The following is the full text of the Explanation on the Draft Property Law of the People's Republic of China delivered by Wang Zhaoguo, vice-chairman of the Standing Committee of the National People's Congress (NPC) at the Fifth Session of the Tenth NPC on Thursday:

1. The Necessity of Enacting the Property Law

The property law is a basic civil law that serves to regulate property relationships and adjust civil relationships stemming from attribution and use of things, and it involves defining the property of the State, the collective, individual and other obligees and protecting the property.

China's General Principles of the Civil Law, Land Administration Law, Law on the Administration of the Urban Real Estate, Law on Land Contract in Rural Areas, Guaranty Law, etc., include not a few provisions on property, which have played an important role in economic and social development. As the reform deepens, the opening-up extends and the socialist economy, politics, culture and society moves forward, in order to meet the requirements of materializing in an all-round way the scientific concept of development and building of a socialist harmonious society, it is necessary to enact a property law, in accordance with the Constitution and on the basis of our experience gained through practice, to stipulate for questions of a general character in the property system and questions in real life calling for urgent regulation, thus further defining the attribution of things to avoid disputes, bring into full play the usefulness of things, protect the property of the obligees and improve the Chinese-style socialist property system.

Enacting the property law is necessitated by the need to uphold the basic socialist economic system. Keeping public ownership dominant and having the economic sectors of diverse forms of ownership develop side by side constitute the basic socialist economic system of the State in the primary stage of socialism. Enactment of the property law will serve to define the scope of state-owned property and collective-owned property and the exercise of State ownership and collective ownership and strengthen protection of state-owned and collective-owned property, and will be conducive to consolidating and developing the economic sector of public ownership; and it will serve to define the scope of private property and protect private property in accordance with law, which will be conducive to encouraging, supporting and guiding the development of the economic sector of non-public ownership.

Enacting the property law is necessitated by the need to regulate the order of the socialist market economy. Clear-cut definition of property and fair competition are the basic requirements for developing the socialist market economy. Enactment of the property law will serve to confirm the attribution of things, specify the contents of ownership. usufruct and security rights, ensure the equal legal status of the various market subjects and their right to development and protect the property of the obligees in accordance with law -- all this will play an important role in developing the socialist market economy.

Enacting the property law is necessitated by the need to safeguard the immediate interests of the people. As the reform and opening-up and 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, of the right to land contractual management they enjoy in accordance with law, and of their other lawful rights and interests. Enactment of the property law will serve to define and protect private ownership, condominium right, right to land contractual management and house-site-use right, for the purpose of protecting the immediate interests of the people, stimulating their vigor to create wealth and promoting social harmony.

Enacting the property law is necessitated by the goal of establishing a Chinese-style socialist legal system by 2010. Property law is an important component part of the civil code. playing the role of a prop in the Chinese-style socialist legal system. Enactment of the property law provides an important step taken within the term of the current National People's Congress for giving a basic shape to the Chinese-style socialist legal system.

2. Formulation of the General Principles for Enacting the Property Law and Drafting of the Property Law

Drafting of the property law started in 1993. The Standing Committee of the National People's Congress has attached great importance to the enactment of the law. In December 2002, the Standing Committee of the Ninth National People's Congress included the property law in the draft civil code for preliminary deliberation. The current Standing Committee of the National People's Congress has included the enactment of the property law in the agenda of important subjects and devoted a lot of time and energies to the work. In order to make a success of the job, the Standing Committee of the National People's Congress has been adhering to the principle of democratic and scientific legislation. In July 2005, it published the draft property law and collected over 10,000 comments and suggestions from the people. Moreover, it held over 100 forums and a number of demonstration meetings, and conducted investigation and study on special subjects in some places, thus fully soliciting the views expressed by people from different quarters, deputies to the National People's Congress, people at the grass-roots level, specialists and scholars, and people from the central departments concerned. In the process, a lot of comments and suggestions were put forward. The Standing Committee of the National People's Congress has attached great importance to the opinions expressed and deliberated the draft on six occasions, which is something unprecedented in the history of legislation in China.

