The following is the full text of the Explanation on the Draft
Property Law of the People's Republic of China delivered by Wang
Zhaoguo, vice-chairman of the Standing Committee of the National
People's Congress (NPC) at the Fifth Session of the Tenth NPC on
Thursday:
1. The Necessity of Enacting the Property
Law
The property law is a basic civil law that serves to regulate
property relationships and adjust civil relationships stemming from
attribution and use of things, and it involves defining the
property of the State, the collective, individual and other
obligees and protecting the property.
China's General Principles of the Civil Law, Land Administration
Law, Law on the Administration of the Urban Real Estate, Law on
Land Contract in Rural Areas, Guaranty Law, etc., include not a few
provisions on property, which have played an important role in
economic and social development. As the reform deepens, the
opening-up extends and the socialist economy, politics, culture and
society moves forward, in order to meet the requirements of
materializing in an all-round way the scientific concept of
development and building of a socialist harmonious society, it is
necessary to enact a property law, in accordance with the
Constitution and on the basis of our experience gained through
practice, to stipulate for questions of a general character in the
property system and questions in real life calling for urgent
regulation, thus further defining the attribution of things to
avoid disputes, bring into full play the usefulness of things,
protect the property of the obligees and improve the Chinese-style
socialist property system.
Enacting the property law is necessitated by the need to uphold
the basic socialist economic system. Keeping public ownership
dominant and having the economic sectors of diverse forms of
ownership develop side by side constitute the basic socialist
economic system of the State in the primary stage of socialism.
Enactment of the property law will serve to define the scope of
state-owned property and collective-owned property and the exercise
of State ownership and collective ownership and strengthen
protection of state-owned and collective-owned property, and will
be conducive to consolidating and developing the economic sector of
public ownership; and it will serve to define the scope of private
property and protect private property in accordance with law, which
will be conducive to encouraging, supporting and guiding the
development of the economic sector of non-public ownership.
Enacting the property law is necessitated by the need to
regulate the order of the socialist market economy. Clear-cut
definition of property and fair competition are the basic
requirements for developing the socialist market economy. Enactment
of the property law will serve to confirm the attribution of
things, specify the contents of ownership. usufruct and security
rights, ensure the equal legal status of the various market
subjects and their right to development and protect the property of
the obligees in accordance with law -- all this will play an
important role in developing the socialist market economy.
Enacting the property law is necessitated by the need to
safeguard the immediate interests of the people. As the reform and
opening-up and the economy develop, people's living standards have
improved in general, and they urgently require effective protection
of their own lawful property accumulated through hard work, of the
right to land contractual management they enjoy in accordance with
law, and of their other lawful rights and interests. Enactment of
the property law will serve to define and protect private
ownership, condominium right, right to land contractual management
and house-site-use right, for the purpose of protecting the
immediate interests of the people, stimulating their vigor to
create wealth and promoting social harmony.
Enacting the property law is necessitated by the goal of
establishing a Chinese-style socialist legal system by 2010.
Property law is an important component part of the civil code.
playing the role of a prop in the Chinese-style socialist legal
system. Enactment of the property law provides an important step
taken within the term of the current National People's Congress for
giving a basic shape to the Chinese-style socialist legal
system.
2. Formulation of the General Principles for Enacting
the Property Law and Drafting of the Property Law
Drafting of the property law started in 1993. The Standing
Committee of the National People's Congress has attached great
importance to the enactment of the law. In December 2002, the
Standing Committee of the Ninth National People's Congress included
the property law in the draft civil code for preliminary
deliberation. The current Standing Committee of the National
People's Congress has included the enactment of the property law in
the agenda of important subjects and devoted a lot of time and
energies to the work. In order to make a success of the job, the
Standing Committee of the National People's Congress has been
adhering to the principle of democratic and scientific legislation.
In July 2005, it published the draft property law and collected
over 10,000 comments and suggestions from the people. Moreover, it
held over 100 forums and a number of demonstration meetings, and
conducted investigation and study on special subjects in some
places, thus fully soliciting the views expressed by people from
different quarters, deputies to the National People's Congress,
people at the grass-roots level, specialists and scholars, and
people from the central departments concerned. In the process, a
lot of comments and suggestions were put forward. The Standing
Committee of the National People's Congress has attached great
importance to the opinions expressed and deliberated the draft on
six occasions, which is something unprecedented in the history of
legislation in China.
