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Chinese Law Blog

Chinese Law Blog promotes legal scholarship with the aim to develop a deeper understanding of China and to facilitate open dialogue between the East and the West. Mainly sourcing from the Chinese Law eJournal edited by the Philip K. H. Wong Centre for Chinese Law, the Blog selects and posts the most cutting-edge research on Chinese law on a near daily basis. It will also track pertinent news, reports, activities, and events that contribute insights into the Chinese legal system.
Contact us (shelbyc@hku.hk) if you want to share sources you find relevant, valuable, and interesting! More research on Chinese law is available on the Chinese Law eJournal. Subscribe to the Chinese Law Blog if you want to receive timely updates by email.

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Concepts of Justice and National Context – Outlining Legal Comparisons between the Federal Republic of Germany, the United States of America, and the People's Republic of China

Posted on Wed, Feb. 8, 2023

Thomas M.J. Möllers, University of Augsburg

 

Comparative law holds the promise of improving knowledge. Looking at other legal systems enables a nuanced understanding of the rules of one’s own country. While comparative law traditionally starts with a concrete issue, the purpose of this paper is to explore why concepts of justice often differ widely from country to country. The following compares three major economic powerhouses: the United States, the People's Republic of China and the Federal Republic of Germany. It will discuss the differences between a liberal and a social market economy, as well as the role of the constitution in society. The outline concludes by looking at the question of when different concepts of justice might converge.

 

Taking Rights Seriously - The Hong Kong Judiciary at a Challenging Time

Posted on Wed, Feb. 8, 2023

Johannes M M Chan, The University of Hong Kong

 

While the judiciary is generally regarded as the defender of the rule of law and fundamental rights, it is not uncommon that judges could also suppress democratic values. Courts around the world have legitimized undemocratic or even repressive law and practices. Authoritarian regimes tend to capture the judiciary, not only because the judiciary would provide the legitimacy for anti-democratic measures, but the nature of the institution could also masquerade such measures as a legitimate exercise of power that makes it more difficult to detect and respond to. This study examines the relationship between the Central Government and the judiciary of the HKSAR. It focuses on the judicial responses when the Central Government decided to shift the emphasis from two systems to one country under the constitutional design of the HKSAR and did exercise full jurisdiction over Hong Kong. 

 

Innovation and Appropriation: Insights from the Chinese Patent Survey

Posted on Tue, Feb. 7, 2023

Dong Cheng, Union College

Michael A. Klein, Rensselaer Polytechnic Institute

M. Fuat Sener, Union College

 

Using comprehensive microdata based on the Chinese Patent Survey, the authors examine the appropriation strategies that firms use to capture value from their innovations. They analyze firm preferences over five distinct appropriation strategies, as well as the motivations underpinning these strategies. They find a robust overall preference for the use of patents among Chinese firms in all industries and across multiple characteristics. However, results indicate that firms pursuing the most expensive R&D projects exhibit a relative preference for secrecy over patents, consistent with theories that predict the use of secrecy to protect a firm’s most valuable intellectual assets. Furthermore, firms routinely indicate a preference for multiple, complementary strategies to protect innovations. In particular, findings suggest that firms utilize patents to secure initial financing and negotiate third party production contracts, while relying on secrecy and/or first mover advantage to protect against competitor imitation.

 

Formulating Copyright Damages in China

Posted on Tue, Feb. 7, 2023

Jyh-An Lee, Chinese University of Hong Kong

 

In China, multinational enterprises (MNEs) have long criticized the unreasonably low damages granted by courts for copyright infringement. Numerous copyright holders are unable to recover infringement losses and litigation expenses even if they win the case, and many MNEs have hesitated to initiate copyright litigation in the country. In response to the above criticisms, China revamped the damages scheme in its 2020 amendment to the Copyright Law by providing new criteria for calculating damages, increasing statutory damages, and introducing punitive damages and a new evidence rule on damages. This study first introduces the damages provisions in China’s previous Copyright Law and the main changes in the new law. It also analyzes the background on individual approaches to copyright damages in the new law and evaluates their effectiveness in facilitating copyright protection.

 

The Forms and Architects of China's International Legal Order

Posted on Mon, Feb. 6, 2023

Matthew S. Erie, University of Oxford

Sida Liu, The University of Hong Kong

 

Conflict of laws is often understood as judges or lawyers choosing the governing law in a multijurisdictional matter. The authors turn this notion on its head to ask whether the rules may also choose the legal experts. While choice of law is often subject to parties’ bargaining, and China, as capital-exporter, may occupy a dominant bargaining position vis-à-vis the host state, the territorial sovereignty and mandatory norms of the latter frequently require local law. Consequently, whereas the legal form produces an ecology of legal professionals, it is often the local lawyers who play a pivotal role in generating and sustaining China’s cross-border deals. This study suggests that China’s “rise” may not reproduce familiar forms of law and globalization. From the perspective of private international law, China itself appears unlikely to overturn the existing international legal order, even if that order is currently undergoing a severe test and China may wish to reform the order to occupy a central role. Top-down perspectives on international legal orders must be mirrored and contested by bottom-up ones; such a holistic view spotlights the highly contingent nature of Chinese outbound capital.

 

Chinese Aircraft Grounded at Kai Tak 1949-1952 (Feb 14 2023)

Posted on Mon, Feb. 6, 2023

Malcolm Merry, The University of Hong Kong

In the spring of 1949 as the Chinese Civil War reached its conclusion, the two main Chinese airlines, controlled by the Nationalist government, moved their aircraft to Kai Tak aerodrome in the then British Crown Colony of HK for safety from the advancing Communists. There followed a 3-year struggle for ownership of the planes between the PRC and American interests who had bought the planes from the Nationalists. The British and HK governments were caught in the middle, insisting that ownership was purely a legal question, despite pressure from the USA and the PRC and the dispute becoming enmeshed by contemporary political tensions. The ensuing litigation raised issues of international law including those of Sovereign Immunity and State Succession to Property. This talk, which is based on the author’s recent book, will examine those aspects, how they arose and how they were resolved, and describe the international tensions in which they were set. 

 

The Good Old Days Will Not be Back for China's Internet Companies

Posted on Fri, Feb. 3, 2023

Angela Huyue Zhang, The University of Hong Kong

 

Are the Chinese technology sector's regulatory troubles ending? Or is Beijing tightening its grip on internet companies even harder? Recent days have provided evidence for both views. How should we decipher the conflicting signals about the direction of the Chinese tech sector? In fact, tech regulation already started to ease a year ago, as the Chinese economy began to suffer a sharp slowdown. While the tech crackdown was short-lived, it has resulted in long-lasting institutional changes. Tech regulation will never recover to the pre-2020 status quo, even though tech companies will enjoy a temporary reprieve. As Beijing's rule becomes both more personalized and more centralized, tech regulation will only become more unpredictable and volatile in the years to come.

 

An Empirical Study of Pain and Suffering Awards in Chinese Personal Injury Cases

Posted on Fri, Feb. 3, 2023

Chunyan Ding, City University of Hong Kong

Zhi Pe, City University of Hong Kong

Drawing on 1,882 personal injury lawsuits involving medical negligence, this study presents the first empirical analysis of pain and suffering awards given by Chinese judges in the real-world setting of personal injury litigation. It investigates when judges refuse to award pain and suffering damages in personal injury cases, and whether the relevant guiding factors suggested by the Supreme People’s Court have a significant influence on award amounts of pain and suffering damages, as well as whether the deep pockets effect and the anchoring effect exist in Chinese personal injury litigation. 

 

Central Judicial Inspector: Establishment of Circuit Tribunals and Corporate Innovation in China

Posted on Thu, Feb. 2, 2023

Kai Wu, Central University of Finance and Economics

Minli Sun, Central University of Finance and Economics

Yuzi Chen, Central University of Finance and Economics

 

The growing localization of the judicial system has been a critical concern in China's justice reform, and its consequence on entrepreneurship receives little attention. The authors evaluate the effects of judicial reform on the innovation of private-controlled listed firms in China using the transformation of judicial decentralization: inter-provincial circuit tribunals. Results show that the establishment of circuit tribunals significantly promotes innovation quantity and quality. The legal reform affects firms' incentives to innovate by increasing access to long-term bank loans and enhancing risk tolerance. The positive effect is more pronounced for firms with weaker political ties, a longer distance from the Supreme People's Court, and a better market institution for the private sector.

