There is new evidence that the Chinese government is about to make more changes to benefit the whole nation. It is no secret that for some time property rights have not been recognized or treated with respect by the State or banking institutions. However, something new is about to happen! Recently, the State Council vowed to release a regulation which will create a unified national property registration system by June of 2014. What this will do is extend State protection to private property in China. In terms of its national history since the 1949 Communist Revolution, this move is indeed unprecedented!
The economic effect of this policy will be a good thing for China's growing middle class and for all its private property owners. It will encourage stability and further investment by the private sector. This is also the first time that the State Council has pledged to establish official property rights into common law. In accordance with China's existing property rights law, which was passed in 2007, the government is required to defend individual property rights. Even so, this law has never been enforced in any meaningful way. The result has been inertia in Chinese consumer confidence. No single authority has been responsible for protecting said property rights. So the State Council has at last made its strategic and important move to do just this!
Despite the move being necessary, it could also be very difficult to accomplish once the task is undertaken. Presently, China manages property rights through a complicated and uneven system of legal certification. The main problem is that credentials can be easily forged. This is because different agencies do not have a single database for national property. Therefore, the effect is that the property rights of private citizens are usually unprotected by law. A unified property rights registration system is necessary for social prosperity. This is a proven fact by the example of middle and working class people in Europe and North America. The opportunity to own their property helped industrialization over time. Since property security is a most urgent concern of all citizens in a market-based economy it is only after people are certain that their property will be protected do they strive to create and build private wealth. In turn, this private confidence fuels economic development on a national scale.
It is interesting that this basic economic fact of history is what often eluded many of the noteworthy Marxist theorists of the past. Eager Communist leaders of the 20th century did not understand the nature of economic growth throughout the history of the world. Bluntly stated, Lenin, Stalin, and Mao simply didn't get it! Therefore, their idealized socialist "utopias" could never become a reality. Consequently, many innocent citizens of these nations paid a heavy price for the errors made by their governments. A nation truly interested in wealth, prosperity, and economic development cannot ignore the basic lessons of the international market-based economy. China's decision to protect property rights of its citizens is a first step toward permanent establishment of a prosperous and vital East Asian community. Such a move cannot either be ignored by the thoughtful investor in the West. Hopefully, economic enlightenment will be the happy result instead!
Harlan Urwiler is the CEO of HRU Enterprises, Inc. He is an international businessman and an expert author of numerous articles on Asian art, history, business, culture, and investment. Feel free to contact us at hruenterprisesinc@gmail.com with your questions or comments. We look forward to hearing from you!
The economic effect of this policy will be a good thing for China's growing middle class and for all its private property owners. It will encourage stability and further investment by the private sector. This is also the first time that the State Council has pledged to establish official property rights into common law. In accordance with China's existing property rights law, which was passed in 2007, the government is required to defend individual property rights. Even so, this law has never been enforced in any meaningful way. The result has been inertia in Chinese consumer confidence. No single authority has been responsible for protecting said property rights. So the State Council has at last made its strategic and important move to do just this!
Despite the move being necessary, it could also be very difficult to accomplish once the task is undertaken. Presently, China manages property rights through a complicated and uneven system of legal certification. The main problem is that credentials can be easily forged. This is because different agencies do not have a single database for national property. Therefore, the effect is that the property rights of private citizens are usually unprotected by law. A unified property rights registration system is necessary for social prosperity. This is a proven fact by the example of middle and working class people in Europe and North America. The opportunity to own their property helped industrialization over time. Since property security is a most urgent concern of all citizens in a market-based economy it is only after people are certain that their property will be protected do they strive to create and build private wealth. In turn, this private confidence fuels economic development on a national scale.
It is interesting that this basic economic fact of history is what often eluded many of the noteworthy Marxist theorists of the past. Eager Communist leaders of the 20th century did not understand the nature of economic growth throughout the history of the world. Bluntly stated, Lenin, Stalin, and Mao simply didn't get it! Therefore, their idealized socialist "utopias" could never become a reality. Consequently, many innocent citizens of these nations paid a heavy price for the errors made by their governments. A nation truly interested in wealth, prosperity, and economic development cannot ignore the basic lessons of the international market-based economy. China's decision to protect property rights of its citizens is a first step toward permanent establishment of a prosperous and vital East Asian community. Such a move cannot either be ignored by the thoughtful investor in the West. Hopefully, economic enlightenment will be the happy result instead!
Harlan Urwiler is the CEO of HRU Enterprises, Inc. He is an international businessman and an expert author of numerous articles on Asian art, history, business, culture, and investment. Feel free to contact us at hruenterprisesinc@gmail.com with your questions or comments. We look forward to hearing from you!