In the recent article (CER October 2007) on the PRC legal system published in CHINA ECONOMIC REVIEW, I was struck by the factual inaccuracy of many of the statements made. The truth is that over the last 10 years China has made remarkable progress in introducing a fully functioning civil law system.
Much work needs to be done, and anyone in China understands the process is just beginning. But the trend is very clear. The Chinese authorities fully understand that economic development and development of a strong legal system go together.
In late 1990, China began adopting the laws and institutions necessary for a modern legal system – a mix of continental European civil law and Asian approaches to law with some Chinese socialist features thrown in. Once it is fully established, the system will look nothing like the US and British common law system, so lawyers trained in these countries will dislike it. But it will do its job of providing the guidance and legal certainty required of a modern market economy.
Data from the Report on China Law Development, published (in Chinese) this year, explodes the five most common myths about the PRC legal system:
Myth No.1: There are no laws in China.
If anything, China has too many laws. Between 1979 and 1983, China promulgated 4,119 laws and regulations, and a further 37,775 between 1996 and 2000. Then the dam broke. In the five-year period from 2001 to 2004, 94,288 laws and regulations were promulgated in China, almost triple the previous five-year period. The pace of Chinese legislation continues at a breathtaking speed, with 2006 seeing the adoption of a property code, individual and corporate tax codes, a labor contract law and an anti-monopoly law. As it now stands, virtually every area of business life in China is covered by a modern statute or regulation.
Myth No.2: There are few lawyers and they are poorly educated.
In 1981, there were only 6,218 lawyers admitted to practice in China. Since there were no legal departments in any of the major Chinese universities, many of these lawyers were poorly trained. By 2005, the number of admitted lawyers had grown to 114,471. Though the number of lawyers is far less than the highly over-lawyered US, it compares favorably with European countries like England, Germany, Italy and Spain, where the number of lawyers ranges from 120,000 to 150,000. Japan has only about 22,000 and Korea about 12,000. The level of education for members of the bar has also improved, with 100% having a post high school education and 54% having college or higher degrees with a specialization in law.
Myth No.3: There are few judges and they are poorly educated.
China has worked especially hard at improving the quantity and quality of its judiciary. In 1987, there were 117,647 judges in China, but only 17% of those judges had received a post high school education. By 2000, this was up to 100%. By 2004, there were 190,961 judges, probably more than any other country in the world. (According to the crime statistics section at Nationmaster.com, there are 67,994 judges in Russia, 29,023 in the US, 6,774 in France and 3,019 in Japan.)
Myth No.4: The laws adopted are meaningless because Chinese people file few lawsuits.
China has seen a tremendous increase in the number of civil lawsuits. In 1981, 1,179,388 decisions were rendered in cases of first instance in China. By 2004, the number had increased to 5,625,310 decisions, up 377%. Meanwhile, the number of mediated civil disputes declined from 7,805,400 in 1981 to 4,414,233 in 2004. Civil disputes formally decided in accordance with the law totaled 10,039,543.
Myth No.5: Chinese statutes are intentionally vague and there is no guidance on interpretation from commentary or case law.
China is a civil law country, and every statute assumes a large body of unstated civil law theory from official and academic commentary. Further, China’s Supreme Court publishes important explanatory comments and cases every year. Fully annotated cases on virtually every major statute are available in large bookstores, but they are usually in Chinese only. For a common law lawyer to try to understand Chinese statutes merely by reading the English language translation is an exercise in futility.
In dealing with China, it is critical to understand the facts. We should not make China an even more difficult place to conduct business by perpetuating stale, old myths that can lead business people to make costly mistakes.
Dickinson is a partner at Harris Moure PLLC , Seattle, Washington and Shanghai, China