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World - Asia/Pacific

China considers constitutional amendment

Could be boon to private sector

In this report:

January 30, 1999
Web posted at: 2:07 a.m. EST (0707 GMT)

BEIJING (CNN) -- The Chinese government is considering amendments to the constitution which could give greater freedom to China's flourishing private sector.

China has about 960,700 private enterprises which employ 13.5 million people. In 1997, they paid 54 billion yuan ($6.5 billion) in taxes.

On Friday, parliament began deliberating proposed amendments to the constitution.

The official Xinhua news agency said the Central Committee of the ruling Communist Party submitted proposed amendments to the standing committee of the National People's Congress for deliberation.

China's private sector has flourished under Deng's market-oriented reforms, but communist authorities have not granted it full legal protection and still ban private ownership of land.

A spokesman for parliament said the amendments would be made public after approval by a full session of parliament in March.

Zero growth for private investment

Economists have been urging the government to stimulate private sector growth to boost the flagging economy.

Xinhua quoted Zheng Xinli, deputy secretary general of the cabinet's State Development Planning Commission, as calling for government measures to boost non-state -- or private -- sector growth.

Investment by the non-state sector showed zero growth at best in 1998 compared with a 22 percent increase in state sector investment, Zheng said.

"The situation is extremely abnormal, given that investment by the non-state sector grew by an average annual rate of 28.6 percent in the past two decades, 10.2 percent more than the state sector," he said.

The non-state sector accounts for about 75 percent of gross domestic product, while the state sector contributes the rest.

However, the state sector sucks up two-thirds of all bank lending, resulting in a severe misallocation of capital.

Slowdown targeted

"The recent slowdown in the growth of the non-state sector should be taken seriously and the problem should be tackled," Zheng said. "It is necessary to maintain the vigour and momentum of the non-state sector," he added.

Tian Jiyun, vice-chairman of parliament and a member of the Communist Party's powerful 22-member Politburo, gave an indication of what was in store.

Xinhua quoted Tian as saying the Central Committee "considered appropriate amendments to part of the constitution" based on the report made by the party's 15th congress.

Chinese-style socialism

The 15th party congress last September enshrined the capitalist-style theories of late paramount leader Deng Xiaoping as the creed of the world's largest communist nation.

Deng, who died in 1997, coined the phrase "socialism with Chinese characteristics" to justify his revolutionary decision to dump Soviet-style central planning and embrace reforms, including un-Marxist concepts such as stock markets and private enterprise.

Xinhua said Communist Party general secretary Jiang Zemin presided over a recent meeting to solicit the views of the All-China Federation of Industry and Commerce.

The federation -- China's chamber of commerce -- is headed by Jing Shuping, who has championed private ownership.

It submitted a motion to parliament in April pushing for the legal protection of private property in communist China.

Reuters contributed to this report.

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