EclectEcon

According to the Coase Theorem (named for the economist who developed it, Professor Theorem),

• If property rights are well-defined and well-enforced, and
• If transaction costs are low (less than the expected gains from the transaction), then
• resources will move to their most highly valued use.

The passing of legislation to establish, enhance, and enforce private property rights in China suggests that as Chinese residents come to trust and expect that their property transactions will be protected by law, there will be more resource movement toward more highly valued uses in China. From the Washington Post,

Jiang Ping, former president of the China University of Political Science and Law and a scholar who advised officials drawing up the law, told the official New China News Agency that it is significant because it helps codify a property law system that has been evolving through regulation in recent years as the country moves away from socialism.

"Only when people's lawful property is well protected will they have the enthusiasm to create more wealth and will China maintain its economic development," Jiang said.

What is disappointing is that the story also quotes this idiot (who clearly qualifies to be leader of Canada's NDP):

"In the property law, state assets and private assets are put on the same level, which I think is totally wrong and even irrational," said Gong Hantian, a Beijing University law professor who has advised the government on legal matters.

"The reason China has such a fast-growing economy is that we have a very strong public sector. . . . Privatization for a socialist country like China is not a gospel, but a disaster," he said.

His facts are wrong. The reason China has such a fast-growing economy is that private entrepreneurship with the ability to earn and retain profits has gained increasing legitimacy over the past two decades. Before the mid-1980s, economic growth was slow because there was little incentive to take financial risks: if you succeeded, you didn't get to keep the rewards, and if you failed, you lost your state-determined job.