 

Political Influence in the Regulation of Chinese Charitable Trusts

Posted on Thu, Feb. 2, 2023

Hui Jing, The University of Hong Kong

 

With the 2016 Charity Law, Chinese legislators created a public-private hybrid model for the governance of charitable trusts. By endowing private actors with greater rights in the creation and management of charitable trusts, this hybrid model demonstrates the State’s intention of changing the functioning of the charitable trust sector from complete dependence on the State to a partnership. However, embedded in China’s particular institutional environment, the partnership relationship still bears the mark of strict government control, which is secured by granting extensive powers to regulators. Jing analyzes the newly established regulatory framework for charitable trusts and outlines how regulators exercise their power in practice. His findings show that the tradition of regulators being subject to intense administrative pressures remains unchanged and that political concerns permeate every aspect of the regulation of charitable trusts.

Improving Dispute Resolution in Two-Sided Platforms: The Case of Review Blackmail 

Posted on Wed, Feb. 1, 2023

 

Yiangos Papanastasiou, University of California, Berkeley

S. Alex Yang, London Business School

Angela Huyue Zhang, The University of Hong Kong

 

The authors study the relative merits of different dispute resolution mechanisms in two-sided platforms in the context of disputes involving malicious reviews and blackmail. They develop a game-theoretic model of the strategic interactions between a seller and a (potentially malicious) consumer. In the model, the seller takes into account the impact of consumer reviews on his future earnings; recognizing this, a malicious consumer may attempt to blackmail the seller by purchasing the product, posting a negative review, and demanding ransom to remove it. Without a dispute resolution mechanism in place, the presence of malicious consumers in the market can lead to a significant decrease in seller profit. The introduction of a standard centralized dispute resolution mechanism (whereby the seller can report allegedly malicious reviews to the host platform) can restore efficiency to some extent but requires the platform’s judgments to be both very quick and highly accurate. The authors demonstrate that a more decentralized mechanism can be much more effective, while simultaneously alleviating—almost entirely—the need for the platform’s judgments to be quick. 

 

Foreword to ‘US Trade Policy, China and the WTO' 

Posted on Wed, Feb. 1, 2023

Paolo Davide Farah, West Virginia University

 

Nerina Boschiero addresses a key topic in contemporary international economic law and global governance. By focusing on a turning point in global politics and the shaping/framing of trade policy in the U.S.– the election of President Trump sheds light on the tumultuous process of reshaping of global governance. The crisis of multilateralism has been discussed at length in academia and mainstream media. However, little attention has been paid to how the U.S. is reacting to the rise of China in the global order, in practical terms. In particular, focus remains on the realm of trade. This book highlights how the path taken by the U.S., with a trade policy at the service of national security, has serious consequences for the global economy. While Biden seems more cautious to engage in trade wars, most of the measures implemented by Trump are still in place. This needs to be viewed in the context of power dynamics and the consequences of the political changes in China and the world towards a reinvigorating authoritarianism and nationalism. 

Talk: Legal Systems Inside Out: American Legal Exceptionalism and China’s Dream of Legal Cosmopolitanism (Feb 3 2023)

Posted on Tue, Jan. 31, 2023

Philip K. H. Wong Centre for Chinese Law, The University of Hong Kong

 

This talk explores the relationship between a legal systems’ foreign-facing elements and its domestic ones. Contrary to “dualistic” theories which suggest that a single legal system may encompass qualitatively different regimes regarding foreign and domestic legal questions, Erie takes the view that gaps between the foreign-facing and domestic aspects of a legal system may threaten that system’s legitimacy and its sustainability. Compatibility between the foreign/external and domestic/internal aspects of a legal system could be measured across a range of categories. Erie focuses on the recognition of difference. The question posed is whether a legal system can regard difference disparately between its foreign-facing and domestic aspects. Erie addresses this question through a comparison between the PRC and the US.

 

Vaccine Development, the China Dilemma and International Regulatory Challenges

Posted on Tue, Jan. 31, 2023

Peter K. Yu, Texas A&M University

 

As the pandemic has become more successfully contained, demands for emergency relief measures have given way to debates on the development of new standards to provide a more effective response during the inter-pandemic period and in the post-COVID era. One challenging debate concerns the role of China in such development at the intersection of intellectual property, international trade, and public health. Among the important issues are whether China will support the development of new international regulatory standards, whether its participation will create complications, how its role will evolve in the near future and how other countries should engage with China in the international regulatory system. Improving global pandemic preparedness in this system is particularly important since many experts have already predicted that another global pandemic will happen in the next decade or two.

No County Is An Island: The Rise of Interjurisdictional Cooperation among Counties in China

Posted on Mon, Jan. 30, 2023

Xinhui Jiang, Nanjing University

Sarah Eaton, Humboldt University of Berlin

Genia Kostka, Freie Universität

 

Why are China’s notoriously competitive local governments increasingly cooperating with each other? Combining interjurisdictional cooperation data from 820 counties and fieldwork in 24 localities, the authors argue that the increasing trend of inter-county cooperation is the newest manifestation of China’s state-rescaling initiative. It is the combined result of the state’s devolution of governance responsibilities and competitive-minded local cadres’ interests in benefits associated with scaling up. This study contributes to understanding how counties’ growing interdependence intersects with the regime’s survival logic in the unfolding reconfiguration of China’s counties.

 

Judicial Review of Administrative Rules in China: Incremental Expansion of Judicial Power

Posted on Mon, Jan. 30, 2023

Shiling Xiao, The University of Hong Kong

Yang Lin, The University of Hong Kong

 

Chinese courts were not expressly vested with the power to review administrative rules until the first amendment to the Administrative Litigation Law (ALL) in 2014. This article examines the evolution of the Chinese judicial review of administrative rulemaking and the court’s practice in the last seven years (2014-2021). It argues that whereas the judicial empowerment in 2014 is a symbolically significant step toward improving Chinese administrative rulemaking, public accountability, and the rule of law, China has merely established a weak-form judicial review of administrative rules, and the timid and deferential approach of the courts to this new empowerment seriously limits the judicial function of supervising government’s policy-making. 

Equality Rights Literature Database

Posted on Thu, Jan. 19, 2023

Equality Rights Project, The University of Hong Kong

 

The Equality Rights Project is a Knowledge Exchange Initiative under the Philip K.H. Wong Centre for Chinese Law. Established in 2015, Equality Rights Project collaborates with lawyers, NGOs and other centres to promote legal education, legal empowerment and legal research with the goal of advancing social inclusion and equality. Equality Rights Literature Database provides timely update and compilation of recent academic research and reports in the area of equality rights.

Beyond Law and Politics: Judicial Mediation in China

Posted on Thu, Jan. 19, 2023

Kun Fan, University of New South Wales

 

Beyond law and politics, Fan considers how will other factors influence individual judicial behavior in China? How do the gains of efficiency and substantive justice compare with the potential losses of procedural protections? Is the mandate of the judges to resolve the disputes between the parties by the most appropriate means, or is it only an attempt to render and enforce an authoritative binding decision? Do judges see their role as only to resolve the immediate conflicts between the parties or as a guardian of justice that transcends the parties? Through a series of interviews of Chinese judges in six courts in three different cities at different stages of economic developments, Fan provides an empirical narrative on how judicial mediation is actually practiced in China and analyzes values and limitations of judicial mediation. She empirically illustrates the multiplicity of influences on judicial behavior and the perception of the role of judges in China. 

HKUCCL International Speaker Series 2022-2023

Posted on Wed, Jan. 18, 2023

Philip K. H. Wong Centre for Chinese Law, The University of Hong Kong

 

In Spring 2023, the Philip K. H. Wong Centre for Chinese Law will invite scholars from multiple jurisdictions to give interactive talks on their most up-to-date ideas and publications. This International Speaker Series will contribute fresh perspectives to help us better understand the past, present, and future of Chinese and global governance, legal institutions, economics, and finance. In their presentation of five illuminating topics, the speakers will offer insights on how to make sense of Chinese judicial trends, China’s dream of legal cosmopolitanism, its reinvention of money, China’s performative governance at the street-level of its bureaucracy, and its relative economic decline in the 18-19th centuries. Anyone with a keen interest in China is most welcome to join us!

