Foreign Policy Research Institute A Nation Must Think Before it Acts China’s Legal Encounter with the West

China’s Legal Encounter with the West

China’s legal encounter with the West began unhappily in the first half of the nineteenth century. At the close of the preceding century, the Qianlong emperor had dismissively informed an emissary from King George III that China had no use for English goods. If there were to be trade, the ruler of the Celestial Empire told his barbarian visitor, it would be conducted through the tribute system, with its rituals demanding that foreigners recognize their subordination to the Chinese throne. Over the next few decades, China’s trade with West had grown rapidly, bringing frictions that included legal issues. Fearing that the British would not properly punish their sailor who accidentally killed Chinese boatmen when firing a salute, Chinese authorities demanded that he be handed over. When the seaman was sentenced to death by public strangulation, it became one of many incidents that prompted Western powers to denounce and reject China’s legal system.

Foreign states’ refusal to subject their nationals to Chinese justice gave rise to extraterritoriality: non-Chinese in China were regulated largely by their home countries’ laws and pursued justice in consular courts or “mixed (Chinese-foreign) courts” that their own governments set up in China—courts that some Chinese also used because they saw them as fairer than domestic alternatives. Chinese resistance to trade, especially British-imported opium for sale in Chinese markets, brought further conflict, including the Opium Wars in the 1840s. Derided by Chinese nationalists as “unequal treaties,” the agreements that Western powers and Japan required China to sign gave those states much authority over law in China, including extraterritorial jurisdiction, quasi-colonial powers in “treaty ports” through which China’s trade passed, and control over key trade-related positions in China’s government.

From Reform Through Revolution

Seeing their country denied the international legal rights of a sovereign state because it was not a member of the “club” of “civilized” or “Christian” nations, and seeing China’s legal institutions as a source of the nation’s inability to avoid foreign encroachment, Chinese reformers in the late nineteenth and early twentieth centuries began to study Western law. Their project expanded from learning Western international law in order to press China’s case against unjust treaties and unequal treatment to studying Western constitutions and laws in the belief that they explained the power of the states that had them. One result was a late Qing dynasty constitution that reflected a distinctively Chinese understanding of Western constitutionalism, casting legislative, executive and judicial powers as facets of the emperor’s enduring sovereignty and citizens’ rights as grants from the emperor. More radical reformers expanded the range of “techniques” that could be borrowed from abroad and narrowed the Chinese “essence” that had to be preserved. One argued that thoroughgoing changes to China’s constitution and institutions, including mimicking the Western-oriented modernization of Peter the Great’s Russia and Meiji Japan, were pragmatic solutions that Confucius would have endorsed. As another leading reformer saw it, China had moved from changing technology to changing institutions to changing culture, all with the aim of saving an imperiled nation and race. In his variation on Western models, a Chinese constitution’s grant of rights to the people would not restrict the state but would strengthen it by energizing the people.

Reform gave way to revolution, with its principal early theorist, Sun Yat-sen, continuing the project of constitutional borrowing. For China’s first republic, Sun envisioned a five-power constitution that combined the three branches of many Western constitutions with two borrowed from Chinese tradition: a censorate and a body overseeing civil service examinations. His vision also included “three people’s principles” that evoked themes from foreign constitutions: people’s nation, people’s sovereignty, and people’s livelihood. This constitutionalism also echoed democratic ideals of Western states’ charters, including popular power to initiate and overturn laws and to select and remove officials. Sun believed, however, that the Chinese people were not ready for democracy and that a period of “tutelary” democracy would be necessary. This notion that good laws should be on the books, but might not be ready for implementation, lingers today in the Reform-Era Chinese legal system.

