Prop­erty pro­tec­tion ben­e­fits

China Daily (Hong Kong) - - COMMENT - — BEI­JING NEWS

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.

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