 

Legal Semiotics, Globalization and Governance

Posted on Wed, Jan. 18, 2023

Larry Catá Backer, The Pennsylvania State University

 

When the leaders of the United States and of the People's Republic of China refer to human rights, they invoke entirely different conceptions. The only thing in common is the use of the term itself. Trouble follows incoherence and the normative gaps that this incoherence produces. The difference in meaning drives contests over the meaning of legitimate governance. These consequences affect not just governance, through law, but also the law and governance of the relation among collectives—subsumed under another term, globalization. Backer suggests the power of semiotics to understand, analyze, and perhaps engage with both the constitution of meaning from which these collectives build and understand themselves, but also to understand the power of law and governance to organize human activity at the most granular level. 

The Human Embryo as a ‘Special Property of Personality Implications’: A Study of Frozen Embryo Disputes under China’s Civil Code

Posted on Tue, Jan. 17, 2023

Chunyan Ding, City University of Hong Kong

 

Chinese government abolished the 36-year-old one-child policy and replaced it with the two-child policy in 2016 and further with the three-child policy in 2021. However, the rate of infertility among couples of reproductive age in the country was about 25%, much higher than a global average of 15%. More and more infertile couples seek fertility treatment, and as a result have produced and stored millions of frozen embryos at hospitals in China, thus creating new challenging legal issues and a significant increase of frozen embryo disputes both in number and type. Since the 2014 ‘orphan embryo dispute’, Chinese courts have decided more frozen embryo disputes, which have raised important issues about the progenitor’s right to procreate and right to reproductive autonomy as well as intergenerational rights in the embryo within the family especially after the implementation of China’s new Civil Code. Ding revisits the fundamental issue about the legal status of the embryo under the Civil Code. She further analyzes the key legal issues arising from three types of Chinese frozen embryo disputes and suggests appropriate legal solutions to them.

 

The Great Rectification: A New Paradigm for China’s Online Platform Economy

Posted on Tue, Jan. 17, 2023

 

Rogier Creemers, Leiden University

 

Creemers reviews the regulatory campaign against China’s online platform sector that took place between 2020 and 2022. He focuses specifically on its substantive policy aspects, arguing that this “rectification” both intended to remedy existing perceived problems in the online platform industry and to reshape the sector to better meet the needs of the rapidly altering economic and development policy environment. The rectification pursued six discrete goals: managing macro-economic risks, maintaining content control, addressing emerging social concerns, remedying market imbalances, mitigating foreign risks, and supporting the technology development area. It led to significant punitive actions, as well as rhetorical and behavioural shifts by companies. As such, it provides a first test case of the bigger changes occurring under the post-19th Party Congress “New Era”, but also holds comparative potential for researching platform governance worldwide.

Dispute Process Choices Among Chinese Companies in the United States: Some Preliminary Data and Analyses

Posted on Mon, Jan. 16, 2023

Ji Li, University of California

Carrie Menkel-Meadow, University of California, Georgetown University

 

This article reports the first ever empirical study of how Chinese-owned businesses in the US utilize contract clauses to choose dispute processes. China presents an interesting case study of whether foreign owned businesses replicate American dispute resolution process choices when disputes arise within the United States. This study also offers a window into the continuing scholarly and practical questions of whether American courts (or other arenas) are considered “biased” against foreign litigants. The authors explore a number of factors that might influence whether Chinese-owned companies prefer arbitration or litigation in disputes arising in the US. They find several factors to be correlated with the presence of arbitration clauses in Chinese business contracts: sensitivity to costs and fees, access to corporate internal legal advice, views about judicial fairness, and preference for US lawyers with Chinese backgrounds. This study also raises several novel questions for further consideration.

 

Becoming 'Co-Ed': A Protestant Gift to China

Posted on Mon, Jan. 16, 2023

Ningning Ma, Peking University

Se Yan, Peking University

Yiling Zhao, Peking University

 

The Protestant missionaries started the trend to educate women in the 19th century China, paving Chinese women’s way into higher education and professional services. Using various measures of Protestant activities by 1920 and a hand-collected dataset of college students from 1928-1938, the authors show that the Protestant missions improved gender equality in higher education. By exploring the timing of Protestant activities, they find counties with earlier missionary settlements had higher levels of gender equality. Because early missionary settlements followed closely with the opening of treaty ports, the authors adopt an IV strategy that exploits the quasi-random variation in counties’ distances to treaty ports opened by 1880. Finally, they find that the increase in educational attainment led to a higher number of female doctors and civil servants in the short run and a higher gender ratio in skilled occupations in the long run.

 

State-Sponsored Activism: How China's Law Reforms Impact NGOs’ Legal Practice

Posted on Fri, Jan. 13, 2023

Yueduan Wang, Peking University

Ying Xia, The University of Hong Kong

 

The authors examine legal opportunity in China after the recent “law-based governance” reforms, including those that have professionalized the judiciary, established NGOs’ public interest standing, and expanded legal aid coverage. Based on in-depth interviews, they find that despite the generally tightening political control over the social sector, the reforms have helped some law-related NGOs expand their litigation practice, social and legislative influence, and domestic funding sources. At the same time, these changes have had considerable cooptation effects by aligning these NGOs’ interests with the state’s and channeling their activities into state-sanctioned institutional processes. The findings suggest that states can effectively utilize a dualist strategy that combines restrictive and supportive approaches to public participation in the legal process. This study thus sheds light on the progression of legality within various political and institutional contexts.

 

The History of the Drafting and Implementation of the Basic Law of the Hong Kong Special Administrative Region

Posted on Fri, Jan. 13, 2023

Albert Hung-yee Chen, The University of Hong Kong

 

Chen discusses the history of the drafting and implementation of the Basic Law. He traces the origins of the Basic Law to the Sino-British Joint Declaration (1984), in which the concept of “One Country, Two Systems” (OCTS) was codified. He examines the process of the drafting of the Basic Law in 1985–1990. Even though the Basic Law only came into effect in HK in 1997, it had the effect of shaping HK’s transition from 1990 to 1997. After reviewing developments in this period, Chen then recounts the history of the implementation of the Basic Law from 1997 to 2021. He demonstrates that the tensions and conflicts inherent in OCTS have plagued the process of the implementation of the Basic Law.

Navigating Complexity: Globalization Narratives in China and the West

Posted on Thu, Jan. 12, 2023

Anthea Roberts, School of Regulation & Global Governance

Nicolas Lamp, Queen's University

 

Relations between China and the West appear to be caught in a downward spiral. In the West, there is a widespread perception that China has unduly benefited from economic globalization, while in China, there appears to be increasing concern that the West is seeking to contain China’s rise. The authors argue that the picture is more complex. They first discuss the highly varied ways in which China appears in Western narratives about economic globalization, then sketch their understanding of how different narratives about globalization are playing out in China. Their approach highlights the diversity of perspectives within and between the West and China. How countries, companies, and individuals navigate this complexity depends not just on the rise and fall of narratives within the West and China, but also on how these narratives intersect and interact with each other.

 

International Law in Chinese Courts

Posted on Thu, Jan. 12, 2023

Björn Ahl, University of Cologne

 

Whereas statutory provisions and government statements regarding the domestic implementation of international law often remain vague, court practice reveals the actual significance of international law within a domestic legal system. The author analyzes a number of treaties from various areas of international law in order to answer, inter alia, the following questions: What kind of international treaties are applied by courts? Do judges give primacy to national law or to international law in case of conflicting provisions? What standards of interpretation do judges apply when interpreting international treaties? The author further analyzes court practice with regard to other sources of international law such as international customary law. Moreover, he addresses the questions of how Chinese courts fit into global trends of applying international law in domestic courts, whether Chinese judges selectively adapt international norms or engage in international norm-making.

