Remade in China: Foreign Investors and Institutional Change in China

By Scott Wilson | Go to book overview

4
Law Guanxi: Chinese Law Goes International
and Foreign Investors Go Local

Legal institutions are natural points of contention between domestic and international actors because they are subject to competing domestic and international considerations of legitimacy.1 Domestic views of justice and desires to promote development may conflict with international conceptions of rule of law, human rights principles, and business norms and rules articulated by international organizations such as the WTO or the UN. In guiding the globalization process, Chinese state officials have faced strong and competing pressures for international legitimacy gained through compliance with international legal norms, for domestic legitimacy by protecting domestic economic actors from competition, and for economic development generated by providing a predictable legal system that protects property rights and spurs economic activity, especially technological development. This chapter demonstrates how both international organizations and foreign states define international legal norms for adoption by states at the macro level and how foreign investors and foreign law firms transmit information about international legal norms to China’s micro and meso levels. Such pressure from below combined with macro-level institutional demands from international organizations above (such as human rights treaties and the WTO) and dovetailed with growing Chinese central state interests in achieving international legitimacy and improving foreign investment flows through better protection of property rights.

International norms on legal issues, however, are somewhat open-ended as to the specific organizational models and legal forms that states must adopt, leaving some space for states to construct legal institutions that meet

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