The Perks and Perils of Making Officials Appear in Court

24. February 2024
A new paper by Tianhao Chen, Wei Xu and Xiaohong Yu

In 2015, the revision of China’s Administrative Litigation Law introduced the Chief Officials’ Appearance System (COAS). The system requires agency leaders themselves, rather than their legal counsel, to appear in court and defend their administrative actions. Unlike other post-2014 legal reforms aimed at empowering the judicial system and fending off local protectionism, the COAS uniquely enhance the engagement of political officials in the judiciary process. This approach is based on the belief that increased participation will help officials to gain a better understanding of public concerns and improve administrative litigation quality. The detailed workings of the COAS were laid out in this previous blogpost by Nina Rotermund.

In this comprehensive study, we set out to assess how and whether the optimistic goals set for the COAS were achieved. Through an empirical analysis of 1551 administrative litigation cases in a Beijing local court and extensive field research across 12 other provinces, the study uncovers unexpected outcomes that merit a closer examination.

Contrary to official expectations, we find that the COAS reproduces the administrative grievances that it is tasked to resolve. Data from Beijing revealed that plaintiffs were 5.08 times more likely to appeal or file a new suit over the same issue when chief officials made court appearances. This tendency was attributed to a mismatch between the plaintiffs’ expectations for meaningful engagement and the often-detached demeanour of the officials, who sometimes resorted to reading from prepared statements without genuinely addressing the plaintiffs’ concerns. This lack of meaningful interaction left plaintiffs dissatisfied, propelling them to pursue further legal avenues.

Moreover, the number of administrative cases overall and the rates of the government losing cases before district leaders’ court attendances in Beijing’s 16 districts were not significantly higher than after they appeared in courts, indicating that lawful governance did not improve. This issue is related to the officials’ generally apathetic approach to court appearances. Statistics indicate that 73.6% of officials planned to conduct the required court visits only in the fourth quarter, when the annual cadre evaluation was underway. This figure is disproportionately higher than the proportions in the other three quarters. Further, the amount of officials’ appearances in court barely surpassed the number of appearances required to fulfil the performance evaluation criteria. This indicates that officials’ appearances are more about fulfilling administrative assessment requirements rather than genuinely improving lawful administration.

“[…] plaintiffs were the so-called nail households (dingzihu 钉子户), ones who refused to relocate and came to court only to claim better compensation. They wouldn’t be pleased by simply meeting the officials in person. Instead, sometimes they even interrogated the officials and we had to interrupt and stop them.”

Judge in Qinghai, August 2022

Despite this, the study also observed surprisingly impartial and even strategic responses from the court. Statistical analysis of Beijing data shows that the involvement of district leaders in court did not skew judicial outcomes in favour of the government. This is partly due to the strategic appointment of high-ranking judges in cases involving chief officials, ensuring a balance of authority in the courtroom. Moreover, the analysis reveals a nuanced trend wherein courts are more likely to rule against government officials who are nearing the end of their term, suggesting a strategic consideration of future relations with the administrative agencies.

Expanding the study nationwide revealed similar trends across China, albeit with regional variations. Through the “China Judicial Politics Database,” which includes 70% of publicly available cases, we identified 28,805 instances of official court appearances. Of these, a mere 146 involved officials at the bureau and deputy bureau levels, noting that the overall frequency of government leaders appearing in court remains low nationwide. Interviews conducted with judges, lawyers, and government officials from 12 provinces, including Zhejiang, Henan, Guizhou, Jiangsu, Guangdong, Sichuan, Qinghai, Shaanxi, Tianjin, Liaoning, Hebei, and Xinjiang, presented a complex but consistent picture. Similar to Beijing, official court appearances were rare and typically motivated by assessment requirements, leading to tense courtroom dynamics between disinterested officials and pragmatic plaintiffs. Courts employed diverse strategies to manage their interactions with the government, sometimes using the theatrical nature of appearances to exert pressure.

“[…] sometimes I would intentionally tolerate plaintiffs’ emotional expressions to exert extra pressure on
administrative agencies.”

Judge in Zhejiang, April 2022

In sum, the study reveals that, contrary to what the creators of COAS had expected, the COAS has not significantly ameliorated administrative dispute resolution. Instead, it has resulted in a renewed triad of administrative litigation: apathetic state agencies, increasingly agitated plaintiffs and strategically empowered courts.

The unintended impacts of the COAS carry certain implications. Despite previous views of administrative litigation in China as no more than a “frail weapon” due to political constraints, the courts appear somewhat empowered, benefiting from the cumulative effects of several reform measures implemented over the last four decades and the strategic behaviours of judges. Additionally, plaintiffs’ willingness to pursue further legal action, fuelled by an increased legal awareness and desire for justice, challenges the notion that official appearances alone would placate citizens. Still water runs deep, and the perverse impact of the COAS implies that the rule-based approach to dispute resolution would be a more desirable and effective route than the paternalistic approach.

The paper ‘Administrative Litigation in China: Assessing the Chief Officials’ Appearance System’ was published in The China Quarterly (free draft available here). Tianhao Chen is an associate professor at the School of Public Policy and Management at Tsinghua University. His research focuses on administrative law, administrative agreements, judicial governance and technology ethics. His work has been published in Chinese Journal of Law, China Legal Science and Law Science.

Wei XU is a PhD candidate studying at the School of Public Policy and Management at Tsinghua University. Her research focuses on platform antitrust, judicial reform, public administration and law.

Xiaohong Yu (corresponding author) is an associate professor in the department of political science at Tsinghua University. Her research focuses on Chinese politics, judicial politics and empirical legal studies. Her work has been published in Journal of Empirical Legal Studies, The China Review and Tsinghua University Law Journal. She can be contacted at xyu[at]

Enabling, Coordinating, Waiving Responsibility? AI Regulation with Chinese Characteristics

3. February 2024
A new paper by Angela Huyue Zhang
In addressing artificial intelligence, the Chinese government has multiple roles: it simultaneously acts as a policymaker, an investor, a supplier, a customer, and a regulator.

In recent years, China has emerged as a pioneer in formulating some of the earliest and most comprehensive legislations regulating recommendation algorithms, deepfakes, and generative AI services. This has left the impression that China has stood at the forefront as a global leader in regulating AI. Matt Sheehan, a highly-regarded expert in Chinese AI policy suggests that the U.S. can gain valuable insights from China’s approach to AI governance. Industry observers therefore view Beijing’s regulatory approach as a potential obstacle to Chinese innovation. Such concerns are not unwarranted. In 2020-2022, China undertook a sweeping crackdown on its tech firms. The erratic nature of Chinese tech policy has unnerved investors, precipitating severe and unintended consequences of deterring investment and entry into the consumer tech business.

However, this perception that China has stood at the forefront in regulating AI fails to account for the intricate dynamics of the Chinese political economy. Authoritarian states face a dual-challenge with emerging technologies, as these technologies can empower civil society on one hand, while enhancing government surveillance capabilities and strengthening social stability on the other. Furthermore, technological advancements are crucial for economic growth and national competitiveness. To balance the need for stability and the desire to foster innovation, China has adopted a bifurcated approach to AI regulation: strict information control juxtaposed with industry-friendly regulation. This approach keenly reflects the complex utility function of the Chinese Communist Party, who seeks legitimacy through multiple sources including growth, stability, and nationalism.

Yet striking a balance between regulation and innovation is far from easy. The Chinese government assumes multiple roles in the AI ecosystem as a policymaker, an investor, a supplier, a customer, and a regulator. Given the government’s extensive involvement, it lacks a strong commitment to regulate the industry. Moreover, although AI can pose many social harms, they have not yet evolved into immediate threats to social and political stability. AI safety risks remain speculative, despite warnings from experts. The Chinese government also recognizes the economic benefits AI promises, amidst the intense Sino-US tech rivalry. The tightening of US export restrictions, which hinder Chinese AI firms’ access to advanced chips, have only intensified this competitive pressure, thereby diminishing the government’s incentive for strict regulation.

The Chinese government also faces significant constraints in imposing strict regulation on AI. China’s tech crackdown in 2020-2022 has demonstrated that harsh regulatory measures can generate strong repercussion in the market. Since early 2023, the Chinese economy has entered into a slump. The government’s focus has thus shifted towards revitalizing the economy and boosting market confidence. Consequently, despite appearances of proactive intervention, Chinese regulators have focused on fostering AI growth. The regulatory rules being adopted have sent strong pro-growth signals while attempting to facilitate stakeholder coordination to advance AI development. This close integration of industrial policy and law is a defining feature of Chinese AI regulation.

Understanding the nuances of China’s AI regulatory strategy is crucial not only for predicting the trajectory of its technological development but also for assessing its implications on the global tech rivalry. Major jurisdictions including both the U.S. and the EU are actively exploring the establishment of a comprehensive AI regulatory framework, as exemplified by the AI Act and Biden’s executive order. Leading US AI firms are involved in various litigations and face mounting pressure to negotiate licenses with media for the use of their content as training data. In contrast, China’s relatively more relaxed regulatory environment may offer its AI firms a short-term competitive advantage over their EU and U.S. counterparts.

