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Mark O'Neill

Chairman Mao recently reopened his mausoleum after a six-month rest and refit. Listening to one proposal in the National People's Congress (NPC) across the street, he may want to close it permanently, go back to the mountains and start the revolution again.

 More than 30 private businessmen who are NPC delegates have signed a petition calling for the constitution to be amended to give the private sector the same status and legal protection as the public sector.

 'We should create an environment of fair and equal competition, clarify the legal status of the private sector and protect its legal rights and interests,' the petition reads.

 The constitution designates public ownership as the 'leading power' of the economy, which the government must consolidate and develop. It does not accord such status to the private sector.

 The private businessmen have a strong case.

 First, private companies account for between 10 and 20 per cent of the gross domestic product, economists say. Accurate figures are elusive because of the confusion over how many collective, shareholding or joint venture companies are private and the fact that many private firms hide their real identity to escape official interference and taxes, legal and illegal.

 Second, over the next three years, the state sector will lay off tens of millions of people and many will find a job, if they find one at all, in a private company.

 Third, in his keynote speech to the 15th Communist Party Congress last September, party chief Jiang Zemin changed the designation of the private sector from being a 'complementary part' of the 'Socialist market economy' to an 'important constituent part'.

 It was this speech that gives the private businessmen the legal basis for their proposal.

 China's most prominent private businessman is Jing Shuping, 79, a pre-1949 Shanghai capitalist who is chairman of the All-China Federation of Industry and Commerce, which represents the private sector.

 He attended the World Economic Forum in Davos last month.

 Mr Jing's association is proposing a similar constitutional amendment at the Chinese People's Political Consultative Conference (CPPCC), an advisory body that is meeting at the same time as the NPC.

 'Private business needs support not only in terms of policy but from the constitution,' Mr Jing said. 'Without it, it is hard to ensure the stability and reliability of the policy.'  The businessmen argue that they are at a disadvantage against state companies legally and financially - for example, in access to loans from banks, doing mergers and acquisitions, and in their dealings with officials who still wield enormous power over their activities.

 Xiao Zhuoji, a well-known economics professor at Beijing University and a sponsor of the petition at the CPPCC, said that private firms get unequal treatment in obtaining bank loans and in listing shares.

 'Before we give joint ventures national treatment, we should give it to private firms,' he said. 'There still exists a prejudice against private firms, a feeling that they are run by low-quality people. This is not fair. Their standard has greatly improved over the last 10 years, although some evade taxes, make fake products, commit fraud and pay bribes.'  Another economist backing the amendment said the NPC is far behind the economy reality on the ground.

 'Such an amendment is long overdue. Without it, private businessmen do not have a sense of security, work for short-term profit and park their money abroad. This is bad for the reforms and for China's future.

 'Many of the NPC delegates support such an amendment, even though they are Communist Party members. I think it is the leadership that cannot accept such a change,' he said.

 One study by the Chinese Academy of Social Sciences estimated that private businessmen move US$20 billion a year offshore.

 NPC delegates do not expect such an amendment to be passed during this year's session.

 'We will amend the constitution in the future,' said Xu Siyi, a professor of Chinese at Xinjiang University and a Xinjiang delegate. 'It takes time to change people's thinking.'  'I see no need to change the constitution,' said Chen Pengfei, a delegate from Shaanxi. 'The constitution should be something fixed. We have recognised the contribution of the private sector. We should develop all sectors of the economy, including shareholding and private firms.'  The status of the private sector is well illustrated by a row which erupted when a real estate developer proposed buying 20 million yuan (about HK$18.6 million) worth of shares in Rongshida, a state company in Anhui that has been one of China's top washing machine producers for the last three years.

 The issue is whether a prominent state company should accept such an investment from a private company.

 The company itself welcomes the investment, saying it badly needs the money to diversify its product line and that the state will maintain a controlling stake.

 But many workers and middle managers disagree, saying that the average worker has less than 10,000 yuan worth of shares and the company president only 80,000 yuan. They fear that, if the 20 million yuan investment is approved, others will follow and control of the company will fall into private hands.

 No need to ask Chairman Mao whether he stands on this issue. That is, if he is still in the mausoleum.



Private business lobbies for same status and legal protection as state sector