上课: Crime Rates in China – Political Pressure + Statistics = Cue Elevator Music

Crime rates in China are low. The latest statistics (see UN Office on Drugs and Crime) place China in the arena with Switzerland and Japan, countries which boast some of the best internationally acknowledged public security and domestic order. As of 2012, China’s murder rate was calculated at 1.1 per 100,000 (compare to Switzerland at 0.7, Britain at 1.2 and America at 5.0). The total amount of reported criminal cases in 2010 was 2.6million (in the US there were 10.3million cases that year). Violent crime and property crime show similarly low numbers. Drug trafficking and abuse rates have not shown significant increase from their near non-existent numbers pre-1979. 

Statistics are by nature misleading. How much credence can we really attribute to these glowing reports? The devil is in the details: ‘murder’ does not necessarily include killings which occur in the course of other violent crimes, nor is each one ‘murder’ equivalent to one victim. According to the World Health Organisation, for the 23,300 murders in 2002, there were 38,000 deaths from “homicide-related injuries”. Furthermore, ‘violent crime’ has no set definition and property crimes do not appear to always count towards general crime statistics. So maybe don’t go poking metaphorical bears in China just yet. 

Let’s set the scene. 

China has experienced profound social, political and economic change in the past 30 years. The country is under significant social stress - growing pains if you will – as millions of rural migrant workers flood the cities and the economic gap between rich and poor widens. From what we know of the human condition, these circumstances do not match with the rosy picture painted by the crime statistics. 

Crime in contemporary China is divided into two distinct periods in almost every analysis: Mao Era (1950s-1979) and Post-Deng Xiaoping Reforms Era (1980s-present). Mao Era China was virtually crime-less. Scholars have attributed this to an “institutional suppression of personal economic motivation”. All property which was valuable enough to steal was a state asset and thus the property of the many already and punishments were prohibitive in their severity. Deng Xiaoping’s Reforms in 1978 marked the economic remaking of China. Accompanying these reforms were the introduction of mobility and the reality of unemployment (factors not within contemplation for Mao’s China). The sun had set on the utopian collective and an economically driven society had taken the field. 

The division between the eras is artificially intensified. The government laments the increase in crime, blaming western cultural influences and glorifying the Mao Era days of security and safety. The idea is: crime is a plague from the West. Are not Hollywood movies known for making good guys out of criminals (see: Ocean’s Eleven) and commending a flagrant disregard of the rules? Chinese culture is one of harmony and peace – no one would deliberately seek to commit any offence. Of course, this is a ridiculous notion. Crime obviously existed in China before 1979. And it’s not as if Chinese culture doesn’t glorify the rogue – one of the Four Great Classical Novels (四大名著) is The Water Bandits (水浒传), a Robin Hood-esque tale of outlaws. But this aspiration to go back and adhere to ‘true Chinese values’ of ‘pre-crime’ drives much of the Ministry of Public Security’s goals. 

The first time China submitted its national crime statistics to Interpol was in 1986. Before that, they were considered ‘state secrets’. Crime statistics are the affair of the Ministry of Public Security and reported yearly by the National Bureau of Statistics. Offences are categorized as criminal (more serious) or public security (less serious) cases. The classical problems with official statistics are there: victims’ reporting behaviour varies over time; definitions of crime change; and recording standards are not consistent. Problems are exacerbated by the Ministry’s aspirations. 

In 2010, the Ministry of Public Security demanded at least 85% success rate in murder cases. The result: if their chances for cracking a case don’t look so great, police officers simply do not register the case. Statistics only look at the registered papers, after all. The 1980s-1990s policy of handing out ‘case-cracking’ bonuses also led to under-recording; police officers once again were incentivised not to record hard-to-solve cases. An emphasis on clearing cases also has darker consequences: wrongful conviction and torture to get favourable confessions are serious concerns to scholars and the populace. 

And there we have it: political pressure and a glorious history of crime-free society set a high bar for China. Maybe China’s low crime rates do not tell the whole story. Maybe the statistics are a bit on the utopian side. But we cannot say anything for sure. 

In the end, what matters is that China feels safe. People are not afraid to walk around alone at night and girls don’t clutch desperately at their purses in the crowded Beijing metro. A prevailing sense that public security is high may do more for crime rates than reports tabulating incremental increases.

One RenMin professor joked: let’s not give the people the idea that there is a burgeoning market for crime out there. 

KEYWORDS: Crime in China, Statistics, Policing, Mao Era, Ministry of Public Security, Safety and Public Order

上课: FDI and BITS – Enter Stage 3, Thank You Barbados

China is a land of contradictions. While one NPC (National People’s Congress) member refers to China as a developing country, a standing judge of the Supreme Court staunchly defines China as a developed nation. The Middle Kingdom flaunts a free market alongside a planned economy. It is both an investor (especially in Africa) and the largest recipient of foreign direct investment in the world after surpassing the USA in 2012.