Meanwhile, China’s approach could give rise to serious regulatory lag. This situation is aggravated by China’s weak market conditions, poor legal institutions, and the tightly coupled political system, potentially leading to latent risks that could escalate into AI-related crises. For example, the Chinese government is invigorating a “whole of society” approach to push forward AI development without necessarily taking effective precautionary measures. Under such a command-and-control strategy, by the time the full impact of AI harms become apparent to top policymakers, it could be too late for effective reversal or mitigation. This dynamic complexity of China’s AI regulation therefore underscores the urgent need for increased international dialogue and collaboration with the country to tackle the safety challenges in AI regulation.

The paper ‘The Promise and Perils of China’s Regulation of Artificial Intelligence’ is available on SSRN. Angela Huyue Zhang, an Associate Professor of Law at The University of Hong Kong and Director of the Phillip K. H. Wong Center for Chinese Law, is widely recognized as a leading authority on Chinese tech regulation. She is the author of Chinese Antitrust Exceptionalism: How the Rise of China Challenges Global Regulation (Oxford, 2021), named one of the Best Political Economy Books of 2021 by ProMarket, and High Wire: How China Regulates Big Tech and Governs Its Economy (Oxford, 2024). In fall 2024, Zhang will join the University of Southern California as a Professor of Law. Follow her on Twitter @AngelaZhangHK.

Embedding Private Law into the Green Transition: The Case of the ‘Green Principle’ under the Chinese Civil Code

14. January 2024
A new paper by Jie Ouyang

Ecological civilisation’ has been a core pillar of the Communist Party of China’s political agenda in recent years. It highlights the growing importance of balancing economic growth with environmental protection. Environmental degradation comes from economic growth, economic growth relies on market functioning, and the market runs on private contracts. Private law doctrines, such as freedom of contract and limited liability of corporations, provide the legal and institutional framework that enables market actors (especially those with stronger bargaining power) to reap the profits from market transactions, while legally outsourcing the environmental externalities to the general public. Think of a cheap pair of jeans – it is cheap because its enormous environmental costs are not factored into its pricing and such pricing is possible because contract law allows/encourages us to only care about our immediate party (‘privity of contract’).

Granted, public environmental regulation poses significant limitations to private dealings. But if private law causes the problem in the first place, maybe we could also think about how we can address the problem from within private law. In the civil codification project since 2017, though the Chinese legislators refrained from a complete overhaul of existing civil legislation, they did endeavour to reconcile the tension between private autonomy and public environmental good. Among others, Art. 9 of the Chinese Civil Code (‘CCC’), which is often known as the ‘green principle’, prescribes sustainability as an overarching principle of private law. It reads: When conducting a civil activity, a person of the civil law shall act in a manner that facilitates conservation of resources and protection of the ecological environment.

This principle is highly abstract – just as abstract as other established principles in private law such as good faith and public policy. Judges in China, however, have not shied away from engaging with this principle, often in a rather creative way. For example, if I plant trees on your land illegally, you would think that you can rightfully ask me to cut them down. But several courts[1] said no – as trees could help prevent soil erosion. In another case,[2] the court reversed a homeowner association’s resolution that prohibited a homeowner from installing an electric vehicle charging station in the parking lot. The decision highlighted the scientific fact that electric cars can reduce fossil fuel consumption and have zero tailpipe emissions. (A side note: the Chinese authority has been actively promoting electric cars since the early 2000s.)

The green principle can be read as an attempt to align private law with the Constitution, which in the eyes of Chinese jurists is the ‘mother law’ that gives birth to other fields of law. Art. 26 of the Chinese Constitution provides: ‘The State protects and improves the environment in which people live and the ecological environment. It prevents and controls pollution and other public hazards.’ The green principle is even part of a broader political project, namely ecological civilisation, which radiates to the entire state apparatus. For example, the Supreme Court has been actively mobilising local courts to provide ‘judicial services’ in order to achieve carbon peak and carbon neutrality, which includes the imperative of ‘correctly applying the green principle’. Ecological civilisation is not only the task of the state as Art. 26 of the Constitution seems to indicate. With Art. 9 CCC, it is indicated that every private person, too, is not part of the transition towards a more sustainable future.

The green principle represents a welcome approach to opening up private law doctrines for environmental concerns. But many actually find such a politically laden principle disruptive to the system of private law. In their eyes, private law centres around interpersonal autonomy and deals with direct exchanges between the parties themselves. Of course, they defend party autonomy and demarcate a clear boundary of private law for a reason – the tentacles of the party-state are already way too present almost everywhere. Sure, we need a proactive and responsive state to fight climate change and save the environment, but what if the state itself is inconsistent in its commitments? For example, China was building significantly more new coal plants in 2022 to address the electricity shortage and was turning forests into farmland to ease the food crisis. Sure, we need to involve private parties to internalise the environmental costs, but what if the green principle is instrumentalised as another gateway for party politics to creep into civil society? For example, the word ‘resources’ under Art. 9 CCC has not only been interpreted as ‘ecological resources’ but also as ‘social resources’[3] and ‘judicial resources’,[4] which carry significant indeterminacy that can only be determined by the judges’ political sensitivity. The green principle tells a rosy story of an ecologically responsive private law of the 21st century, but, what will the real outcome be?

The article ‘Unleashing the Green Principle in the Chinese Civil Code: Embedding Private Law into the Green Transition’ has been published in the Journal of European Consumer and Market Law, Volume 12, Issue 5 (2023) pp. 203 – 208. Jie Ouyang (LinkedIn, SSRN) is a PhD candidate and Lecturer at the University of Groningen. His research primarily focuses on European private law (especially European consumer law), fundamental rights and sustainability.

[1] For example, Xixian Xinyang Primary People’s Court of Henan Province (2017) Yu 1528 Civil-First No. 4405 (河南省信阳市息县人民法院(2017)豫1528民初4405号民事判决书); Suining Primary People’s Court of Hunan Province (2017) Xiang 0527 Civil-First No. 969 (湖南省绥宁县人民法院(2017)湘0527民初969民事判决书).

[2] Jing’an Primary People’s Court of Shanghai Municipality (2018) Hu 0106 Civil-First No. 3616 (上海市静安区人民法院(2018)沪0106民初3616号民事判决书).

[3] For example, Ziyang Intermediate People’s Court of Sichuan Province (2018) Chuan 20 Civil-Final No. 427 (四川省资阳市中级人民法院(2018)川20民终427号民事判决书).

[4] For example, Tai’an Intermediate People’s Court of Shandong Province (2019) Lu 09 Civil-Final No. 3147 (山东省泰安市中级人民法院(2019鲁09民终3147号民事判决书).

Making the Private Public: Regulating Content Moderation

22. December 2023
A paper by Baiyang Xiao
Capture of the video installation “Unerasable Characters II” by Winnie Soon: Drawing on the Weiboscope database, she designed software that visualizes Weibo posts that have been erased on a daily basis during the pandemic. Exhibit “Data Relations“, Australian Centre for Contemporary Art, Melbourne

Internet service providers (ISPs) globally are increasingly legally obliged to monitor and regulate content on their service. In general, such obligations may emanate from explicit legislative mandates, such as Article 17 of the EU’s Directive on Copyright in the Digital Single Market, or from the imposition of strict liability for user-generated content by judicial authorities, effectively requiring intermediaries to actively monitor and moderate illegal content to circumvent liability. China implemented a dual-track legal mechanism on content moderation that emphasizes the public and private distinction. Specifically, ISPs are exempted from monitoring obligations in private law, while public law explicitly imposes monitoring obligations for ISPs, requiring them to take on the role of gatekeepers who have a responsibility towards the public interest. This study aims to explain what legal measures China adopted to serve the needs of content control and compares the framework with the regulatory approach of the EU.

What is the current legal framework for content moderation?

On the one hand, the Chinese jurisprudence has reached consensus that the principle of prohibition on general monitoring obligations applies in private sphere and leaves certain room for monitoring obligations in cases of specific natures. In its authoritative interpretation of Article 1197 of the Civil Code, the Legislative Affairs Commission referred to international conventional practice and clarified that ‘ISPs that provide technical services are not subject to general monitoring obligations,’ but did not preclude the possibility of monitoring obligations of a specific nature. Moreover, the Supreme People’s Court (SPC) clarifies that the court shall not determine an ISP is at fault where it fails to conduct proactive monitoring regarding a user’s infringement. In another Guiding Opinion, the SPC explicitly stated that ‘[courts shall] not impose a general obligation of prior review and a relatively high degree of duty of care upon the ISPs […].’

On the other hand, under public law, ISPs are required to review, monitor, and inspect information prohibited from being disseminated by laws and administrative regulations. When they ‘discover’ illegal content disseminated on their services, they must fulfil their proactive monitoring obligations by taking certain measures to prevent the transmission of such content. In addition to technical filtering mechanisms, platforms must also employ trained personnel to conduct human reviews of uploaded content. Otherwise, they will face penalties for their failure to perform their monitoring obligations. Unsurprisingly, the scope of monitoring can be considered comprehensive, as the ISPs are required to monitor almost all online content in accordance with various laws, administrative regulations, and even ‘relevant state provisions.’

How did online platforms implement legal rules in practice?