The general principles for enacting the property law are: with
Deng Xiaoping Theory and the important thought of "Three
Represents" as the guidance, materializing the scientific concept
on development in an all-round way, keeping to the correct
political orientation and giving a full and accurate expression to
and upholding the basic socialist economic system on the basis of
the specific conditions and realities of our country; applying the
principle of equal protection to the property of the State, the
collective and the individual in accordance with the provisions of
the Constitution and laws and, at the same time, strengthening the
protection of state-owned property against the loss of such
property; giving a full and accurate expression to the basic
policies of the Party in the rural areas at the present stage and
safeguarding the interests of the large numbers of farmers; and in
view of the problems in real life that need urgent regulation,
conducting overall coordination of all kinds of interests and
relationships, in order to promote social harmony. In short, in
formulating the property law, we must, from beginning to end, keep
to the correct political orientation and the Chinese
characteristics of the property law and persist in proceeding from
the realities in all aspects.
On the basis of the principles mentioned above and thanks to the
rational comments and suggestions expressed by all quarters and to
repeated discussion and revision of the draft, the final draft
embodies greater changes compared with the initial one. When the
component members of the Standing Committee deliberated the draft
at the 25th Meeting of the current Standing Committee of the NPC,
they highly valued and fully affirmed the draft, believing that the
draft embodied the unity of the Party's position and the will of
the people, represented a crystallization of the wisdom of the
collective, and was about to be mature. The decision on submitting
the draft to the Fifth Session of the Tenth National People's
Congress for deliberation was adopted by an overwhelming majority
vote. After the Meeting, the General Office of the Standing
Committee delivered the draft property law to the deputies to the
National People's Congress according the statutory procedure on
last January 12 and made arrangements for them to study and discuss
the draft in preparation for deliberation. Further amendment to the
draft was made on the basis of the suggestions made by some
deputies during discussion, hence the present draft submitted to
the Session for the deliberation. The draft is composed of five
parts, with 247 articles under 19 chapters.
3. The Main Contents of the Draft Property
Law
(1) Adherence to the Basic Socialist Economic
System.
The Chinese-style socialist property system is determined by the
basic socialist economic system and is in essence different from
the capitalist property system. Therefore, enactment of the
Chinese- style property law must give a full and accurate
expression to the basic socialist economic system and the "Two
Unswervingly" (to unswervingly consolidate and develop the economic
sector of public ownership, and to unswervingly encourage, support
and guide the development of the economic sector of non-public
ownership - trans. ) which is put forward at the 16th National
Congress of the Communist Party of China. First, in the draft,
upholding the basic economic system of the State is made the basic
principle, the draft explicitly stipulates, "In the primary stage
of socialism, the State upholds the basic economic system in which
public ownership is dominant and the economic sectors of diverse
forms of ownership develop side by side." "The State consolidates
and develops the economic sector of public ownership, and
encourages, supports and guides the development of the economic
sector of non- public ownership." As the core of the property law,
this basic principle runs through and is embodied in this law as a
whole. Second, the proprietary right is a reflection of the
ownership system in law and provides the basis for the property
system. Clear-cut stipulations are made on ownership by the State
and the collective and by the individual and there are
comparatively more provisions on ownership by the State, which is
conducive to upholding and improving the basic socialist economic
system and to bringing into full play the advantages of all the
economic sectors of the various forms of ownership, so that they
stimulate one another for common development. Third, developing the
socialist market economy is the inevitable requirement of upholding
and improving the basic socialist economic system. On the premise
of explicit provisions that "the exercise of rights by a
usufructuary or a secured party shall not damage the rights and
interests of the owner", stipulations on usufructs and security
rights are made in the draft, which is conducive to bringing into
full play the usefulness of things, maintaining the order of market
transaction and promoting the economic development.
(2) Equal Protection of the Property of the State, the
Collective and the Individual.
The property law comes under the civil code, one important
principle of which being equal protection of the rights of the
obligees. The draft property law stipulates, "The property of the
State, the collective, the individual and other obligees is
protected by law, and no units or individuals may infringe upon it.
"
The Constitution stipulates, "The State practices socialist
market economy." Fair competition, equal protection and survival of
the fittest are the basic rules governing the market economy. Under
conditions of the socialist market economy, the subjects of the
market, formed by economic sectors of different forms of ownership,
operate and form mutual relations in a unified market, they all
have an equal status on the market, enjoying the same rights,
observing the same rules and bearing the same responsibility. If
the different subjects of the market are not provided with equal
protection, or if the methods used for settling disputes or the
legal responsibilities to be borne are varied, it will not be
possible to develop the socialist market economy, nor will it be
possible to uphold and improve the basic economic system of
socialism. In order to keep abreast of the development of the
socialist market economy, it is further made clear by the Third
Plenary Session of the 16th Central Committee of the CPC that "the
equal legal status and the right to development of all the subjects
of the market shall be guaranteed". Even with respect to the
property which is not transacted on the market, the Constitution
also clearly stipulates, "Citizen's lawful private property is
inviolable." "The State, in accordance with law, protects the
rights of citizens to private property and to its inheritance." On
the premise that ownership of property is established according to
law, as subjects of property, no matter whether it is the State,
collective or individual, their right of property shall be given
equal protection. Equal protection does not necessarily mean that
the economic sectors of different forms of ownership play the same
role or perform the same function in the national economy.
