BEIJING, March 16: China swept away a pillar of its communist idealogy on Friday when parliament gave unprecedented rights to private property -- one of two landmark laws that were passed aimed at making society more equal.
The Property Law will seek to level the playing field between the private and the state-owned sector while the corporate income tax law will erase some of the privileges that foreign firms have enjoyed over local enterprises.
“In the past, we were concerned about creating growth, even if it meant inherently unfair policies. Now the emphasis is more on fairness,” said Yan Jirong, a professor at the School of Government at Beiijng University.
The Property Law went through a record 13 years of debate, passed seven readings and had been the subject of criticism and proposals from 47 government departments and an unprecedented 11,500 members of the public.
However, China's parliament is regarded as a rubber stamp body for the communist rulers and 96.9 per cent of lawmakers voted for it, reflecting the official view that the time had finally come for it to be passed.
“The Property Law is a milestone in Chinese legislative history,” said Hu Xingdou, an outspoken liberal intellectual and an economist at the Beijing Institute of Technology.
Supporters of the Property Law said it would protect private companies against economic crimes, such as embezzlement by their own staff.
But old-school Marxists were its most fierce opponents, arguing the law was a sell-out pushing China dangerously close to the capitalist camp.
“If Mao Zedong had been alive today, there's no way a law like this would have emerged,” one of the leading campaigners against the legislation, Gong Xiantian, said earlier, referring to communist China’s founder.
Opponents also argued the law would help corrupt officials and other lawbreakers protect their ill-gotten gains.
The majority view, officially at least, it that property ownership needed to be better defined, following decades of economic reforms that had seen the communist ideal of state-control eroded.
For example, murky definitions about who owns what assets are at the heart of some of modern China's most serious conflicts, such as bloody clashes over land use rights in the countryside.
“The average citizen wants to see the law passed, mostly because of its effects on dispute-prone matters such as the individual's rights in relocation for urban development programs,” the state-run China Daily said in a recent editorial.
When the constitution was amended in 2004 to enshrine the broad principle of private property protection, there was far less debate.
Some observers argued that the heated discussion the Property Law triggered as it moved closer to being approved reflected growing discontent with the inequality that economic reforms had created in recent years.
The corporate tax law, meanwhile, which passed with 97.8 percent of the votes, triggered little controversy, even though it will add billions of dollars to the total tax bill paid by foreign companies.
It will force most foreign-invested companies to eventually pay 25 percent of their income to the government, compared with their currently preferential 15 percent rate and the 33 percent levied on Chinese firms.
“It has become evident that preferential income tax rates for foreign-funded companies now amount to unnecessary discrimination against domestic enterprises,” the China Daily said in another editorial.
A unified tax rate has been expected since China entered the World Trade Organisation in late 2001 as the trade body does not permit this type of discrimination among enterprises.
If the new tax law is implemented in 2008, the foreign-funded enterprises' income tax bill will increase by 41 billion yuan (5.3 billion dollars), according to estimates from the government.—AFP