Law enforcement agencies fully utilize the advantages of platforms in discovering, identifying, and handling illegal content, and entrust ISPs to proactively engage in collateral censorship through private ordering. Thus, platforms’ house rules act as a critical supplement to state legislation by restricting otherwise-legal content or activities. In practice, these house rules classify all the illegal, harmful and undesirable content as prohibited content, and ignore the distinction between prohibited content and undesirable content made in relevant administrative regulations. In fact, major Chinese platforms adopted a crafty approach by introducing more blurred and abstract concepts to explain the ambiguous language of legislation, thus worsening the predictability of house rules. Although commentators voice concerns about legal uncertainty deriving from ambiguous rules, the platforms frame them as ‘flexible’. With their expansive monitoring and an erratic and opaque decision-making process, mega platforms exercise much stronger control over the flow of information, regardless of more serious consequences that impact the fundamental rights of users.

On the one hand, in the broad T&Cs and Community Guidelines, a vast space is left for platforms to apply alternative mechanisms, which are often not transparent and not subject to external oversight, to moderate content. Within this frame, platforms adopt diverse measures to conduct content moderation, both preventive (ex-ante) and reactive (ex-post). Reactive measures such as region- and service-specific methods are employed to control the availability, visibility and accessibility of certain content, or restrict users’ ability to provide information, independently or in response to government mandates. Meanwhile, preventive content moderation, which aims to make content contingent on the prior consent of a designated public authority, usually takes the form of automated content filtering of unpublished content.

On the other hand, platforms extend the scope of content moderation with the substantial quasi-legislative power obtained from house rules. By introducing more uncertain concepts to elaborate on vague terms in public law, the predictability and transparency of house rules are further diminished. Under this parental state, other types of political heterodox speeches, legal speeches that violate widely held social norms and moral beliefs, or infrastructural values of platforms, are removed or blocked in practice.

When lacking systematic and institutional constraints, the constantly expanding content moderation practices are characterized by being quasi-legislative (T&Cs and Community Guidelines), quasi-executing (content moderation measures), and quasi-judicial (determination of illegal and harmful). Evidently, under the top-down collateral censorship mechanism, platforms try to adopt various stricter content moderation measures and further extend the scope of monitoring to eliminate potential uncertainties and risks. Such practices can further empower platforms, giving them greater control in terms of moderation technologies used and the making of norms for acceptable online content.

How did Chinese courts interpret content moderation in judicial practice?

Public law monitoring obligations encompass not only content that violates public law norms, but also content that violates private law norms. In judicial practice, the public law monitoring obligation is often interpreted as a duty of care.1 Courts thus deem that ISPs failed to fulfil their duty of care where they failed to perform public law monitoring obligations against online illegal content. The logic behind such legal reasoning indicates that, by virtue of their public law monitoring obligation, ISPs are presumed to have a corresponding monitoring obligation under private law. More importantly, courts implied that platforms should bear civil liability if they failed to perform their public law monitoring obligations.

In addition, fulfilling public law monitoring obligations may expose platforms to civil liability due to their actual knowledge of the existence of infringing content. In other cases, courts ruled that platforms risk losing their safe harbor protection if they take proactive measures to address illegal and harmful content.2 In certain exceptional circumstances, the level of duty of care for ISPs may be significantly elevated. For example, an ISP providing information storage space services is deemed to have constructive knowledge of a user’s infringement of the right of communication to the public on information networks, if the ISP substantially accesses the disputed content of popular movies and TV series or establishes a dedicated ranking for them on its own initiative. The legal reasoning in this decision implies that, since ISPs must fulfil their public law monitoring obligations, they should also be aware of potential copyright infringement within the content being monitored. 

Therefore, platforms face a dilemma: If they fail to fulfil their monitoring obligation set by public law, they are deemed to have committed an act that contributes to the occurrence of the infringement, for which they must assume administrative liability; at the same time, they need to conduct ex ante monitoring of content uploaded in order to fulfil the monitoring obligation set by public law, which means they have had constructive knowledge of the existence of infringing content and thus may bear a higher level of duty of care. Where infringing content appears on a platform, it is likely that the platform will be deemed to have knowledge regarding the existence of such content and thus be held liable. Particularly, law enforcement agencies are prone to fall into ‘results-oriented’ reasoning by presuming that ISPs failed to fulfil monitoring obligations.

Overall, the regulation of content moderation serves as a ‘policy lever’ used by public authorities to obtain control over the big tech powerhouses. At the same time, platforms are vested with a potent power, which has substantially mitigated not only illicit but also ‘lawful but awful’ online content to a large extent. However, this has accelerated the fragmentation of online law enforcement and generated the need for algorithmic recommendation and filtering systems. In the long run, excessively vague rules, inconsistent enforcement, paired with excessive reliance on algorithms will render the expansive collateral censorship of online content an inevitable failure, since it burdens ISPs with significant compliance costs and impacts freedom of expression, access to information and media pluralism at large.

The paperMaking the private public: Regulating content moderation under Chinese lawwas published in the Computer Law & Security Review. Baiyang Xiao is a PhD Candidate from University of Szeged, Institute of Comparative Law and Legal Theory. He is also a scholarship holder at the Max Planck Institute for Innovation and Competition. His main research interest is copyright law, intermediary liability, and AI governance in comparative perspectives.

  1. E.g. (2004)苏中民三初字第098号民事判决书; (2008)穗中法民三终字第119号民事判决书 ↩︎
  2.  E.g. (2021)京73民终220号民事判决书; (2019)京0491民初16240号民事判决书 ↩︎

Evolution of China’s SOE Reforms: Grasping the Large and Releasing the Small?

8. December 2023
A working paper by Tianqi Gu
Weng Jieming is the Vice-Chairman of China’s State-owned Assets Supervision and Administration Commission (SASAC), the institution overseeing the 97 companies owned by China’s central government. World Economic Forum Annual Meeting” by World Economic Forum is licensed under CC BY-NC-SA 2.0.

Since the turn of the 21st century, China has experienced a tremendous economic rise and made significant progress in transitioning to a market economy. State-owned enterprise (SOE) reforms commenced in 1978, however, the country is still home to more than 300,000 SOEs that continue to play a dominant role in the national economy. China’s chronically large state economy prompts the question: What is the current plan of the Chinese government for the country’s state-owned economy? This paper examines the design of the latest SOE reform policies in light of their historical development to find answers, thereby laying some groundwork for understanding Chinese SOEs’ increasing engagement in international commercial activities.

To some extent, China’s Constitution provides clarification: it reads that ‘the state shall uphold a fundamental economic system under which public ownership is the mainstay’ (Article 6) and ‘the state economy shall be the leading force in the national economy’ (Article 7). The state economy’s primacy in China’s national economy is also enshrined in the Chinese Communist Party (CCP) ideology and has been stressed consistently by its leaders—In 2020, President Xi publicly reiterated the paramount significance of SOEs, describing them as the economic and political foundation that support China’s socialist political regime. Accordingly, in practice, Chinese SOEs have played an important role as the primary implementors of government directives and national policies in support of China’s social stability and strategic development, as evidenced by their policy-driven contributions to overcome the COVID-19 pandemic.

Given the entrenched ideological, statutory, and practical significance of SOEs in China’s political-economic system, it is implausible that China pursued or pursues genuine privatisation of its state economy. A first privatisation move, in the second round of SOE reforms (1993-2002), consisted of the ‘Grasp the Large and Release the Small’ programme. It was promoted in the context of the Chinese state economy’s overall desperation caused by SOEs’ disastrous performance in market competition following the 1978 Reform and Opening up. The essence of the programme can be summarised as partial marketisation—preserving the critical industries (i.e., industries essential for national growth and social stability) for continued monopolisation by SOEs and allowing various ownership forms and the privatisation of SOEs that lost grounds to non-state competitors. The programme nearly halved the number of Chinese SOEs and significantly contributed to the general resurgence of China’s state sector around 2008. Substantially, it strengthened rather than weaken China’s state economy and reshaped China’s state economy landscape into a dichotomous system, in which SOEs monopolise in critical industries and compete with non-state firms in others.

Upon assuming the presidency in 2012, President Xi Jinping launched the fourth round of SOE reforms, declaring that China would continue and enhance its reliance on the state economy to advance national development. As a result, the latest round of SOE reforms has continued the core thinking of ‘Grasp the Large and Release the Small’, albeit with a varied policy tailored to the altered foreign and domestic situations, such as the rising Sino-Western tensions and the severe production overcapacity in heavy industries.

The ongoing reform to restructure the state economy consists of massive government-orchestrated mergers between SOEs at the central level (i.e., SOEs owned and supervised by the central government), while preserving critical industries for State-sanctioned SOE monopolies. Simultaneously, the Chinese government has put forth a series of specialised slim-down programmes primarily targeting unprofitable SOEs and SOEs operating in non-critical industries. These programmes aim to boost overall operational efficiency of the state economy and foster robust competition among all forms of ownership in the non-critical industries.

