Upcoming Event - National People's Congress in China

Tomorrow begins this year's annual session of the National People's Congress (NPC), which is the highest legislative body in the People's Republic of China. While the international community is mostly concerned by China's plan to increase its defense budget by 17.8 percent, two pieces of legislation might have a major impact on China's economic future.

First, the NPC is about to pass a law that will bring corporate tax rates of foreign companies on line with the rates for local companies. This law might indicate a trend from the part of the Chinese economic policy towards a disentanglement from foreign investment.

Second, and more controversial, this year's NPC might finally approve a private property law that will provide privately owned property the same legal status as state-owned property. The proposed law, which departs from traditional socialist ideology, explicitly prohibits the violation of property rights, especially through seizure and expropriation by public authorities, without due compensation. The new private property law could attract those (foreign) investors who so far were reluctant to make long-term investments due to the lack of private property protection.