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China legislators vote to liberalize their economy

By ASSOCIATED PRESS
Published March 17, 2007

BEIJING - China's legislators on Friday passed a law providing the most sweeping protection for private businesses and property since the nation's move toward a more capitalist-style economy beginning in the late 1970s.

The law offers the same protection for private and public property, a recognition of the private sector's rise since the start of economic reforms. The private sector, including foreign investment, has grown to account for 65 percent of gross national product and up to 70 percent of tax revenues.

The measure was strongly opposed by a small but highly influential group of scholars and retired communist officials, who called it a threat to the state's guiding role and a vehicle for unrestrained privatization that will feed a growing income gap between rich and poor.

Such opposition and the communist leadership's ambivalence about reducing the primacy of state property caused the law to be kicked around for 14 years before a final version was submitted this year. It easily passed the National People's Congress.

Perhaps aiding the law's passage was the status of state industries, which have shed influence along with employees of late. China's labor minister said earlier this week that jobs need to be found this year for another 5-million laid-off state enterprise workers.

Along with private businesses, the law also aims to bolster the rights of house buyers who have pushed the urban home ownership rate to more than 80 percent, as well as farmers who have frequently lost their land to infrastructure and housing projects, with little or no compensation.

The legislature also passed a law that reduces tax advantages for foreign-financed companies, and equalizes them with Chinese enterprises at 25 percent.

Meanwhile, Premier Wen Jiabao pledged to foster nascent detente with regional rival Japan.

[Last modified March 17, 2007, 02:05:36]