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O 091020Z MAR 07
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TO RUEHC/SECSTATE WASHDC IMMEDIATE 5466
INFO RUEHOO/CHINA POSTS COLLECTIVE PRIORITY
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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