Minority Shareholder Voting and Dividend Policy

Posted on Wed, Jan. 11, 2023

Jing Lin, University of Electronic Science and Technology of China

Fang Li, Southwestern University of Finance and Economics

Steven Xiaofan Zheng, University of Manitoba

Mingshan Zhou, Southwestern University of Finance and Economics

 

The authors find that minority shareholders’ voting opposition to dividend proposals is associated with significantly higher cash dividend payout in the following year for stocks listed in Shanghai Stock Exchange. When minority shareholders’ voting opposition increases, the likelihood and frequency of regulatory penalties increase. The reverse happens after firms increase dividend payout. Minority shareholders’ voting opposition has a stronger positive effect on cash dividend payout when they post more messages in stock forums and when independent directors express dissenting opinions. The effect is weaker if the board chair or CEO has political connections. The authors do find evidence that minority shareholder voting opposition reduces expropriation by major shareholders. This supports a hypothesis that regulators use the minority shareholder voting results to screen out possible cases of shareholder oppression.

 

The Rise, Fall and Future of P2P Lending Platforms in China: the Role of Policy, Law and Enforcement

Posted on Wed, Jan. 11, 2023

Joseph Lee, University of Manchester

Yonghui Bao, University of Exeter

 

Financial innovation has boosted the growth of alternative financing channels and increased access to finance. In 2015, the Chinese gov began supporting the development of financial platforms such as peer-to-peer lending platforms and equity crowdfunding platforms without a strong regulatory framework in place. However, the growth of platforms while regulation was loose increased risk in the financial market, so stricter policies to regulate financial platforms were then introduced. The new regulation was so strict that many financial platforms did not survive and even some major financial platforms were in danger. All peer-to-peer platforms in China were closed by the end of 2021. This paper traces the development of financial platforms in China. It discusses the risks posed by such a rapid development through systemic risk and investor protection. It then looks at the legal and administrative tools used by the Chinese authorities to control risk, and their effect on the future development of FinTech platforms in China. 

NPC Interpretation and Overseas Lawyers 

Posted on Tue, Jan. 10, 2023

Albert Hung-yee Chen, The University of Hong Kong

 

As to whether Timothy Wynn Owen, Queen's Counsel of the UK, can participate in the trial and defense of Jimmy Lai's case, the Chief Executive submitted a report to the central government on Nov 28, 2022, suggesting that the Standing Committee of the National People’s Congress (NPC) should be requested to interpret the “Hong Kong National Security Law” to deal with “whether overseas lawyers who do not have local qualifications to practice law can participate in handling criminal cases endangering national security.” In response, the Standing Committee of the NPC issued an interpretation on Articles 14 and 47 of the "Hong Kong National Security Law" on Dec 30, 2022.

Conference on “The Empirical Turn in Chinese Legal Research: Challenges, Strategies, and Solutions” (Jan 9-10 2023)

Posted on Fri, Jan. 6, 2023

Faculty of Law, The University of Hong Kong

 

Empirical studies of the Chinese legal system have proliferated in recent decades. This trend has only been accelerated by greater generation of data on the one hand and methodological innovations in the social sciences on the other. Empirical legal research promises to enrich our understanding of legal phenomenon and to furnish a knowledge base for debating legal doctrine and theory. But the apparent objectivity of numbers can also mislead those unfamiliar with the assumptions and extrapolations underlying many of the conclusions drawn from quantitative research. To foster critical and constructive discussion about this emerging field, HKU Law will host a conference to be held in-person at the University’s Centennial Campus on Jan 9-10 2023. Online participation is also available. 

 

A Fireside Chat with Benjamin Liebman on Chinese Judicial Trend (Jan 10 2023)

Posted on Fri, Jan. 6, 2023

Philip K.H. Wong Centre for Chinese Law, The University of Hong Kong

 

There is a long-held perception that Chinese courts are weak, so why do people study them? Are Chinese judicial reforms heading toward the right direction? How might the selection of new Party leadership change the trajectory of Chinese judicial reform? Philip K.H. Wong Centre for Chinese Law will host an in-person fireside chat with Professor Benjamin Liebman on Chinese judicial trend to help better understand these questions. Online participation is also available.

Local Judicial System Reform and Corporate Investment: Evidence from Unified Management of Local Courts Below the Province

Posted on Fri, Jan. 6, 2023

Renjie Zhao, Northwest University

Jiakai Zhang, The City University of New York

 

Using the policy of unified management of local courts below the province, the authors found that the independence of the judiciary can significantly improve the success rate of firms in administrative litigation cases, promoting the corporate fixed assets investment rate. The positive influence of reform of local judicial system on private firms is more significant than that on state-owned enterprises. Mechanism analysis shows that the reform of local judicial system will promote financial development and improve corporate financing, reduce corporate bribery expenditures and promote long-term investment and R&D expenditures, which indicates that deepening judicial system reform can achieve the simultaneous advancement of legal construction and economic construction.

The Coming Central Bank Digital Currency Revolution and the E-CNY: Considerations and Ramifications

Posted on Thu, Jan. 5, 2023

Heng Wang, Singapore Management University

Ross P. Buckley, University of New South Wales

 

The only central bank money individuals and businesses have today is cash. Everything else they use as money is commercial bank promises. Central bank digital currencies (CBDC) will likely change all this by putting central bank money into everyone’s hands. China is a front runner in this revolution, and its CBDC, the e-CNY, may well in time profoundly affect the international economic order. Wang and Buckley analyse the major considerations around the e-CNY, its ramifications in particular for trade, and its possible challenges.

 

Promoting Financial Inclusion Through the Launch of Virtual Banks? Empirical Insights from Hong Kong Banking Customers

Posted on Thu, Jan. 5, 2023

Sau Wai Law, Hong Kong Shue Yan University

 

Law examines how virtual banks in Hong Kong may discourage the use of banking services and create new forms of financial exclusion. The competitive edge of virtual banks is also lacking when conventional banks offer the same online services. Law suggests the role of technology in promoting financial inclusion should be scrutinised.

Natural Resource Governance in Qing China: Lineage Institutions and the Making of Common Property Regimes

Posted on Wed, Jan. 4, 2023

Jason Jia-Xi Wu, Harvard University

 

Using forest commons in Qing China (1644-1912) as a historical case study, Wu argues that lineage institutions—a form of organized kinship—created conditions for the longevity of common property regimes in China due to three factors: (1) as a result of the Qing state’s laissez-faire attitude towards property, lineages assumed key administrative functions in regulating property relations at the locality; (2) lineages took advantage of the laws and institutions of the Qing state, which were designed to protect entrenched local interests rather than to maximize economic welfare; and (3) the organizational features of lineages allowed them to provide extra-legal solutions to disputes arising from contested access to common resources, largely displacing the roles of formal legal institutions. These factors illustrate the degree to which organized kinship groups were able to adopt sophisticated institutional arrangements that co-opted, resisted, and even competed with the state in crafting the rules of the game.

Global Constitutionalism and the People’s Republic of China: Dignity as the 'Fundamental Basis' of the Legal System?

Posted on Tue, Jan. 3, 2023

Alec Stone Sweet, University of Hong Kong

Trevor T W. Wan, University of Hong Kong

 

The PRC has declared dignity to be a foundational norm of the legal system, as institutionalized through a suite of constitutional and legislative reforms. Indeed, the 2017–2021 period features a set of the most far-reaching statutes in the history of the PRC, the centerpiece of which is the new Civil Code (2021). In both structure and content, statutory provisions of the Code comprise a quasi-constitutional charter of rights. Many Chinese scholars treat the Code as such, developing sophisticated constitutional theory along the way. At the core of these claims is dignity, from which a host of additional rights can be derived. After situating these developments in light of global constitutional practice, the authors examine the emergence of dignity as an officially-sanctioned commitment device, analyze the pertinent scholarly discourse, the new Civil Code, and the various roles that the Communist Party, the National People’s Congress, and the Supreme People’s Court are expected to perform in supervising the work of the judiciary.

Approaching the Legitimacy Paradox in Hong Kong: Lessons for Hybrid Regime Courts

Posted on Mon, Jan. 2, 2023

Julius Yam, University of Hong Kong

 

A hybrid regime court faces a legitimacy paradox: an activist court risks attracting backlash from the incumbent, whereas a deferential court may undermine public trust. For the first twenty years or so, the HK courts have been a successful example of navigating the legitimacy paradox despite the conflicting expectations from political actors. Yam draws on the experiences of the HK courts since the handover to better understand the legitimacy paradox. He identifies three tools that HK courts have used to maneuver through the paradox. Studying these techniques may provide insights that are relevant to courts in similarly constrained political environments as to how judicial legitimacy can be earned. He also reflects on the institutional future of HK courts in light of the increasing polarization of HK society as a result of the anti-extradition bill protests and signs of greater interference from Mainland China.

