In a landmark move, China is expected to enshrine protection of private property in its Constitution this week.

The revision mandates that “citizens’ legally obtained private property shall not be violated.”

The proposed amendment also provides that “the state may, for the necessity of public interest, requisition or expropriate citizens’ private property and pay compensation in accordance with the law.”

“The proposed amendment will exert profound influence in China’s economic reform and society,” Liang Huixing, a leading civil law professor with the Chinese Academy of Social Sciences and a member of the Chinese People’ Political Consultative Conference (CPPCC), China’s top advisory body, told China.org.cn.

“The Constitution, at the top of the country’s legal framework, has to be transformed to adapt to the country’s strategic shift from the planned economy monopolized by a purely public sector to a market one featuring a mixed structure including public, private and foreign elements,” said Liang.

“The current constitutional provision on private property protection that ‘the state protects the right of citizens to own lawfully earned income, savings, houses and other lawful property’ is incomplete and fails to well meet requirements of the times.”

“The provision only enumerates a few kinds of private property to be protected, which makes it very limited; and it does not explicitly protect private property in various forms such as stocks and intellectual property, and the most important category: private means of production,” said Liang.

“Legally speaking, the current provision on public property protection and the proposed amendment on private property protection could be combined into ‘property obtained legally shall not be violated,’ which is more succinct, integrated and balanced. However, such wording is ignored and the existing provision on public property protection is kept intact. The treatment is deliberately devised, considering that any change in the present provision on public property is misleading and could possibly spark domestic confusion as well as international suspicion as to whether China is promoting privatization,” explained Liang.

Despite this, private property will gain an equal legal status with public property under the proposed amendment. Once approved, it will dispel private entrepreneurs’ anxieties for the safety of their property and greatly bolster their confidence.

China briefly allowed private enterprises to continue operating after 1949. They were banned in the late 1950s but have been restored to legitimacy since the late 1970s.

However, since then many Chinese private entrepreneurs have continued to worry about the ultimate fate of their growing wealth. In seeking ways to avoid risk, they sometimes created new problems.

“Some private businesspeople deposited large sums of money they made in China in foreign banks. Some tried to build relationships with publicly owned enterprises and operate businesses under their names, resulting in many ownership disputes. Others were reluctant to put the money they made back into business expansion and just squandered it, for instance, going gambling in Macao, and more recently, in South Korea,” said Liang.

Individual private entrepreneurs and the All-China Federation of Industry & Commerce, one of the CPPCC interest groups, have lobbied for constitutional guarantees for years.

Besides providing protection for private property, the proposed amendment states that China “encourages, supports and guides the private economy,” further consolidating the legal status of private entrepreneurs.

“Very good, very good, very good!” Liu Yonghao, chairman of one of China’s largest private companies, the New Hope Group Co., told the press when the proposed constitutional amendment was released two days ago.

“We private entrepreneurs are very pleased with the amendment, and it will benefit ordinary rural and urban citizens, too. Their houses, stocks and some means of production will be better protected, “ said Liu.

“Both printed media and radio and television should teach the public to look correctly on private property and the rich. In recent years, some of them have linked wealth to corruption, which is disrespectful to private businesspeople and misleads the public,” Liu commented.

Some businesspeople have expressed concern that the proposed provision that “citizens’ legally obtained private property shall not be violated” might give local governments excuses to declare a citizen’s property illegal and seize it at will in the future. They feel the words “legally obtained” are redundant and problematic.

“Such worries are absolutely unnecessary,” said Liang Huixing. “It’s a misunderstanding of the law. Every country provides protection for legally obtained private property and denies protection to illegally obtained private property. Properties obtained from illegal businesses such as smuggling do not deserve protection.”

Liang noted that the proposed constitutional amendment only lays down basic principles. More specific rules can be found in property registration regulations and will be detailed in the planned Property Law.

He pointed out that it is essential to make it compulsory that civil servants at different government level study the Constitution and the amendment, thus bearing the principles well in mind.

(China.org.cn by staff reporter Chen Chao, March 10, 2004)