Identifier
Created
Classification
Origin
07BEIJING1591
2007-03-09 10:20:00
CONFIDENTIAL
Embassy Beijing
Cable title:  

NPC PREPARES TO ENDORSE PROPERTY RIGHTS LAW,

Tags:  PHUM PGOV SOCI KCUL CH 
pdf how-to read a cable
VZCZCXRO0807
OO RUEHCN RUEHGH RUEHVC
DE RUEHBJ #1591/01 0681020
ZNY CCCCC ZZH
O 091020Z MAR 07
FM AMEMBASSY BEIJING
TO RUEHC/SECSTATE WASHDC IMMEDIATE 5466
INFO RUEHOO/CHINA POSTS COLLECTIVE PRIORITY
RHEHNSC/NSC WASHDC PRIORITY
C O N F I D E N T I A L SECTION 01 OF 03 BEIJING 001591 

SIPDIS

SIPDIS

E.O. 12958: DECL: 03/09/2032
TAGS: PHUM PGOV SOCI KCUL CH
SUBJECT: NPC PREPARES TO ENDORSE PROPERTY RIGHTS LAW,
DEFLECTS HARDLINE CRITICISM

REF: A. A) FBIS 20070308968029

B. B) FBIS CPF20070302332001

C. C) 06 BEIJING 03851

Classified By: Political Internal Unit Chief Susan
Thornton. Reasons 1.4 (b/d).

Summary
-------

C O N F I D E N T I A L SECTION 01 OF 03 BEIJING 001591

SIPDIS

SIPDIS

E.O. 12958: DECL: 03/09/2032
TAGS: PHUM PGOV SOCI KCUL CH
SUBJECT: NPC PREPARES TO ENDORSE PROPERTY RIGHTS LAW,
DEFLECTS HARDLINE CRITICISM

REF: A. A) FBIS 20070308968029

B. B) FBIS CPF20070302332001

C. C) 06 BEIJING 03851

Classified By: Political Internal Unit Chief Susan
Thornton. Reasons 1.4 (b/d).

Summary
--------------


1. (C) The revised version of China's oft-delayed and
highly controversial "Property Rights Law," currently
under discussion at the annual National People's
Congress (NPC),contains new language designed to
defuse criticism that the party is abandoning
socialist principles. However, it also takes a
historic step forward in China's market reforms by
prescribing "equal protection" for private property.
The draft devotes significantly more attention than
earlier drafts to protection of state-owned assets and
unauthorized seizures of "collective" property, but
contains a strong endorsement for raising the legal
status of private property. Jiangsu Party Secretary
Li Yuanchao told the Ambassador that the law will
limit the flexibility of local leaders to take
property and land for public projects (see septel).
Comment: Party leaders have concluded that the law
will facilitate further market reforms and have
steered a careful course between providing cover
against charges from hardline critics and deflecting
pressure from party liberals for more extensive
legitimization of private property. End Summary and
Comment.

NPC "Explanation" Indicates Law Will Pass
--------------


2. (U) Politburo member and NPC Vice Chairman Wang
Zhaoguo read an "explanation" of the draft law to
deputies at the second plenary session of the NPC on
March 8 (ref A). Wang said the law had gone through
an "unprecedented" six readings by the NPC Standing
Committee over the past decade and would be further
revised at the NPC session before being put to a vote.
He claimed that after an earlier draft was published
in July 2005, the Standing Committee received over
10,000 comments and suggestions from citizens and
subsequently conducted a number of opinion surveys
among different groups to make the current revisions.
The current draft has not been made public and was not

distributed to press and diplomatic observers at the
session, but according to Wang, it was given to
deputies on January 12. He said the new draft
consisted of 247 articles, an increase of 49 over the
previous version.

Defusing "Leftist" Criticism
--------------


3. (U) Originally slated to be presented to the NPC
at last year's annual session, the bill was scuttled
after a barrage of scathing public criticism led by
Beijing University Marxist legal scholar Gong Xiantian
accusing party leaders of violating China's
constitution, facilitating a rapid sell-off of state-
owned assets, exacerbating the growing gap between the
rich and poor, legitimizing the ill-gotten gains of
corrupt officials, and laying the basis for a
"capitalist state" (ref D). As recently as December
of last year, Gong posted another "open letter" on the
Internet with many signatures in an effort to derail
the bill at this year's NPC and the latest issue of
the influential and provocative finance magazine
Caijing was apparently pulled because of an article on
the law. A China Daily reporter told Poloff that her
contacts at Caijing said the staff was very surprised
by the party's action, assuming that because the bill
was under discussion at the NPC it was safe territory.