Judicializing Environmental Politics? China's Procurator-Led Public Interest Litigation against the Government

Posted on Wed, Dec. 21, 2022

Yueduan Wang, Peking University

Ying Xia, University of Hong Kong

 

Scholars consider deficient local accountability mechanisms a key shortcoming of China’s response to environmental issues. Through empirical analysis of the new procurator-led public interest litigation (PIL) system, this study examines whether – and to what extent – this shortcoming can be remedied by empowering the juridical institutions. It concludes that thanks to the procuratorates’ political insider status, relative autonomy from local politics and extensive resources, procurators have generally found ways to maintain a delicate balance between holding executive agencies environmentally accountable and managing local governments’ resistance to the PIL system. However, reliance on top-down political support may ultimately hinder the expansion and stability of the procuratorial PIL system.

Contract Law and Financial Regulation in China: An Illegality Perspective 

Posted on Tue, Dec. 20, 2022

Chao Xi, Chinese University of Hong Kong

 

Xi depicts the unique evolutionary trajectory of the Chinese law on illegality and public policy as applied to financial contracts and transactions. He demonstrates that until recently Chinese law had generally evolved towards insulating contractual freedom and uncertainty from the intrusion of financial regulation in particular and regulatory legislation in general. The recent elevation of financial regulation to become China’s foremost policy priority, however, has resulted in a reassessment of this approach. Financial regulatory rules have been re-characterised as embodiments of public policy. Consequently, Chinese contract law seems to have been mobilized as a tool to achieve national policy objectives. Notable though it is, this reassessment does not seem penetrating and all-encompassing.

Default and Bankruptcy Resolution in China

Posted on Mon, Dec. 19, 2022

Edith S. Hotchkiss, Boston College

Kose John, New York University

Bo Li, Tsinghua University

Jacopo Ponticelli, Northwestern University

Wei Wang, Queen's University

 

The authors review the literature on the recent growth of corporate debt in China, and present stylized facts on the evolution of debt composition, non-performing loans, defaults, and bankruptcy filings. They then describe the legal and political institutions that characterize the system for restructuring and liquidating financially distressed firms, including recent reforms of China's bankruptcy law. Finally, they discuss the main challenges faced by China in the implementation of these reforms, including frictions in judicial enforcement. They also propose potential avenues for future research.

 

Legal and Institutional Impediments to Sharing Economy: Case of Uber's Non-uptake in Hong Kong

Posted on Mon, Dec. 19, 2022

Kwan Yuen Iu, Albert Luk’s Chambers

Paul W.H. Cheuk, Chinese University of Hong Kong

 

In the face of technological changes brought by sharing economy, there is a differential in the responsiveness of rule-making institutions across different jurisdictions. The authors analyze the rule-making institutions that allow for the regulatory changes procured by Uber and the institutional impediments that may restrict jurisdiction in accommodating this type of crowd-based technological disrupters. Uber’s non-adoption in HK is compared to its success in the US to assess the limitations of rule-making institutions in responding to the legal change required by sharing economy companies. 

Venture Capital Research in China: Data and Institutional Details

Posted on Fri, Dec. 16, 2022

Jun Chen, Renmin University of China

 

Although the history of China’s venture capital (VC) market is relatively short, it has already become the second largest VC market in the world and produced the second largest number of “unicorns” after the US. Despite the remarkable growth of both China’s tech sector and venture capital market, academic research in this area remains sparse. Two broad issues hinder the efforts of researchers studying this market: choosing the right data sources and understanding evolving institutional details. To address these two issues, Chen first describes available data sources, accompanied with filters aimed at improving the quality of the data. He then reviews institutional details unique to the Chinese setting and recent regulatory changes that have direct impacts on the Chinese venture capital market. 

Decoding the Supreme People's Court's Services and Safeguards Opinions

Posted on Thu, Dec. 15, 2022

Susan Finder, Peking University, University of Hong Kong

 

Over the past seven years, the Supreme People’s Court (SPC) has issued almost 30 documents that contain the phrase “judicial services and safeguards” (司法服务与保障) followed by the title of a new or updated national strategy or major initiative. These documents have received little attention at home or abroad, but they represent what is becoming the SPC’s most important function in the Xi era. Reading them closely illuminates how Party policy becomes legal policy, with the possibility of eventually being incorporated into soft law, quasi-law, and even hard law. These documents are written for insiders and employ a combination of court and party jargon. Many matters are implied or require knowledge about how the court and related systems work or interact to fully understand.

Chinese Data Protection in Transition: A Look at Enforceability of Rights and the Role of Courts

Posted on Thu, Dec. 15, 2022

Hunter Dorwart, Future of Privacy Forum

 

In recent years, the Chinese government has solidified its data protection framework through a series of laws and regulations to address the social, economic, and political challenges posed by the digital age. Many of these policy instruments explicitly recognize data subject rights and set forth numerous obligations for entities processing personal information—a trend seen in other regulatory approaches around the world. While much of the academic community has focused on the implementation of this larger framework through China’s top-down, centrally administered institutions, little discussion has turned to the role of courts in enforcing these rights at the local level. This paper attempts to address that gap by examining recent privacy litigation in China and situating it within China’s larger governance structure. 

Separation of Powers in Hong Kong: Inching Towards a More Flexible Judicial Interpretation 

Posted on Wed, Dec. 14, 2022

Danny Gittings, University of Hong Kong

 

Separation of powers is not an area where courts in a number of common law jurisdictions have displayed a great deal of consistency, and the Hong Kong judiciary proved no exception during the early decades of the Special Administrative Region. Faced with a doctrine enshrined in the Basic Law, which they had virtually no prior experience of interpreting during Hong Kong’s colonial era, the courts resorted to a simplistic and formalist approach during some early cases, drawing on rigid overseas precedents to enforce the prophylactic barriers between executive, legislature and judiciary so beloved by separation of powers purists. But influenced by the writings of Sir Anthony Mason, the courts began inching towards a more flexible interpretation of separation of powers during the second decade of the Special Administrative Region. Yet this quasi-functionalist approach remains a work very much in progress.

 

The Political Economy of Eminent Domain: The Economic and Political Effects of Housing Demolition in China

Posted on Wed, Dec. 14, 2022

Wenbiao Sha, Sun Yat-sen University

Xianqiang Zou, Renmin University of China

 

The authors ask whether eminent domain can deliver net benefits to households and how affected citizens politically interact with the government. The context is house seizure and demolition in urban China during 2010-2018, a period in which market value-based compensation is offered for seized houses. Using large-scale panel data, the authors find having one household’s housing seized or demolished increases households’ housing wealth by 14% and total consumption by 20%. It also reduces the labor supply of affected household members and improves their psychological well-being. They also find housing demolition increases affected citizens’ trust in local officials and subjective evaluation of local government performance in less corrupt cities. These findings highlight the importance of fair compensation and sound governance for implementing eminent domain programs in developing countries.

AI’s Future Impact on Copyright for AI-Generated Work: Insights from Chinese Case Law

Posted on Tue, Dec. 13, 2022

Ernest Southworth, University of Hong Kong

Yahong Li, University of Hong Kong

 

AI generated work presents a significant challenge to established rules of copyright. The authors provide insight into two landmark cases from the People’s Republic of China that directly deal with the issues of copyright raised by artificially generated works. Through the analysis of those cases, the authors offer a first in assessing judicial reasoning applied to AI generated works. The originality of AI generated works, including both the acts of the AI software and human users of that software, is discussed using a comparative approach between PRC, US, UK and EU law. The “arrangers” provision with the Copyright, Design and Patents Act 1988 is analysed and cross applied to those recent cases to demonstrate that it offers other jurisdictions a solid template for dealing with authorship disputes of AI generated work.

 

How the Chinese Judiciary Works: New Insights from Data-Driven Research

Posted on Tue, Dec. 13, 2022

Chao Xi, Chinese University of Hong Kong

 

The various transparency initiatives orchestrated by the Supreme People’s Court have significantly increased availability of data on the Chinese judiciary. A growing literature has ensued, offering penetrating insights. Xi's research aims to make original contributions to this rapidly developing field. It presents key findings from a number of data-oriented projects on the work of China’s judiciary, demonstrating the tremendous potential of data-driven research. It also highlights some potential methodological challenges, particularly the issue of data missingness.

