China’s next revolution

The Economist: China's next revolution

A new property law is a breakthrough, even though it raises hopes that one-party rule may dash.

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….So one law due to receive the NPC's rubber stamp this month, giving individuals the same legal protection for their property as the state, has proved unusually contentious. It was to be passed a year ago, but was delayed after howls of protest from leftists, who see it as among the final of many sell-outs of the ideas of Marx, Lenin and Mao Zedong, to which the party pretends fealty.

The party's decision to enact the law in spite of that resistance is a great symbolic victory for economic reform and the rule of law. Clearer, enforceable property rights are essential if China's fantastic 30-year boom is to continue and if the tensions it has generated are to be managed without widespread violence. 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 (see article).

In the cities, and of greater importance to the decision-makers pushing the law through, a growing middle class with its wealth tied up in houses wants to pass these assets on to their only children. These people are anxious about the security of their property and, like their fellows in the countryside, are becoming more assertive. In other countries the emergence of this group as an important political constituency has been followed by an unstoppable drift towards greater pluralism.

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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.

This law cannot in itself resolve the murkiest question: who owns what? This is especially true in the countryside, where the mass collectivisation during Mao's Great Leap Forward of half a century ago left farmland “collectively” owned. Peasants have since been granted short (30-year) leases. But even outside agriculture it is often unclear whether a “private” enterprise is really owned by individuals or by a local government or party unit. Conversely, some “collective” or “state” enterprises operate in ways indistinguishable from the private interests of their bosses. Moreover, should an underdog try to use the new law to enforce his rights, the corrupt and pliant judiciary would usually ensure he was wasting his time. Since the Cultural Revolution, when the NPC passed just one law between 1967 and 1976, the legislature has been legislating quite prolifically. But the passage of laws is not the rule of law.

Which leads to a final obstacle: without an accountable executive branch, the necessary reform of the legal system is not going to happen….

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The leftists derive their theory not from Confucius, but from Marx. Were the latter writing today, he would surely see in China a revolution waiting to happen—or perhaps two. One is the bourgeois revolution led by the emerging property-owning middle class that the new law will help. The other is the potential for the simmering resentment in the countryside to boil over, perhaps in frustration at the law's shortcomings. Property rights are at the root of both—which is why the dozing NPC delegates may have started a process this month that will one day change their country completely.