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Foreign Investment in China

Foreign Investment in China: The Administrative Legal System

Copyright Date: 1997
Pages: 256
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  • Book Info
    Foreign Investment in China
    Book Description:

    China's legal system is characterized by the gap between law and reality. Focusing on regulatory law, and with reference to the foreign investment area, this book identifies the functional and structural problems within China's administrative legal system that perpetuate this gap. Topics examined in depth include China's unusual hierarchy of legislation, the lack of clear delineation between legal and policy norms, the great scope of discretion accorded to bodies charged with legal interpretation and implementation, the limited scope of judicial review, and the resulting problems of legislative inconsistency and haphazard legal enforcement. The book contends that China's legal system is being built on a faulty and incomplete basis, and that if these problems remain unaddressed, China's legal future is at risk.

    eISBN: 978-988-220-135-4
    Subjects: Law

Table of Contents

  1. Front Matter
    (pp. i-vi)
  2. Table of Contents
    (pp. vii-ix)
  3. List of Diagrams
    (pp. x-x)
  4. Foreword
    (pp. xi-xiv)
    Pitman Potter

    The past fifteen years of China’s ‘open door’ policies have seen a dramatic expansion in foreign investment activity. In response to the increased size and complexity of foreign business operations in China, the Chinese legislative regime governing foreign investment has also expanded significantly. In contrast to the late 1970s and early 1980s, when it would have been fair to say that China had virtually no law to govern the intricacies of foreign business operations, today the PRC boasts a wealth of statutory and regulatory enactments. And in contrast to earlier times when foreign businesses and political leaders urged China to...

  5. Acknowledgments
    (pp. xv-xv)
  6. List of Abbreviations
    (pp. xvi-xvi)
  7. 1 Law and Reality
    (pp. 1-50)

    Laws that embody norms transplanted from foreign legal systems normally face substantial implementation problems. The experience of many Asian countries during the colonial and post-colonial periods shows that legal regulation is less relevant to social reality than are customary norms.¹ Imported legal concepts may not correspond with entrenched societal values. Consequently, people may be unwilling to adjust their behaviour to fit the new legal standards.

    This is the case in the PRC which since 1978 has been establishing a legal system substantially drawn from continental and common law prototypes. China has pinned its future on its adoption of Western economic...

  8. 2 China’s Administrative Legal Structure
    (pp. 51-92)

    Administrative law plays an inordinately important role within China’s legal system. Chinese law is almost all public law in the sense that it is designed to regulate behaviour, and parties cannot decide on their own to opt in or out.¹ Much of that area of law known in China as ‘economic law’ — law used by the state to regulate the economy — is actually part of the wider area of administrative law. The laws relating to foreign investment are but a small subset of economic law.

    Unlike some civil law jurisdictions, China does not have a specific administrative code that systematically...

  9. 3 Legal Flexibility
    (pp. 93-146)

    The Chinese have adopted a rationale that lends itself to the creation of laws that are inherently flexible so that they may be adjusted according to the vagaries of human behaviour. Such laws allow for wide variation in application as they are customarily expressed as general principles (yuanze). Chinese jurists such as Chen Shouyi take this understanding of law to be consistent with socialism, which considers law as part of the superstructure of society. When economic relations change, law should change as well:

    Socialist law must develop and change in accordance with the development and change of economical, political, cultural...

  10. 4 Legal Consistency
    (pp. 147-188)

    The Chinese appear to take a rather relaxed approach to maintaining consistency in content among rules and regulations at the national/national and national/local levels. The general principle of legislative consistency emphasizes consistency with the ‘spirit’ rather than with the ‘letter’ of the relevant higher law or laws. This is also true with respect to consistency with the PRC Constitution.¹

    The meaning of legislative inconsistency in the context of China’s complex unitary legal structure has been described by leading Chinese administrative law scholars Ying Songnian and Dong Hao, as follows:

    What we mean by conflict is the conflict and contradiction in...

  11. 5 Implementation of Law
    (pp. 189-242)

    Legal implementation in the PRC tends to be ad hoc, haphazard and lacking in consistency. Uncertain implementation results from the practice and ability of local administrative agencies to take advantage of laws in a manner reminiscent of policy implementation. This is because, as law and policy are so closely linked in their primary role of engendering social and economic change, the old framework of political management tends to appear in the process of legal implementation.

    As mentioned in the earlier discussion of ‘specification of law’, law in China tends to take on the colour of policy in the course of...

  12. 6 Legal Supervision
    (pp. 243-282)

    World-renowned administrative law scholar Bernard Schwartz has stated that of the three essential elements of any administrative law system (delegated power, fundamental fairness, independent review), the provision for independent review of administrative action is the most important, so important in fact that in comparison, all other requirements become but ‘as sounding brass or a tinkling cymbal’.¹ China has supposedly put into place a variety of structures — judicial review, review by administrative tribunal, administrative and party supervision — for the purpose of correcting inappropriate or illegal administrative decision-making. This rather elaborate structure of administrative review and supervision appears, however, to be incapable...

  13. 7 Conclusion
    (pp. 283-290)

    This work is a theoretical attempt to demonstrate normative dislocation in China and its effect on the operation of China’s legal system. Drawing on examples from the foreign investment area, it has sought to explain why law on its face does not, or indeed cannot, connect with reality in China, how law is applied in order to bridge this normative gap, the relationship between normative dislocation and inconsistent implementation of law, how lack of legal autonomy contributes to the problems of implementation, and the consequences of inconsistent implementation for the legitimacy of law and of government based on law.


  14. Bibliography
    (pp. 291-310)
  15. List of Statutes
    (pp. 311-320)
  16. Glossary of Chinese Words
    (pp. 321-326)
  17. Index
    (pp. 327-330)