Enforceability of Anti-Reverse Engineering Clauses in Software Licensing Agreements: The Chinese Position and Lessons from the United States and European Union’s Laws

Posted on Mon, Dec. 12, 2022

Yang Chen, University of Pennsylvania Carey Law School

Current laws related to intellectual property (IP) protection afford certain strong protections for software programs. However, all IP laws have their limits set by legislators purposefully, to maintain a sound balance between private monopoly rights and public interest. To deal with these limits, software companies frequently include certain restrictive provisions in software enduser licensing terms. The anti-reverse engineering clause is a typical example of companies’ efforts to supplement IP protections for software programs. The enforceability of these terms is a critical issue because they disrupt the balance intended by IP laws. Chen discusses the position of China on the enforceability of antireverse engineering clauses and finds that the Chinese position is too uncertain. By drawing on insights and policy considerations from the US and EU positions, Chen argues the one-size-fits-all approach is inadequate for China and that an intermediate approach would be a more appropriate alternative. 

 

All Rise for the Honourable Robot Judge? Using Artificial Intelligence to Regulate AI

Posted on Mon, Dec. 12, 2022

Simon Chesterman, National University of Singapore

There is a rich literature on the challenges that AI poses to the legal order. But to what extent might such systems also offer part of the solution? China, which has among the least developed rules to regulate conduct by AI systems, is at the forefront of using that same technology in the courtroom. This, however, is a double-edged sword as its use implies a view of law that is instrumental, with parties to proceedings treated as means rather than ends. That, in turn, raises fundamental questions about the nature of law and authority: at base, whether law is reducible to code that can optimize the human condition, or if it must remain a site of contestation, of politics, and inextricably linked to institutions that are themselves accountable to a public. For some of the questions raised, what the answer is may be less important than how and why it was reached, and whom an affected population can hold to account for its consequences.

The Criminalisation of Cryptocurrency Operation in China: Limits of Private Money Reconsidered

Posted on Fri, Dec. 9, 2022

Shuping Li, University of Hong Kong

 

Li examines the governance model and the political economic considerations in the criminalisation trend of cryptocurrencies in China since 2017. Cryptocurrencies are completely banned for threats to the central bank and commercial bank-dominated sovereign monetary system and their policy tasks; for financial stability, market integrity and illegal fundraising concerns and for regulatory cost and capability of identifying and supervising different kinds of cryptocurrencies and their operators. The downside of such a criminalisation decision is arguably sacrificing market efficiency and autonomy. Based on the idea that the essence of money is credit, Li then explores the limits of private money operation in China. A policy suggestion is that private entities with technological strengths for risk control and infrastructure design should be encouraged to provide banking and payment services. 

 

Book Review: Advancing the Right to Healthcare in China: Towards Accountability

Posted on Fri, Dec. 9, 2022

Michael Palmer, University of London

 

Zhang Yi’s book shows how China is trying to construct an effective healthcare system while dealing with various problems. The book examines issues in healthcare provision and rights primarily in the context of the international obligations that the PRC has assumed. In 2001, the PRC ratified the International Covenant on Economic, Social and Cultural Rights, and has responsibilities to implement appropriate measures domestically in order to deliver the right to health. A very important dimension is accountability. The book offers a valuable and well-structured study, examining in particular what role greater accountability might play in advancing the right to health care in the People’s Republic. It uses China as a case study, seeking to offer a model of constructive accountability that addresses health concerns not only in China, but also in other societies, especially those with non-electoral regimes.

Moving out of Agriculture as Emancipation? Property Rights, Labor Reallocation, and Gender Inequality in Rural China

Posted on Thu, Dec. 8, 2022

 

Xinjie Shi, Zhejiang University

Bingyu Huangfu, Zhejiang University

Songqing Jin, Michigan State University

Xuwen Gao, Peking University

 

This study examines the gender-differentiated effects of improved land property rights on labor reallocation in the timing of the implementation of the Rural Land Contracting Law in China, which allows farmers to lease out their land. The authors find that while both men and women tend to shift their labor away from the agricultural sector and into non-agricultural sectors following the land reform, women lag behind men, with a noticeable gender gap in growth of days worked in off-farm sectors. Implementing land reforms without accompanying reforms to address the root causes of the gendered difference in off-farm employment would not only limit the potential of the reform benefit but also result in the reduced bargaining power of females and subsequent negative effects on the welfare of the next generation, especially female children. 

 

 

Beyond Digital Protectionism? Comparing Personal Data Regulation Frameworks in China, India, and South Korea

Posted on Thu, Dec. 8, 2022

Rohan Grover, University of Southern California

Kyooeun Jang, University of Southern California

Li Wen Su, University of Southern California

 

Personal data is increasingly a site of political and economic contestation. States around the world have adopted personal data protection regulations (PDPRs) while asserting distinct data governance frameworks. What are the specific values and conceptualizations about data that are advanced with actually existing PDPRs? The authors provide a comparative policy analysis of PDPRs in three Asian states and then pursue a critical evaluation of “protectionism” and “sovereignty” in each context. They argue that PDPRs must be understood in each state’s specific conceptualization of privacy, relationship to major tech platforms, and approach to citizen-state relations. Their findings carry implications for evaluating data protection regulations within specific contexts and not within a simple binary distinction between an open and a fragmented internet.

Liberalizing the Chinese Market: State-Owned Enterprise Disciplines in the EU-China Comprehensive Agreement on Investment

Posted on Wed, Dec. 7, 2022

Xueji Su, Chinese University of Hong Kong

 

The newly-concluded EU-China Comprehensive Agreement on Investment (CAI) is the black sheep in the investment agreement family. Su pins down one principal investment liberalization discipline provided in the CAI – the state-owned enterprise (SOE) rule. Su concerns the capability and problems of the new SOE rule in addressing market access issues arising from the competition and incumbency of SOEs. Dedicated SOE disciplines are not an innovation of the CAI. Nor does the rule seem strikingly different from state-of-the-art treaty practice. However, delving into the nuances, Su finds that, when it comes to market liberalization, the CAI blurs out the stringent, clear-cut approach the (CP)TPP model is intended to establish. For both bodies of rules leave plenty of room for interpretation, the effectiveness of the new SOE rule remains uncertain and susceptible to politicization.

 

The Uncommon Law in the Hong Kong SAR: The Shifting Norms of Press Freedom under the National Security Law

Posted on Wed, Dec. 7, 2022

Anne S. Y. Cheung, University of Hong Kong

 

Some attributed the decline of press freedom to the National Security Law (NSL) , enacted on 30 June 2020 by the PRC Government to be directly applicable to Hong Kong. Indeed, the NSL provides a critical intersecting point to examine the continued operation of the one country two systems model. Other than analyzing the legal provisions of the NSL and the judicial interpretation of relevant cases affecting the media, the study of press freedom in the HKSAR must be examined in the larger national security roadmap of the PRC. Cheung argues that the enactment of NSL signifies an important milestone in the development of the “uncommon” law in the HKSAR: a move towards a system of common law with Chinese characteristics and rendering the common law operating in the HKSAR becoming uncommon among other common law jurisdictions. 

China’s Standard Contractual Clauses: Restricted Use and Complex Terms

Posted on Tue, Dec. 6, 2022

Graham Greenleaf, University of New South Wales

 

The Cyberspace Administration of China (CAC) issued a consultation draft on 30 June 2022 of its Standard Contract for the Export of Personal Information (SCE), and Provisions governing their use. These SCEs are China’s equivalent to the EU’s Standard Contractual Clauses (SCCs), but are very different in content and when they may be used. Greenleaf offers a short introduction to the SCEs. There are quite restrictive conditions on which personal information handlers (controllers) may use the SCEs. SCEs much include an extensive list of standard clauses, as well as provide quite a lot of information about the export in question. Also, the controller must first carry out a personal information protection impact assessment (PIPIA). This can be dangerous if the controller does not ‘get it right’.