The restructuring reform has proven fruitful: the ‘Grasp the Large’ merger strategy has created 20 world champions in critical industries, including China Baowu Steel Group and China Minmetals Group (ranked 44th and 65th in the 2023 Fortune Global 500, respectively). The strategy has also helped the Chinese government get rid of 14,000 undesired SOEs and enhance the overall financial performance of state economy. However, in the context of the rising Sino-western geopolitical tensions and the Xi Jinping administration’s assertive foreign policies, China’s efforts to reform its state economy following the ‘Grasp the Large and Release the Small’ highlight the likelihood that the reform would facilitate Beijing’s centralised control over a handful of SOE monopolies. This might further existing scepticism that Chinese major SOEs’ international commercial activities serve policy objectives rather than purely commercial goals. This scepticism may hinder the legitimate overseas expansion of Chinese SOEs through, for instance, the enhanced inbound foreign investment screening mechanisms that most developed countries have adopted. This could also make it more difficult for China to normalise relations with old-day economic partners like the UK, EU and Australia.

The working paper “The Latest Round of China’s State-owned Enterprise Reforms: Grasping the Large and Releasing the Small?” can be accessed here.

Tianqi Gu is a PhD candidate at the Sydney Law School. She holds a Bachelor of Laws from Dalian Maritime University (China), a Master of Laws (LL.M) in International Commercial Law from University College London, and a second LL.M from the University of Sydney. Tianqi is the holder of Australian Government Research Training Program Scholarship and Chinese National Scholarship. Her research focuses on Chinese SOE investments in Australia in the context of China’s SOE reforms and Australia’s foreign investment review framework and international investment law. Tianqi Gu can be reached at

Rule of Law in China: Stages in the 40-year Journey

11. November 2023
A new paper by Ruiping Ye

In the past 40 odd years, China has experienced sweeping changes on its legal scene. After the denunciation of law and the destruction of legal institutions during the Cultural Revolution, the country set out to rebuild a legal system when the so-called “decade of catastrophe” came to an end. Since then, legislation has proliferated with law drafting skills becoming increasingly sophisticated, courts adjudicating tens of millions cases annually, and the number of legal practitioners growing from 12,000 in 1986 to more than 651,600 in 2022. The concept of yifa zhiguo (依法治国, literally ruling the country according to the law) was formally propounded in 1997. By 1999, the Constitution was amended to declare that “The People’s Republic of China implements yifa zhiguo and builds a socialist fazhi (法治, rule of law) state”. In 2017, the ruling Communist Party of China established a leadership group on comprehensively advancing yifa zhiguo. A year later, a dedicated yifa zhiguo Committee was established within the Party.

What do yifa zhiguo and fazhi mean in the Chinese context? What do the developments in China’s legal arena signify in terms of China’s progress in achieving the rule of law? Looking past the growing body of legislation and the expanding legal profession, the development of law in China since Reform and Opening began in 1978 has travelled through three stages, from laying down rule of law principles as the foundation, to focusing on ruling by law, and finally current efforts to use law as a means of legitimising the Party’s rule and government actions.

In the early 1980s, Chinese legal scholars and policymakers searched for a governance model that would be different from that of the Mao era. They debated about the rule of law and the rule of man. While much of the discourse did not go beyond the traditional tropes of Confucian “rule of (sage) man” on one side and legalist “rule by law” on the other, some scholars introduced and advocated for principles of the Western rule of law, such as the separation of powers, the supremacy of law, equality before the law and Nulla poena sine lege (no penalty without law). The adoption of fazhi (法制, literally a system of law, legal system), instead of fazhi (法治, rule of law), was a compromise between the two broad camps of “rule by both law and man” and “rule of law”. Considering that at that point in time the country was standing on the rubble of the Cultural Revolution, it was probably pragmatic to prioritise building a system of law, which would provide a tangible framework for the rule of law.

Worth noting is that, despite the use of the term fazhi (法制, legal system) instead of fazhi (法治, rule of law), the 3rd plenary session of the 11th Central Committee of the Communist Party in 1978 and the 1982 Constitution adopted key principles of the rule of law. The 3rd plenary session vowed to “make law stable, consistent and with great authority”, to ensure compliance with law, due independence of courts, and equality of all persons under the law. The 1982 Constitution enshrines all the above principles – the supremacy of the law, equality before the law and judicial independence. The constitutional provisions were skeletal, and the Constitution was (and still is) more of a political manifesto than an enforceable piece of legislation, but the provisions manifested the government’s commitment to the key principles, enshrined in the country’s supreme legal document. A blueprint was drawn, allowing future developments to gradually realize the rule of law.   

Post-1989 China curbed the tendency to “Westernise” and reiterated the four cardinal principles for ruling the country, namely socialism, the dictatorship of the proletariat, the leadership of the Party, as well as Marxism, Leninism and Mao Zedong Thought. The Party searched for a theoretical development for the role of law, and the idea of yifa zhiguo was introduced. The 1999 amendment to the Constitution declared the goal of building a “socialist fazhi (法治, rule of law) state”. The two Chinese characters for fazhi (法治) together mean “law governs”, an essence of the rule of law. The official Chinese translation of the phrase is “socialist rule of law”.

Fazhi is also a shorthand reference to yifa zhiguo. The term yifa zhiguo is relatively straightforward; it has usually been translated as “governing the country according to law” or “law-based governance”.  A series of laws were passed to restrict government’s administrative powers, including allowing litigation against certain government actions, imposing procedural requirements and limits on administrative penalties and licencing, and providing for state compensation. These laws aimed to correct and improve previous practices that often had no legal basis, yet it was the bureaucracy and not the ruling Party that was subject to the law. At the same time, the idea of yide zhiguo (以德治国, ruling the country by virtue/morality) was highlighted as a principle parallel to yifa zhiguo. Therefore, socialist rule of law was in essence rule by law, wherein law was but one instrument to govern the country.  

Since the 2010s, China’s legal reform intensified, as the Party devoted more energy to “construct a socialist fazhi system with Chinese characteristics and to construct a socialist fazhi state”. The Party has become more visibly active in state affairs, increasingly invoking the yifa zhiguo narrative. Significantly, the leadership of the Party was written into the Constitution in 2018, and it has since appeared in a number of amended or new statutes. The 2018 amendment to the 1982 Constitution therefore enshrines the Party as the legitimate ruler of the country and creates the legal basis for its dominant position. Another important change was the legalisation of previously unlawful means of restricting personal freedom. Most notably, the often-criticised shuanggui (双规, two specifics) which had been used by the Party’s disciplinary committee to detain suspected corrupt officials and witnesses extra-legally, was authorised by the Supervision Law of 2018.

China’s 40 odd years of legal development started with aspiration and foundational principles for the rule of law. Post-1989 it developed to become rule by law, and eventually turned towards using law to legally sanction the Party’s rule.

The article “Shifting Meanings of Fazhi and China’s Journal toward Socialist Rule of Law” (draft available here) was published in the International Journal of Constitutional Law, Vol. 19 Issue 5. Ruiping Ye is a Senior Lecturer in law at Victoria University of Wellington, New Zealand. Her research interests lie in the areas of comparative law, the Chinese legal system, law and culture, land law and aboriginal land tenure.

Jerome A. Cohen on China in International Law and its ‘Rule by Law’

22. October 2023
Laura Formichella and Enrico Toti interviewed Jerome A. Cohen

Professor Cohen, more than forty years have passed since the book you edited Contemporary Chinese Law: Research Problems and Perspective, it was exactly 1970. The four hundred pages volume contains important contributions on themes concerning Chinese law. Specifically, your paper “Chinese Attitudes Toward International Law – and Our Own” reconstructs the theme and provides significant reflections and synthesis on the topic. From the 1970s to today, how have Chinese attitudes toward International Law changed?

I started to follow China’s approach toward international law just when the Cultural Revolution began. Changes in the theory and practice of international law in China since 1966 have led to an unthinkable development, of which we have only gradually become aware.
Yet the PRC [People’s Republic of China] had demonstrated a revolutionary outlook toward the international community from the time of its establishment in 1949. This was in obvious response to the world community’s rejection of China’s new revolutionary government. If the United States had recognized and established diplomatic relations with the PRC from the outset of the communist regime, we might have moderated its hostility. For our own domestic political reasons, however, we did not. The United States also opposed the PRC‘s entry into the United Nations under any formula. Thus, the United Nations rejected the PRC as the lawful representative of the Chinese people, despite its control of the Mainland and despite the fact that the ROC [Republic of China] authorities had fled from Mainland China to Taiwan. The government of the ROC held onto the Chinese seat in both the Security Council and the General Assembly, even though it lost the civil war. Moreover, immediately after the United Nations rejected the PRC, when the United States decided to pursue the retreating North Korean forces into North Korea and possibly eliminate the buffer state on China’s border, the entry of “Chinese People’s Volunteers” into the Korean conflict served to enhance the PRC’s revolutionary rhetoric against the existing world organization. The United Nations, not only the United States, became China’s enemy in Korea.
Even after the Korean Armistice in 1953 and the PRC’s adoption of “the five principles of peaceful coexistence” and a more moderate foreign policy, the UN continued its exclusion of Beijing and Chairman Mao did not abandon the hope of establishing an international organization of developing countries that might rival the United Nations. China’s distrust of the Western-controlled United Nations was matched by its distrust of the international law reflected in UN practice. Moreover, most major Western countries still refused to recognize and establish bilateral diplomatic relations with Beijing. In that era, PRC views of international law were shaped by the Soviet Union’s experts, just as China’s domestic legal developments followed the Soviet legal model until the Sino-Soviet split of the late 1950s and the radicalization of the
PRC’s domestic legal system.

