Thursday, March 8, 2007

Is China Listening to De Soto?

The BBC just reported that China is considering a new law to protect private property, suggesting more openness, transparency, and reform in China. From the IHT:

"China's Parliament began debating landmark legislation to protect private property on Thursday following a rare and lengthy public consultation that suggests the Communist Party may be willing to allow more scrutiny of controversial government policies."

The Chinese government is constantly innovating and reinventing itself. It seems China has wisely taken into consideration the role of private property protection in economic development, an issue often associated with Peruvian economist Hernando De Soto, who wrote in the New York Times a few years ago:

"The single most important source of funds for new businesses in the United States is a mortgage on the entrepreneur's house. These assets can also provide a link to the owner's credit history, an accountable address for the collection of debts and taxes, the basis for the creation of reliable and universal public utilities, and a foundation for the creation of securities... Third World and former communist nations do not have this representational process. As a result, most of them are undercapitalized..."

Read Christian Barry's interview with De Soto at the Carnegie Council here and De Soto's Carnegie Council Morgenthau lecture here.

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