 

China and WTO Reform

Posted on Tue, Dec. 6, 2022

Robert Wolfe, Queen’s University

Xinquan Tu, University of International Business and Economics

Bernard Hoekman, European University Institute

 

China, the EU and the U.S. are the world’s largest traders, and many of the tensions in the trading system arise in the relations among them. The authors’ premise is that reforming WTO is a necessary condition for the organization to be a more salient forum for the three large economies to address trade tensions, and that agreement among these three trade powers in turn is necessary to resolve the problems of the WTO. The authors discuss both how China understands WTO reform, and how the other two leading powers see the China problem in the WTO. They consider how the three see transparency, plurilateral negotiations, economic development differences, fisheries and industrial subsidies, WTO working practices, and dispute settlement. 

Breaching the Taboo? Constitutional Dimensions of China's New Civil Code 

Posted on Mon, Dec. 5, 2022

Alec Stone Sweet, University of Hong Kong

Chong Bu, University of Hong Kong

 

Chinese political and legal elites have celebrated the new Civil Code (Jan 1, 2021) as the most important statute in the nation’s history, and the ‘cornerstone’ of the turn toward ‘rule of law’ and ‘good governance’. While constituting an act of massive delegation to the courts, judges remain formally prohibited from directly enforcing the PRC’s Constitution. The authors explore the relationship between the Code and Constitution, through a comparative analysis of: (i) the wider process of the ‘constitutionalisation’ around the globe; (ii) the scholarly discourse on the ‘horizontal effect’ of rights and the prohibition of constitutional judicial review in China; (iii) the normative structure of the Code itself; and (iv) the development of ‘political’ control mechanisms, to be deployed by the CCP and the highest organs of the state to constrain how judges use their interpretive powers.

 

The Regulation of Personal Data Accuracy in China’s Public Social Credit System

Posted on Mon, Dec. 5, 2022

Hannah Klöber, University of Cologne

 

The state-run Social Credit System (SCS), China’s mega-project to improve governance capabilities and legal compliance, depends on accurate data to achieve its purposes, but national-level regulation promoting it is slim. Klöber examines the overall regulatory framework dealing with the accuracy of personal information used in the public SCS, considering special sectoral and provincial regulations and national legislation. Her study frames the SCS as a data processing mechanism and discusses data input and use, as well as the overall legal framework it operates in. Subsequently it assesses the legal content of existing regulations with regard to ensuring data accuracy. Klöber finds that special legislation is inconsistent, and that national legislation is often too vague to deal with the complicated and diverse processes of the SCS. Further legislation will be needed to standardize procedures.

 

Policy Coordination and Selective Corruption Control in China

Posted on Mon, Dec. 5, 2022

Jing Vivian Zhan, Chinese University of Hong Kong

Jiangnan Zhu, University of Hong Kong

 

The allocation of the scant attention available for fighting corruption strongly affects corruption control. Although research has found that authoritarian regimes tend to fight corruption selectively, it is unknown whether and how they allocate attention across different policy areas to combat corruption. The authors propose that single-party authoritarian regimes can steer anticorruption attention to the policy domains prioritized by the central authority through the mechanism of cross-organizational policy coordination. Using original datasets compiled from Chinese governmental and procuratorial policy papers from 1998 to 2016, the authors demonstrate that Chinese prosecutors direct anticorruption attention to the policy domains accentuated in the central government’s major reforms. Field interviews support this finding and reveal possible disruption of anticorruption efforts in policy domains falling off the central government’s top list. 

Why I Research China’s Supreme People’s Court (SPC)

Posted on Fri, Dec. 2, 2022

Susan Finder, Peking University, University of Hong Kong

Finder provides a brief article explaining a few of the most important things that non-specialists outside of China should understand about China’s highest court. First, the SPC is a unique institution among national supreme courts with some special functions and modes of operation. Second, like other Party and state organs, the SPC is organized in an administrative pyramid, and its judges have bureaucratic ranks. Third, because CCP leadership now values the role of the SPC in national governance, it is more involved in approving major changes to the court system. Fourth, the SPC is institutionally both more and less powerful than other apex courts. Fifth, the SPC treats judicial decision-making as an institutional function, making the role of individual judges less important and less visible. Sixth, what the SPC decides is already having an impact on the world outside China.

 

Review of Shucheng Wang, Law as an Instrument

Posted on Fri, Dec. 2, 2022

Donald C. Clarke, George Washington University

 

Clarke reviews Wang’s book Law as an Instrument. He finds that Wang provides a well-informed, in-depth exploration of the sources of Chinese law and catches the political realities of the Chinese legal system. As Wang himself says, the book “aims to make a contribution by systematically examining various sources of Chinese law and illustrating the dynamics of their sociopolitical logic employed in the applications.” Wang is specifically concerned with positive law, and even more specifically with law defined as the rules courts apply when making decisions in cases before them. The book covers the Constitution, formal judicial interpretations by the Supreme People’s Court (SPC), other kinds of judicial documents created by courts in the course of their work, formal Guiding Cases issued by the SPC, and judicial precedents more generally coming under various labels.

 

Why to Apply for Legal Interpretation on Jimmy Lai’s Hiring of a British Barrister

Posted on Fri, Dec. 2, 2022

Albert Chen Hung-yee, University of Hong Kong

 

The HKSAR gov requested an interpretation of the law from the Central gov regarding the case of Jimmy Lai, the founder of Next Media. The trigger point was a new legal issue that had never been dealt with in HK’s legal system, i.e., whether lawyers can be approved by the court to participate in litigation involving the National Security Law and represent their clients in court defense. It is an international practice for lawyers who are qualified to practice in their own jurisdictions to provide legal services and to represent the parties in court. Yet HK is a special case due to historical reasons, with its law allowing the court to approve in individual cases Queen’s Counsel to participate in the hearing of cases involving important and complex legal issues.

When a Judicial Mistake Went Viral: The Diffusion of Law in China

Posted on Thu, Dec. 1, 2022

Chao Xi, Chinese University of Hong Kong

Yingcheng Qi, Jilin University

Ruobing Wang, Chinese University of Hong Kong

Ning Cao, Chinese University of Hong Kong

 

Earlier anecdotal evidence suggests that judicially-developed doctrines, concepts, principles, norms and practices are disseminated not only downwards, but also upwards and horizontally, among Chinese courts. Methodologically, however, the rejection of the common law notion of precedents by China’s civil law tradition has rendered any attempt to quantitatively track the dissemination of legal information an unrewarding exercise. The spread – and citations by mistake – of a non-existent judicial interpretation across all four levels of the Chinese judiciary has offered a rare window into the diffusion of law in China. The authors present a first quantitative data-based evidence that hierarchical relationships between courts are at work in channeling information in the Chinese judiciary, particularly at the basic and intermediate levels. They also empirically demonstrate the role of cultural and geographical bonds in facilitating the dissemination of information among Chinese courts.

 

The Imaginaries of Regulatory Spaces in an Age of Administrative Discretion: Social Credit ‘in’ or ‘as’ the Cage of Regulation of Socialist Legality

Posted on Thu, Dec. 1, 2022

Larry Catá Backer, Pennsylvania State University

 

Social credit can be understood as the building blocks for a legality based on the quantification of objectives and expectations that target people, groups, activity, and their interactions in all spheres of human collective organization. Backer’s research asks a straightforward question: in what ways are social credit systems embedded into the conceptualization and implementation of socialist legality. Two sub-questions follow: (1) how does that embedding shape the character of social credit ‘as’ or ‘in’ the cage of regulation through which the rule of law structures of Chinese constitutionalism are ordered; and (2) in what ways does the implementation of social credit through platforms change or displace traditional forms of the administration of law. Backer’s paper undertakes a close reading of the progression of State Council SCS White Papers in the context of the recent State Council White Papers on the construction and characteristics of Socialist Democracy and Political Parties in China. The object is to theorize ideologically authoritative Socialist Legality expressed as both the law of and a law for social credit under the leadership and guidance of the Communist Party of China. Lastly, the consequences of this interlinking are explored.

