China's Law Enforcement Rising
One of the things I keep hearing while here in China is increased monitoring of laws by Chinese authorities. I am hearing this both from those who are happy about this change and those who are unhappy.
One of our clients complained how a bank yesterday would not allow it to engage in a transaction our client tells us he had done many times before. When we explained to him how the bank was only following the law, he rightly pointed out how the law it was following had been in place for nearly a year. In a discussion I had with Andrew Hupert, of Best Practices China, last night, he told me of how much better Shanghai is now than when he first came here five years ago. I asked him what made it better and he put "increased enforcement of laws" right after "better restaurants."
Today's Asia Wall Street Journal hammers home China's increasing crackdown on law violations. In an article entitled, "China's Visa Crackdown Reflects Olympics Anxiety" [subscription may be required], the article discusses a recent crackdown on visa violators in Beijing. The article mostly ascribes the visa crackdown to the Beijing 2008 Olympics, but I see it is more than that. I see this as very similar to the disallowed bank transaction. Both are attempts to reign in foreigners who violate China's laws. Peter Humphrey Managing Director of risk management firm ChinaWhys Company (whom I had the pleasure of meeting while in Beijing earlier this week), seems to agree. He sees the visa crackdown as "motivated in part by a desire to improve tax collection by cracking down on foreigners working without permission."
The trend is clear, unrelenting, and unequivocal. The number of Chinese laws aimed at business is increasing and enforcement of those laws is increasing as well.
Comments (9)
Read through and enter the discussion by using the form at the endChina and I - September 21, 2007 7:18 AM
Hello Dan,
What annoys me the most here are the "laowai" who think they are above the law, just because they are "laowai". I know the case of a loawai who recently his legal case against a property developer. So, he sued the judge, saying she was corrupted. He doesn't want to admit that he lost on legal ground. It is a developing story, I bet you will hear about it in the coming months. I bet that at the end, his working visa will not be renewed.
nanheyangrouchuan - September 21, 2007 9:36 AM
The question is: is this law enforcement being applied evenly or mostly being applied on foreigners?
chriswaugh_bj - September 22, 2007 12:48 AM
Two things:
1: From what my boss told me, there is a strong connection between the Olympics and Beijing's visa crackdown. The government knows too well the Olympics are a big attraction for foreign troublemakers, and wants to minimise the risk of disruption. A visa crackdown is one way to go about that. Of course, there are other reasons, and quite frankly, it's long since time foreigners stopped getting such an easy ride here.
2: One thing I've found disturbing about Chinese English-language news reports on many new laws recently is the apparent emphasis on cracking down on foreign companies and illegal behaviour by foreigners. Are foreigners being specifically targeted while Chinese continue on their merry law-breaking way? Or are these laws being applied equally across the board?
China Law Blog - September 22, 2007 4:07 PM
Chris D-E --
I agree with you on what is happening. We are seeing two things happening very quickly with our clients. Those who have been operating illegally but are thriving are coming to us to make everything legal. Others are telling us that if they were to go legit they would go into the red. They are making the choice to keep going, knowing they may be literally shut down soon or forced to shut down once caught.
China Law Blog - September 22, 2007 4:09 PM
China and I --
I bet you are right on all counts. We have clients who get furuious when China actually tries to enforce its laws.
China Law Blog - September 22, 2007 4:12 PM
nh --
That is a good question, to which I do not know the answer because I do not have much of a read at all regarding enforcement against Chinese companies. We represent foreign companes doing China business; we do not represent Chinese companies doing China business. So we are pretty much in the dark on that. My sense though is that enforcement of laws is increasing in China as a whole, but, increasing much faster when it comes to foreign companies. I see this as similar to hotel and rental car taxes in the United States. Every city loves these taxes because they tax outsiders so they almost never anger the applicable electorate. Same in China. It is just so much easier to crack down on foreigners.
China Law Blog - September 22, 2007 4:13 PM
chriswaugh_bj --
Those are the questions to ask and I TRY to answer them in my response to nh above.
William Lewis - September 24, 2007 11:10 AM
If Beijing is actually going to enforce their laws, this sure doesn't bode well for the massage parlors and bath houses.
The Economist did a special on Financial Centers last week. Shanghai is certainly one of them, but they commented that the regulation and greater certainty of outcome in legal disputes in Chicago, London and New York, are what really set those three financial centers apart from the rest of the world. Though Friedrich Hayek would contend that there can be no Rule of Law under socialism, the enforcement of the laws on the books must contribute to greater legal certainty in China. But if there is no attempt to apply these laws evenhandedly, then the potential level of foreign investment is bound to suffer.
Or, Olympics.
Richard Jarvis - December 18, 2007 8:08 PM
Can anyone tell me what type of law enforcement there is in China for Chinese Companies commiting fraud against western business owners which I am one of?
I have found a website (Trade Key) that list wholesalers which I contacted and began doing business with if you want to call it that. We set up a deal for mechandise, send them money through Western Union then they don't send us product or don't send us what we ordered. Then when you try to contact them they don't reply. I have all the evidence (Supporting WU statements and emails etc.) Can anyone offer some suggestions?