“Regulationism”

My apologies to lexicographers, linguists, and English teachers out there for coining the word “regulationism.” But I couldn’t help it after seeing so many regulations that come into my China New Law alerts on a daily basis. To me, regulationsim means a tendency by a government(s) to resort to administrative regulations to solve social issues that might otherwise be resolved through alternative means.

Most people who know China are aware of the plethora of regulations in China, and my mentioning of the issue is surely no news. But, I am not certain that people know how the almost ubiquitous and countless rules and regulations impact China’s efforts to establish the rule of law, and how they affect people’s daily lives (both good and bad). I am not sure I know either, but I fear that regulations, once they start to “run wild” and become a short cut to the formal legislative process, do come with high costs that citizens probably do not want to pay.

For example, there have been fierce discussions on the regulation/standard on steamed buns in China. Reportedly, all steam buns must be made of flour, and be either oval or round in shape. Understandably, there needs to be certain standards for quality and sanitation, but a required shape for buns? Yes, this regulation will benefit average consumers by ensuring that all steamed buns will have a desirable uniform quality; however, these regulations also result in fewer choices for consumers. What if a consumer wants a triangular bun? What if she desires a bun made of a mixture of flour and corn meal in the market? Therefore, an unexpected corollary of excessive regulation is the blockade of the market mechanism.

In light of the consequence of this steamed bun regulation, its necessity should be called into question. The fact is that China already has Product Quality Law (and its relevant regulations), which should be sufficient to address quality concerns. Why then is another regulation necessary just for steamed buns? The answer, I guess is that the two Chinese agencies, General Administration of Quality Supervision & Inspection and Standardization Administration, subscribe to “regulationism.”

(Note: in the midst of a fury of outcries about the standard shape of steamed buns, the Standardization Administration issued an explanation that the standard shape of steamed buns in the regulations is only a recommendation, not a requirement.) Query, why even a recommendation?

While this topic of excessive regulating is discussed, I just learned of another notice by the State Council issued on December 31, 2007, which has to do with the ban on the production, sale and use of ultra-thin plastic grocery sacks (<0.025 mm). Pursuant to the notice, this ban goes into effect on June 1, 2008, and the National Reform and Development Commission will revise the Investment Guide Catalogue to reflect this national campaign to root out ultra-thin plastic sacks. In addition, starting on June 1, 2008, all markets in China shall cease to offer plastic sacks for free, and shall charge customers a specific fee for sacks requested by customers.

Clearly, this new regulation aims to increase the externality for the use of plastic sacks, which is an annoying solid pollutant in China and elsewhere. Hopefully, it will be effective in achieving its administrative purpose in stemming pollution and shifting the cost of pollution to average consumers and investors in manufacturing of ultra-thin plastic sacks. I don’t doubt the wisdom of the rationale behind the regulation, but I do have qualms about how it will be enforced in China. So many enormous polluters of China’s skies, rivers, lakes, and wetlands go unpunished in spite of China's long existing environmental laws and regulations. Thus, how could a neutral China observer be convinced that the government will go after a small business owner or grocer for selling a few thin plastic sacks, following the announcement of yet another regulation? This leads to, as I see it, another unexpected consequence of regulationism—societal cynicism about excessive regulations. If regulations are not to be strictly enforced, why make them in the first place?

Any thoughts?

Death Penalty by Lethal Injection: Humane or Inhumane?

As reported below by the New York Times, China plans to replace execution by shooting in the head with lethal injection, thus providing a more “humane” method of capital punishment.

China plans to expand the use of lethal injection to replace the current method of execution, a shot to the back of the head, the newspaper China Daily quoted Jiang Xingchang, vice president of the Supreme People’s Court, as saying. Half of the 404 intermediate people’s courts, which carry out most executions, now use lethal injection, he said. “It is considered more humane” and “will eventually” be expanded to all such courts, he said without providing a timetable.