The most distinctive of the theories of international law imported from the Soviet Union stated that there were really three types of international law. There was the bourgeois view of international law, to regulate relations among bourgeois states, there was the international law to govern relations between the socialist world and the bourgeois world, and then, there was socialist international law, to govern relations among the socialist states.

Certainly, China’s leaders had good reasons to be cynical about American assertions of international law. During the PRC’s first decade, the United States took many illegitimate, covert actions against China in an effort to undermine the new regime. For example, it flew non-communist Chinese and American CIA agents into China to help organize unrest. Also, after training expatriate Tibetans in mountain warfare in Colorado, it dropped them back into their homeland to stoke the fires of resistance.
In mid-1957, China entered a more radical phase at home and abroad, one that culminated in the chaos of the Cultural Revolution’s earliest years, 1966 to 1969, and resulted in the alienation of virtually every significant country in the world. In that period, China’s practice of international law reached its nadir, especially with respect to violating the rights of foreigners and foreign diplomats in China.
Fortunately, such institutional and ideological non-conformity began to ebb with the end of the most violent portion of the Cultural Revolution in the autumn of 1969, when Beijing began a renewed effort to enter the UN and to complete its normalization of bilateral relations with the major powers. Yet despite Canada’s groundbreaking establishment of diplomatic relations with Beijing in 1970 and the PRC’s UN entry the following year, China’s leaders, still in the midst of fierce internal political struggles in the waning years of Chairman Mao’s rule, revealed a continuing mistrust of UN institutions and commonly understood international law.
A personal anecdote illustrates this point. On June 16, 1972, I had the good fortune to have dinner with Premier Zhou Enlai. I sat on his left and John Fairbank, the great historian of China, sat on his right.
We were both from Harvard and had been members of a Harvard-MIT faculty group of China specialists who, immediately after Richard Nixon’s 1968 election, had given the President-elect and his new assistant, our erstwhile colleague Henry Kissinger, a memorandum proposing steps towards a new American policy toward China. Since the first half of this session seemed to go well while reviewing Sino-American relations and the Vietnam war, I decided to ask about the Chinese Government’s current attitude toward international law. I introduced the topic by suggesting that the PRC, having just become a prominent participant in the UN with a permanent, veto-wielding seat in the Security Council, should also consider sending an expert to serve as a judge on the International Court of Justice (ICJ) in the Hague. That provoked the loud laughter of all the Chinese officials, who plainly thought it a ludicrous proposal. Why, they wondered, should the PRC want to assume a seat on the fifteen-member ICJ, where they were sure most judges would be prejudiced against an Asian, Communist state and would disagree with its views? Moreover, as has subsequently become even clearer, the PRC has traditionally mistrusted settling international disputes through adjudication, arbitration and other forms of third-party decision-making. Despite China’s millennial practice of mediating domestic disputes, even mediation’s more limited third-party participation in international dispute resolution has been shunned by Beijing. I held my ground, arguing that, for permanent members of the Security Council, an ICJ judgeship is one of the perquisites of being a world power and that the PRC should not pass up the opportunity. It took more than another decade before Beijing finally posted to the ICJ the first of what has become a succession of very well-qualified Chinese judges. However, the process of PRC participation in international adjudication is not complete. Like the United States, China has not accepted the compulsory jurisdiction of the ICJ, nor has it accepted participation in the relatively new International Criminal Court, although it has placed capable representatives on certain ad hoc international criminal tribunals.
Moreover, Beijing generally insisted that countries that wished to establish diplomatic relations with it had to acknowledge, to varying extents, that Taiwan should be deemed to be part of China. The PRC’s October 1971 replacement of Taiwan in the UN was the dramatic moment, of course, and would not have been possible if Beijing had not assured all and sundry, at least implicitly, that it would henceforth observe universal standards of international law and practice. Beijing wanted to finally get inside the big tent, and to do so it had to indicate that it would play by the rules.

Other countries had decided that the only way to get China to play by the rules was to finally admit it into the big tent. Thus, the PRC began the process of moderating its statements and its practices relating to international law, and trying not only to become a participant in, but also a shaper of, international law in various forums.

The book that Hungdah Chiu and I did, “People’s China and International Law”, reviews the earliest years of this crucial history. To be sure, a big country with the PRC’s radical tradition could not fundamentally change direction in a day, and, as the following story suggests, the difficulties encountered in the process should not be underestimated.
Finally, at least until the mid-1970s, the impact of the Cultural Revolution on China’s educational, research and bureaucratic systems had left many PRC diplomats and officials ill-equipped to cope with the legal demands of the new situation. I remember another personal anecdote: in 1973, the PRC’s permanent representative to the UN, the very able Ambassador Huang Hua, told me how embarrassing it was that, for lack of a qualified official to fill Beijing’s seat on the UN General Assembly’s Sixth Committee, which is responsible for legal affairs, he had to ask his wife, who was only trained in economics, to do so!
Almost fifty years later, the situation is very different. The PRC has developed impressive expertise in the field of public international law. Its law schools and political science departments offer detailed instruction in the subject by well-trained specialists, many of whom have done advanced study in the world’s leading academic institutions and some of whom have been invited to teach there. These scholars and their colleagues at the country’s many research and policy organizations often publish sophisticated analyses in books, academic journals and media essays, not only in the Chinese language but also in English and other foreign languages, and are active participants in non-governmental international law conferences and dialogues. In addition, they frequently provide advice to various departments of the Chinese government.

Contemporary PRC officials and diplomats are products of this educational system and have developed their legal expertise in sundry areas of international responsibility. This is apparent from their activities while representing their government in many international fora as well as while posted at home to the Law and Treaty Division and other bureaus of the Ministry of Foreign Affairs as well as other agencies within the government, including those that deal with foreign economic and business issues. Some also have honed their credentials while employees of the UN or other public and private international organizations.
Together, this impressive and increasingly large group of specialists brings to bear an important body of international legal knowledge and a potential for acting as a restraining influence upon the exercise of untrammeled official power. Of course, as in the United States and other countries, these experts in and out of government often disagree among themselves about the proper application of international law to inevitably complex and controversial problems, and in any event their views are often overridden by more powerful official decisionmakers who may not be attuned to international legal considerations or who give greater weight to political, military, economic and other factors.
Because of the PRC’s unusually repressive domestic political climate during the Xi Jinping years, to an unquantifiable extent the opportunities for Chinese international law experts to influence government policies and actions are undoubtedly not as great as those enjoyed by counterparts in foreign democracies. Certainly, discretion is the better part of valor when Chinese experts state their views in public. To be sure, there is greater scope for expression when advocating a future course than when criticizing decisions already taken. Yet, Chinese colleagues tell me that today, whether as official or consultant, one has to tread especially carefully when offering opinions, even within the confidential confines of government discussions prior to the making of decisions.

Professor Cohen, a second question on an equally important topic which is key to understanding many other themes. How is the World Trade Organization, as an international forum that seeks to provide a single platform for member states to negotiate bilaterally and multilaterally and aims to foster the spirit of a new international legal and economic order, understood and utilized in China?

Those looking for evidence to encourage the belief that the PRC will increasingly comply with the current rules-based international order usually take heart from its participation in the World Trade Organization (WTO). That participation was preceded by both a long period of intense negotiations concerning the extraordinarily demanding terms imposed upon Beijing’s entry and Beijing’s simultaneous prodigious effort to revamp its laws, regulations, and institutions in order to comply with those evolving terms.
Since its entry in 2001, Beijing has become an accepting and active member of the WTO system, at least with respect to dispute resolution. Those who, because of Beijing’s long-standing aversion to the use of arbitration to settle international disputes between governments, predicted that the PRC would never take part in the WTO’s formal dispute resolution processes have been proved wrong. After a few years of learning the procedures and substance of WTO arbitration, the PRC has become a vibrant participant in the system. It wins some cases and loses others but plays the game! To be sure, the enthusiasm of Chinese spokespersons for the process appears to have diminished a bit of late, and they continue to claim that Western, especially American, experts frequently “outlawyer” them. Yet, ironically, it has been the United States Government under President Trump that has recently posed obstacles to WTO arbitration by opposing the appointment of new appellate arbitrators.
The PRC has also shown signs of warily moving toward participation in the World Bank’s institution for the arbitration of disputes between foreign investors and host governments – the International Center for the Settlement of Investment Disputes (ICSID). And, of course, Beijing, in addition to its court system, has long supported a vast and complex network of domestic arbitration institutions for dealing with trade, investment and other commercial legal disputes, including those directly and indirectly involving foreign business. The PRC’s recent successful establishment of the multilateral Asian Infrastructure Investment Bank (AIIB), a welcome supplement and possible rival to the World Bank, should also add to Chinese sophistication and support for international dispute resolution. More uncertain and controversial are Beijing’s many ambitious bilateral One Belt, One Road (OBOR) projects, also grouped under the name Belt and Road Initiative (BRI), which represent a more obviously self-serving political-economic strategy. The PRC evidently hopes that the BRI will benefit from the services of new Chinese dispute settlement institutions, such as Beijing’s recently-established international commercial courts.
As Susan Finder has written, this appears to be part of an effort to «move the locus of China-related dispute resolution from London and other centers in Europe (or elsewhere) to China, where Chinese parties will encounter a more familiar dispute resolution system». It would be surprising, however, if many of the PRC’s BRI partners with significant bargaining power accept dispute resolution in China instead of in more neutral I, if not their own. Certainly, the PRC, as soon as it established a basic environment for attracting foreign direct investors, insisted that they settle relevant disputes in China rather than in their homeland. Many topics deserve scrutiny, including not only the PRC’s respect for multilateral treaties other than the WTO and UNCLOS agreements, such as those international labor treaties that it has selectively chosen to adopt, but also its adherence to bilateral agreements. The latter topic often receives less attention than the former.