The People’s Republic in the Mao Years

Mao Zedong’s Chinese Communist Party regime moved away from this tradition despite its emergence from the broader Chinese nationalist revolution. Before coming to power, the Party had had an ambivalent relationship with Moscow and the Communist International, including on issues with implications for law and constitutions. Mao’s party embraced Marxist doctrines of class struggle and Leninist notions of democratic centralism (under which citizens’ input mattered in formulating policy, but disciplined obedience to the Party’s decision was required). Yet, the CCP also developed ideas of an inclusive “new democracy” and “practice” as “the sole criterion of truth.” On coming to power, the new regime formally cancelled all the laws of the prior Nationalist regime and borrowed its constitution and principal laws from the Soviet Union. The first PRC constitution, adopted in 1954, was closely modeled on the USSR’s Stalin constitution, including its famously empty list of liberal rights and liberties.1

The PRC adapted much of its law from Soviet sources. In an example from the 1950s, a worker who wrote “Mao is dead” on a slip of paper that he left in his drawer faced prosecution for his act. The court decided that criminal defamation was the appropriate charge and acquitted the defendant because Soviet defamation law required intentionally communicating the libelous sentiment to another, which the defendant had not done. In the early 1960s, those accused of stealing faced prosecution under laws based on USSR models, with their sentences depending on a mix of universal and distinctively communist factors, including the magnitude of the harm, prior criminal record, class background, whether the theft was from the state, and the presence (or absence) of a regime-directed political “campaign” targeting the defendant’s activity or a group to which he belonged. In international law, Mao’s China subscribed to Soviet doctrines that there were distinct systems of “capitalist” or “bourgeois” international law and “socialist” international law, not a single universal system as “imperialist” countries self-servingly maintained. Until the Cultural Revolution brought destruction of Chinese laws and legal institutions in the later 1960s, much of this Soviet-style “socialist legality” endured despite the serious rift between Moscow and Beijing that began in the late 1950s.

Reform-era China

Since the Reform Era began in 1979, China has reopened to unprecedented, vast, foreign (primarily Western) legal advice and assistance programs. Providers have included United Nations agencies, North American and European Union government entities, and major private foundations in the U.S. and elsewhere. Their efforts have addressed a wide range of legal issues. Projects focusing on legislation have included law-drafting techniques, public law areas (such as administrative procedure) and market-oriented economic law (such as contract, securities, company and intellectual property law). Exchanges and visits have been extensive, including U.S. Supreme Court Justices, other judges, legal academics, government attorneys, lawyers in private practice and from nongovernmental organizations who have traveled to China in large numbers. The flow of Chinese judges and officials with responsibility for legal affairs to the U.S. and elsewhere in the West has been larger still. In recent years, top legal officials in the PRC have placed even more emphasis on learning foreign law as Chinese companies increasingly “go out” into the world and deal with other states’ legal systems. Significant projects, especially from NGOs, have focused on increasing ordinary Chinese citizens’ “access to justice” and legal aid for the poor, women and other disadvantaged groups.

Less formal mechanisms for transmitting legal ideas from the West have been broader and perhaps more significant. Legal educational ties have expanded exponentially. Many thousands of PRC-educated law students have come to the U.S. for graduate legal education during the last fifteen to twenty years. Leading Chinese law schools have cooperation or exchange programs with counterparts in the U.S. and elsewhere. Some grant their own degrees. Full “joint-venture” law schools (with Chinese and western partners) are starting to emerge. Fulbright grants, the former Committee on Legal Educational Exchange with China, and Chinese law research centers at some leading U.S. law schools have given Chinese legal scholars and judges extended periods in abroad and exposure to foreign legal ideas.

Since reverting to China in 1997, Hong Kong, with its British-style legal system, has become an especially important and relatively uncontroversial source of Western-style legal ideas in China. Foreign law firms provide another major channel. Many foreign firms have offices in Shanghai and Beijing staffed with Chinese and foreign lawyers. Chinese firms have many Western-trained lawyers. These lawyers interact with one another, make Chinese laws intelligible to sophisticated foreign clients, and provide advice on foreign law to Chinese clients with transnational projects.

Much foreign legal and law-related information reaches China through traditional media publications and, increasingly, the Internet. Given the politically sensitive nature of some legal issues in China, however, this avenue for legal influence faces constraints from the regime’s restrictive regulation of new media, including web cafe patrols, Internet police, and requirements that foreign Internet service providers disclose user information and acquiesce in censorship.

