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Books


 

The Natural Law is the Gentlemen's Mission
By SHENG Hong


Rules and Prosperity
By FENG Xingyuan


 

A History of China
By YAO Zhongqiu

 


On Hayek
By YAO Zhongqiu


The Limits of Government ⅡI
By YAO Zhongqiu


Capital Freedom of China
2011 Annual Report

By FENG Xingyuan and
MAO Shoulong


Coase and China
Edit by ZHANG Shuguang and SHENG Hong

Where the Chinese Anxieties Come From
By MAO Yushi


Humanistic Economics
By MAO Yushi


Food Security and Farm Land Protection in China
By MAO Yushi ,ZHAO Nong and YANG Xiaojing


Report on the Living Enviroment of China's Private Enterprises
By FENG xingyuan and
HE Guangwen


Game: Subdivision, Implementation and Protection of Ownership of Land
By ZHANG Shuguang


The Nature, Performance and Reform of State-owned Enterprises
By Unirule Institute of Economics


Rediscovering Confucianism
By YAO Zhongqiu



Virtue, Gentleman and Custom
By YAO Zhongqiu


China's Path to Change
By YAO Zhongqiu




The Great Wall and the Coase Theorem
By SHENG Hong



Innovating at the Margin of Traditions
By SHENG Hong





Economics That I Understand
By MAO Yushi





Why Are There No Decent Enterprisers in China?
By ZHANG Shuguang



What Should China Rely On for Food Security?
By MAO Yushi and ZHAO Nong





Case Studies in China’s Institutional Change (Volume IV)





Unirule Working Paper (2011)

 

 

 

 

 

 

 

Highlights

 

The Spiritual Foundation of the Rule of Constitution


To “firmly uphold the authority of the Constitution and the law” was stipulated by the Fourth plenary Session of the 18th Central Committee as a fundamental institutional principle. However, the significance of this stipulation was not fully understood. It at least means that all the civil servants should hold the constitution as the highest code of conduct, instead of the orders from their superiors. Apparently, the mentality of the whole civil services of China in terms of a “constitutional awareness” is not enough.


The lack of constitutional awareness is systematic for Chinese government officials


Some words and deeds during the plenary session by the government officials have revealed their attitude towards the rule of constitution and shown that they certainly lack the awareness and basic understanding of the constitution. For instance, Mr. LI Shixiang, the Deputy Mayor of Beijing, said: “Beijing will never cancel the limit for house purchases” when it came to the topic. His words were immediately countered by the amendment of the PRC Legislation Law. As an administrative department, Beijing municipal government has no right to reduce the rights of the people, even though it has the right to draft local regulations providing such regulations do not go against the constitution and higher-level laws. Mr. LI does not know that policies only are effective within a certain period of time, where “never” does not apply. Another example concerns Mr. GUO Shuqing, the governor of Shandong Province, who made a public promise that no Shandong citizens would ever join the shopping rush for milk powder in Hong Kong. Mr. GUO was an outstanding economist when he was working as my senior colleague in the graduate school at Chinese Academy of Social Sciences. To my disappointment, Mr. GUO confused the difference and boundary between public goods and private goods, and his power as governor within the area of public goods.


Another infamous political figure is Mr. QIU He who arguably knew little about the constitution when he said “thanks to the fact that China does not allow private ownership of land but only permit the limited right to use the land for 30, 50, or 70 years while 97% of the countries in the world adopt private property rights” when he tried to prove that the Chinese government was the most “incorrupt” one in the world. As the Deputy Secretary of the CPC committee in Yunnan Province, he was not aware that Article 10 of the Constitution stipulates ”land in the rural areas is collectively owned by the village collective.” What’s more, he was investigated for land-related corruption allegations before. He grabbed villagers’ land so vigorously, because he did not know that village collectives collectively owned rural land. He made huge profit for himself by expropriating land, because he used “nation-owned land” as a fig leave.


Such cases should not be deemed only accidental and individual. The lack of constitutional awareness for is systematic. Mr. WANG Ercheng, Deputy Director of Organizational Department of the CPC, talked about the issue of “qualification of the deputies of the National People's Congress”, which was a confusion of his own position. Article 59 of the Constitution stipulates, “The National People’s Congress is composed of deputies elected from the provinces, autonomous regions, municipalities directly under the Central Government, and special administrative regions, as well as from the armed forces. All the minority nationalities are entitled to appropriate representation.” Article 7 of the Electoral Law of the PRC stipulates that “The standing committees of the people's congresses of provinces, autonomous regions, municipalities directly under the Central Government, cities divided into districts, and autonomous prefectures shall direct the work of electing deputies to the people's congresses at or below the county level in their administrative areas.” Even though the Organisational Department of the CPC is deeply involved in the election of government officials, it does not have the power as the hosting agency for elections. Apparently, it neglected the Constitution and the Electoral Law of the PRC.


A more serious problem is that almost every administrative department believes they have the legislative power. For example, the Ministry of Land and Resources believes it has the power to determine whether the houses of the rural citizens can be sold at their will; the Ministry of Housing and Urban-Rural Development believes it can set and cancel the limit to the purchase and sales of residential houses, the National Health and Family Planning Commission believes it can decide whether Chinese couples can have a second child, the State Administration of Taxation believes it can set the property tax, the Ministry of Education believes it can decide what’s to be taught at universities, etc.. In fact, all these administrative departments have meddled with citizens’ basic rights, and the power they think they have belongs to the legislative bodies. What they have missed is that they are merely executive bodies promulgated by the Constitution with limited powers to execute the law, and making regulations on the premise that such regulations are coherent with the higher level laws and the constitution and with due procedures instead of making the law. Their current activities are violation of the constitution.


