CHINA'S MOVES TOWARDS granting private property constitutional protection are a useful step forward. Doing so, however, will not end official meddling in the economy, nor in itself stimulate further private sector growth.
The main reason for this is the emphasis on ownership. The proposed constitutional amendment, approved by the National People's Congress Standing Committee on the weekend and now only needing to be rubber-stamped by the full NPC when it meets in March, states that 'private property obtained legally shall not be violated'.
Symbolically this may be important. It suggests that what anyone owns is in fact theirs, and will not be arbitrarily taken away from them. But it does not take the people who need it most - those attempting to build China's private sector - very far.
This is because ownership is only important as part of a far larger structure of rules about what one can or cannot do with things that are owned - for example, how can things be used to make money, or how can they legally be taken from someone and given to someone else.
Two recent events showed just how the emphasis on ownership should not be overplayed. First was the failure of Huarong Asset Management's auction of some 25 billion yuan's worth of bad loans. The reason given for the failure was that the prospective buyers - mainly foreign banks - did not have enough information about the loans to know whether they had a chance of making money.
The issue was not ownership. The prospective buyers were not worried that they would fail to end up owning what they bought. Instead they were concerned whether they would be able to realise the value of any debts they might have bought.
If a financial institution buys a bundle of non-performing loans, it want to know what sort of support - or obstruction - officials and courts are likely to give to attempts to realise value by selling off assets or closing companies.