Western Law Through International Legal Obligations

China’s growing acceptance of international legal obligations has created another potent mechanism for imparting legal rules and norms primarily of Western origin. China’s entering the World Trade Organization and its burgeoning foreign trade provide the most significant example. Former Premier Zhu Rongji pursued WTO membership partly because he believed it would accelerate legal and other reforms in China’s economy. WTO rules require China to provide independent and unbiased legal review of trade-related decisions (such as imposition of a tariff or refusal to allow goods to enter the country), to make all trade-related laws public and accessible, and to submit trade laws and practices to regular review for conformity to WTO rules.

Those rules require Chinese laws to embody principles of liberal trade, non-discrimination among trading partners or against foreign goods that have lawfully entered, and to forego unfair export-promotion. As a WTO member and through specific pledges it made in acceding to the WTO, China became bound to amend laws governing intellectual property, service sectors and other matters, bringing them more into line with global norms. On some expansive assessments, WTO membership implies an obligation to provide an effective legal framework for a market economy and a relatively high degree of rule of law. Otherwise, on this view, a member state would find itself chronically in violation of its WTO obligations.

China’s first years in the WTO have brought numerous foreign complaints of poor implementation, including tolerance of intellectual property piracy, unremoved barriers to foreign auto parts sales, and improper subsidies for Chinese paper exports. China too has complained that partners’ acts have violated obligations to China, including U.S. barriers to steel imports and Korean sales of garlic at artificially low prices. Although these disputes produce ill will, and have reached various stages in the WTO’s highly judicialized dispute-resolution process, they also reflect and encourage diffusion of Western capitalist-created legal norms into China.

Human rights provide a second key example. After decades of rejecting international human rights law as sham universalism and a Western plot, China officially accepted universal human rights amid Beijing’s drive to recover from the international opprobrium that followed the violent suppression of the Tiananmen Democracy Movement in 1989. China has accepted the principal international human rights treaties. Its constitution and laws contain many provisions that parallel those binding international legal norms. To be sure, China’s acceptance has been hedged in principle, and practice continues to fall woefully short. Chinese citizens’ rights remain officially dependent on their fulfillment of duties. Collective rights, rights to development, and rights to state sovereignty receive priority over individual liberties. Provisions promising freedoms of speech, assembly, and religion and freedoms from unreasonable searches and arbitrary detention are not honored. (Chinese law allows three years incarceration without even the minimal protections offered by PRC criminal justice.) China’s human rights record remains marred by legally mandated repression of “evil cults” such as Falun Gong, condemnation of accused “separatists” such as the Dalai Lama, use of criminal prosecution and exile against “seditious” democracy activists such as Wei Jingsheng, and recalcitrance in allowing the use of the international legal means under the UN Charter to address atrocities in areas where China has influence, such as Sudan.

Nonetheless, China’s engagement with international human rights law has made foreign laws and norms more salient. It is now more acceptable to criticize China’s human rights shortcomings and to challenge regime failures to live up to the human rights legal obligations that it has accepted. This greater acceptance of international human rights law notably has coincided with improvement in human rights conditions in China and, most recently, China’s growing acknowledgement of a lawful international role in addressing human rights atrocities abroad.

“Globalization” and Legal Change

Several other aspects of China’s deepening engagement with the outside world—many of them economic—have brought diverse and powerful external influences on Chinese law and related areas. China has enacted foreign investment laws that are generally familiar to international investors based in the developed West and other countries with similar legal systems. Since the beginning of the Reform Era, the PRC has adopted increasingly “international style” laws governing Chinese-foreign joint ventures, wholly foreign-owned subsidiary companies, foreign investment in shares of firms listed on Chinese stock exchanges, Chinese-foreign joint-venture mutual funds that invest in China, and foreign firms’ merger with, or acquisition of, Chinese companies. With this framework, China has risen to the top ranks of foreign investment recipients, rivaling the United States.

Chinese firms’ pursuit of foreign capital has led them to list on overseas stock exchanges, especially New York and Hong Kong. Such listings have required Chinese companies to meet those exchanges’ regulatory requirements. This has demanded internal reforms for large PRC enterprises and created another avenue for influence of foreign (primarily Anglo-American or Western) ideas in business and economic law.

