China: New property law – only for the rich

At this year’s recently concluded National People’s Congress (NPC) meeting, the Chinese government promised to increase efforts to cut pollution, spend more on poor rural areas, the health service and schools.

The problem is, we’ve heard all this before! A closer look at what is being proposed reveals little more than cosmetic measures, while the ruthless capitalist direction of government policy remains unchanged. The NPC, comprising 2,900 delegates from all levels of government, the military, academia and business, is China’s annual rubber-stamp ’parliament’.

In opening the meeting, premier Wen Jiabao repeated his government’s mantra of "social equity and justice" and building "a harmonious society". But as Wen also made clear, the government will "adhere to the policy of reform and opening up", the official code for capitalist globalisation.

There have been growing calls, even from within the NPC, for the government to spend some of its record $1000 billion of foreign exchange reserves on rebuilding the collapsed health service and rural education system. But the government has rejected this. These reserves could only be spent inside the country if the central bank converted them into yuan by selling dollars. This in turn would push the Chinese currency higher and hurt its exporters. This is something Beijing obviously wants to avoid, but the threat of revolt from below may push them in this direction.

Growing inequality

China’s gross domestic product (GDP) has grown by more than 10 percent in each of the past four years, becoming the world’s fourth-largest economy. At the same time, the bottom ten percent of the population (130 million people – equivalent to the whole population of Japan) is poorer today than at the start of the new century, according to World Bank figures. Behind the dazzling official growth rate there is a deepening social crisis as illustrated by the 87,000 "mass incidents" (protests) in 2005, eight times the level of a decade ago. Conflicts have erupted over a range of issues: rampant official corruption, mass non-payment of wages, widespread eviction of poor farmers to make way for speculative land deals, and growing discontent over the rising price of housing. The huge gap between rich and poor has increased even further in the last 12 months, despite the government’s promises to close the gap.

The dramatic fall in the share of wages in the Chinese economy, to 41 percent of GDP in 2005, from 53 percent in 1998 tells us who really gains from today’s policies. It is the super-rich, the capitalists, property tycoons and top directors. The lion’s share of China’s increased wealth has gone to the elite. Even in the citadel of global capitalism, the United States, wages account for 57 percent of GDP, a higher share than in what some of the country’s leaders persist in calling ’socialist’ China.

While the government says it "puts people first", it still spend less than 4 percent of national income on education, despite setting this figure as the target in 1993. China spent just 2.8 percent of GDP on education in 2005. This ratio is lower than in many poorer countries such as the Philippines, Peru and India. It is also a lower ratio than in the year 2000 (2.9 percent), since when China’s GDP has more than doubled (from $1.1 trillion to $2.7 trillion).

The scandal of rising healthcare costs has led some hospitals in China to issue its doctors and nurses with protective helmets because of the risk of being attacked by angry patients and relatives.

"The hostility between hospitals and patients has never been more outstanding in Chinese history," a spokesman for the Ministry of Health told the Beijing Review [March 2007]. According to a 2006 study by the Chinese Academy of Social Services, the cost of medical treatment is now the number one concern for Chinese people, ahead of "unemployment" and "excessive income disparity". Medical costs now account for almost 12 percent of the average household’s annual non-food expenditure, the study found.

On environmental controls, measures to slow excessive investment, illegal land seizures and the collapse of essential services, the statements of the Chinese leadership simply do not correspond to reality. Nowadays local governments either ignore or dilute central government edicts ordering them to increase spending in these fields. This occurs for a variety of reasons, not least because many local governments are virtually bankrupt. But also, in the mad chase to attract investment from foreign and Chinese companies, most local authorities would rather spend money on infrastructure projects such as roads, power plants, hotels and even golf courses than on services to meet the needs of the poor.

In the poorer inland provinces, which only attract a fraction of the business investment that pours into coastal regions, local governments have financed their infrastructure spending through increased taxes and service charges or by selling farmland to property developers. The displacement of millions of peasants often without compensation is a major cause of unrest. But the practise continues despite bans imposed by the central government. Last year up to 90 percent of land sales in some provinces were "illegal".

New property law

The NPC also passed a much delayed new law strengthening the legal status of private property. Private property is already accorded equal protection in China’s constitution following an amendment in 2004, described as "one of the most significant constitutional changes since the 1949 revolution" according to James Kynge in the Financial Times [12 June 2003]. In 1949, the land and the economy as a whole were nationalised under Mao Zedong. What is this really about?

Spanning 40 pages and 247 articles, the law uses arguments familiar in western capitalist societies to equate the "homes and cars" bought by the newly affluent middle class, and even better paid sections of the urban working class, with the "means of production" and "investments" of the capitalists. All are forms of "private property", according to the law, that need to be protected by the state. But as Professor Gong Xiantian, a prominent critic of the law points out, it "only protects the assets of a small minority of rich people, while the poor essentially have nothing worth protecting."