In some cases where bilateral agreements have allegedly been more informally or non-transparently made, it is not possible to confirm either the details of the alleged commitment or the basis for the claim that the PRC has failed to honor it. One example (from outside the area of civil and political rights) is the charge by the United States Government that in 2015 Xi Jinping promised not to militarize contested islands in the South China Sea, yet nevertheless proceeded to quietly do so.

Another is the American charge that, also in 2015, the two governments agreed not to engage in cyberhacking of the other side’s commercial enterprises but that Beijing, after briefly suspending such attacks, subsequently resumed them. In some cases where China has formally committed to bilateral agreements, its implementation has been questionable. An even more recent example of Beijing’s highhandedness In a bilateral consular dispute occurred when in late 2018 it famously detained two Canadian nationals in apparent retaliation for Canada’s cooperation with an American request to extradite a major Chinese business executive. The hapless detainees, seemingly held as hostages more than legitimately suspected criminals, were not given the full protections prescribed in the Sino-Canadian consular agreement.
Although minimal consular access to each of them was belatedly permitted, they both continued to be kept incommunicado and denied access to required legal assistance, ostensibly on the basis of Ministry of State Security suspicion that they represented threats to national security. They were also reportedly subjected to all-night lighting in their detention cells. It is unfortunate that, following their ultimate release from illegitimate detention, these detainees have not responded to calls for them to reveal further details of their suffering.
Since the end of the 19th century, when China began its process of modernization, the Western expression “rule of law”, in Chinese 法制 fǎzhì, has continued to spread among the Chinese and in academic circles. There is now a strong desire for the rule of law to take hold and there remain many expectations.

However, China’s Five-Year Plan for the Construction of the Rule of Law, between 2020-2025, contains a notion that departs from that conceived by the United Nations, the United States, and the European Union, particularly with regard to this Communist regime’s rejection of the separation of powers and the independence of the judiciary and its completely different conception of human rights and democracy. On this issue too, we would like to hear your views. Let us go to the heart of the matter.

The subject is topical and of great interest. I have spoken on numerous occasions on this sensitive issue and have been able to note the difficulty of Chinese scholars to make analyses free from the pressures of the Communist Party. Happily, I was surprised and pleased by the formidable essay of Professor Ruiping Ye, when I was invited by the International Journal of Constitutional Law to comment on her disquisition (our blogpost). She is not based in the PRC but in the law faculty of New Zealand’s Victoria University of Wellington and is therefore literally remote from the conflicting pressures to which Chinese scholars of constitutional law are generally subject. Based on my knowledge, I can attest the accuracy of her characterizations and analysis.
The periodization that the author Imposes upon the post-Cultural Revolution PRC determination to replace Chairman Mao’s cruel chaos with an appropriate legal system seems correct. The 1978-89 era was an age of great, groping, intellectual ferment. There was a broadly shared felt, if inchoate, need to work toward the goal of subjecting “government,” including the Communist Party that controlled the government, to the law that was gradually being enacted and that would embrace concepts such as “equality before the law” and “judicial independence”.
Even after the political fall of the reformer Hu Yaobang as formal Party leader, his successor was also a reformer, the able and dynamic Zhao Ziyang, who continued the vaguely articulated quest to find a way to limit the power of the Party and produce “government under law”. Zhao proposed disentangling the Party from day-to-day state operations, confining it to policy formulation, selection of personnel, and other general matters. If successful, this effort would have developed the rule of law in China.
As Professor Ye recognizes, «Given that China was at the beginning of rebuilding a legal system, fundamental rule of law principles could not be realized overnight, but the blueprint was drawn and the foundation was laid, upon which details could be added and structures could be built».
Sadly, this was not to happen. The military massacre of at least hundreds of peaceful protesters that took place on June 3-4, 1989 near Beijing’s Tiananmen Square ended the possible reform era. Threatened with popular overthrow, the Party’s suddenly revamped leadership, after actually placing the newly-deposed Zhao Ziyang under house arrest for what would be the last sixteen years of his life, promptly abandoned
its flirtation with Westernized “government under law”. In its stead, it chose what may be encapsulated as “law under government”, a path much more congenial to the imperial traditions of the “Central Realm”.
Indeed, there is a marked similarity between the Party-state’s enthusiastic embrace of “rule BY law” and the legalist philosophy of government adopted by China’s first emperor. Over two thousand years ago, his Qin dynasty unified the country through uniform application of laws authorizing unchallengeable harsh punishments.

Ironically, there was during this second post-1978 period, which can be seen as lasting roughly from mid-1989 until the 2012 ascension of Xi Jinping as Party General Secretary, an enormous amount of apparent legal progress. It featured constitutional amendments, legislation on many topics including administrative law and government information disclosure authorizing the right to sue officials in circumscribed circumstances, other procedural and institutional improvements, development of an increasingly sophisticated judiciary and legal profession, and a huge expansion in the number of law schools and university legal departments. The prime motivation for these ambitious achievements was the Party leadership’s desire to successfully develop a “socialist market economy” and reap the benefits of cooperation with the world community, as symbolized by PRC acceptance into the World Trade Organization.

Yet this turn toward the new and attractive slogan of “ruling the country according to law” was in fact a betrayal of the hopes for a genuine “rule of law”. Some of these achievements did put certain restraints on the conduct of the official government bureaucracy, as imperial law did too, but in neither case did law restrain the ruling power – in our day the Party leadership and, until the twentieth century, the emperor.
Another noteworthy point is the ostensible revival of respect for Confucian philosophy. Until recent years, the country’s Communist revolutionaries, like other twentieth-century Chinese radicals and reformers, condemned Confucius and his disciples as the fount of the “feudalism” that had consigned the once great imperial “Central Realm” to the “century of humiliation” that began, according to Party scriptures, with the Opium War of 1839 and lasted until Communist “Liberation” in 1949. Recognizing from historical experience that the Chinese, like others, are best governed not by coercion alone but by the ruler’s parallel resort to ideology and moral suasion, and seeking to respond to the nation’s sagging faith in Communism, the Party has lately sought to broaden its appeal by invoking a selective version of Confucianism to serve, like the legal system, as another instrument of political control.
The third and present period in the post-1978 contest between “rule of law” and “rule by law” began, as Professor Ye notes, just over a decade ago and moved into high gear in 2012 when Xi Jinping assumed Party leadership and shortly thereafter also became both President of the state and Chairman of the National Military Commission. Although the current era might be characterized as essentially a further application of the principle of “governing according to law”, i.e. “rule by law,” that dominated the second stage, the recent changes wrought in the name of “doing everything through law” have been so distinctive as to warrant separate attention.
Surely this is Xi Jinping’s attempt to complete the process, already well under way, of cloaking Party monopolization of government power with the mantle of legality. It is, of course, a far cry – indeed at the opposite end of the spectrum – from the hope of the long-deposed Zhao Ziyang to largely separate the Party from the government. Three bold constitutional amendments have brought the Party closer to integration with, and almost congruence with, the government than ever before.
The most publicity-generating amendment was the abolition of the two-term limit for the office of the nation’s President. The presidency has gradually come to rival the prestige, if not the power, of the Party General Secretary, for which there is no term limit under Party rules.
This amendment legally formalized congruence at the very top of the Party, government, and military hierarchies.
To ensure legal confirmation of the principle of Party control over the government, the Constitution was further amended to insert that principle into the document’s body, rather than allowing it to rest, as before, in the oft-perceived ambiguity of the Constitution’s preface.
And, to leave no doubt that this principle would be implemented more thoroughly than ever, the third constitutional amendment established a fourth branch of government under the National People’s Congress (NPC). It was designed to consolidate in real life the Party’s control over the other three branches and even over the theoretically all-powerful NPC. The new National Supervisory Commission (NSC) is the most significant innovation yet made in the Soviet government model imported from the late USSR by all other “socialist” states, past and present. It has been endowed with the power to coerce not only all of the Party’s 96 million members but all public officials and others who exercise public functions broadly construed. The NSC builds upon, and shares offices, personnel, and practices with, the Party’s legally unauthorized “discipline and inspection” system, which has played a key role in enforcing the Party’s will among Party members through surveillance, incommunicado detention, and torture so effectively that many targets committed suicide after being summoned. The NSC is considered in fact to be more powerful than the other, pre-existing branches of government – the executive branch including the public security force, the procuracy or prosecution office, and certainly the courts. Although nominally required to report to the NPC like the other branches, the NSC, as the Party’s key legallyauthorized official suppressor of not only corruption but also violations of Party discipline and state law in any respects, is widely thought to be more powerful in affecting individuals and practical affairs than even the NPC and its staff.

In these circumstances, it is easy to conclude that the Party has obliterated prospects for the “rule of law” even while endlessly hijacking its name in order to impose “rule by law.”

