Chinese may OK property rights law

Hiroyuki Sugiyama Yomiuri Shimbun Correspondent

Chinese lawmakers are expected to pass and enact in March a property rights law that clearly protects privately owned land, according to Chinese Communist Party sources.

If the National People's Congress passes the bill into law, economic activity by private companies and foreign investors will be freed up. Until now, China has maintained the principle of state property since its establishment as a communist state and continues to grant considerable power to public authorities.

According to the sources, the most important point of the new law is that it will establish the inviolability of private property.

Under the Constitution, state-owned property is seen as both sacred and inviolable, but the protection of private property is limited to that deemed "legal."

Though the final wording has yet to be decided, the sources said the law will include a passage that states: "Ownership rights of the state, groups and individuals are protected by law, and no individual or organization may violate these rights."

As a result, private property will have the same legal status as that held by the state or the public.

A government official involved in writing the bill said, "The infringement on property rights, such as abusing power to arbitrarily seize or expropriate property, will be prohibited."

Under former Chairman Mao Zedong, the Communist Party seized private property. Since 1978, under a policy of reform and openness, private property has been given greater protection.

Though the Constitution was amended in 2004 to include the protection of private property, enforcement of the right has remained ambiguous partly because of internal party disputes over the right's relationship with the state ownership system.

The new law also will give cheer to foreign companies operating in the country, as the ambiguity has led to serious disputes in the past, including instances in which local governments demanded that foreign firms vacate their land, claiming it was publicly owned.

The sources also said the new law would reduce anxiety about long-term investment in the private sector, including the firms that account for about 65 percent of China's gross domestic product.

Recently, it has been common for local governments to line their pockets by forcibly expropriating land, offering very little compensation in return. The practice has caused a strong backlash from the public at large. In fact, many of the 87,000 riots that took place in China in 2005 are believed to have been sparked by such abuse of authority.

The new law will oblige the authorities to offer appropriate compensation when expropriating land or forcing residents to vacate their property.

The new law likely will afford building owners an automatic extension of their land rights.