Any day now, China’s National Peopleâ€™s Congress is expected to pass a private property law that gives the property of individuals the same protection as that of the state. The New York Times notes that,
Approval of the property law was expected last year, but party leaders tabled the proposal after an unusually public and passionate ideological fight erupted. It was led by leftist scholars who argued that the law would worsen income inequality, legalize the misappropriation of state assets and undermine the socialist tenet of state ownership of property.
No doubt there were some sleepless nights spent at CCP headquarters over this one, but in the end, economic progress won out over communist ideology (wasn’t that battle won long ago?).
Also reporting on the law’s imminent passage, the Economist notes,
Every month sees thousands of protests across China by poor farmers outraged at the expropriation of their land for piffling or no compensation. As in previous years, placating those left behind in China’s rush for growth has been a main theme of the NPC
As if to prove the point, 20,000 people rioted in Hunan during the first week of the Congress. Although ostensibly over transportation costs, it’s easy to see this as another protest by those “left behind.” Lest we expect instant change from the impending law, the Economist gives us a dose of reality:
This latest law, likewise, will not bring the full property-rights revolution China’s development demands. Indeed, it will not meet the most crying need: to give peasants marketable ownership rights to the land they farm. If they could sell their land, tens of millions of underemployed farmers might find productive work. Those who stay on the farm could acquire bigger land holdings and use them more efficiently. Nor will the new law let peasants use their land as security on which they could borrow and invest to boost productivity. Nor, even now, will they be free from the threat of expropriation, another disincentive to investment. Much good land has already been grabbed, and the new law will merely protect the grabbers’ gains.
Outsourcing manufacturing to China continues to be protectionists’ bugbear, and they will likely see anything that makes the country more welcoming to capitalists as bad. A freer China, though, is good for the United States and for the world. Yes, it may prompt more businesses to outsource or invest in China, but that train has already left the station. The best thing for the US economy is for China to move from hungry capitalists to satisfied capitalists. When that happens wages will begin to equalize and China will fulfill its potential as the home of billions of prosperous consumers. This property law is one more step down that road.
As a sad aside, the Times notes the confiscation of land by “corrupt officials working in concert with developers.” As China moves closer to a Western economy, not so long ago the US took a step closer to China’s economy.
[Update: For more extensive coverage see China Law Blog.]