How long is the current era likely to endure?

The circumstances surrounding the decisions of Deng Xiaoping to end Chairman Mao’s “class struggle” in 1978 and of Chiang Kaishek’s heirs to peacefully democratize his Leninist-type totalitarian regime on Taiwan during the decade beginning 1987 were very different from those that are likely to prevail for the foreseeable future in twenty-first century China. Yet history is notoriously adventitious, China’s progress under Communism has witnessed many swings of the pendulum, and potential “revolutionary successors” to the ill-fated Zhao Ziyang, prepared to pursue a liberalizing path, amply exist among today’s dissatisfied but suppressed Party elite.

This interview is a part of a volume (in Italian) published by Edizione Scientifiche Italiane and available for purchase here.

Laura Formichella teaches Chinese law at Tor Vergata University of Rome, Law School. She obtained her PhD with a thesis titled “Sistema giuridico romanistico. Unificazione del diritto e diritto dell’integrazione” from Tor Vergata University, where she is a researcher, spending long periods of study at China University of Political Science and Law in Beijing and other Chinese universities. She is the author and editor of numerous publications on Chinese Law and translations into Italian of the most important laws of the PRC. She has participated in numerous national and international conferences as invited or plenary speaker.

Enrico Toti teaches Chinese law at Roma Tre Law school. He obtained his PhD from Tor Vergata University, spending long periods of study and research at the China University of Political Science and Law in Beijing and other Chinese universities. In 2021 he published the monograph Diritto cinese dei contratti e Sistema giuridico romanistica. Tra legge e dottrina. He is the author and editor of numerous publications on Chinese Law and translations into Italian of the most important laws applicable in the PRC and founder of the website He is Visiting Professor at the School of Law of the Shanghai International Studies University.

Navigating Stricter Data Privacy Rules for Cross-Border Data Transfers With China

3. October 2023
A new paper by W. Gregory Voss and Emmanuel Pernot-Leplay

Cross-border data transfers are a sensitive topic in many jurisdictions, even more so when China is concerned. The EU and the U.S. regulate those flows in very different ways, and China just issued rules showcasing its own specific approach, mixing privacy and national security together, which have become a compliance hurdle for many multinational companies. Our study observes holistically the regulation of personal data flows both into and from China.

Why and how the USA and the EU regulate data flows to China

In both the EU and the USA, China is often seen as an untrusted destination for data exports because of the risks that would exist for both individual rights protection and national security. These concerns are addressed by restricting the cross-border data transfers to China, but it’s done differently in the EU and the USA.

The USA does not have general data transfer restrictions, but it has taken specific actions for national security and user privacy reasons that limit data flows to China. Those are best exemplified by the Grindr and TikTok cases, both on national security protection grounds, for fear of access to the data by the Chinese government and potential blackmailing against nationals of the USA in a position to obtain access to sensitive materials. This is a regulatory risk for Chinese companies, which has sometimes resulted in them storing data in the USA. Because the USA currently lacks an omnibus data privacy law covering data flows, unlike the EU and China, data privacy restrictions cannot serve as the grounds for such procedures, and therefore the USA must resort to national security rules, instead. Nonetheless, this solution remains impractical and used only for high-profile cases. In the future however, proposed data privacy legislation in the USA may impose requirements on transferring personal data to China, resembling restrictions in other major regions.

On the other hand, the EU has strong data privacy rules in the GDPR, including on cross-border data transfers, but by virtue of the division of powers between the EU and its component Member States, national security issues are left to the prerogative of each of the Member State. The GDPR sets several conditions and safeguards to be applied to data transfers for them to be legal. The main ones are the adequacy decision on the one hand, and standard contractual clauses from the European Commission on the other. The latter provide a legal framework that obligates both the data exporter and the data importer (the entity outside the European Economic Area receiving the data) to protect the personal data in accordance with GDPR principles. An adequacy decision, however, means an entity can freely export data to the country that has received this adequacy decision from the European Commission, which greatly facilitates business operations for companies and economic exchanges between the two jurisdictions. But, in the case of China, such decision is currently virtually unforeseeable. This is due to the fact that the European Commission assesses issues such as the rule of law in the destination country in deciding adequacy. Because of the structural specificities of its political and legal system, China is unlikely to meet this first condition. Companies can still export data to China, but the exporting and receiving parties will need to commit to the standard contractual clauses.

China now restricts cross-border data flows to protect both personal data and national interests

Whereas the USA acts on outbound data flows using mainly national security arguments, and the EU focuses on data privacy, China combines both rationales in its own approach.

To provide contextual clarification, it is pertinent to underscore that the progression of data protection legislation in China has followed a peculiar trajectory. At first, there were only a few rules targeting specific sectors, with lightweight protections. This resembled the US-approach and favoured a free use of personal data without many safeguards and rights for the individuals. However, faced with the increase of privacy abuse threatening to cause social unrest, China gradually moved towards a more protective approach and started the legal transplantation of certain rules and concepts from the EU, offering more protection to Chinese consumers against misuse of their data by the private sector. As one may expect protection of the citizen against data collection by the government remains embryonic, due to the specificities of China’s political and legal system.

This progress culminated in the Personal Information Protection Law (PIPL) from 2021, sometimes dubbed as China’s GDPR, which also showcases China’s own approach to the regulation of personal data use, especially on cross-border data transfers through mechanisms implemented in 2023. In a syncretic manner, China has indeed combined data privacy and national security concerns into its mechanism to restrict data flows, impacting both domestic and international companies.

Under the PIPL, companies seeking to transfer data outside of China have possibilities: certification, standard contractual clauses (SCCs), and security assessments. These mechanisms aim to ensure that personal data remains protected and that its transfer aligns with the law’s requirements. The certification mechanism offers a route for intra-group data transfers (akin to Europe’s Binding Corporate Rules (BCRs)). However, its adoption may be hindered by complexities and potential costs. The PIPL’s SCCs provide a standardized framework for data transfers, mirroring similar processes under GDPR. However, unlike in the EU, an organization can use those two systems only under a threshold that may easily be crossed by bigger corporations. Above it, and for more sensitive data transfers, a state-led security assessment is required. This assessment evaluates not only data protection levels but also considers China’s national security, economic stability, and political implications. This is especially the case for organizations deemed critical information infrastructure operators, and is a Chinese specificity that does not exist in either the EU or the USA. Because of the large room for discretionary interpretations, favoured by the vague terminology used in the requirements, this assessment puts multinationals looking to take data out of China in a grey zone, with potential high impact on their business operations. However, it is a risk that China does want to mitigate.

China’s data localization rules are robust and align with global trends in privacy protection on one hand, but feature significant specificities on the other, which leads to uncertainty for companies but provides more maneuvering room to authorities looking to protect China’s interests. As the EU’s GDPR influenced several other jurisdictions’ data privacy rules, time will tell if China’s own approach on data flow screening will be mimicked by other countries, and if the intertwining of data privacy with national security will confirm a new trend.

The article “China Data Flows and Power in the Era of Chinese Big Tech is forthcoming with the Northwestern Journal of International Law & Business, Vol. 44, Issue 2.

W. Gregory Voss is an Associate Professor at TBS Business School (formerly Toulouse Business School). His research focuses primarily on technology law and fundamental rights (e.g., privacy & data protection).

Dr. Emmanuel Pernot-Leplay is a principal data privacy specialist at Schneider Electric. He holds a PhD degree in Comparative Law from Shanghai Jiaotong University and writes on comparative law and policy, in the fields of data privacy, digital policy and their implications for national security.

The Silent Influence of Guiding Cases: A Text Reuse Approach

12. September 2023
A new paper by Benjamin Minhao Chen, Zhiyu Li, David Cai and Elliott Ash
Guiding Cases no. 19 and no. 24 both concern traffic accident liability disputes and are among those most often referred to.

What are Guiding Cases?

As a matter of doctrine, cases are not a source of law in socialist legal systems. In the People’s Republic of China, judges are generally not required to adhere to or cite prior judicial decisions. These principles have, however, been qualified—some say violated—by the Supreme People’s Court’s designation of Guiding Cases to be followed by all courts when adjudicating similar disputes.

The Guiding Case (指导性案例) system was introduced in 2011 “[i]n order to summarize adjudication experiences, unify the application of law, enhance adjudication quality, and safeguard judicial impartiality” (Provisions of the Supreme People’s Court Concerning Work on Case Guidance, 2010, English here). Guiding Cases are based on judgements selected from courts nationwide and address a wide variety of legal topics ranging from breach of contract to homicide to unfair competition to liability for traffic accidents. A Guiding Case consists of seven key sections, namely “Title”, “Keywords”, “Main Points of the Adjudication”, “Related Legal Rules”, “Basic Facts of the Case”, “Results of the Adjudication”, and “Reasons for the Adjudication”. Beginning in 2015, the “Main Points of the Adjudication” of Guiding Cases – abstract rules distilled by the adjudication committee of the SPC from the original judgments – must be referred to (参照) by courts at all levels when adjudicating similar cases (Detailed Rules for the Implementation of the ‘Provisions of the Supreme People’s Court Concerning Work on Case Guidance’, 2015, English here).

