Property protection benefits
The just-concluded Central Economic Work Conference stressed that China will strengthen the building of its property protection system and accelerate the compiling of its Civil Code as part of efforts to protect the property rights of organizations and individuals. Such a policy emphasis from the top-level, tone-setting conference came two weeks after the Central Committee of the Communist Party of China and the State Council, China’s Cabinet, co-published a guideline urging efforts be made to protect private property rights in accordance with the law.
In the context of the continuing slowdown in private investment, such a policy stress is of great significance to increasing private enterprises’ willingness to invest in fixed assets.
Data from the National Bureau of Statistics indicate that from January to November, the country’s private fixed-asset investment grew by only 3.1 percent year-on-year in nominal terms, a sharp decline from 10.2 percent a year earlier. Such factors as blocked market access, the lack of investment opportunities, financing difficulties and rising costs have contributed to the decline in such investment, but insufficient protection of private property rights has also proved to be a prime cause.
At a time when private enterprises do not have the motivation to increase investment, the country should carry out necessary reforms to offer institutional guarantees to eradicate their possible concerns. Increased property rights protection for private investors along with ongoing economic restructuring should be regarded as important ways to boost economic growth.
Any private assets, if gained legally, should be under the protection of the law. Private enterprises serve as a locomotive of China’s economic growth. Considering the country’s economy lacks a strong sustainable driving force for growth, decision-makers should take the necessary measures to protect private property rights as a means to boost investment.