The general principles for enacting the property law are: with Deng Xiaoping Theory and the important thought of "Three Represents" as the guidance, materializing the scientific concept on development in an all-round way, keeping to the correct political orientation and giving a full and accurate expression to and upholding the basic socialist economic system on the basis of the specific conditions and realities of our country; applying the principle of equal protection to the property of the State, the collective and the individual in accordance with the provisions of the Constitution and laws and, at the same time, strengthening the protection of state-owned property against the loss of such property; giving a full and accurate expression to the basic policies of the Party in the rural areas at the present stage and safeguarding the interests of the large numbers of farmers; and in view of the problems in real life that need urgent regulation, conducting overall coordination of all kinds of interests and relationships, in order to promote social harmony. In short, in formulating the property law, we must, from beginning to end, keep to the correct political orientation and the Chinese characteristics of the property law and persist in proceeding from the realities in all aspects.

On the basis of the principles mentioned above and thanks to the rational comments and suggestions expressed by all quarters and to repeated discussion and revision of the draft, the final draft embodies greater changes compared with the initial one. When the component members of the Standing Committee deliberated the draft at the 25th Meeting of the current Standing Committee of the NPC, they highly valued and fully affirmed the draft, believing that the draft embodied the unity of the Party's position and the will of the people, represented a crystallization of the wisdom of the collective, and was about to be mature. The decision on submitting the draft to the Fifth Session of the Tenth National People's Congress for deliberation was adopted by an overwhelming majority vote. After the Meeting, the General Office of the Standing Committee delivered the draft property law to the deputies to the National People's Congress according the statutory procedure on last January 12 and made arrangements for them to study and discuss the draft in preparation for deliberation. Further amendment to the draft was made on the basis of the suggestions made by some deputies during discussion, hence the present draft submitted to the Session for the deliberation. The draft is composed of five parts, with 247 articles under 19 chapters.

3. The Main Contents of the Draft Property Law

(1) Adherence to the Basic Socialist Economic System.

The Chinese-style socialist property system is determined by the basic socialist economic system and is in essence different from the capitalist property system. Therefore, enactment of the Chinese- style property law must give a full and accurate expression to the basic socialist economic system and the "Two Unswervingly" (to unswervingly consolidate and develop the economic sector of public ownership, and to unswervingly encourage, support and guide the development of the economic sector of non-public ownership - trans. ) which is put forward at the 16th National Congress of the Communist Party of China. First, in the draft, upholding the basic economic system of the State is made the basic principle, the draft explicitly stipulates, "In the primary stage of socialism, the State upholds the basic economic system in which public ownership is dominant and the economic sectors of diverse forms of ownership develop side by side." "The State consolidates and develops the economic sector of public ownership, and encourages, supports and guides the development of the economic sector of non- public ownership." As the core of the property law, this basic principle runs through and is embodied in this law as a whole. Second, the proprietary right is a reflection of the ownership system in law and provides the basis for the property system. Clear-cut stipulations are made on ownership by the State and the collective and by the individual and there are comparatively more provisions on ownership by the State, which is conducive to upholding and improving the basic socialist economic system and to bringing into full play the advantages of all the economic sectors of the various forms of ownership, so that they stimulate one another for common development. Third, developing the socialist market economy is the inevitable requirement of upholding and improving the basic socialist economic system. On the premise of explicit provisions that "the exercise of rights by a usufructuary or a secured party shall not damage the rights and interests of the owner", stipulations on usufructs and security rights are made in the draft, which is conducive to bringing into full play the usefulness of things, maintaining the order of market transaction and promoting the economic development.

(2) Equal Protection of the Property of the State, the Collective and the Individual.

The property law comes under the civil code, one important principle of which being equal protection of the rights of the obligees. The draft property law stipulates, "The property of the State, the collective, the individual and other obligees is protected by law, and no units or individuals may infringe upon it. "