China’s trade surpluses have produced vast foreign exchange reserves (approximately $1.5 trillion) that Chinese companies and the Chinese state (through a nascent sovereign wealth fund) seek to invest abroad, including in the U.S. and elsewhere in the West. This requires Chinese investors to conform their behavior to host-country laws, including specific foreign investment laws and general corporate and business laws. The firms that Chinese companies acquire retain their prior obligations under their home-country laws and their extensive experience complying with those laws. These features can be sources of significant influence from abroad for PRC entities.

Other important channels for foreign, primarily Western, legal influences have come from more friction-producing aspects of China’s globalization. While some Chinese acquisitions of U.S. firms have been relatively uncontroversial (such as Lenovo’s purchase of IBM’s personal computer division), others have provoked resistance (such as CNOOC’s failed bid for Unocal). Legal processes (including review by the federal inter-agency Committee on Foreign Investment in the United States, focusing on national security implications) and political reaction (including congressional scrutiny of China’s investment motives and willingness to abide by market rules) have exposed would-be Chinese investors to arcane and unwelcoming features of U.S. law, much as Japanese companies faced when they bought American assets in the 1980s. This exposure has occurred at a time when PRC authorities have been seeking templates for tougher laws to protect Chinese firms from foreign acquisition or competition.

Scandals involving dangerous Chinese exports to the West and Japan—including dumplings, toys, pharmaceuticals and pet food—have brought increased foreign demands and reinforced domestic pressure for greater health and safety regulation, including reforms that incorporate or adapt foreign standards or methods. As Chinese factories have become major sources of cross-border pollution in East Asia and beyond, and as China’s mishandling of SARS revealed a potentially recurring source of threats to global public health, foreign sources have increased pressure and offers of advice to bring relevant Chinese laws and practices more into line with international standards generated by Western and developed countries.

China’s integration with the global economy has generated more discrete legal disputes that have created another mechanism for legal learning from the West. PRC firms now routinely litigate and arbitrate commercial disputes in U.S. and other foreign courts and arbitration tribunals. Many of these disputes are governed by American or other foreign law. Litigation in Chinese courts and proceedings before the China International Economic and Trade Arbitration Commission and other PRC arbitral bodies also include many cases with foreign parties and applying foreign law.

The Road Ahead

Although the scope and range of foreign, and especially Western, legal influences on China have expanded tremendously since the beginning of the Reform Era, the future trajectory is uncertain. Several factors point to further expansion. The many pathways of influence created during nearly three decades of reform are unlikely to be closed off, and some seem to be broadening. As China’s overall engagement with the world continues to expand, so too will transnational legal influences. Some argue that Western-influenced legal changes that have already occurred, especially in the economic sphere, necessarily imply legal change in more “political” or “public law” areas such as legal means for government accountability or constitutional—and perhaps democratic—limits to state power. Others argue that the economic development that Western-style legal changes have facilitated will increase demand for Western-influenced legal change in such political and public law areas.

On the other hand, some foresee a slowing or reversal of influence from the West. On this view, Reform Era Chinese borrowing of Western legal ideas remains within the nineteenth-century tradition of appropriating foreign “techniques” while preserving, and making them serve, a Chinese “essence.” The PRC’s agenda is notably at odds with rules and norms generated by Western-dominated institutions and processes on many issues, including international trade, foreign investment, intellectual property, human rights, rights of separatist movements, and intervention to prevent humanitarian disasters or human rights atrocities.

Some foresee China again becoming an exporter of legal and law-related ideas. This is one possible feature of what some call a “Beijing Consensus” that has emerged to rival the “Washington Consensus” model of neo-liberal market economics, relatively free trade, the rule of law, and electoral democracy. If this occurs, China would reprise—albeit with different content—its former role as a model for foreigners, perhaps echoing Voltaire’s admiration of China’s meritocratic, rule-governed bureaucracy, or the U.S.’s inclusion of Confucius among the great foreign law givers on the frieze of the Supreme Court building.