4. (U) The current draft, as cited by Wang in his
explanation, adds sections reasserting the centrality
of the state-owned sector in China's "socialist market
economy" and spells out measures to prevent or punish
the loss of state-owned assets including "illegal
possession or sharing, looting, withholding or
destruction" of state property. He said the state
would continue to "solidify and develop" the public
sector while "encouraging, supporting, and guiding"
the development of the non-public sector and that the
law contained "comparatively more provisions on
ownership by the State."

BEIJING 00001591 002 OF 003




5. (U) The law also contains new provisions
addressing the problem of illegal seizure of farm land
and other rural property and urban residents' housing
and mandating adequate compensation for property that
is legally acquired by the state. It allows farmers
to promptly renew long-term land contracts when they
expire and, in what appears to be another effort to
deflect criticism and portray the party as committed
to strong measures to stop expropriation of land and
housing, stipulates that adequate compensation goes
beyond the market value of the land to include
maintenance of farmers and urban dwellers "standard of
living." One legal contact pointed out, however, that
the language does not appear to be legally binding and
that the reference is more symbolic than practical in
the legal sense.

Historic Status for Private Property
--------------


6. (U) Despite this formal nod to the ideological
issues raised by orthodox critics, Wang signaled that
the Hu Jintao leadership has signed off on a higher
legal status for private property and will ensue that
the Property Law will be adopted by ths session of
the NPC. Noting that "private poperty has been
increasing with each passing dy," Wu stated that
providing greater protection is "what the Party stands
for" and meets "the urgent demands of the people." In
an implicit jab at hardline critics, he said the PRC
constitution "clearly stipulates that a citizen's
lawful private property is inviolable" and that a
"clear-cut definition of property and fair
competition" constitute "the basic requirements for
developing the socialist market economy."


7. (U) Wang cited provisions of the law stipulating
that the state would protect the rights of citizens to
"private property and its inheritance," including
"articles for daily use, means of production and raw
materials, and lawful deposits and investments the
gains derived from them." He singled out for special
attention private housing, noting that since "more and
more urban residents now own their own houses,"
"condominium rights" are important along with the
"lawful rights and interests of building owners." To
deflect criticism that the law would legitimize ill-
gotten gains from corruption, the draft added language
that only "lawfully acquired" property is subject to
equal protection.

Li Yuanchao Says Law of Historic Importance
--------------


8. (C) At a dinner hosted by the Ambassador on March
8 (see septel),Jiangsu Party Secretary Li Yuanchao
described the draft law as "of historic importance"
and said he is certain it will pass. He said he
supports the law because it enhances citizens' rights,
but said it will pose considerable challenges for
Jiangsu, especially because it will limit the
provincial government's flexibility in how it manages
land resources. Local authorities will now have to
secure the consent of residents before taking property
for public purposes.

Media Spin, Internet Chatter
--------------


9. (U) Netizen comments to date are generally
supportive, but also mirror the ideological divisions
in the debate over the law in the past year-and-a-
half. Netizens from both orthodox and liberal
perspectives writing on Xinhua's website, expressed
hope that the law would primarily protect the
interests of common people. One questioned whether
the "equal protection" principle really represents
"socialism," while another wondered "what will happen
when there is a conflict between (public and private)
interests" and a third said "those who have property
and property rights are paying very close attention,
but what changes will the law bring to the little
people?" Writing from a the more liberal end of the
political spectrum on the BBS of People Daily's
website, a CPPCC member warned against using "Cultural
Revolution" labels like "socialist and capitalist,"
while a People's University professor praised the
effort to bring legal reform into sync with economic
development to protect the "fruits of creative labor"
spawned by reform. Another netizen on Xinhua's

BEIJING 00001591 003 OF 003


website thought the draft was "an outstanding piece of
legislation" that shows the government "cares about
protecting the rights of common people and considers
their opinions."

Comment
--------------


10. (C) The draft law is consistent with strong
recent assertions by Party leaders, including Premier
Wen Jiabao just prior to the NPC, that continued
market reform and economic development is their top
priority. Top leaders most likely have calculated
that they have changed the draft enough to provide
adequate political cover against charges from hardline
ideologues and the political interests they represent
that the Party is abandoning socialist ideals, on the
one hand, and to mollify pressures from the more
liberal wing of the Party that the Party is not moving
fast enough to provide the legal basis for further
market reforms, on the other.
RANDT