Economic Analysis of Law in China

Article excerpt

Economic Analysis of Law in China, edited by Thomas Eger, Michael Faure and Zhang Naigen. Cheltenham: Edward Elgar, 2007. xx + 324 pp. £85.00 (hardcover).

This book is an exemplary multi-disciplinary and multi-institutional study of contemporary Chinese law. A collective effort by a group of European and Chinese scholars, it skillfully tests the relationships between law and economics in the Chinese context. Chinese legal study in English has traditionally been dominated by a political analysis which emphasizes law's peripheral position in politics. This book studies the instrumental role of law in economic growth through promoting competition, enhancing predictability and facilitating transactions. In doing so, it brings law from the periphery toward the centre.

The book has three parts. Part 1, composed of three chapters, deals with evolving fiscal constitutionalism in China, highlighting the importance of decentralization, competition and local creativity in economic growth. Chapter 1, by Thomas Eger and Margo Schüller, offers an interesting comparison between the European Union's effort to create a common market and Chinese economic decentralization. What makes the two seemingly unlike cases comparable is the importance of a "market-preserving federalism" in economic growth in both. Chapter 2, by Pierre Garello, is a sophisticated comparative analysis of fiscal decentralization in China and the implications of the 1994 tax reforms. Chapter 3, by Jianwei Zhang and Yijia Jing, examines the balance between spontaneous local economic initiatives and macro political stability in China. All three chapters recognize the difficulty and the inherent risk in striking a delicate balance between central control that denies local initiatives and decentralization that fosters local protectionism.

Part 2, consisting of six chapters by nine authors, is the main body of the book and applies economic analyses to China's emerging economic regulatory regime, including: competition policies; regulation of professions, capital market and stock companies; and virtual property rights. The chapters, in themselves or in combination with others, are substantive in providing a general (often EU-based) conceptual framework for a particular area of law, followed by a critical examination of the relevant Chinese legal development, and concrete policy recommendations. They are clear in formulating theoretical propositions, and instrumental in making the questions China-related. Readers can identify and examine Chinese problems more clearly once the benchmarks and criteria are set. …