China parliament passes property, tax laws

Beijing, Mar 16: China's parliament today passed a landmark bill on property rights as its annual session closed after two weeks of deliberations on issues which have ranged from green growth and corporate taxes to bear bile.

The National People's Congress was widely expected to approve the property rights and corporate income tax law bills and the 2007 budget at a session from 0200 GMT, ending a 12-day meeting. Premier Wen Jiabao is set to hold a news conference at 0830 hours.

The property and tax bills both passed by large margins and were met with enthusiastic applause. Only 52 out of the nearly 3,000 delegates voted against the property bill, and just 37 opposed the tax bill. There were also a few abstentions.

Parliament is largely a rubber stamp for the ruling Communist Party's policies, affirming priorities for the year ahead.

Wen said in his opening speech that those themes would centre on seeing through promises to save energy and cut pollution while striving to keep the world's fourth-largest economy humming.

He also pledged to lift spending on the countryside, where increasing protests fuelled by corruption, land grabs and a yawning rich-poor gap threaten stability, underscoring concerns over the chasm between the booming coast and lagging hinterland.

But while parliament has never voted down a bill, the property law, which aims to bolster protection of private assets and stem illegal expropriation, has been unusually contentious.

It endured a record seven readings and was pushed off the agenda last year after critics warned it would worsen social inequality and undermine China's socialist principles by putting private and state-owned property on a more equal footing.

The law aims to better protect business assets and stamp out looting of state assets, but it does little for farmers, whose collectively owned land is vulnerable to expropriation by local officials and cannot be used as collateral to secure loans.

''It's very clear that the property rights law will have no impact, it's not intended to have any impact on the rural land situation. That's an entirely different regulatory kettle of fish,'' said Arthur Kroeber of research firm Dragonomics.

And although Wen pledged to lift spending on the countryside by 15.3 per cent, funding for rural development will grow at a pace that is slightly less than that for the overall budget and significantly below the 17.8 per cent boost in defence spending.

Tax Law

The corporate income tax bill ends preferential treatment for foreign-funded firms by unifying tax rates at 25 per cent, a move that reflects China's determination to wean its economy off exports and move away from cheap manufactured goods.

Analysts said the law was unlikely to deter foreign direct investment, with foreign firms more concerned with the need for China to continue to level the playing field by promoting rule of law and regulatory transparency than with higher taxes.

''What they are asking for increasingly is they would like China to develop a much more open, a much more fair, a much more suitable operating environment and legal environment,'' said Edward Tse, Greater China managing director for Booz Allen Hamilton, consultancy to many Fortune 500 firms.

The New York-based Human Rights Watch said the parliamentary session has been marred by crackdowns on protesters and a surge in house arrests of rights activists.

More than 700 petitioners who travelled to Beijing to seek redress for local abuses have been detained and forcibly sent home, in what the rights watchdog said was the largest clean-up operation by police in years.

Beyond new laws and weighty issues of how to govern the world's most populous country, some delegates had altogether different concerns. One lawmaker brought a proposal to phase out the farming of bear bile, another demanded the immediate closure of a Starbucks coffee branch inside Beijing's Forbidden City.

Parliament was also notable this year by the absence of Chen Liangyu, who was sacked in September as party boss of Shanghai, where investigators are probing a massive scandal involving the misuse of social security funds.

Reuters