The Constitution stipulates, "The State practices socialist market economy." Fair competition, equal protection and survival of the fittest are the basic rules governing the market economy. Under conditions of the socialist market economy, the subjects of the market, formed by economic sectors of different forms of ownership, operate and form mutual relations in a unified market, they all have an equal status on the market, enjoying the same rights, observing the same rules and bearing the same responsibility. If the different subjects of the market are not provided with equal protection, or if the methods used for settling disputes or the legal responsibilities to be borne are varied, it will not be possible to develop the socialist market economy, nor will it be possible to uphold and improve the basic economic system of socialism. In order to keep abreast of the development of the socialist market economy, it is further made clear by the Third Plenary Session of the 16th Central Committee of the CPC that "the equal legal status and the right to development of all the subjects of the market shall be guaranteed". Even with respect to the property which is not transacted on the market, the Constitution also clearly stipulates, "Citizen's lawful private property is inviolable." "The State, in accordance with law, protects the rights of citizens to private property and to its inheritance." On the premise that ownership of property is established according to law, as subjects of property, no matter whether it is the State, collective or individual, their right of property shall be given equal protection. Equal protection does not necessarily mean that the economic sectors of different forms of ownership play the same role or perform the same function in the national economy. According to the provisions of the Constitution, the economic sector of public ownership is dominant, the state-owned economic sector is the leading force, and the economic sector of non-public ownership constitutes an important component of the socialist market economy, each playing a different role and performing a different function in the national economy. This is chiefly manifested in the macro-economic control conducted and the public resources distributed and market access granted by the State. Where the important industries and key fields of endeavor which have a bearing on State security and the lifelines of the national economy are concerned, the controlling role of the state-owned economic sector must be ensured, and all this is stipulated by economic and administrative laws.

(3) State-owned property.

In the draft property law, explicit stipulations are made on the scope of state-owned property, the exercise of State ownership, effective protection of state-owned property, etc.

With respect to the scope of state-owned property. The draft property law, in accordance with the Constitution and relevant laws, explicitly stipulates that state-owned property includes: the natural resources and infrastructure belonging to the State, the property of government departments and the institutions sponsored by the State, etc.; and, in addition, it stipulates that the State Council or the local people's governments shall, in accordance with the provisions of laws and administrative regulations and on behalf of the State, respectively perform the duties of promoters of the enterprises and enjoy the rights and interests of promoters. This further defines in law the scope of the resources and the property for business operation owned by the State, which will play a key role in promoting and expanding the state-owned economic sector, increasing the economic strength of the State and bringing the superiority of the socialist system into play.

On the question of the exercise of State ownership. In accordance with the provisions of the Constitution, the National People's Congress is the highest organ of the State power and the State Council is the executive body of the highest organ of the State power. The fact that the National People's Congress exercises the State power on behalf of the people throughout the country is embodied in its making of decisions in accordance with law on major issues that have a bearing on the overall situation of the State, and the organ that puts those decisions into effect is the State Council. It follows that it is the government, not the National People's Congress, that concretely exercises the ownership of the State. In such laws as the Land Administration Law, Mineral Resources Law, Grassland Law and Law on Administration over the Use of Sea Areas, it is explicitly stipulated that the State Council exercises the ownership on behalf of the State. As a matter of fact, it is also the administration system currently in effect. The draft property law stipulates, "The State Council shall exercise the ownership of state-owned property on behalf of the State; and where otherwise provided for in laws, the provisions there shall prevail." It is not only in conformity with the characteristics of the people's congress system, but also embodies the requirements laid down at the 16th National Conference of the CPC that the State formulate laws and administrative regulations to establish a state-owned assets management system whereby the Central Government and local governments respectively perform the duties of promoters on behalf of the State and enjoy the rights and interests of owners. The fact that the National People's Congress empowers the State Council through legislation to exercise the ownership of the State on behalf of the State embodies the nature of the National People's Congress and the characteristics of the exercise of its functions and powers. In exercising ownership of the State, the governments shall be accountable to the people's congresses and subject to their supervision according to law.

On the question of protection of state-owned property. In light of the present situation of the loss of state-owned property, the draft property law strengthens the protection of state-owned property from the following five aspects on the basis of adherence to the principle of equal protection:

One, it stipulates, "The property owned by the State as provided for by law belongs to ownership of the State, that is, ownership of the entire people." And it also makes stipulations on the specific property that belongs to state-owned property, in order to prevent the loss of state-owned property due to equivocal definition of its ownership.

Two, it stipulates, "No units or individuals shall be allowed to obtain ownership of the immovables or movables exclusively owned by the Sate as is provided for by law."

Three, it stipulates, "The property owned by the State shall be protected by law, and illegal possession, looting, illegal sharing, withholding or destruction of such property by any unit or individual is prohibited."