The first law relating to Foreign Direct Investment (FDI) was the Sino-Foreign Equity Joint Venture (EJV) Law promulgated in 1979, when China officially opened its doors to the world. Other traditional forms of FDI followed: Wholly-Foreign-Owned Enterprises (WFOE) in 1986, Sino-foreign Co-operative Joint Ventures in 1988. A few years later, new patterns joined the game: Foreign Investment Companies Limited by Shares (FICLS), Holding Investment Companies (HIC), and Build Operation Transfer (BOT)s. 

FDI and Joint Venture Law is a clear demonstration of one of the major themes in Chinese Law: incremental transition. Not only does this area of law speak of the co-existence of prima facie mutually exclusive dichotomies (China standing with one leg in the developed and the other in the developing world), but it also highlights China’s priorities as it slowly opens up. China has gone through three distinct stages of development, most clearly visible in Bilateral Investment Treaties (BIT) she has signed. 

Stage One kicks off in 1982: China signs her first BIT with Sweden (yes, the Swedes – but fear not, lest all my ramblings about the Deutsch be naught, Germany was close behind). This was the era of the traditional patterns for FDI, where the norm was limited liability companies where the Chinese would be able to have a say (for this was the time when the legal climate lacked a Corporate Law and all corporations belonged to the government). China wanted investors really invest in China: no half-built house of cards subject to the whims of the foreign market and no exploitation of China’s labour and natural resources. EJVs required foreign investors to invest a minimum of 25% of the capital (as opposed to most other contemporary systems in developing countries, which set a maximum in order to prevent foreign control). China wanted foreign investors to make efforts in the management of their joint ventures; to be invested in their enterprises. Registered capital, profits and risks were to be divided by equity and no matter what the percentage of investment was covered by the foreign investor, the Chairman of the Board of Directors (the big boss of the EJV), had to be Chinese. All production and operation plans had to be submitted in their intimate entirety to the corresponding administrative authority (a planned economy check by the government). WFOEs – since no Chinese party can participate in the enterprise – were governed by two strict requirements: (1) advanced technology and equipment should be used; and (2) products produced should be marketed outside China. China would benefit through the in-state building and operation of advanced technology. Activate educational thirst for a self-sustainable industrial revolution. 

In Stage One, most BITs advocated negotiation and consultation first and only allowed international ad hoc arbitration if the local court confirmed nationalization or expropriation (read: at the discretion of the Chinese government). 

Stage Two spans 1993-1998, defined by China joining ICSID (International Center for Settlement of Investment Disputes). The laws themselves were changing: no longer was the Chairman of the Board of Directors required to be Chinese – this was to be decided privately by the parties with the only stipulation that if the Chairman was foreign, the Vice-Chairman be Chinese and vice versa. And the big drop: no arbitrary nationalization or expropriation of the joint venture was permitted to the government. Except for “the social public interest”, joint ventures could breathe easy. BITs added provisions: competent courts of the contracting party accepting the investment can settle disputes (before, this was limited to Chinese domestic courts); disputes involving the amount of compensation for expropriation that cannot be settled within six months could now be submitted to ICSID or ad hoc arbitration if the state is not party to ICSID (with the caveat that only disputes involving the amount of compensation for expropriation could be submitted to the ICSID or ad hoc arbitration).

Stage Three is largely marked by reforms to many of the FDI and Joint Venture laws enumerated at the beginning of this essay – all circa 2000 (China having ascended to the WTO effective in 2001). The ascension of China to the WTO is a reoccurring factor in much of the legal reform present in the Chinese system. Trade unions were granted a voice. Raw materials for the joint venture could be purchased both inside and outside of China, according to the principle of fairness and reasonableness. Furthermore, there was no longer a need to file production and operation plans to the Chinese government. The independence of the joint ventures became a factor in law-making.

But Stage Three really begins in 1998 with the signing of the BIT between China and Barbados. This BIT lifted all limitations: all disputes, not just those involving expropriation or nationalization compensation, could be submitted to ICSID and ad hoc tribunals. And while ad hoc tribunal awards are only final and binding as reviewed by domestic Chinese courts, ICSID awards are final and binding with only ICSID itself having the authority to declare the awards non-enforceable. The unspoken shift: Chinese courts delegating some of their power. 

Three stages, a neat depiction of changing Chinese priorities: incremental opening up of the Chinese economy and the acquiescence of the legal system to playing the international legal game (at least as far as disputes go). The BIT with Barbados marked the start of a stage that is still incrementally working towards greater independence for joint ventures and greater protection of foreign enterprises today.

