China to Pass Landmark Property Law

China to Pass Landmark Property Law
[Interview] Zhang Weiying,
Dean of Peking University's Management School
Sunny Lee (sunnylee)
Published 2007-01-27 07:21 (KST)

China's parliament is set to discuss a landmark property law when it meets in March. Beijing is thus one step closer to approving the newest draft version of the legislation, which has been reworked seven times because of its apparent capitalistic penchant which conflicts with China's socialist orientation.

The law to protect private property has been a political hot potato in China where state ownership still dominates key parts of the economy.

Zhang Weiying, dean of Guanghua School of Management at Peking University, said he believes the bill would pass the parliament.

"The parliament will pass the law. That will be a very important signal," he said in a recent interview.

Zhang said passing the bill will "give more confidence" to China's rising entrepreneurs, who are "crucial" for China's economic development.

"When people have security, they will know what they will get. They will be more motivated to work, make more money and invest," he said.

Zhang said a well-adopted property law can be a tool for a value creation and wealth redistribution.

"But the danger is some people are very anti-business," and there is ideological resistance, Zhang said, adding there may be "some important changes" likely to be made in the 17th Communist Party Congress in September.

"The leadership...can do something, which they couldn't do before... The top leaders may become braver in implementing reform policies," Zhang said without elaborating.

Zhang said recently Chinese economy has become easier to predict, with the economy has been less dominated by the government.

"That is a much nicer system. Unlike the government, when the private sector makes an investment, they look at it with a relatively long-term perspective...That was the reason the economy has become more stable. So, it is easy to predict this year's economy," he said.

Zhang said he is "confident" the economy this year will grow similar to last year's level, citing stable labor supply and improved productivity that he expects to last for a few years to come.

Zhang said he disagrees with some China watchers who think China's economy will start sliding after the 2008 Olympic Games as the high-expectation bubble up to the world event will go burst once it ends.

Instead, Zhang said China's economy will still be able to grow between 8 and 10 percent after the 2008 Olympic Games, buoyed by strong demands in both domestic and global markets.

"We do not expect any big change even after the Olympic games. (There will be) still a strong demand and supply," Zhang said.

China Has A Long Way To Go

Meanwhile, Zhang said China has "a lot of things to do" before to be really a market economy. "I don't think it's a market economy yet in a strict sense." He said, for example, the capital market and land market are still highly controlled by the government.

When asked when he expects China to get a market economy status from the U.S., he said, "China doesn't need to worry about that. America will eventually recognize China as a market economy. Now it is too much political."

Zhang said there is no good solution for the trade dispute between China and America because essentially "this is a political game. Each government thinks and raises voices strategically. Politics needs confrontation."

"I think the confrontation will continue," Zhang said.

In 2006, China's trade surplus jumped 74 percent from 2005 to hit a record US$177.47 billion, which will likely encourage further American pressures on Beijing to let the yuan appreciate at a faster pace.

China's Commerce Minister Bo Xilai said reducing China's trade surplus will be a key task for 2007.

China is making its own effort to gradually move toward a more open economy, Zhang said. "The government now cannot fully control the (economy's) brake any more," which he said reflects a "fundamental" change.

"We're becoming better students of Adam Smith," Zhang said.

©2007 OhmyNew