Curiously enough, the United States Supreme Court will hear arguments in the case of Baze v. Rees on January 7, 2008. The issue of this case centers not on the constitutionality of the death penalty, but on the constitutionality of the cocktail used in the lethal injections in the United States. Defendants plan to argue that, according to the FoxNews, one of the chemicals used in the cocktail causes severe pain and violates the Eighth Amendment. Basically, they advance the argument that the current chemical mix of lethal injection causes unconstitutional pain and suffering to the convicted.

Here, you have the vice president of the Supreme People’s Court of China advocating the lethal injection, citing that it is more “humane” than the somewhat out-dated (still used in some places) bullet-in-the-head execution. Juxtaposing the apparent “welcome” of lethal injection in China with the growing “challenge” it faces in the United States, one can see the huge differences in the criminal jurisprudence in the two countries.

Apart from the difference, one should, however, not ignore the attention that the death penalty has received in both countries in recent years. In the United States, there has been a de facto moratorium on the death penalty, while the Supreme People’s Court of China now automatically exercises subject matter jurisdiction over every death penalty review case. As debates surrounding the death penalty continue on both sides of the Pacific, it would be interesting to see what results in Baze v. Rees and how it will impact academic discussions in China about lethal injection.

And as we all sit tight for the ruling in Baze v. Rees to descend, the answer to the question posed in the title of this post is--stay tuned.

Migrant Workers Self Help: Extreme Edition

A group of workers camped around a fancy Audi, surrounding it in order to force the owner of the car to pay wages owed to them (h/t China Digital Times).

The picture speaks volumes about the social condition that Chinese migrant workers endure—overworked, underpaid, unappreciated, and at times violated. What is more, it epitomizes a social phenomenon where a class of people who are unaware of (or unable to utilize) another tool to exercise their rights to be paid for their blood and toil—the law.

For want of justice, people can resort to self help or the law. As the migrant workers often do, self help appears to be the most sensible and accessible method of achieving justice. A plausible reason for their tendency to self help is that they do not have the money to hire lawyers; and they probably do not know to report the violators to the proper authorities, thus availing themselves of administrative assistance. Or, they do not have faith in the legal system in its ability to dispense justice to poor migrant workers. Irrespective of the reason, this phenomenon reveals an undeniable weakness in the Chinese legal system—the poor, the weak, and the disenfranchised do not have easy access to it. (Of course, this is not a problem unique to China.)

2007 Review: A Year of Hard Hitting Legislations

As 2007 winds down to its last hours, Chinese lawmakers have made this year one of hard hitting legislations. Within this year, multiple pieces of significant laws and regulations came into being, impacting many facets of the Chinese society. This post aims to highlight a few legislations with huge influence on foreign investments.

1. Regulations on the Administration of Commercial Franchise (商业特许经营管理条例)
Promulgated and adopted by the State Council on February 6, 2007, the Regulations modified and improved upon its predecessor, rendering commercial franchising a registration-only commercial activity (instead of an “approval” activity). And as a result of the Regulations, off-shore direct commercial franchising to China is now allowed as long as the franchisor has two units in operation for more than one year. Pursuant to the Regulations, the Information Disclosure Measures and the Registration Measures were adopted to provide detailed directions on franchising in China. For more, read my three-part comments on franchising in China here, here, and here.

2. Property Law of the People’s Republic of China (中华人民共和国物权法)
After more than a decade of discussions and political compromises, the National People’s Congress finally adopted the Property Law on March 16, 2007, making it one of the most significant pieces of laws in modern China’s history (if not the most significant). Regardless of its differences from the western concept of private property law, the Chinese Property Law is a landmark legislation in that it defines for first time the rights and obligations of private property ownership. China Law Blog has an excellent series on this topic, and I posted a piece on a dispute involving this law.

