Private Enterprise Set to Get Boost in China

In an effort to solidify China’s economic reforms, the legislature is preparing to amend the constitution to protect private enterprise and strengthen the rule of law.

The amendments, to be ratified by the National People’s Congress next month, also will enshrine the economic ideas of Deng Xiaoping alongside the ideologies of Marx, Lenin and Mao.

“Their [the government’s] adjustments to the constitution are intended to show that they won’t retreat from Deng Xiaoping’s theories,” said Liu Junning, a political scientist at the Chinese Academy of Social Sciences. “But they also won’t advance beyond them.”

Most of the changes were decided at last fall’s 15th Communist Party congress, and now the constitution will be updated--much as it was in 1988 and 1993--to catch up with party policies.

At best, the amendments could encourage China’s fledgling private sector to expand, employing more workers laid off by ailing state firms and boosting flagging exports.

Economist Mao Yushi of the independent think tank Unirule said that in 1992, Deng’s exhortations to accelerate economic growth “heightened people’s expectations and set off major increases in investment, real estate and foreign trade.”

The constitution’s reference to private enterprise as a “supplement” to the public sector will be amended to call it “an important component” of the “socialist market economy.” The charter will, however, continue to enshrine the dominance of the public sector.

Although the non-state sector already accounts for three-quarters of the country’s gross domestic product, it gets only a third of the loans made by state banks. Private firms are also barred from listing on stock exchanges.

As of last year, China had about 960,700 private enterprises with 13.5 million employees. In 1997, these businesses paid $6.5 billion in taxes.

Despite extensive lobbying by private businesses, China’s lawmakers will stop short of giving private property the same “sacred and inviolable” status as state property.

“Communism and private property are antithetical to each other,” political scientist Liu said. Therefore, the constitution’s preamble will add a clause indefinitely extending China’s “primary stage of socialism,” during which the state may employ market economics.

Recently, advocates of political reform have made private property rights the crux of a crusade for democratic limits on state power.

In recent remarks, President Jiang Zemin seemed to support such limits. “What is most important is that the powers of government organs are regulated and limited in accordance with law, so as to ensure state power is practiced strictly in line with the constitution,” Jiang said.

Jiang added that such limits apply to the Communist Party too.

“The party has no special interests of its own and will not allow any of its members to enjoy special rights,” Jiang recently told non-party advisors.

Critics counter that the Communist Party enjoys unchallenged rule not specified anywhere in the constitution.