Thank you, Barbados. 

KEYWORDS: FDI, Joint Venture Law, EJV, WFOE, BIT, Incremental Transition, Opening Up, Developed & Developing, WTO, ICSID, ad hoc international tribunals, expropriation, tribunal awards

上课: One for All and All for One, the Character of the Chinese System of Law

There are five legal families recognized by legal scholars: the civil law, the common law, Islamic law, Hindu law and Chinese law. Of course, other legal systems are sometimes added to the list – e.g. socialist law – while yet other classifications condense the legal families into just three: civil, common and religious. The modern Chinese law borrows from three legal families – civil, common and Chinese – and so I will attempt to briefly skate over the three here.

The civil law and common law are most easily differentiated when compared based on their sources. The civil law comes from Roman law (The Code of Justinian) and is characterized by laws that are written, codified and not determined by judges. Customs, practical realities – Germanic, ecclesiastical, feudal and local -, and prevailing thought – natural law and legal positivism – meshed with Roman law to form the Continental-European tradition of law. In that sense, it is often referred to as Romano-Germanic law. Civil law draws from abstractions (and thus has an inquisitorial court system – that is, a system where the court is actively involved in ascertaining the facts of a case) and distinguishes substantive rules from procedural rules.

The common law system finds origins in the Norman Conquest of Britain in the 11th century. It is commonly referred to as Anglo-American law. As opposed to the civil law, the common law is a judge-made law. Cases are the primary source of law, acting alongside legislative laws and statutes. Law is based on the rule of stare decisis: the principles and rules established by the court in previous cases are binding (or at least persuasive) on the courts in subsequent similar cases. Furthermore, the court system is an adversarial system, not an inquisitorial one: the court is a neutral arbitrator between the prosecution and the defence. Thus, lawyers play the role of interrogators and judges are understood as the creators of the law. Judges are chosen from the ranks of lawyers, unlike in the civil system where judges follow a separate training regime.

Chinese law refers to the ancient legal tradition of China and other Asian countries which had close relations with China. The ideology defining this legal system is the outcome of Confucian thought: law serves to reinforce roles and as a means of social control. Confucian philosophy strives for harmony, opposing the use of excessive legal coercion and instead advocating education and moral examples.

The modern legal system in China folds together all three of the above systems. Primarily based on the civil system as a result of the codification of law under the Republic of China in 1930, common law principles do find a way into the system. Where the inquisitorial system still reigns in theory, judicial reform has practically instituted an adversarial system in the people’s courts (so that the parties and their lawyers, rather than the judges, take on the active role). The prevalence of the informal legal system – using mediations as a means of solving civil disputes, where personal relationships are paramount – is testimony to Confucian thought.

All for one and one Chinese system for all legal traditions. Now the fundamental question…does it work?

KEYWORDS: Legal Families, Chinese Legal Culture, Civil Law, Common Law, Chinese Law

上课: The Dark Ages, the Black Abyss or 1949-1978 China

All professors of Chinese Law – or at least those giving a general overview of the system – preface their forays with an allusion to the dark abyss from which the modern Chinese law sprung. 

Okay, so perhaps I am being a bit melodramatic. Constitutional Law and the Law of Marriage did exist between the years of 1949-1978. In fact, Constitutional Law was an active project during those years. The National People’s Congress has enacted four Constitutions since 1949: the 1954 Constitution, the 1975 Constitution and the 1978 Constitution all leading up to the current working Constitution of 1982, which has been amended itself four times (in 1988, 1993, 1998, and 2004). 

However, the legal system itself was essentially outlawed (paradox if there ever was one). Political decisions were not required to comply with the Constitution and government actions were often taken outside areas regulated by the latter. Furthermore, the courts themselves were more puppets up for show than anything else. Legal education and the legal profession were destroyed. Without legal experts or lawyers or judges, there was no one to advocate a rational formal system or, in fact, draft one. 

In 1979, the siege ended and a scramble to set up a functioning legal system initiated the reform and opening up of China. The primary focus was the economy. The method, an organized madness: laws were issued for specific topics and locations, drafted on a trial basis and then redrafted later. Efforts were made to professionalize and rationalize the judiciary and legal profession after nearly thirty years without a formal legal education system. 

The darkness before the birth of the modern legal system has important repercussions. Mediation is an important way to handle civil disputes, a legal education is not a requirement to take the bar, and the legislature, not the Constitution, reigns supreme. 

Let it not be said that legal history is ever irrelevant.

KEYWORDS: Chinese Legal Culture, Chinese History, Constitutional Law, Opening Up