China Law Blog

"perpetually uphold the political orientation of being loyal to the party, loyal to the country and the people, and loyalty to the law."

A contradiction in itself...

Maybe I am missing something,but I don't find Dr Willy Lam 's conclusion convincing .The sentences cited in the article seems to be standard party rhetorics for several decades.Without clarifying the subtle differences with records I wouldn't haste to call it "strenthening". The article reads more like an alarmist piece written by a reporter. More indepth analysis is needed on this issue.

Sounds a lot like the same sort of language that is always being issued from Party HQ. I certainly would not rule out the strong possibility that I've been thoroughly brainwashed by capitalism and "Western" law, but isn't the best way for the courts to exhibit "loyal[ty] to the party, loyal[ty] to the country and the people, and loyalty to the law" by rendering consistent and equitable decisions? Long term stability and prosperity have a fondness for the predictable, and the Party tends to spout off these as their primary goals. So, wouldn't loyalty to China best be demonstrated by a fair judiciary?

I believe that there is an economic and social factor to these trends. Right now, inflation in China is high and may be picking up steam. The Shanghai and Shenzhen stock markets have fallen by 48% in the first six months of 2008.Real estate prices, first in Shenzhen and now in Shanghai and Beijing are heading south. There is strong potential for civil unrest in this generally unfavorable economic climate worldwide.

I believe that the government's thinking is that in order to insure social stability, the government must be prepared to crack down harder through the courts. Liberalization is fine in fat times, but now the fat times are over. Otherwise, there is the danger that events may spin out of control, threatening the party's leadership in China. Let's be realistic, the party is the government in China.

I have talked about some of the issues in this post:
http://www.chinavortex.com/2008/06/poverty-numbers-as-a-chinese-social-stability-indicator/

Paul,

I think the Chinese central government actually wants the stock market and housing prices to fall, as they have been based on speculation, not fundamentals (and high housing prices hurts a lot of people). The sooner speculation is stopped, the better -- with bubbles a little pain now is better than more pain later.

In fact, I wish the US government were more pro-active about speculations -- the pain the US is going through now in housing and finance would've been much less in 2003/2004 when housing would've peaked (without the aid of "financial innovation" such as pay-option ARM's, 100% financing, etc).

I agree with you that it's good to get speculation out of the market. This is especially necessary, with all the bad credit which was created over the past few years with the wild proliferation of now questionable derivatives in the US market.

But it's necessary to go one level deeper, and look at who the speculators are. In China, the speculators are mostly retail investors who are speculating with their family savings. Why do they speculate? Because there are no other investment vehicles available to them besides the stock market and real estate. Many of these people have lost their savings entirely.

In the US the speculators are mainly fund managers.

In both markets, the people who make out well are those who are early in, early out. The problem with retail investors is that they don't know when to get out, and get greedy for more. As a result, they lose everything.

If the Chinese government wants to encourage more medium- and long-term investment, it has to fight inflation and offer bonds which offer a decent return to investors. I'm sure you remember when the US offered saving bonds. It would be good if the US and Chinese governments both offered financial instruments of this kind to their citizens.

I just find it interesting that Willy Lam's article is in the Global Terrorism Analysis section...

I recall, about 10 years ago, the BJ office of an English law firm circulated to us maritime lawyers a copy of a Chinese maritime court decision. Fascinatingly detailed in its factual analysis of a complicated dispute between owners, charterers and third-party cargo interests, just when it seemed, after several pages of thrilling build-up to the point of logically awarding the decision to owners, the denouement did a politically-inspired 180-degree turn! The final paragraph of the decision cited the ubiquitous maxim of the need for social harmony and all that rubbish, and inexplicably awarded the decision to cargo. As the Brits and the rest of us tacitly thought, "What the h...??!!" If all the members of the Comite International Maritime had been in the same room simultaneously reading this decision, an outsider would have imagined it to be a meeting of Parkinson's Disease sufferers, because dozens of heads would have been uncontrollably shaking (in disbelief).

Personally, and professionally, I do not believe that foreigners are inherently dealt a bad hand in Chinese courts. I do believe, however, that we have to recognize the ideological leanings of the courts, which leanings amount to a judicial mission statement for the CCP, and thus be all the more sensitive in how we fashion our legal arguments in promoting clients' positions in the courts, while holding true to the need to represent zealously our clients.