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In Creating A Legal System For A Market Economy, China Must Mind The Gaps.

By Dan Harris and Steve Dickinson

Professor Donald C. Clarke of George Washington University Law School (a former law school professor of CLB's own Steve Dickinson and the prof behind the Chinese Law Prof Blog) recently had his paper published, entitled, "China: Creating a Legal System for a Market Economy." The abstract describes the paper as follows:

Since the early 1990s, China has come a long way in legislating the foundational rules for its reformed economy. Virtually all of the important areas-contracts, business organizations, securities, bankruptcy, and secured transactions, to name a few - are now covered by national legislation as well as lower-level regulations. Yet an important feature of a legal structure suited to a market economy is missing: the ability of the system to generate from below solutions to problems not adequately dealt with by existing legislation. The top-down model that has dominated Chinese law reform efforts to date can only do so much. What is needed now is a more welcoming attitude to market-generated solutions to the gaps and other problems that will invariably exist in legislation. The state's distrust of civil-society institutions and other bottom-up initiatives suggests, however, that this different approach will not come easily.

Professor Clarke is absolutely right. China has come a long way in passing a whole slew of really well crafted business laws, but once these laws get enacted, Beijing so often becomes paralyzed and cannot seem to come out with regulations fast enough to tell those of us in the field how we are actually supposed to work within the "big laws." So instead of businesses knowing exactly what they need to do to comply, they are oftentimes left wondering when the regulations will come out and what exactly they will say. This is absolutely typical of nearly every law referenced in the abstract above and is true of the new labor law as well. In other words, "what is needed now is a more welcoming attitude to market-generated solutions to the gaps and other problems that will invariably exist in legislation." Professor Clarke's article makes for very interesting reading.

Full post as published by China Law Blog on May 06, 2008 (boomark / email).