China Nears Passage of Landmark Private Property, Corp. Tax Laws
China's national legislature began deliberating on Thursday a landmark law that would provide legal protections for private property as well as a law that would gradually equalize corporate taxes on foreign and domestic corporations.
The two pieces of legislation are a result of years of debate within the Communist Party and are intended to protect private wealth, create more coherence in the tax code and continue the country's market-driven economic reforms. The property law is particularly symbolic, because it codifies private property into the evolving legal code of a country that is growing rich on capitalism but nominally remains a socialist state.
"To me, the private property law is more a symbolic ratification of how far China has rejected its socialist past," Arthur R. Kroeber, managing editor of China Economic Quarterly, said in an e-mail message. "That's important insofar as it signifies a point of no return in the reform process."
Both pieces of legislation were introduced Thursday during the National People's Congress, the annual two-week gathering of the Communist Party-controlled legislative body. Passage, considered a formality, is expected next week.
Approval of the property law had been expected last year, but party leaders tabled the proposal after an unusually public and passionate ideological fight erupted, led by leftist scholars who argued that the law would worsen income inequality, legalize the misappropriation of state assets and undermine the socialist tenet of state ownership of property.
"This will accelerate the loss of state assets," Gong Xiantian, a Peking University law professor, said in an interview this week. "And it will accelerate the process of turning the country into a place where private ownership is the dominant system."