3. Corporate Taxation Law (中华人民共和国企业所得税)
For better or worse (depending on your perspective), the National People’s Congress adopted this law on March 16, 2007, thus ending years of a bifurcated taxation practice where foreign and domestic corporations were taxed at different rates. This law provides a uniform base tax rate of 25% for all corporations, while giving significant tax incentives to high-tech and environmentally-friendly projects. Fearing a backlash of foreign taxpayers, the drafters included a five-year phase-in provision. For more, read this.

4. Labor Contract Law (中华人民共和国劳动合同法)
Employment Enhancement Law (中华人民共和国就业促进法)
Labor Dispute Mediation & Arbitration Act (中华人民共和国劳动争议调解仲裁法)

The Chinese legislators, in the National People’s Congress and its Standing Committee, went on a coordinated and lasting mission to tackle labor/employment relations in China in 2007. They came up with three pieces of legislation, of which the Labor Contract Law garnered the most attention and interest. The New York Times characterized the Labor Contract Law as “sweeping.” Sweeping indeed! It redefines the employment relationship by imposing the restrictive terms, among others, that an employer can stipulate in a labor contract. As far as commentators go, nobody has been as diligent and thorough on this law than our Dan Harris at China Law Blog.

5. Anti-Monopoly Law (中华人民共和国反垄断法)
On August 30, 2007, the Standing Committee of the National People’s Congress put an end to ad hoc anti-competition regulations in China. It adopted China’s first ever comprehensive competition law—the Anti-Monopoly Law (to be effective on August 1, 2008). As China’s economy continues to expand, as foreign investors keep pumping capital into certain sectors into China, and as Chinese companies grow larger in scale and influence, the Anti-Monopoly Law came at a very good time. Referred to as the “economic constitution”, will the Anti-Monopoly Law be a bliss or a curse to interested parties? Will it end (to a certain degree) local protectionism? Keep your eyes peeled on new developments on this law.

6. Law on Lawyers (Amendments) (中华人民共和国律师法)
Amendments were adopted by the Standing Committee on August 30 to address growing concerns on the legal profession. Since the promulgation of the Lawyer’s Law in 1996, the legal profession has experienced exponential growth, in terms of the importance of the profession and lawyers in the society. These amendments were meant to make lawyers’ lives better, especially criminal lawyers by giving them access to gov’t documents, access to clients without interference, and immunity for arguments and comments made in courtrooms while representing clients. Legal ethics is one of my favorite topics in law school, and read my posts on this topic here.

7. Civil Procedure Law (Amendments) (全国人大常委会关于修改《民事诉讼法》的决定)
These amendments mainly address some persistent issues in civil litigation in China—enforcement of civil judgments. By virtue of the amendments, those who refuse to execute a civil court ruling -- fines climb from 1,000 yuan to 10,000 yuan (1300 U.S. dollars) for individual offenders, and from 30,000 yuan to 300,000 yuan (39,000 U.S. dollars) for companies. The law also provides that those who refuse to cooperate with civil courts in making sure a ruling is executed may be detained.

8. National Holidays Schedule Modified (国务院关于修改《全国年节及纪念日放假办法》的决定
Golden holidays for the Labor Day and “Independence Day” will no longer be holidays of disaster. Prior to the change, holidays in China were mostly for commemorating political events, and they provided two longest holidays in China when the entire country basically went on vacation. That brought immeasurable opportunities and hardship to the transportation, tourism and service industries. The new holiday schedule adds three traditional holidays (Grave Sweeping Day, Dragon Boat Festival and the Moon Festival); correspondingly, the Labor Day and Independence Day holidays are shortened to one day and three days respectively.

I included this in the review because I thought that this change not only makes sense but also reflects the wishes of the people. In addition, the change gives traditional/cultural holidays a higher status, which is a very good thing for the dying traditions in China. Cheers to traditions!

As we wait for the ball to drop (bell to ring, or whatever way you celebrate) to usher in the year of the Rat, 2007 will be remembered as a year of hard-hitting legislations. Let’s see what 2008 has in store for the China law blogosphere.

