Back on February 27th I write: The right to private property and functional legal restrictions on the power of government to usurp private property for political ends is simply a well crafted illusion in China. It was true at the time but time changes things.
Property law works for poor: The law, which for the first time explicitly protects private property, was passed by the National People's Congress (NPC) on March 16 along with a corporate income tax bill that ends preferential treatment for foreign-funded firms by unifying tax rates at 25 percent.
More Rights for Millionaires: The bill took 14 years in the drafting and was subject to a record seven readings by legislators since being tabled in 2002. It was in fact scheduled to be passed a year ago, but widespread objections amplified by heated Internet-circulated commentaries forced its last-minute withdrawal from the parliament's agenda. One of the bill's most vocal critics, a law professor at Peking University, Gong Xiantian, condemned it as "copying capitalist law like slaves" and offering equal protection to "a rich man's car and a beggar man's stick". … "Socialism is based on public ownership".
Three Sweeping Events in China: Each step, when taken separately, is fuel for more growth. All three, when combined, are electrifying. Whether or not these reforms bring more political freedom to China remains to be seen. But they’re likely to set off a chain reaction of further legal changes, and ultimately, an end to nearly all vestiges of communism in China’s economy.
Reform #1 Chinese National Legislature Passes New Property Law: Your take-away from this change: If you thought China’s growth has been impressive even without laws protecting personal property ... and even without the enthusiastic participation of the masses ... wait till you see what can happen as this reform unleashes the entrepreneurial spirit of hundreds of millions of Chinese citizens that, until now, have been held back or left out!
Reform #2 New Phase in the Development Of China’s Financial Markets: For the first time, China will now allow trading in stock index futures and options. … As long as the stock market was tiny, no big deal. But now China’s stock markets have been growing by leaps and bounds. Just since the end of 2005, the total value of China’s stock markets has tripled — to more than U.S. $1 trillion. And still there was no way for investors to hedge effectively. With this new reform, all that is changing.
Reform #3 The Largest Investment Fund of ALL Time! Economists expect the Chinese government to allocate $200 billion to $400 billion to the new fund. The largest mutual fund in the U.S., the Magellan Fund, has “only” $50 billion or so on assets. So right off the bat, the new Chinese fund would be four to eight times larger than anything we’ve ever seen in the U.S. financial markets.