According to the provisions of the Constitution, the economic
sector of public ownership is dominant, the state-owned economic
sector is the leading force, and the economic sector of non-public
ownership constitutes an important component of the socialist
market economy, each playing a different role and performing a
different function in the national economy. This is chiefly
manifested in the macro-economic control conducted and the public
resources distributed and market access granted by the State. Where
the important industries and key fields of endeavor which have a
bearing on State security and the lifelines of the national economy
are concerned, the controlling role of the state-owned economic
sector must be ensured, and all this is stipulated by economic and
administrative laws.
(3) State-owned property.
In the draft property law, explicit stipulations are made on the
scope of state-owned property, the exercise of State ownership,
effective protection of state-owned property, etc.
With respect to the scope of state-owned property. The draft
property law, in accordance with the Constitution and relevant
laws, explicitly stipulates that state-owned property includes: the
natural resources and infrastructure belonging to the State, the
property of government departments and the institutions sponsored
by the State, etc.; and, in addition, it stipulates that the State
Council or the local people's governments shall, in accordance with
the provisions of laws and administrative regulations and on behalf
of the State, respectively perform the duties of promoters of the
enterprises and enjoy the rights and interests of promoters. This
further defines in law the scope of the resources and the property
for business operation owned by the State, which will play a key
role in promoting and expanding the state-owned economic sector,
increasing the economic strength of the State and bringing the
superiority of the socialist system into play.
On the question of the exercise of State ownership. In
accordance with the provisions of the Constitution, the National
People's Congress is the highest organ of the State power and the
State Council is the executive body of the highest organ of the
State power. The fact that the National People's Congress exercises
the State power on behalf of the people throughout the country is
embodied in its making of decisions in accordance with law on major
issues that have a bearing on the overall situation of the State,
and the organ that puts those decisions into effect is the State
Council. It follows that it is the government, not the National
People's Congress, that concretely exercises the ownership of the
State. In such laws as the Land Administration Law, Mineral
Resources Law, Grassland Law and Law on Administration over the Use
of Sea Areas, it is explicitly stipulated that the State Council
exercises the ownership on behalf of the State. As a matter of
fact, it is also the administration system currently in effect. The
draft property law stipulates, "The State Council shall exercise
the ownership of state-owned property on behalf of the State; and
where otherwise provided for in laws, the provisions there shall
prevail." It is not only in conformity with the characteristics of
the people's congress system, but also embodies the requirements
laid down at the 16th National Conference of the CPC that the State
formulate laws and administrative regulations to establish a
state-owned assets management system whereby the Central Government
and local governments respectively perform the duties of promoters
on behalf of the State and enjoy the rights and interests of
owners. The fact that the National People's Congress empowers the
State Council through legislation to exercise the ownership of the
State on behalf of the State embodies the nature of the National
People's Congress and the characteristics of the exercise of its
functions and powers. In exercising ownership of the State, the
governments shall be accountable to the people's congresses and
subject to their supervision according to law.
On the question of protection of state-owned property. In light
of the present situation of the loss of state-owned property, the
draft property law strengthens the protection of state-owned
property from the following five aspects on the basis of adherence
to the principle of equal protection:
One, it stipulates, "The property owned by the State as provided
for by law belongs to ownership of the State, that is, ownership of
the entire people." And it also makes stipulations on the specific
property that belongs to state-owned property, in order to prevent
the loss of state-owned property due to equivocal definition of its
ownership.
Two, it stipulates, "No units or individuals shall be allowed to
obtain ownership of the immovables or movables exclusively owned by
the Sate as is provided for by law."
Three, it stipulates, "The property owned by the State shall be
protected by law, and illegal possession, looting, illegal sharing,
withholding or destruction of such property by any unit or
individual is prohibited."
