China's legislators passed a law today providing the most sweeping protection for private businesses and property since the nation's move toward a more capitalist-style economy beginning in the late 1970s.
The law offers the same protection for private and public property, a recognition of the private sector's rise since the start of economic reforms. The private sector, including foreign investment, has grown to account for 65 percent of gross national product and up to 70 percent of tax revenues.
The measure was strongly opposed by a small but highly influential group of scholars and retired communist officials, who called it a threat to the state's guiding role and a vehicle for unrestrained privatization that will feed a growing income gap between rich and poor.
"The law basically ignores the constitution's upholding of socialist public property as sacred and not to be violated," said Gong Xiantian, a Peking University professor.
Such opposition and the communist leadership's ambivalence about reducing the primacy of state property caused the law to be kicked around for 14 years before a final version was submitted this year. It passed in a vote of 2,799 delegates in favor with 52 opposed and 37 abstaining on the final day of the annual two-week session of the National People's Congress.
Perhaps aiding the law's passage was the status of state industries, which have shed influence along with employees of late. China's labor minister said earlier this week that jobs need to be found this year for another 5 million laid-off state enterprise workers.
Along with private businesses, the law also aims to bolster the rights of house buyers who have pushed the urban home ownership rate to more than 80 percent, as well as farmers who have frequently lost their land to infrastructure and housing projects, with little or no compensation.
The legislature also passed a new tax law that unifies the tax rate for foreign-financed companies with those of Chinese enterprises at 25 per cent, ending an era that saw China create special economic and technology zones with low taxes to attract nearly $700 billion in foreign investment that fueled this nation's rise to become the world's fourth-largest economy.
Under the old system, Chinese companies paid 33 percent of profits in tax, while new foreign investors were exempt from taxes for two years, get a 50 percent cut for three more and after that could receive breaks that kept rates as low as 10 percent.
That system had led to frequent complaints about unequal treatment.
AP