The 1999 amendment to the country's Constitution upgraded the non-State economy from a "complement to the State-owned economy" to "an important constituting part" of the socialist market economy.

The amendment, approved by the plenary meeting of the Ninth NPC, has been widely regarded as a milestone in the promotion of private enterprise in China.

It has not only clarified the nation's stance of protecting private property but also encouraged the development of the private sector.

Private enterprises are defined as private businesses employing more than eight people. Those with fewer than eight employees fall into the category of individual businesses in China.

The nation now has more than 1.7 million privately run domestic enterprises representing a total investment of 1.1 trillion yuan (US$132.85 billion) and a labour force of 27 million, statistics reveal.

"The better private property is protected, the greater the contribution the private sector will make to the national economy," said Bao Yujun, chairman of the Beijing-based Institution on the Promotion of Private Economy.

"The sense of security, in both economic and political terms, will still the qualms of investors and encourage them to expand their businesses."

The top legislature's efforts to step up protection was consolidated at the end of last year when the draft of the nation's first civil code was submitted to the NPC Standing Committee for preliminary reading.

The civil code, currently under legislative scrutiny, is expected to offer more comprehensive protection of private property.

"The civil code will play a vital role in promoting the national economy, maintaining social stability and safeguarding people's lives," said Wang Shengming, director of the Civil Legislation Office with the Legal Affairs Commission of the NPC Standing Committee.

The civil legislation affects both the daily life of individuals and the operation of corporations.

It regulates almost every activity that a corporation may undertake, such as trade, leasing, transportation, storage, fund-raising, settlement and the development of new products.

It also offers guidelines for individuals on the basic necessities of life - food, clothing, shelter and transportation - as well as recreation, marriage and family, among other activities.

The civil code, which promotes equality, fairness and good faith, offers more comprehensive protection of private property by introducing a volume of tangible property law.

In the draft code, a whole chapter has been devoted to the protection of private property.

The main purpose of the property rights law is to define and specify rights of possession in China. It is a crucial part of civil legislation.

Only when the right of possession is guaranteed can investors feel confident when investing, said Wang Liming, a civil law professor with the Law School of the Beijing-based Renmin University of China.

The draft civil code has also stipulated the right of individuals and corporations to mine, prospect, fish and use water.

(China Daily February 21, 2003)