 

Work or Crook: The Socioeconomic Consequences of the Export Slowdown in China

Posted on Thu, Dec. 1, 2022

Hong Ma, Tsinghua University

Yu Pan, Tsinghua University

Mingzhi Xu, Peking University

The authors highlight a lesser-known consequence of the remarkable slowdown in global trade growth in recent years: the rise of criminal activities. Applying the textual analysis to millions of judgment documents at all levels of courts in China, the authors find higher crime rates in cities that experience a more severe export slowdown. The effects are more pronounced in regions that specialize in manufacturing, that have a larger share of the young and migrant population. Regarding types of crime, larger effects are found in resource appropriation activities such as robbery, stealing, defraudation, counterfeiting, and intellectual property infringement, as well as in criminal activities involving violence, felony traffic offenses, drugs, prostitution, and gambling. Negative export shocks also cause shrinking job opportunities, declining labor earnings, and rising labor disputes, suggesting that a weakened manufacturing labor market lowers the opportunity costs of committing a crime. Alternative mechanisms, such as spending on stability maintenance, appear to play less of a role. The paper’s estimates indicate that if China's export had maintained an annual growth rate as high as in 2011, the crime rate would have decreased by 9.5% from the current level.

 

Uncovering Trade Secrets in China: An Empirical Study of Civil Litigation from 2010 to 2020

Posted on Thu, Dec. 1, 2022

 

Jyh-An Lee, Chinese University of Hong Kong

Jingwen Liu, Chinese University of Hong Kong

Haifeng Huang, Chinese University of Hong Kong

 

The importance of trade secrets has been increasingly recognized by both policymakers and industry players in China. This said, the country’s trading partners and foreign investors have perceptions that trade secret protection there is far from adequate. These perceptions are rooted largely in the unsatisfactory plaintiff win rates, the low awarded damages and the excessive burden-of-proof requirements that trade secret owners are subjected to by China. Although these issues have been controversial for more than two decades, relevant debates have been framed, without empirical support, as simply the perceptions of diverse stakeholders. To help bridge the gaps in this debate, the authors investigate all published civil cases pertaining to trade secret misappropriation in China from 2010 to 2020. In analyzing the empirical data, they present various findings that shed considerable light on patterns of trade secret protection in China during the 2010–2020 period.

Judicial Independence, Local Protectionism, and Economic Integration: Evidence from China

Posted on Thu, Dec. 1, 2022

Ernest Liu, Princeton University

Yi Lu, Tsinghua University

Wenwei Peng, Hong Kong University of Science & Technology

Shaoda Wang, University of Chicago

 

The authors show that judicial independence can reduce local protectionism and foster cross-regional economic integration. Their research exploits a judicial independence reform in China with staggered roll-out since 2014. The reform removed local governments’ control over local courts’ financial and personnel decisions, thereby substantially improving local courts’ independence. The authors find that local defendants’ rate of winning court cases against non-local plaintiffs declined by 7.0% after the reform. The effect is mainly driven by improvements in the quality of judicial decisions and is more salient for politically connected local defendants. Over time, the reduction in local protectionism encouraged smaller non-local firms to file lawsuits against larger local firms. The authors also find that the decline in local protectionism could attract 8.4% more inward investment flows into reformed localities. This has the potential to increase China’s GDP by 2.3% when the judicial independence reform is implemented nationwide.

Finance Without Law: The Case of China

Posted on Wed, Nov. 30, 2022

Shitong Qiao, Duke University

Can there be a highly developed financial market without the legal protection of investors and creditors? Qiao investigates how two financial markets of trillions of dollars have developed extralegally. More specifically, he examines: (1) how Chinese internet companies have designed contracts to circumvent the government’s ban on foreign capital in certain industries and (2) how Chinese entities and foreign investors contract out of China’s stringent regulations on the issuance of international bonds. These extralegal contracts incur significant legal uncertainties and are unlikely to be enforceable in Chinese courts; yet numerous international investors have invested in China through such contracts. Overall, Qiao’s paper reveals that the network of financial intermediaries that controls access to the international capital market, the industry-specific communities of Chinese entrepreneurs and corporations that need access to that market, and the Chinese state, which promotes stability and predictability in both markets despite their extralegal contractual basis, replaces judicial enforcement in supporting financial development of a remarkable duration and scale. 

Bureaucracy in the Service of Law: Holding Chinese Controlling Shareholders Accountable

Posted on Wed, Nov. 30, 2022

Ezra Wasserman Mitchell, Shanghai University of Political Science and Law

Common law style fiduciary duty has existed in Chinese Company Law since 2006. Most of the literature pronounced it a failure, or at best a slowly developing doctrine. But Mitchell’s research finds that recent judicial enforcement of fiduciary duty is quite healthy in privately-held companies, at least in Shanghai. Although doctrinal analysis is almost non-existent, Shanghai judges know a fiduciary breach when they see one and possess the statutory means to redress it. Matters are also well when it comes to holding controlling shareholders accountable in privately-held companies, despite the rare usage of the relevant statute. The real problem is the virtually non-existent legal accountability of controlling shareholders in mixed ownership enterprises, especially listed SOEs. Mitchell proposes a way to situate fiduciary enforcement within the appropriate and suitable Chinese bureaucratic tradition rather than to continue to try to force adjudicative methods where they have failed and will continue to fail because of structural, political, and cultural impediments, thus creating a uniquely Chinese way of controlling shareholder fiduciary enforcement.

Citizens’ Data Privacy in China: The State of the Art of the Personal Information Protection Law (PIPL)

Posted on Tue, Nov. 29, 2022

Igor Calzada, University of Oxford

The Personal Information Protection Law (PIPL) was launched on 1 November 2021 in China. Calzada provides a state-of-the-art review of PIPL through a policy analysis. His paper aims to compare the three main worldwide data privacy paradigms that exist at present: (i) the General Data Protection Regulation (GDPR) in the E.U., (ii) the California Consumer Privacy Act (CCPA) in the U.S., and (iii) PIPL in China. The research question is twofold: (i) how will PIPL affect the data privacy of Chinese citizens and consequently, (ii) how will PIPL influence the global digital order, particularly paralleling the existing GDPR and CCPA? The paper first introduces the topic of data privacy as a global concern, followed by an in-depth policy context analysis of PIPL and a literature review on privacy that elucidates in particular the impact of the Social Credit System. A comparative benchmarking is then carried out between the GDPR, CCPA, and PIPL. A case study of Shenzhen is also examined by undertaking a multistakeholder analysis following the Penta Helix framework.

Converging Proposals for Platform Regulation in China, the EU and the U.S.: Comparison and Commentary

Posted on Tue, Nov. 29, 2022

Liyang Hou, Shanghai Jiao Tong University

Shuai Han, Shanghai Jiao Tong University

China's State Administration for Market Regulation announced two guidelines in October 2021. The drafted Guidelines for Classification and Grading of Internet Platforms categorize digital platforms into super, large and medium-to-small platforms by size, and the drafted Guidelines for Implementing Subject Responsibilities on Internet Platforms impose extra responsibilities and obligations when a platform falls into the category of “super” or “large”, with the purpose of securing fair competition, equal internal governance, and an open ecosystem. China is certainly not alone in doing so. The EU recently adopted the Digital Markets Act, while the US House of Representatives formed a set of five bills trying to hold accountable Big Tech companies for anti-competitive conduct. All these guidelines and proposed acts have one common goal that is to seek government regulation against big platform operators outside the box of competition law. So what are the differences between these arrangements, and what should be the future for platform regulation?

A Comparison of Inbound and Outbound Investment Regulatory Regimes in China: Focus on Environmental Protection

Posted on Tue, Nov. 29, 2022

Matthew Erie, University of Oxford

Jingjing Zhang, University of Maryland

The paper compares China’s foreign direct investment (FDI) and overseas direct investment (ODI) regimes, finding that, at a general level, whereas the former has transitioned from restrictive to lenient, the latter has evolved in the opposite direction, from lenient to restrictive. The different trajectories cannot be explained solely in terms of the time lag in their respective development. The authors argue that one reason why the FDI regime is more advanced is because of the influence of the WTO accession of 2001. Whereas the FDI regime has become more streamlined, efficient and coordinated, partly as a result of the WTO accession package, the ODI regime, which has not yet benefited from an analogous multilateral framework, remains bureaucratic, suboptimal, and disaggregated. The authors base their analysis on a data set of hundreds of normative documents that comprise the FDI and ODI regulatory regimes. They focus on the specific example of the regulation of the environment impact of FDI and ODI, and find that the environmental and social impact of Chinese ODI is inadequately regulated resulting in potential harms to Chinese investors and impacted communities in host states alike in the course of Chinese-financed projects overseas.

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