- The Washington Times - Tuesday, December 23, 2003

BEIJING — Millions of Chinese who have started businesses and invested in stocks and bonds will be guaranteed the right to private property for the first time since the 1949 revolution under a constitutional amendment proposed yesterday by communist leaders.

The change would give an official status to the entrepreneurs who once were considered the enemy of communism, but now drive China’s economy, creating millions of jobs and dotting the skylines of Beijing and other cities with office towers and apartment blocks.

After months of debate, party leaders submitted the proposed amendment yesterday to the National People’s Congress, with a proposal to enshrine in the constitution the theories of Jiang Zemin, the former leader who invited capitalists to join the party. Approval by the legislature should be a formality.

The changes reflect the party’s decision to cast off leftist dogma in pursuit of prosperity and national status — and to embrace the forces driving change in order to stay in control.

“The Chinese leadership understands that the private sector will be the engine for economic growth,” said Joseph Cheng, a political scientist at the City University of Hong Kong.

In part the change is symbolic, bringing the constitution up to date with China’s market-driven reality. But it also is likely to strengthen the rule of law in a business environment where many common transactions go on without legal structure or regulation.

The lack of constitutional protection has not prevented millions from rushing into capitalism. Private business has fueled a surge in living standards for ordinary Chinese and has created the jobs needed by China as state companies slash payrolls in an effort to become profitable.

The government of Shanghai, China’s commercial capital, says its economic output per person has passed $5,000 a year.

Private property has been recognized in the constitution, but entrepreneurs have pressed for the next step of protection.

The amendment is likely to be followed by changes in the law to create structures for business practices such as trading real estate or stocks and bonds — things Chinese already do but without legal guidelines or protections.

One major practical boost for entrepreneurs could be that state banks would be more willing to offer them loans. State banks lend almost solely to state-run companies, seeing private firms as too risky. With their private property protected, businesses could use it as collateral to get loans.

Chinese entrepreneurs have also complained that foreign businessmen have an advantage, since regulations protecting foreign investments are in place.

A key element missing from the announcement yesterday was any mention of political reform.

President Hu Jintao, who replaced Mr. Jiang in March, has called publicly for greater “socialist democracy.” But the phrase refers to making the closed, secretive ruling party more responsive to public needs — not sharing power with opposition parties.

China holds nonpartisan elections to village-level posts and for powerless advisory bodies in major cities. Chinese leaders say they have no immediate plans to allow voting for higher-level posts — a step that would give popularly chosen officials real power.

“Apparently, the present leadership has been unable or unwilling to take up this issue,” said Mr. Cheng, of City University.

The disparity reflects the gulf between the successes of China’s dictatorial system and the struggles of Russia. Once the world’s other communist giant, it embraced multiparty democracy, but has watched its living standards slide.

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