Party vow to protect private business

PUBLISHED : Wednesday, 15 October, 2003, 12:00am
UPDATED : Wednesday, 15 October, 2003, 12:00am

Communist leadership promises protection for private business

The Communist Party leadership ended a four-day meeting yesterday with a pledge to deepen economic reforms by protecting private business.

A statement released after the close of the third plenum of the 16th Communist Party Congress dwelled at length on the economy. No political reforms were mentioned.

State television said the meeting agreed to continue supporting state-owned firms while encouraging private companies to enter sectors previously closed to them, such as infrastructure and public utilities.

'Non-state firms will enjoy the same treatment as other enterprises in fund-raising, investment, land use, tax and foreign trade,' China Central Television quoted the delegates as saying.

The meeting approved two key decisions, one regarding 'the improvement of the socialist market economic system' and a proposed amendment to the national constitution, Xinhua reported.

Details of the two proposals were not released but it is believed the constitutional amendment involves the protection of private property rights and the adoption of former President Jiang Zemin's Theory of the Three Represents.

The constitutional amendment will be submitted to the Standing Committee of the 10th National People's Congress for deliberation.

For the first time, President Hu Jintao, the party's general secretary, made a 'work report' to the 242-member Central Committee and invited it to debate the issues being discussed. The plenum had been hailed in advance as a landmark event in the ongoing process of economic reform, which began in 1978. But at first glance critics were sceptical.

Zhong Wei, a professor of economics at Peking Normal University, doubted the plenum would live up to its advance billing as the most important breakthrough in economic reform since 1993.

The centrepiece of deepening economic reform was to move the government from direct management of the economy and break up monopolies, he said. But the recently formed State Asset Management Commission covered only a fraction of the state-owned enterprises and the government had not acted to break up the monopoly of giant oil companies, he added.

Mr Zhong said no effective measures had been proposed to fix the financial system, and the asset management companies set up five years ago had only dealt with about half of the non-performing loans held by the banks.

The amendment on the protection of private property had little practical consequence in the absence of a constitutional court, he said. 'The new leaders seek to use economic growth to justify their legitimacy. But there is no new thinking. They have shown no strong will to break the barriers.'

The statement following the plenum upheld the essential role of market forces in allocating resources, but also affirmed the central place of public ownership.

The plenum stressed the importance of clarifying the ownership of property, which underpins the orderly functioning of the market economy and the establishment of a working credit system.

Addressing the troubled rural economy, the plenum affirmed the household responsibility system, which marked the first breakthrough in the reform era, and spelled out new rules for the use of land, allowing farmers to transfer their rights to the use of the land.

The government also pledged to speed reforms to reduce tax burdens on farmers, the change certain subsidies and give equal opportunity to the rural and township workforce. The plenum said the government should retreat from directly managing the economy and instead concentrate on providing services and co-ordination.

Priority was placed on creating new jobs and encouraging entrepreneurship, but the statement said the state must build a safety net, providing social security, unemployment insurance and medical assistance.

To narrow the gap in regional development, the government would continue the drive to develop the northwest and revitalise the old industrial base of the northeast while letting the more developed eastern provinces attain a higher level of modernisation.

In the wake of the Sars epidemic, the statement called for an improvement to the government's emergency response system and public health and education.

The statement said economic reform must be supported by a sound legal system and that the Communist Party should beef up internal discipline to check the spread of corruption.

Absent from the statement was any significant reference to Hong Kong or Taiwan other than the need to strengthen ties. No personnel changes were announced.