Four, in light of loss of the property of the state-owned enterprises, it stipulates, "Any unit or individual that, in violation of the provisions on management of state-owned property, causes loss of state-owned property by transferring it at a low price, illegally sharing it in conspiracy with another person, placing a charge over it without authorization, or by other means in the course of restructure of the enterprise, merger or division of the enterprise, or affiliated transaction, etc., shall bear legal liability according to law."

Five, in light of the problems existing in supervision over state-owned property, it stipulates that where in performing their duties of administration of and supervision over state-owned property, the authorities and their staff members "cause loss of state-owned property due to their abuse of power or dereliction of their duties, they shall bear legal liability according to law."

These stipulations manifest the essence of the Constitution on the need to strengthen protection of the socialist public property and are of tremendous practical significance.

(4) Property of the Collective.

In accordance with the Constitution and the Party's basic rural policies at the present stage, the draft property law explicitly stipulates, "Rural collective economic organizations apply the dual operation system characterized by the combination of centralized operation with decentralized operation on the basis of operation by households under a contract." And at the same time, the "right to land contractual management" and the "house-site-use right" are stipulated separately in special chapters.

In order to grant the farmers a long-term and guaranteed land- use right, the draft property law stipulates that, at the expiration of the term of a contract for a piece of farmland, grassland or forest land, the contractor of the right to land contractual management may have the contract renewed in accordance with the relevant provisions of the State.

On the question whether the restrictions on the transfer and mortgage of the right to land contractual management and the house- site-use right can be lifted. In view of the fact that at present, the social security system in the rural areas of our country has not yet been established in an all-round way and that the right to land contractual management and the house-site-use right provide the farmers' lifelong foundation, the conditions for lifting such restrictions are not yet ripe, when considering from the perspective of the country as a whole. In order to maintain the laws currently in force and the policies of the State on rural land at the present stage, as well as to leave some room for revising relevant laws or adjusting relevant policies in the future, the draft property law stipulates, "Persons enjoying the right to land contractual management shall be entitled to circulate such right by adopting such means as subcontract, exchange and assignment in accordance with the provision is of the Law on Land Contract in Rural Areas." "Such laws as the Land Administration Law and the relevant regulations of the State shall be applicable to the obtainment, exercise or assignment of the house-site-use right."

On property of the collective in cities and towns. The enterprises of the collective in cities and towns in our country have gradually been established since the 1950s. Through their evolution over the last few decades, some of them were established by state-owned enterprises for the purpose of offering jobs to the children of their workers and for the youths who had received a school education and had returned to cities and towns from the countryside; and others were established by state-owned enterprises for the purpose of separating subsidiary industries from them and replacing their surplus labor force in the course of reform of the enterprise system. Through reform of the enterprise system over the last few years, great changes have taken place in the enterprises of the collective in cities and towns. At present, reform of the enterprises of the collective in cities and towns continues to deepen in accordance with the principles laid down since the 16th National Conference of the CPC. The draft property law has made stipulations in principle on the property of the collective in cities and towns in term of the right to things, as follows, "The immovables or movables owned by the collective in cities and towns shall, in accordance with the provisions of laws and administrative regulations, be possessed and used by, shall benefit, and shall be disposed by, the said collective." And it stipulates, "The property owned by the collective shall be protected by law, and illegal possession, looting, illegal sharing, or destruction by any unit or individual is prohibited." These stipulations are not only in conformity with the present conditions, but also leave some room for deepening the reform in the future.

(5) Private Property.

Since the reform and opening up, the economy has been developing rapidly, the people's living standards have continued to improve, and private property has been increasing with each passing day. Effective protection of private property of citizens is not only stipulated by the Constitution and is what the Party stands for, but also the general aspiration and urgent demand of the people. The draft property law stipulates, "Individual persons shall be entitled to enjoy ownership of such immovables and movables as their lawful incomes, houses, articles for daily use, means of production and raw materials." "Lawful deposits and investments of individual persons and the gains derived from their investments shall be protected by law." "In accordance with the provisions of law, the State protects the rights of individual persons to inheritance and their other lawful rights and interests." "The lawful property of individual persons shall be protected by law, and illegally taking possession, looting and destruction of such property by any unit or individual is prohibited." These stipulations serve to further improve the legal system for protection of private property and are conducive to stimulating people's initiative to create and accumulate wealth and to promote social harmony.

