At the first session of the 10th National People's Congress in 2003, the law on State assets was the subject of more than 160 proposals by deputies, which later grew into the pressure that finally saw the issue put on the country's legislative agenda from 2003 to 2008.

A group was set up that year to draft the law. It has turned out to be an arduous process. More than two years have passed, but still this law lacks a draft for discussion.

The group drafting the law hosted a forum last month to solicit opinions from academics, relative government departments and a number of key State-owned enterprises.

According to reports in the Economic Observer, the major questions asked by the group included the exact role of the State-owned Assets Supervision and Administration Commission (SASAC), the shared ownership pattern of State assets between the central and local governments and how to supervise of State-owned enterprises' assets.

While these questions remain unsettled, it is impossible for the group to formulate legislation concerning State assets. It is also unlikely the law will be complete before mid 2006.

This time frame was laid out by Li Rongrong, chairman of the SASAC. Li said in May 2004 that he expected the law on State assets to be promulgated within two years on the first anniversary of the issuance of the Provisional Regulations Concerning the Oversight and Management of State-owned Assets in Enterprises.

But different from this provisional regulation, an administrative rule on State assets, especially one that has been under consideration for so long, should be a fundamental document, "like a constitution for State assets," said Li Shuguang, a professor of law with China University of Politics and Law, in an interview with Caijing Magazine.

"For the law involves the interests of all citizens in the country. Otherwise, it would pose obstacles to further boosting the value of State assets," said Professor Li.

As a member of the group drafting the law, Li admitted it would be difficult to hammer out the legislation before the time limit laid down.

To become a "constitutional" document for State assets, the law must clearly define the borders between State assets and assets under other ownership, the legal position of State assets, the responsibility and rights of the State to these assets, which institution would manage or dispose of State assets for citizens and address a host of other problems.

The complexity of China's transforming economy makes such definitions a tough task. Even drawing a line between State assets and others is not that simple.

Professor Li and many other law experts have agreed that State assets cover a much wider scope than just those of State-owned enterprises.

They should include the assets of State-owned enterprises, the assets of non-business institutions like the government and schools, and resources owned by the State like land, forests and rivers.

They should also include the State's rights to use State resources and rights to the intangible assets of the State. Most people are unaware of many of the State's assets, and equally ignorant of their value.

Li Shuguang believed the absence of such a clear and popular definition meant State assets were being abused or even pocketed by groups or individuals.

For example, the land is owned by the State, but the right to use the land is now in the hands of local governments. When investors win the right to use the land from local governments, economic returns naturally become the income of local governments while the legitimate owner - the State - does not see much compensation. And in many cases, the transfer of land use rights is manipulated to the benefit of certain groups or individuals.

It is not hard to imagine the impediments the drafters are facing in trying to make changes to the current situation. And this is just one of the numerous problems they have been charged with handling.

Given such difficulties, many experts have suggested formulating laws first on some specific issues, like a law on State-owned enterprises and one on the disposal of State assets. Only after these issues are resolved and the lawmakers have enhanced their ability to tackle the problems can there be a "constitution" for State assets.

One thorn in the side of the drafting group that has yet to be addressed is the role of the SARMC, the government branch currently in charge of the administration and supervision of State assets.

The commission represents the owners of State assets. It can choose and employ the management and take part in the decision-making of State-owned enterprises.

At the same time, as a branch of the government, it is also responsible for the supervision of State-owned enterprises to ensure these assets are being run soundly.

Liu Jipeng, a professor with Capital University of Economics and Business, pointed out in the China Economic Times that the dual-role mode of SARMC did not tally with modern methods of corporate governance or theories on government and politics.

Although it has become the thinking of many that the current role of the SARMC should be changed, debate has not yet subsided even on which direction the body should take in such changes: to be a supervisor or executive manager.

One of the more popular solutions was provided by well-known economist Fan Gang.

Fan said in an interview with the Southern Weekend that since State assets belong to all citizens, the proper entity to make fundamental decisions concerning them could be one like the National People's Congress.

It has the power to read the budget and balance sheets of State assets. And an institution under its command would supervise the detailed management of the assets.

According to Liu Jipeng, SARMC should stay a government branch but act solely as a supervisor and let a State-owned company run State-owned enterprises and other State-assets.

Whatever the outcome, opinions are so worryingly divided that the drafters of the law will be hard pressed to come up with a conclusion within the set time frame.

(China Daily May 20, 2005)