No great leap

It is tempting to consider the recent constitutional amendment to protect private property as a great leap forward for the People's Republic of China.

In reality, it would be more accurate to describe it as a symbolic step forward in China's long march to capitalism.

The importance of the amendment lies in the fact that this marks the first time in the history of Communist China, and a quarter century into economic reform, that private property will receive official protection.

But can private entrepreneurs who have lived in continual apprehension of state appropriation and harassment breathe easily from now on? Can foreign investors? There are two reasons why the amendment may need to be treated with caution.

First, the amendment states that "private property obtained legally shall not be violated" and it provides for compensation in the event of expropriation.

Prima facie, this implies that private and state-owned property will be treated on par. The reason some Sinologists suggest that little could change is that the wording of the amendment leaves scope for interpretation.

It is still possible, say, for officials to claim that property was illegally obtained and confiscate it without compensation.

This remains a real risk in a country where, like many developing countries, there is often a wide gap between the spirit of the law and reality.

Indeed, despite some laudable and energetic attempts at legislative reform "" since the start of this year more than 100 new laws have come into effect "" China's judicial system remains open to interpretation and negotiation.

In short, without an independent judiciary and media, private entrepreneurs will continue to have little redress against expropriation and extortion.

While China's bargainable system of justice may have had some advantages for businessmen and entrepreneurs so far, it is uncertain how efficiently it will serve in the long term as China seeks to accelerate the pace of liberalisation.

Therefore, a constitutional amendment, however progressive, that is not backed by a deepening of judicial reform may, in reality, have little impact.

The second subsidiary point is the possible proxy legitimacy that the amendment offers to party officials, at all levels, and their families who own a fair amount of undisclosed commercial assets.

These crony capitalists continue to represent opaque and sometimes competing interests to genuine private entrepreneurs.

Overall, however, it is fair to say this amendment is a step in the right direction. It is telling that this amendment has been introduced in response to popular demand "" China already has laws on private property but the demand for constitutional guarantees comes from the emerging entrepreneurial and consumer class that is setting up new businesses or buying real estate and financial assets.

A pledge to protect private property indicates a realistic if grudging acceptance by the Chinese authorities that even a "socialist market economy" requires private enterprise and talent "" of which there is no dearth in China "" if it is to prosper.