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3 - China’s Legal System Is Not about the Rule of Law

The Advantages and Limits of the Relation-Based System

from Part I - The Advantage of Low Human Rights

Published online by Cambridge University Press:  06 January 2022

Shaomin Li
Shaomin Li
Affiliation:
Old Dominion University, Virginia
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Summary

This chapter discusses China’s legal system and governance environment. In terms of its legal system, China is weak when it comes to developing a rule-based governance structure in which the laws are independently and impartially enforced. The author will review what hinders China’s legal development from cultural, economic, and political perspectives. The author’s central argument is that in the absence of a rule-based system, China has been relying on a relation-based system in which transactions and disputes are governed by private relationships. Understanding relation-based governance is key for foreign investors to protect their interests. The author addresses under what conditions the relation-based system can be efficient, and whether it will be replaced by the rule-based system in China.

Keywords

Rule-basedrelation-basedrule of lawrule by lawguanxilegal systemprivate orderingpublic orderingchecks and balancesenforcement
Type
Chapter
Information
The Rise of China, Inc.
How the Chinese Communist Party Transformed China into a Giant Corporation
 , pp. 49 - 92
Publisher: Cambridge University Press
Print publication year: 2022

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