Guiding Cases have therefore been characterized by some as “a new source of ‘judge-made law’ in China” (Liu 2021) and ‘the remarkable terminus a quo’ of the trend ‘toward embracing case law’ (Wang 2020). The true impact of Guiding Cases on judicial practice has however been called into question by many legal scholars and commentators. Previous studies almost uniformly find that citations to Guiding Cases are sparse, and many Guiding Cases are not cited at all (Daum 2017; Zhang 2018). The ‘extremely low’ incidence of citations is taken as symptomatic of ‘the dysfunction of the [G]uiding [C]ase system as a type of case law’ (Wang 2019) and as proof of the incongruity of case-based adjudication in China (Ahl 2014; Zuo & Chen 2015; Finder 2017; Jia 2016).

How to measure their influence?

However, citations might not be an accurate measure of the influence of cases, especially in jurisdictions that do not recognize judicial decisions as a source of law. In our study, we re-evaluate the impact of Guiding Cases on adjudicatory outcomes by searching for instances of text reuse between the Main Points of Adjudication of Guiding Cases and the legal rationales given by lower courts.

Our premise is that reuse of text uniquely ascribable to the Main Points of Adjudication is a strong indicium of the influence of Guiding Cases on judicial decision-making. This idea is implemented by running the Basic Local Alignment Search Tool (or BLAST) algorithm to search for text reuse in approximately 3 million judgments of Shanghai and Beijing courts from January 1970 to September 2021. Matches returned by the BLAST algorithm are validated by legally qualified human coders. To make human validation of the machine-generated results feasible, our analysis is limited to two Guiding Cases identified by prior research as being among the most cited (Zhang 2020; Guo & Sun 2018): Guiding Cases 24 and 60.

To summarize, we find more instances of unattributed text reuse than citations for the Guiding Cases studied. For Guiding Case 24, the number of local court decisions that engaged in validated, unattributed text reuse is approximately four to six times the number of decisions citing the Guiding Case. Moreover, between 3.4 and 14.6% of local judgments that could have applied Guiding Case 60 cited it and between 9.5 and 11.7% of them recited language from Guiding Case 60 without acknowledging so.

A close reading of local court decisions reveals that it is not uncommon for them to cite statutory or regulatory instruments for propositions reproduced from a Guiding Case (“statutory ventriloquy”). In addition, rather than quote the Main Points of Adjudication as directed by the Supreme People’s Court’s Detailed Rules, many judgments simply repeated the various legal arguments adduced in the Guiding Case (“jurisprudential retracing”).

It appears that despite applying the Guiding Cases, local judges practice statutory ventriloquy or jurisprudential retracing to avoid citing them as a source of legal authority. Both techniques serve to maintain the dogma of legislative supremacy even as statutory law is being supplemented—and sometimes modified—through judicial initiative.

Do they really have little impact?

To conclude, previous studies report that Guiding Cases are rarely cited in judicial decisions, suggesting that their practical effect is negligible. The anemic impact of Guiding Cases has sometimes been taken as demonstrating the fundamental incompatibility between socialist legality and judicial precedent.

We demonstrate, however, that Guiding Cases are more influential than conventionally thought. The influence of Guiding Cases is not only manifested through citations; it can also be detected through the reuse of text uniquely traceable to them. By uncovering how the Guiding Cases are referred to other than by name, we not only illuminate the operation of Chinese law but also inform debates about legal traditions, cultures, and transplants.

The paper The Silent Influence of Chinese Guiding Cases: A Text Reuse Approach was published in Artificial Intelligence and Law in May 2023. The authors will present the paper at the Annual ECLS Conference in Helsinki on September 22nd. The work described in this post was substantially supported by a grant from the Research Grants Council of the Hong Kong Special Administrative Region, China (Project No. HKU

Benjamin M. Chen is associate professor of law at the University of Hong Kong. He applies interdisciplinary methods to the study of administrative and judicial processes and institutions.

Zhiyu Li is an assistant professor in law and policy and a fellow at the Research Methods Centre at Durham University, UK. She studies the interplay between courts, technology, and politics through comparative and interdisciplinary approaches.

David Cai is a MRes/PhD student in the Economics and Management program at the LSE. He uses econometric and machine learning techniques on applied social scientific questions.

Elliott Ash is Assistant Professor of Law, Economics, and Data Science at ETH Zurich’s Center for Law & Economics, Switzerland. His research and teaching focus on empirical analysis of the law and legal system using techniques from econometrics, natural language processing, and machine learning.

Chinese State-Owned Companies and Investment in Latin America and Europe

29. August 2023
A new paper draft by Larry Catá Backer
Lock on the Panama Canal

In the United States at least, there has been an increasing worry about the state of US relations (economic and political) with Latin American states. Increasingly that is measured by the extent of Chinese development of its own political and economic relations with Latin American and Caribbean states. Europeans, more than most, worry about this shift in the sources of overseas investments from the perspective of their now decades long objectives to embed human rights more directly in economic activities and political life. 
US military leaders have also expressed fears about Beijing’s influence on Mexico’s communications industry, where 80 percent of telecoms are provided by Chinese companies, according to General Glen VanHerck, commander of both the US Northern Command and the North American Aerospace Defense Command. China is also extending its reach into the ‘Lithium Triangle’ which spans Argentina, Bolivia and Chile: The Chinese battery company Catl recently struck a deal worth more than $1 billion to develop Bolivia’s lithium reserves. Some analysts have speculated this resource-grab constitutes a ‘lithium monopoly in the making’. The benefits gained from these investments are coupled with the willingness of Latin American countries to accept loans worth tens of billions of dollars from China.
At the center of Chinese overseas investment are their state-owned and controlled enterprises. The Chinese state-owned enterprise (CSOE) presents an anomaly in the operation of the well-ordered construction of a self-referencing and closed system of liberal democratic internationalism, especially as that system touches on business responsibilities under national and international human rights and environmental law and markets driven norms. The anomaly is sourced in the increasingly distinct and autonomous framework principles within which it is possible to develop conduct-based systems respectful of both human and environmental rights which are emerging in between liberal democratic and Marxist-Leninist systems.
This essay considers the forms and manifestations of these disjunctions where CSOEs are used as vehicles for the projection of Chinese economic activity beyond its borders. The essay first situates the CSOE within the political ideology of its home state. These CSOEs are both creatures of the political-economic system from which they are constituted and economic actors seeking to maximize return for investment in a risk reducing environment. CSOEs are instruments of state power and its political-economic objectives, as well as value maximizing market participants. They seek to avoid risk and maximize value-but their calculation of risk and value are a function of the normative system from which they are constituted. That, in turn, affects their engagement with human rights and the sustainability impacts of their operations.

To better understand the CSOE especially as they operate in host states is especially necessary as global and national systems for compliance and accountability are refined, and as national security regimes increasingly constrain the extent and form of inbound public investment. To that end the essay focuses on the formal structures for CSOE supervision by state organs that operationalize the guiding ideology through which they are conceived and operated. This provides the basis for a deeper consideration of the way that the projection of CSOEs abroad is structured within a conceptual cage of policy objectives: specifically, emerging conceptions of socialist human rights, including environmental rights and obligations, and an operational framework in the form of the Chinese Belt & Road Initiative. It is only in the complex interplay of these layers of law, principle, regulation, and guidance described above, that one can begin to see the outline of the normative cage within which human rights can be understood and practiced by CSOEs. 

Nonetheless, at its core, the study is about risk- its ideology and the way it is expressed through governance expectations and principles. One speaks here about legal risk (to align the discussion with the 1st Pillar of the UN Guiding Principles), but also of business risk (aligning the markets driven, private law structures of the UNGP 2nd Pillar). More importantly, the sort of risk that one encounters here, in comparing the liberal democratic and Marxist-Leninist models of human rights and sustainability, is intimately tied to the principle of “prevent-mitigate-remedy”, and its administrative-compliance overlay.  In a sense, when one speaks to human rights and sustainability, and especially climate change, one is using the qualitative language of rights to speak to the quantitative probabilities of risk of harm, and more importantly risk of irremediable harm. The function of those principles, then, framed through the prevent-mitigate-remedy principle is to provide a formula for valuing those risks, and for placing them within a hierarchy of risk tolerance. Increasingly in liberal democratic regimes, risk tolerance for strategies that do not privilege prevention (and then mitigation and last remedy) are reduced, or in some cases, risk aversion is implicitly or explicitly the result of the application of the “principles” analysis. That is fair enough and represents the culmination of conversation about value choices. Nonetheless, Marxist-Leninist systems approach risk, and risk tolerance, in a different way. That difference is in part a function of differences in the conceptualization of both human rights and sustainability as a function of development and collective prosperity. But it is also in part a reflection, effectively, of what might be preferences for mitigation-remediation (or otherwise exit if the costs of prevention exceed the anticipated vale of an activity), at least indifference as between the strategies as a function of expected value. That poses some challenges for any project that seeks global consensus on what had once been the unchallenged valuations and framework of liberal democracy.   

Larry Catá Backer is a W. Richard and Mary Eshelman Faculty Scholar and Professor of Law and International Affairs. He does research in Legal Fundaments, Political Economy and International Relations. Currently working on “Next Generation Law”–data driven governance; the emergence of new global trade regimes (Belt and Road Initiative and America First); and the emergence of new theories of Leninist state organization as they may apply to non-Leninist institutions.