1 Role of law in planned economy In general theory, law underpins private economic activity –Secures property rights –Underpins contracting In China under Mao, ideology more than law –Ideological controls –Chaos of Cultural Revolution ( ) In China of the early reform period, new role for law –Bring regularity to government operations –Indicate policy direction –Regulating operation of state-run enterprises –Ex: Bankruptcy Law (1986) "[t]he threat of bankruptcy urges all enterprises and people on and will turn muddleheaded people into shrewd ones and lazy people into diligent ones" (Hu, 1986) i.e.  general policy direction Could bring court proceedings, but bankruptcy process really under control of ministries—not courts

2 Role of law in transition from plan to market Reduce role of decision making by bureaucrats Increase role of universal rules Linked to emergence of private enterprises Later linked to privatization of public ent’s –No bureaucratic superior Explosion of economic legislation by NPC

3 Role of law in transition from plan to market Note China— “growing out of the plan” NOT “big bang” Co-evolution of economy and law But nothing inevitable

4 Role of law in transition from plan to market Role of foreign trade and investment Initially, special, separate legal system for foreigners –1979 Equity Joint Venture Law Note actually “law” promulgated by NPC Contrast domestic private sector (stay tuned) –corporate income tax Now legal regime for Chinese entities more like that for foreigners

5 How Laws are Made Daniel Berman—landmark study: How a “Bill Becomes a Law” “policy-making processes have an enormous impact on the content of the laws they produce and are not mere ‘technical devices’ designed to permit orderly Congressional lawmaking (Tanner 1995:39).”

6 5 stages of law making Agenda setting Inter-agency review Top leadership approval NPC debate and passage Implementation

7 3 arenas of law/rule making State Council Communist Party central apparatus National People’s Congress & St. Comm. –Legislative Affairs Commission

8 Hierarchy of Authoritative Doc’s Sources: –Constitution (1982) –Law on Legislation (2000) –State Council Regulations on the Procedure for Enactment of Administrative Regulations (2001)

9 Enactments with the formal status of law—in the sense of being enforceable by courts Constitution xianfa 宪法 National People’s Congress & Standing Committee  statutes/laws falü 法律 State Council  administrative regulations xingzheng fagui 行政法规 Provincial-level people’s congresses  local regulations difangxing fagui 地方性法规

10 Enactments without the formal status of law—not technically enforceable by courts Government ministries and sub-provincial governments  “tertiary rules” guizhang 规章 Courts may “refer” to tertiary rules if they do not clearly conflict with higher-level rules (ALL 1989) These are “Normative Documents” as opposed to rules in language used in Peerenboom

11 Hierarchy of Authoritative Doc’s Problems –No good system for authoritatively resolving conflicts between different rules –Technically, Constitution Law on Legislation –NPC, Standing Committee May review and invalidate legislation passed by lower-level bodies NPC not known to have overturned a single administrative or local regulation (Chen 2004:114)

12 Hierarchy of Authoritative Doc’s Problems (continued) –Courts not allowed to play role of resolving conflicts of law/rules Not allowed to invalidate legislation Can only either appeal to higher legislative body or apply lower-level rule –In practice, local governments dominate Regulations passed by lower-level governments often trump superior regulations

13 How are rules made in the domestic political economy? Ex: Private enterprise 1981 State Council provisions for urban individual household firms getihu (7 employees) 1983 Central Party Document #1 extends these provisions to rural areas 1986 Zhejiang Provincial Party Committee “Request for Instructions regarding Establishment of the Wenzhou Experimental Zone” to CCP Central Committee and State Council 1987 Central Party Document #5 justifies greater role for private enterprise

14 Ex: Private enterprise (continued) th Party Congress “primary stage of socialism” 1988 National People’s Congress revises Constitution to recognize legitimacy of private enterprise 1988 State Council “Provisional Regulations on Private Enterprises” th Party Congress “private sector important part of economy”

15 Ex: Private enterprise (continued) 1999 NPC revised Constitution Article 11 “The country should protect the legitimate rights and interests of the self employed and private enterprises… and exercise guidance, supervision, management…” 2001 CCP admits private enterpreneurs as party members 2004 NPC revises Constitution “non-publicly- owned sector encouraged”

16 Example of how to show something’s urgent and important In 2007, the State Council initiated a nationwide campaign focusing on what it regarded as the two most common and serious types of land disputes: violations of land contracting rights and illegal land takings. State Council/Seven Ministry-Commission Notice Regarding Launch of Specific Governance [Procedures] Nationwide for Prominent Rural Land Problems, June 10, In addition to the State Council, the other leading agencies include the –Ministry of Agriculture, –Ministry of Land and Resources, –Ministry of Supervision, –Ministry of Civil Affairs, –CCP Leading Group for Rural Work, the –State Council Office for Rectification, and the –State Bureau for Letters and Visits.

17 Workshop: Legislative drafting process Labor Contract Law—2 groups Property Law—2 groups