Domestic Law Reforms in Post-Mao China

By Pitman B. Potter | Go to book overview

4 Legal Institution, Administrative Device, or Foreign Import: The Roles of Contract in the People's Republic of China

James V. Feinerman

Reflecting the importance of contracts as elements of the new market orientation in China's economic reform policies, contract law became a key component of the Chinese domestic law reforms. However, the resulting mix of administrative edict and generalized private law rules reflected conflicts both over Chinese economic and regulatory policies and over the use of law to effectuate these policies. These uncertainties called into question the effectiveness of law in managing economic activity in China.

The study of civil law in China since the founding of the People's Republic of China in 1949 has focused on few other issues as intensively as it has on contract. 1 Indeed, to some observers the presence or absence of, or at least the extent of emphasis on, contract is the most significant indicator of contemporaneous development of the Chinese legal system; the widespread use of contract in the Chinese economy portends more serious commitment to the rule of law. 2 In the light of China's quite independent legal development 3--much different from that of Western countries with either civil law or common law traditions--any discussion of the nature of contract in China requires consideration of the types of contract used, the legal regime that governs them, and the social factors with which they interact. 4 Only then can contract in its Chinese manifestation be placed in comparative perspective.

Over four decades, contract has evolved from an administrative mechanism to control economic exchanges between units in the 1950s into a complex congeries of legal rules and business practices involving not only state enterprises but also individuals, collectives, and foreign participants in China's economy. Separate legal orders have been developed to regulate domestic contracts and those to which a foreign entity or person is a party. 5 In connection with long-range

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