no less than 130 million hectares. ‘‘This is a constraint figure, a base line that must not be broken,” he said.

With regard to the expropriation of houses and other immovable property owned by units and individual citizens in both cities and the countryside, the law stipulates: "Compensation for resettlement shall be paid to the units and individuals whose houses or other immovables are expropriated, in order to preserve their lawful rights and interests; where the residential unit of an individual is expropriated, his living conditions shall be guaranteed."

At least in principle, compensation for the expropriation of land, houses and other immovable property are already covered in previously promulgated laws. The fact, Wang Zhaoguo admitted, is that more often than not, such compensations ‘‘are not duly paid and are misappropriated.” Observers are quick to note that infringements upon some of the basic rights of citizens, such as the right to residence, the right to livelihood, are causing mass protests or ‘‘mass incidents” in China’s official terminology. There were 87,000 protests reported in 2005, according to official figures. Complete numbers for 2006 have not been released.

For this reason, the Property Law provides that "No unit or individual shall embezzle, misappropriate, illegally share, withhold or pay in default, the compensations for expropriation or other fees." Wang said that under the Property Law, any unit or individual that violates this stipulation shall bear legal liability in accordance with law.

‘‘Never Should China Go Back to Egalitarianism”　　

Obviously, the Property Law is meant to bolster efforts of the ruling Party and government to build a ‘‘harmonious society under socialism.” Wang Zhaoguo noted that the country's economic and social changes made the law necessary. "As the reform and opening up of the economy develop, people's living standards have improved in general and they urgently require effective protection of their own lawful property accumulated through hard work," Wang told 2,835 NPC deputies gathered in the massive Great Hall of the People, Beijing.

But analysts have also suggested that tightening the security of home ownership could increase support for the government among China's increasingly affluent, urban middle class. Wang Zhaoguo went so far as to describe "effective protection of private property" as "what the [Communist] Party stands for."

There is no official for definition the term ‘‘middle class.” In China, the ‘‘middle class” is understood as comprising people living on ‘‘high incomes” that average more than 120,000 yuan (about US$13,700) a year who, beginning this year, will have to submit tax returns to the government every year. According to estimates by Professor Li Qiang, a sociologist at the prestigious Tsinghua University, these people account for about 10 percent of the Chinese population, including about 1.3 million millionaires or billionaires, and they own about one-third of the national wealth. In contrast, the poorest 20 percent of the Chinese population, those at the bottom of the ‘‘pyramid,” have less than 20 percent of the national wealth. ‘‘For transport, "you’ have a brand new Benz limousine sold at half a million yuan (US$65,000) and have to use a second-hand bicycle I bought with 40 yuan (US$5),” said Wu Hongping, a construction worker in Beijing. ‘‘The law, however, provides equal protection to 'your’ limousine and 'my’ bicycle now almost beyond repair. Do you call that fair?”   

To questions such as this, Li Qiang and other experts give the same answer. ‘‘I bought my limousine with honest money, with money I have earned through hard, lawful work,” the Tsinghua professor says. ‘‘That’s why the Property Law protects it. It protects °Æyour’ bicycle as well, as long as it was bought with honest money. That is what fairness means in the Property Law.”

‘‘Development is the unbending principle,” he says, citing Deng Xiaoping when, in the early 1980s, he advanced the policy of allowing a few to get rich first through honest work with a view to eventually achieving ‘‘prosperity for all.” ‘‘The only way to bring about social fairness is to protect high-income groups and expand the medium-income group while raising the incomes of the low-income group,” Li said.

‘‘Prosperity for all,” he concedes, is a ‘‘long-term goal,” and the goal of narrowing the differences between the rich and poor can be attained ‘‘only through development.” The law, he adds, will encourage people to work hard and create wealth. ‘‘Never should China return to egalitarianism, to those days when people °Æate from the same big rice bowl,’ ‘‘ Li Qiang said, referring to the practices that allowed people to draw the same pay whether they were hardworking or lazy.

‘‘Basic Socialist Economic System” to Continue 　　

Back in 1993, the NPC began drafting a property law. After lengthy ‘‘investigation and study” that involved not only lawmakers but also China’s top law experts, in July 2005, it published a draft Property Law for public scrutiny. In just one month, the NPC received more than 10,000 suggestions, criticisms and comments from people all over the country. After revision, the draft was submitted to the 2006 session of the NPC for deliberation. But it stopped at that for opposition from a small but highly influential group of scholars and retired officials.

Gong Xiantian, a Peking University professor, is among the most vehement opponents. "The law basically ignores the Constitution's upholding of socialist public property as sacred and not to be violated," he was quoted by Christian Science Monitor as saying. People like Gong also argued that after the draft became law, there could be unrestrained privatization, thus threatening the guiding role of the State.

To counter such opposition, the Property Law, Wang Zhaoguo noted, applies the principle of equal protection to the property of the State, the collective and the individual and, at the same time, strengthens the protection of State-owned property against the loss of such property. He assured the NPC deputies that China will continue to uphold its ‘‘basic economic system” that keeps public ownership dominant while having the economic sectors under diverse forms of ownership develop side by side.

While allowing farmers to renew the contracts for farming collectively owned land, the Property Law stops short of allowing a privatization of such land. On the question of whether the restrictions on the transfer and mortgage of the right to land contractual management can be lifted, Wang Zhaoguo said that in view of the fact that at present, the social security system in the rural areas has not yet been established in an all-round way and that the right to land contractual management provides farmers' a lifelong foundation, ‘‘the conditions for lifting such restrictions are not yet ripe, when considering the perspective of the country as a whole.”

In the opinion of Professor Wang Liming, dean of the People’s University Law School and member of the NPC Law Committee, the Property Law is a ‘‘milestone” in China’s endeavour to establish a more complete civil code. ‘‘We will formulate a law in support of the Property Law, the Law of Liability for Rights Infringement,” he said. ‘‘That law has been included into the NPC’s law-making plans and if all goes well, it should be enacted in 2010.”

The planned People’s Republic of China Civil Code comprises the "General Principles" and nine existing laws, including the newly enacted Property Law, the Marriage Law, the Contract Law and others. ‘‘There is only one law yet to be enacted,” Wang said, ‘‘and that is the supportive law for the Property Law.”