In an attempt to popularise this measure aimed at legitimising the process of capitalist restoration, the Chinese Communist Party leaders claim the law will give greater protection to farmers facing the seizure of their land by officials and property developers. Around 200,000 hectares of rural land are seized each year to make way for industrial or residential development. But the new property law, while specifying what forms of redress and what levels of compensation should apply, does not signal the end of land seizures.

"A new law out of Beijing will not influence local officials," said Lu Zenghua, a farmer from Jiangsu province. "Without strong enforcement, our problems remain unsolved."[Financial Times, 9 March 2007]

The most liberal wing of the ruling party have argued for full-blown privatisation of farmland, claiming this will protect small farmers against eviction. This is not true. Experience from former ’Soviet’ countries such as Ukraine, show that privatisation of land has rapidly led to the formation of a new landowning elite and countless small farmers being forced to sell up.

The law states, "Individual persons shall be entitled to enjoy ownership of such immovables and movables as their lawful incomes, houses, articles for daily use, means of production and raw materials."

According to the law’s definition, owning a DVD player is fundamentally the same thing as owning a coalmine or a textile factory! Socialists are not in favour of the confiscation of personal property by the state and favour an abundance of all the necessities of life which in today’s world would include such things as DVDs. On the contrary; a genuinely socialist society would create an abundance of such modern necessities. But private ownership of the means of production is a different thing altogether.

Socialists advocate public ownership and democratic control and management of the means of production precisely because this is the only way to plan economic activity to meet the needs of the whole population, avoiding the insane waste, speculation and environmental destruction that is endemic in private, capitalist, ownership and control.

This basic idea – the centrality of public ownership – became fundamental to those who founded the state after taking power in 1949. As the big capitalists fled, and given the example of the then USSR, they moved to establish a bureaucratically controlled state-owned planned economy which led to a massive expansion of the economy. The state ownership of the land and the fight against illiteracy and made big improvements in the conditions of the peasantry. But all of this was a far cry from the genuine notion of democratic socialist planning, being modelled instead on Stalin’s dictatorship. A large layer of the current generation of CCP leaders have moved away from this idea altogether, embracing the capitalist market instead.

The new law will accelerate the loss of state-owned assets through legal and illegal privatisations. It is this process that has underpinned the growth of a capitalist class in China. Rather than "new" wealth created by "hard work" as the movers of the property law would have us believe, most of the wealth amassed by China’s super-rich has come from the theft of public assets as the old state-owned industries have been privatised and broken up. Although there are no openly visible equivalents of Russia’s oligarchs, there are very prominent tycoons with private business empires who regularly appear in public and sometimes make political statements/demands. Of China’s 20,000 wealthiest individuals, 90 percent are members of the CCP or related to party members and government officials.

Democratic socialist alternative needed

Most public criticism of the new law has come from the so-called "New Left", who do not advocate a return to central planning but rather a "mixed economy" in which the state maintains a guiding role. Hence they oppose the massive privatisation policies of recent years, although in some cases, they oppose only the illegal method of privatisation. "New Left" spokesmen also critically support the current CCP leaders, and have been encouraged to some extent by the top leadership as a safe "left opposition" that forms a useful counterbalance to the "ultra-liberals" on the party’s right.

Rather than "Marxist" in the true sense of the term, the economic arguments of this grouping are similar to the "Old Left" social democrats in western countries in the 1970s-80s, and some of the arguments put forward by prominent globalisation critics today (for higher taxes on capital and more state intervention). While China’s "New Left" make valid criticisms of current policies, their solution is merely to change the "mix" between private and state control, rather than challenge the fundamental precepts of a policy that has seen the re-emergence of capitalism and all its attendant evils in China.

Genuine socialists and Marxists argue this is completely insufficient. Rather than attempting to convince the government of the error of its ways, real change must come from below; from the massed ranks of the working class and poor peasantry. This requires the democratic self-organisation of working people through independent, combative trade unions and democratically elected workplace committees. It also requires a workers’ party that fights to defend state property and reverse privatisation rather than pander to the interests of the rich as the CCP leaders have increasingly done. China’s recent rapid growth has been based upon exports, something that makes it extremely vulnerable to an International downturn or recession. A genuine workers’ party would need to explain that securing present and future living standards requires a programme of democratic socialism, drawing on the rich experience of the Chinese and international working class, and learning from the disasters that resulted from the CCP’s dictatorial distortion of "socialism" in the past.


This is an edited version of two articles that appeared on the Chinaworker web-site on 9th and 13th March.

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March 2007