Four, in light of loss of the property of the state-owned
enterprises, it stipulates, "Any unit or individual that, in
violation of the provisions on management of state-owned property,
causes loss of state-owned property by transferring it at a low
price, illegally sharing it in conspiracy with another person,
placing a charge over it without authorization, or by other means
in the course of restructure of the enterprise, merger or division
of the enterprise, or affiliated transaction, etc., shall bear
legal liability according to law."
Five, in light of the problems existing in supervision over
state-owned property, it stipulates that where in performing their
duties of administration of and supervision over state-owned
property, the authorities and their staff members "cause loss of
state-owned property due to their abuse of power or dereliction of
their duties, they shall bear legal liability according to
law."
These stipulations manifest the essence of the Constitution on
the need to strengthen protection of the socialist public property
and are of tremendous practical significance.
(4) Property of the Collective.
In accordance with the Constitution and the Party's basic rural
policies at the present stage, the draft property law explicitly
stipulates, "Rural collective economic organizations apply the dual
operation system characterized by the combination of centralized
operation with decentralized operation on the basis of operation by
households under a contract." And at the same time, the "right to
land contractual management" and the "house-site-use right" are
stipulated separately in special chapters.
In order to grant the farmers a long-term and guaranteed land-
use right, the draft property law stipulates that, at the
expiration of the term of a contract for a piece of farmland,
grassland or forest land, the contractor of the right to land
contractual management may have the contract renewed in accordance
with the relevant provisions of the State.
On the question whether the restrictions on the transfer and
mortgage of the right to land contractual management and the house-
site-use right can be lifted. In view of the fact that at present,
the social security system in the rural areas of our country has
not yet been established in an all-round way and that the right to
land contractual management and the house-site-use right provide
the farmers' lifelong foundation, the conditions for lifting such
restrictions are not yet ripe, when considering from the
perspective of the country as a whole. In order to maintain the
laws currently in force and the policies of the State on rural land
at the present stage, as well as to leave some room for revising
relevant laws or adjusting relevant policies in the future, the
draft property law stipulates, "Persons enjoying the right to land
contractual management shall be entitled to circulate such right by
adopting such means as subcontract, exchange and assignment in
accordance with the provision is of the Law on Land Contract in
Rural Areas." "Such laws as the Land Administration Law and the
relevant regulations of the State shall be applicable to the
obtainment, exercise or assignment of the house-site-use
right."
On property of the collective in cities and towns. The
enterprises of the collective in cities and towns in our country
have gradually been established since the 1950s. Through their
evolution over the last few decades, some of them were established
by state-owned enterprises for the purpose of offering jobs to the
children of their workers and for the youths who had received a
school education and had returned to cities and towns from the
countryside; and others were established by state-owned enterprises
for the purpose of separating subsidiary industries from them and
replacing their surplus labor force in the course of reform of the
enterprise system. Through reform of the enterprise system over the
last few years, great changes have taken place in the enterprises
of the collective in cities and towns. At present, reform of the
enterprises of the collective in cities and towns continues to
deepen in accordance with the principles laid down since the 16th
National Conference of the CPC. The draft property law has made
stipulations in principle on the property of the collective in
cities and towns in term of the right to things, as follows, "The
immovables or movables owned by the collective in cities and towns
shall, in accordance with the provisions of laws and administrative
regulations, be possessed and used by, shall benefit, and shall be
disposed by, the said collective." And it stipulates, "The property
owned by the collective shall be protected by law, and illegal
possession, looting, illegal sharing, or destruction by any unit or
individual is prohibited." These stipulations are not only in
conformity with the present conditions, but also leave some room
for deepening the reform in the future.
(5) Private Property.
Since the reform and opening up, the economy has been developing
rapidly, the people's living standards have continued to improve,
and private property has been increasing with each passing day.
Effective protection of private property of citizens is not only
stipulated by the Constitution and is what the Party stands for,
but also the general aspiration and urgent demand of the people.
The draft property law stipulates, "Individual persons shall be
entitled to enjoy ownership of such immovables and movables as
their lawful incomes, houses, articles for daily use, means of
production and raw materials." "Lawful deposits and investments of
individual persons and the gains derived from their investments
shall be protected by law." "In accordance with the provisions of
law, the State protects the rights of individual persons to
inheritance and their other lawful rights and interests." "The
lawful property of individual persons shall be protected by law,
and illegally taking possession, looting and destruction of such
property by any unit or individual is prohibited." These
stipulations serve to further improve the legal system for
protection of private property and are conducive to stimulating
people's initiative to create and accumulate wealth and to promote
social harmony.
