Page 44 - 2017 White Paper
P. 44
7 White Paper on the Business Environment in China
rule of law in people’s hearts will be a longer process than During the first quarter of 2016, The Diplomat posed
drafting laws on paper.” such a question. Noting the already slowing growth and
declining operating income of its largest SOEs, China
Wang Yukai, professor at the Chinese Academy of still attempted reforms while still continuing to maintain
Governance, yicai.com, Oct 15 control. The Diplomat noted that China had already
launched trials to test changes in mergers, salaries,
“Various levels of people’s congresses sometimes employee shareholding, and corporate restructuring
“entrust” their legislative power to government agencies. as part of the aim to pilot new SOE reforms. Chinese
This has resulted in a number of unjust laws that protect leadership had made pronouncements that mixed
the agencies’ interests at the cost of people’s rights. To ownership would be offered, although some critics
promote the rule of law, such distorted practices must contended that mixed ownership would not be enough
change first, and the absurdity of the same pair of hands to improve the profitability and management of SOEs
holding both legislative power and administrative power (Hsu 2016).
must end.”
At the same time, Xinhua reported, Premier Li
Liu Junhai, professor of law at Renmin University of Keqiang urgently called for efforts to improve the quality
China, The Economic Observer, Oct 20 and efficiency of SOEs. He urged SOEs to spearhead
“cultivating new growth dynamics” and “reforming the
“Efforts to promote the rule of law might fail without traditional growth dynamic” and champion efficiency
the protection of citizens’ property. We learn that lesson through “technology, reforms, restructuring, and better
from numerous violent demolitions of residents’ houses. management” (Tian 2016).
A complete system of property rights law must be
established. Then the ordinary people, finding their rights Also in March, China’s Ministry of Commerce
protected, will support the rule of law from the heart.” announced that foreign participation would be
welcome in its drive to reform SOEs. Xinhua reported the
hexun.com, Oct 20 spokesman of the Ministry of Commerce Shen Danyang
as saying that mergers and acquisitions (M&As) by foreign
“President Xi Jinping emphasized obedience to the partners would help bring in advanced management
Constitution. But China has neither a constitutional court experience and improve domestic firms' international
nor a constitutional review system. We expect the Fourth competitiveness. He promised that China would continue
Plenum to be innovative and to discuss the possibility to improve the environment for foreign investment,
of such a system so that the Constitution will be truly while encouraging foreign investment in sectors such as
respected. This is a prerequisite to the rule of law.” high technology, environmental protection and services
(Huaxia 2016a).
Jiao Hongchang, professor of law at China University
of Political Science and Law, Beijing News, Oct 17 Progress was already being made with SOE reforms,
Xinhua reported triumphantly in March 2016, as
In December 2014, China Daily published a special restrictions on mixed ownership at SOEs have been
editorial entitled “Constitution Day Matters” in which relaxed and employee equity stakes, together with the
it points out that “given the prevalent ignorance of recruitment of professional executives and managers,
and disregard for the Constitution public officials have allowed. SOE reform being perceived as going hand
displayed, it is necessary to have all State functionaries in hand with structural supply-side reform, China was
take an oath to the fundamental law”. It also went on to “determined” about dealing with SOE reform in 2016;
quote the American legal scholar Harold J. Berman, who however, Xinhua admits, this does not mean that reform
said “The law must be believed in, or it will exist in name is an easy task and“progress is not as rapid as anticipated”
only”, before going on to observe that “that is precisely (Xinhua 2016a).
where [China’s] problem lies” (China Daily 2014b).
In June 2016 though, the Financial Times observed
SOE Reform: Tough Nut to Crack that the government was moving to tighten its grip on
SOEs, seemingly reversing its push for reform. The new
Progress Report shift, outlined in recent state media articles and party
In 2016, how far was China willing to go with SOE
reform?
44
rule of law in people’s hearts will be a longer process than During the first quarter of 2016, The Diplomat posed
drafting laws on paper.” such a question. Noting the already slowing growth and
declining operating income of its largest SOEs, China
Wang Yukai, professor at the Chinese Academy of still attempted reforms while still continuing to maintain
Governance, yicai.com, Oct 15 control. The Diplomat noted that China had already
launched trials to test changes in mergers, salaries,
“Various levels of people’s congresses sometimes employee shareholding, and corporate restructuring
“entrust” their legislative power to government agencies. as part of the aim to pilot new SOE reforms. Chinese
This has resulted in a number of unjust laws that protect leadership had made pronouncements that mixed
the agencies’ interests at the cost of people’s rights. To ownership would be offered, although some critics
promote the rule of law, such distorted practices must contended that mixed ownership would not be enough
change first, and the absurdity of the same pair of hands to improve the profitability and management of SOEs
holding both legislative power and administrative power (Hsu 2016).
must end.”
At the same time, Xinhua reported, Premier Li
Liu Junhai, professor of law at Renmin University of Keqiang urgently called for efforts to improve the quality
China, The Economic Observer, Oct 20 and efficiency of SOEs. He urged SOEs to spearhead
“cultivating new growth dynamics” and “reforming the
“Efforts to promote the rule of law might fail without traditional growth dynamic” and champion efficiency
the protection of citizens’ property. We learn that lesson through “technology, reforms, restructuring, and better
from numerous violent demolitions of residents’ houses. management” (Tian 2016).
A complete system of property rights law must be
established. Then the ordinary people, finding their rights Also in March, China’s Ministry of Commerce
protected, will support the rule of law from the heart.” announced that foreign participation would be
welcome in its drive to reform SOEs. Xinhua reported the
hexun.com, Oct 20 spokesman of the Ministry of Commerce Shen Danyang
as saying that mergers and acquisitions (M&As) by foreign
“President Xi Jinping emphasized obedience to the partners would help bring in advanced management
Constitution. But China has neither a constitutional court experience and improve domestic firms' international
nor a constitutional review system. We expect the Fourth competitiveness. He promised that China would continue
Plenum to be innovative and to discuss the possibility to improve the environment for foreign investment,
of such a system so that the Constitution will be truly while encouraging foreign investment in sectors such as
respected. This is a prerequisite to the rule of law.” high technology, environmental protection and services
(Huaxia 2016a).
Jiao Hongchang, professor of law at China University
of Political Science and Law, Beijing News, Oct 17 Progress was already being made with SOE reforms,
Xinhua reported triumphantly in March 2016, as
In December 2014, China Daily published a special restrictions on mixed ownership at SOEs have been
editorial entitled “Constitution Day Matters” in which relaxed and employee equity stakes, together with the
it points out that “given the prevalent ignorance of recruitment of professional executives and managers,
and disregard for the Constitution public officials have allowed. SOE reform being perceived as going hand
displayed, it is necessary to have all State functionaries in hand with structural supply-side reform, China was
take an oath to the fundamental law”. It also went on to “determined” about dealing with SOE reform in 2016;
quote the American legal scholar Harold J. Berman, who however, Xinhua admits, this does not mean that reform
said “The law must be believed in, or it will exist in name is an easy task and“progress is not as rapid as anticipated”
only”, before going on to observe that “that is precisely (Xinhua 2016a).
where [China’s] problem lies” (China Daily 2014b).
In June 2016 though, the Financial Times observed
SOE Reform: Tough Nut to Crack that the government was moving to tighten its grip on
SOEs, seemingly reversing its push for reform. The new
Progress Report shift, outlined in recent state media articles and party
In 2016, how far was China willing to go with SOE
reform?
44
