The affirmation of the rule of law makes more safe the foreign investments in China

The affirmation of the rule of law makes more safe the foreign investments in China


IC&Partners Asia

In the 13th Five-Year Plan, China emerges as a nation that wants to show that it has not only the numbers but, more importantly, the qualities to be considered as one of the leading countries in the international community.


This ambitious goal is the common theme of the legal reforms that the Chinese leadership intends to implement before 2021 (the year when China will celebrate the hundredth anniversary of the Chinese Communist Party’s foundation).


The Plan for the period 2016-2020 differs from previous ones not only because the Chinese political class decided to prioritize the quality of development instead of the amount of growth, but also because there is a clear will to fight the phenomena of corruption, cronyism, and inequality that have characterized Chinese capitalism thus far.


The Chinese leadership realized that to direct the country towards a more sustainable model (without hampering development), China needs to construct its rule of law. A full certainty and impartiality in the application of the law must be guaranteed in order to overcome the inequalities and distortions of the system that can cause instability and social unrest.


In fact, the five-year plan emphasized the principle of equality, which implies respect for the authority of the Constitution and the laws by all the members of the society, including the administrative authorities: the fact that the citizens, the state bodies, and the local governments are all required to operate within a framework of legality drastically reduces the risks of malfeasance and corruption.


Also for this reason, the Chinese government will continue to promote the codification of Chinese law. In particular, one of the present projects is drafting a single Civil Code to replace the many laws that makes up the complex Civil laws regulatory framework in China today.


The future Civil Code will incorporate the main Civil laws that are currently in effect (in particular, “The General Principles of Civil Law” of 1986, the “The Contract Law ” of 1999, the “Law on the Real Rights” of 2007, the “Law on Tort Liability “of 2010) and will be divided into two parts: the first part will focus on the general principles of civil law; the second part will incorporate the specific areas regulated by the civil law: rights of personality, family law, inheritance law, rights in rem, the general part on obligations, contracts, and tort law.


This plan to streamline the regulatory system in China is also important to foreign investors. Foreign investors want a solid guarantees on legal matters so that their enormous economic commitments are protected by a certain and precise legislation. Therefore, the goal set out in the Plan to fully implement the rule of law is a good news for foreign companies present in China: in fact, the steady economic growth and a strong political stability in China will be joined by more and more legal certainty and Chinese judges’ impartial law enforcement.


It is no coincidence that the judicial reform is mentioned in the Five Year Plan as one of the main tools to implement this transition towards full realization of the rule of law. The Five-Year Plan clearly indicates the desire to limit the discretion of the judges in law enforcement and to strengthen protections for citizens and businesses from being victims of erroneous judgments, as it have unfortunately happened in the past.


Chinese courts are called upon to create an environment conducive to economic development, guaranteeing fair trials, regulated by certain and transparent procedures; this reform is part of the battle waged by the leadership of Xi Jinping against several miscarriages in the past decade that have involved the public security organs, procuratorates and the Chinese courts.


In line with the strategy adopted by Xi Jinping since his appointment as president of the country, China will seek to strengthen the legislation in the fight against corruption to ensure greater accountability of public officials and judges, in order to make easier to identify and convict those in the apparatus of security and in the Chinese court system that are responsible for injustice against ordinary citizens.