Along with the reform of the housing system, more and more urban residents have come to possess their own houses, the bulk of which are in residential districts, therefore, the condominium right has become an important right in the individual persons' rights to immovables. Proceeding from the purpose of maintaining the lawful rights and interests of the owners of buildings, the draft property law explicitly stipulates that the owners shall enjoy ownership over the special parts within a building, such as the residential units and the units for business purposes, and enjoy the right of sharing and jointly managing the common parts other than the special parts, such as the public facilities like the lifts and public places like the greens. Moreover, the draft has also made stipulations governing such matters as ownership of the garages and parking lots, the functions of the owners' committee and the relations between the owners and the property services.

(6) Compensation for Expropriation.

Expropriation of collective- owned land and the houses of urban and rural residents has a bearing on the immediate interests of the people and is a general concern of the society.

As it is, China is a country with a huge population and insufficient cultivated land. At present, the land retained for cultivation throughout the country only totals 1.83 billion mu (or 122 million hectares), with only 1.4 mu (or about 0.0933 hectares) per head, accounting for one-third of the world average level. As is fixed in the Outlines of the Eleventh Five-Year Plan approved at the Fourth Session of the Tenth National People's Congress, by the year 2010, the amount of land retained for cultivation must be kept at 1.8 billion mu (or 120 million hectares), which is a constraint figure, a base line that must not be exceeded. Applying the most strict land administration system and, in particular, effectively protecting the capital farmland are the most urgent and herculean tasks confronting our country today. The draft property law explicitly stipulates, "The State provides special protection for cultivated land through strictly restricting the transformation of land for agriculture into land for construction and keeping under control the total amount of land used for construction. No entity shall expropriate collective-owned land by exceeding the limits of power or in violation of the procedures as provided for by law."

In accordance with the Constitution, the draft property law stipulates that, for public interests, land owned by collectives and the houses and other immovables of the units and individuals may be expropriated within the limits of power and according to the procedures as provided for by law. At the same time, the draft provides for the principles for compensation for expropriations and the specific items to be compensated for.

With respect to the question of expropriation of collective- owned land, the draft property law stipulates, "For expropriation of collective-owned land, such fees shall be paid as compensations for the land expropriated, subsidies for resettlement, compensations for the fixtures and the young crops on land, and the premiums for social security of the farmers whose land is expropriated shall be allocated in full, in order to guarantee their normal lives and safeguard their lawful rights and interests. "This stipulation reflects the principle of the Party and the State that compensation for expropriation of land and for resettlement must be sufficient to guarantee that the living standards of the farmers whose land is expropriated will not be lowered and their livelihood will be ensured for a long time to come. On the question of expropriation of the houses and other immovables of units and individuals, the draft 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." In view of the unbalanced development of different areas, the specific compensation standards and measures shall be formulated in the relevant laws such as the Land Administration Law in compliance with the principles for compensation and the items to be compensated for, as prescribed in the draft property law, and in light of the specific circumstances.

In view of the fact that in actual life compensations for expropriation are not duly paid and that such compensations are misappropriated, the draft property law expressly stipulates, "No unit or individual shall embezzle, misappropriate, illegally share, withhold or pay in default, the compensations for expropriation or other fees." Any unit or individual that violates this stipulation shall bear legal liability in accordance with law.

In addition, the draft property law contains the following:

One, on the question of correct handling of adjacent relations, the draft made stipulations governing matters that give rise to adjacent relations, such as use of water, drainage, passage, ventilation and light, which will help develop production, provide conveniences in people's lives, protect the rights and interests of the adjacent obligees and promote harmony in the neighborhoods.

Two, on the question of security rights, on the basis of the Guaranty Law, provisions on the property that can be used for providing guaranty are added in the draft, which serves to further improves the guaranty system, in order to promote financing and economic development.

Three, on the question of protection of property, the draft made comprehensive stipulations governing the ways and means of protection of property, and provides that any unit or individual that infringes on the property right shall bear, apart from civil liability, administrative or criminal liability according to law, thus improving the system for protection of property. And four, on the question of possession, the draft mainly provides for the protection of possession and the liability for tort committed by illegal possessors, to maintain public order and protect the lawful rights and interests of the obligees.

(Xinhua News Agency March 8, 2007)