Along with the reform of the housing system, more and more urban
residents have come to possess their own houses, the bulk of which
are in residential districts, therefore, the condominium right has
become an important right in the individual persons' rights to
immovables. Proceeding from the purpose of maintaining the lawful
rights and interests of the owners of buildings, the draft property
law explicitly stipulates that the owners shall enjoy ownership
over the special parts within a building, such as the residential
units and the units for business purposes, and enjoy the right of
sharing and jointly managing the common parts other than the
special parts, such as the public facilities like the lifts and
public places like the greens. Moreover, the draft has also made
stipulations governing such matters as ownership of the garages and
parking lots, the functions of the owners' committee and the
relations between the owners and the property services.
(6) Compensation for Expropriation.
Expropriation of collective- owned land and the houses of urban
and rural residents has a bearing on the immediate interests of the
people and is a general concern of the society.
As it is, China is a country with a huge population and
insufficient cultivated land. At present, the land retained for
cultivation throughout the country only totals 1.83 billion mu (or
122 million hectares), with only 1.4 mu (or about 0.0933 hectares)
per head, accounting for one-third of the world average level. As
is fixed in the Outlines of the Eleventh Five-Year Plan approved at
the Fourth Session of the Tenth National People's Congress, by the
year 2010, the amount of land retained for cultivation must be kept
at 1.8 billion mu (or 120 million hectares), which is a constraint
figure, a base line that must not be exceeded. Applying the most
strict land administration system and, in particular, effectively
protecting the capital farmland are the most urgent and herculean
tasks confronting our country today. The draft property law
explicitly stipulates, "The State provides special protection for
cultivated land through strictly restricting the transformation of
land for agriculture into land for construction and keeping under
control the total amount of land used for construction. No entity
shall expropriate collective-owned land by exceeding the limits of
power or in violation of the procedures as provided for by
law."
In accordance with the Constitution, the draft property law
stipulates that, for public interests, land owned by collectives
and the houses and other immovables of the units and individuals
may be expropriated within the limits of power and according to the
procedures as provided for by law. At the same time, the draft
provides for the principles for compensation for expropriations and
the specific items to be compensated for.
With respect to the question of expropriation of collective-
owned land, the draft property law stipulates, "For expropriation
of collective-owned land, such fees shall be paid as compensations
for the land expropriated, subsidies for resettlement,
compensations for the fixtures and the young crops on land, and the
premiums for social security of the farmers whose land is
expropriated shall be allocated in full, in order to guarantee
their normal lives and safeguard their lawful rights and interests.
"This stipulation reflects the principle of the Party and the State
that compensation for expropriation of land and for resettlement
must be sufficient to guarantee that the living standards of the
farmers whose land is expropriated will not be lowered and their
livelihood will be ensured for a long time to come. On the question
of expropriation of the houses and other immovables of units and
individuals, the draft stipulates, "Compensation for resettlement
shall be paid to the units and individuals whose houses or other
immovables are expropriated, in order to preserve their lawful
rights and interests; where the residential unit of an individual
is expropriated, his living conditions shall be guaranteed." In
view of the unbalanced development of different areas, the specific
compensation standards and measures shall be formulated in the
relevant laws such as the Land Administration Law in compliance
with the principles for compensation and the items to be
compensated for, as prescribed in the draft property law, and in
light of the specific circumstances.
In view of the fact that in actual life compensations for
expropriation are not duly paid and that such compensations are
misappropriated, the draft property law expressly stipulates, "No
unit or individual shall embezzle, misappropriate, illegally share,
withhold or pay in default, the compensations for expropriation or
other fees." Any unit or individual that violates this stipulation
shall bear legal liability in accordance with law.
In addition, the draft property law contains the
following:
One, on the question of correct handling of adjacent relations,
the draft made stipulations governing matters that give rise to
adjacent relations, such as use of water, drainage, passage,
ventilation and light, which will help develop production, provide
conveniences in people's lives, protect the rights and interests of
the adjacent obligees and promote harmony in the neighborhoods.
Two, on the question of security rights, on the basis of the
Guaranty Law, provisions on the property that can be used for
providing guaranty are added in the draft, which serves to further
improves the guaranty system, in order to promote financing and
economic development.
Three, on the question of protection of property, the draft made
comprehensive stipulations governing the ways and means of
protection of property, and provides that any unit or individual
that infringes on the property right shall bear, apart from civil
liability, administrative or criminal liability according to law,
thus improving the system for protection of property. And four, on
the question of possession, the draft mainly provides for the
protection of possession and the liability for tort committed by
illegal possessors, to maintain public order and protect the lawful
rights and interests of the obligees.
(Xinhua News Agency March 8, 2007)