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Keep it private

The new Bill in China which allows citizens to own property has sparked off a debate on the pattern of communism it practises, writes Ravni Thakur.

india Updated: Apr 20, 2007 00:53 IST

In March the Chinese People’s Congress finally passed a Bill legalising private property in China. This Bill sparked a massive public debate and focused attention on the deep divisions within Chinese society over the nature of communism in China today. While the liberals pushed for the right to private property, the conservative Left saw this as the final end to Maoist ideology. Despite its annual double digit growth and progressive economic reforms, land and property in China remained under State ownership. Even its booming housing market in urban areas was on the basis of State leases for 40 to 70 years, after which the property would have to be re-bought from the State. This, in effect, gave no inheritance rights to the next generation. Similarly, after the communes were disbanded in the late 1970s, they were replaced by lease grants to individual households for up to 30 years. Land, thus, remained State-owned and in rural areas, collectively owned.

Although ownership was claimed by the village, and village committees are supposed to be democratically elected, the truth is that unelected party chiefs still had the final say in all decisions. In effect, lack of private property laws meant that the individual owner was constantly under the control of the State apparatus.

The new law lays down guidelines for property rights. A person is considered a owner of his real estate if his property is registered with the government. A growing middle-class that has invested in property and a large private sector that has invested in factories and machinery are keen to see this law in place and will certainly feel more secure about their investments. The farmers, despite the rhetoric, have been the biggest losers without property rights.

Their land has been systematically taken over by state governments in the name of development projects and economic growth, often without any compensation, leading to severe social unrest in small towns and rural areas. This was possible because the land was owned by the State and those farming the land had no legal claims to evade eviction. However, entrenched Left-wing critics of the government point out that this is the final nail in the coffin of communism. They point out that the new law will overnight legitimise the takeover of State property, sold at throwaway prices to corrupt bureaucrats and their relatives, and a few private entrepreneurs who have benefited most from economic reforms.

They also point to the increasing gap between rich and poor — China has the highest gini co-efficient in the world today. Corruption remains the major cause for the growing legitimacy crisis faced by the communists.

The government, especially under Hu Jintao as President and Wen Jiabao as Prime Minister, already seems to be inclined towards toning down the concentration on economic growth and, instead, focusing on social development goals. This includes a new deal for rural China with increased investment in education and health. These are the two main areas which comprise a large chunk of family expenditures since the advent of the economic reforms.

Today, an average middle-class family spends one-third of its income on education and more on health. The big rice bowl has definitely been smashed. The government has also stressed on the limits of economic reforms, and has listed State sectors that will not be privatised. These include areas considered fundamental to national security, such as oil and telecommunications. Similarly, provisions of social welfare will also remain under State administration and supervision.

The debate over legalising private property throws into sharp focus the ideological contradictions in present-day China. Is it or isn’t it China-specific capitalism? Or is it China-specific socialism? These questions were frequently revisited while I was visiting China.

The Left-wing critics see State ownership as fundamental to State socialist societies — as China is, they assert. Economic reformers are convinced that the right to private property is necessary to ensure security for the growing number of private sector entrepreneurs and is a way to provide social stability. They feel it is time to recognise the reality of China and not merely its fake slogans. For them a right to private property provides freedom from the bureaucracy. They believe that the legitimate guarantee of property rights will also curtail corruption and the flight of capital from the country.

The implications of this for the State and the growing middle-class are enormous. A secure middle-class that can no longer be held to ransom on arbitrary and whimsical State fiats could lead to a growing demand for more effective democracy and right to free speech. On the other hand, it could also lead to growing social tension as the right to private property reinforces already visible and sharp social inequalities.

The Chinese government walks a tightrope. Its only recourse will be to use its growing GDP to help fund effective social development goals, like India is now trying to do.

Ravni Thakur is Reader, Department of East Asian Studies, Delhi University