For a complete of all the legislations adopted in 2007, visit here (in Chinese only).

Blogroll Addition: Experience Not Logic

Though there is an abundance of China related blogs out there, same is not true for blogs on China law and business written by current law students. My friend, Will Lewis, has a new blog named Experience Not Logic. Will Lewis, like me, is still in law school, and here is how he describes his blog:

The purpose of this blog is to explore the business and legal culture of China. In 1881 Oliver Wendell Holmes, Jr. wrote, "The life of the law has not been logic; it has been experience." Each time I read a US court decision, Holmes' quote flashes through my mind. In China, the rule is the same, but the experience is different. Here's to broadening the experience...

In just about a month, he has put up some amazing posts:

Liebman on Restricted Reform in China Courts
China IP Litigation Data: What Does it Mean?
Chinese Scholars Examine New US Patent Law

Check out this very cool blog.

Death of a Migrant, Pregnant Woman

Ms. Liyun Li (李丽云), a migrant worker from Hunan Province, met her boyfriend Zhijun Xiao (肖志军) in Beijing and had dated him for three year. Like so many other young Chinese ladies, she went to Beijing in search of better paying jobs and a future. Unfortunately, her pursuit of happiness ended abruptly in November 2007, along with her short hopeful life and her unborn child.

She felt under the weather for two weeks in early November, and probably for lack of funds, she avoided expensive doctors in hospitals. Instead, she went a private clinic where she was treated for a common cold. But, her health deteriorated afterwards and her boyfriend had to send her to the Beijing Chaoyang District Hospital (West District), where doctors found her to be in a dire medical emergency—her heart was failing in addition to a host of other symptoms. In order to avert a disaster, she must undergo a C-section and other emergency care immediately.

She did not have a penny on her; nor did her boyfriend. But, the hospital staff offered to operate first on credit, which rarely happens in China.

Money was not the issue on that day when she died. It did not matter; what mattered, what would have mattered was her boyfriend’s signature on an agreement for the hospital to operate and do what it needed to do to save her and her baby’s life. Before any medical operation, the hospital had to have informed consent, by law, in the form of a signature from Ms. Liyun Li, her family member, or persons related to her. But her boyfriend, the only person who could have given the consent refused, repeatedly.

As the clock ticked on, her breath grew fainter; as hours vanished together with the precious heart beat of the baby in her womb, doctors, nurses, administrators begged for his signature. But he still wouldn’t do it. In stead of signing his signature on the consent form, he wrote: “I refuse the C-section, and I shall be responsible for all consequences.” With that, the emergency care staff, in despair, witnessed the death of Ms. Liyun Li and her unborn baby, in a span of about three hours.

That sums up the griping story of Ms. Liyun Li’s death in a Beijing hospital on November 21, 2007.

Bad things happen every day, everywhere; tragedies occur all the time in China, many of which go unreported. But, Ms. Li’s story is different—it bothered me and it still does. I cannot help but think about other possible outcome to her emergency visit to the hospital. What would have happened had her boyfriend just signed the damn consent form? What if there had been no legal requirement for the consent of a boyfriend under that kind of medical emergency? And what if the hospital took matters into its own hands and operated without his consent? And what might have been had her boyfriend simply been absent from the entire situation in the hospital?

Unpleasant as it might be, death often awakens social conscience and engenders action. Ms. Liyun Li’s death was no exception. Her death has sparked a flurry of debate in the medical and legal communities in China. They are asking the same “what if” questions; they want to know whom to hold responsible for the tragic loss of two lives, one of whom never had a chance to behold the wonders of the world. They want to avoid any repetition of such a gut-wrenching tragedy.

(Please check back later for the legal issues in and possible ramifications of this story.)

Wahaha Wins Suit Against Danone Board of Director Case

Here is yet another update on the Danone v. Wahaha dispute---"Wahaha Wins Suit Against Danone Director for Conflict". In China, of course.