Amendment gives China's businessmen added status

BEIJING -- Millions of Chinese who have plunged into capitalism by starting businesses and investing in stocks and bonds will be guaranteed their right to private property for the first time since the 1949 revolution under a constitutional amendment proposed Monday 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 Monday to the National People's Congress, along 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 will also likely 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 in to capitalism. Private business has driven a surge in living standards for ordinary Chinese and has created the jobs needed by China as state companies slash payrolls in a race 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 would likely 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 will 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 already in place.

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

President Hu Jintao, who replaced 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 Cheng.

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.

In 1993, two years after the Soviet collapse, Russia enshrined the right to private property in its constitution. But amid resistance by the Communist Party and other hardliners, it took years for laws allowing land and farmland sales to be passed.

Russia carried out a widespread privatization that many criticized for not benefiting the vast majority of Russians -- and still much was left in state hands. Foreign and domestic businessmen alike fear that the government might attempt to renationalize property.

China briefly allowed small private businesses after its revolution, but they were banned by the late 1950s. Even following the launch of economic reforms by then-supreme leader Deng Xiaoping in 1979, it took the communists years to overcome their distaste and scrap laws against such things as hiring employees.

In 1999, the constitution was amended to declare private business an "important component" of the economy, not just a "complement" to state industry.

The proposed property amendment says that "private property obtained legally shall not be violated," the official Xinhua News Agency reported. It said that would put private property "on an equal footing with public property."

The other proposal would say Jiang's theories are considered guiding principles of the nation, along with the ideology of communist founder Mao Zedong and Deng, Xinhua reported.

That would give Jiang, 77, a victory in his campaign for a place in history alongside the country's communist giants. However, Xinhua didn't say whether he would be mentioned by name -- an honor that many in the party are rumored to oppose.

Jiang's awkwardly named "Three Represents" ideology argues that the party has to modernize itself, representing entrepreneurs in addition to its role as "vanguard of the working class."

That would let communist leaders draw China's new business elite into their own circle, keeping the party relevant in a changing society and shoring up their own power.