It is quite common, therefore, that Chinese civil servants know little about the constitution.


The Party and the Government Lacks Constitutional Awareness, which Leads to the Loyalty to the superior, instead of the Constitution


The reasons may vary, but firstly, it is because within the party and government system in China, there is barely any education on constitutionalism. The recruitment examination for civil servants cares little about the Constitution. Sometimes, the only question in this concern refers to the highest law in China. The examination concerns more technical knowledge, and the examination itself is just like a high school competition. To many people’s surprise, there has been a rising tide against constitutionalism in recent years. Due to the narrow and distorted understanding of the constitution, many people have grown a fear for constitutionalism. The newspapers do not dare to publish anything that has the word “constitutionalism”, and publishers do not produce books that concern constitutionalism, which explains partially why civil servants do not read any literature on constitutionalism and nurture such a concept by themselves.


In fact, there are still over 1.8 million search entries on the Chinese search engine Baidu for constitutionalism, and over 54,3000 entries for book searches on Google. The Chinese character “Xian” (“宪”, meaning constitution) is a rather old character, and there are over 100 phrases starting with “Xian”, such as “Xian Gang” (“宪纲”, the outline of the constitution), ”Xian Ze” (“宪则”, the principles of the constitution), “Xian Zhi” (“宪制”, the institution of the constitution), and so on. Forbidding “constitutionalism” and making “constitution” a sensitive word means to cut Mainland China from the culture and thoughts relating to constitution, which in turn promises the lack of cultural influences. During MAO Zedong’s times, the criticism of Einstein led to the suppression of the knowledge of the relativity theory; and forbidding western economics led to the absence of an understanding of the market economy for Chinese people.


The result of such measures is clearly harmful.


The sole reason for the anti-constitutionalists is that constitutional reforms may “overthrow the CPC’s leadership”, which is obviously false. The key to the problem concerns the definition of a political party. Are we talking about the power in some people’s hands, or a set of rules? As we know, a political party consists of people who share the same political agenda, therefore, the set of constitutional consensus is called the “party program”. Without this constitutional consensus, power means nothing but the violence that requires everyone’s submission. Man is more constrained compared to power. Men become nothing but some symbols within a set of rules and power allocations. Besides, if these people are allowed to decide the rules according to their personal interests, it can be foreseen that the system will be rather volatile, and the interest of other groups in the society will be harmed every now and then. If the political party is to play a positive role as the leader, power should not be the only thing that's needed. The political party should also come to consensus with the people in order to form a society that can be led by the party. Therefore, constitutionalism is also the foundation for party politics.


Those rules that are only beneficial to some cannot become universal rules. Therefore, such rules will be challenged. And if rules are universally applied that may get in someone’s way, the rules are still held higher than individuals. Hence, the principles that uphold justice are the premise for a political party to exist for long. After the Cultural Revolution, the CPC realised that “class struggles” were not the principles to sustain power but rather something to persecute people and overthrow the party. Then the CPC shifted the basic rules to those beneficial to the economic development, i.e., the welfare of the people. And this set of rules that upholds justice is the basis for the party to sustain, which demonstrates Constitutionalism. In the real life case in China, this set of justice-upholding rules is the Constitution. And the basic requirement for constitutional reforms is the implementation of the Constitution.


The second major reason for the lack of constitutional awareness for Chinese government officials is that there is no self-correction mechanism. In the case of Mr. QIU He, along with many other sacked government officials for allegation of corruption, such as Mr. JI Jianye, there is no constitutional protection for the collective ownership of the rural land where low compensations are made by the local government to expropriate the rural land. Mr. QIU He’s career was mainly attributed to his efforts in the urban development, while Mr. JI Jianye was nicknamed “Bulldozer Mayor”. However, they were never prosecuted for the violation of the constitution. Mr. QIU He and Mr. JI Jianye were not sacked because of their violation of the constitution, but because of their corruption in land-related cases. It can be summoned that they are not likely to reflect on their breach of the constitution even behind bars.


Another commonly seen behaviour is the violation of Article 35 of the Constitution. As we often see, an executive officer, a county level director in some cases, can even mobilise government violence in order to suppress criticism from the people. For instance, when Mr. BO Xilai, the former governor of Chongqing, was in office, he sent many who criticised him to penal farms. Another rather common phenomenon is arresting journalists. Some journalists were arrested for their disclosure of the local government misbehaviours. For instance, Ms. ZHU Wenna from Faren Magazine was arrested, Mr. CHEN Yangzhou from New Express Newspaper, Ms. LI Min from CCTV, Mr. XIE Chaoping from Shaanxi Province, and Mr. ZHU Ruifeng from Renmin Jiandu network, were arrested for their disclosure of the local government issues. Even though misinformation may take place in the exposes of these journalists, due procedures should have been taken to deal with them. Those local governments have violated Article 35 of the Constitution because there have never been effective measures to contain their behaviours, which makes the Constitution nothing more than a stack of paper.


When the constitutional principle for justice cannot be implemented throughout the system, then the directors of various administrative levels are able to put their wills upon the behaviours of their departments, including the rules for the appointment and selection of government officials. This way, a set of rules and conduct codes are passed without review, as there’s no independent department to review the mechanism. As power overtakes the constitutional rules, the selection and appointment of civil servants becomes a game where only those who are close to power benefit. For example, XU Caihou, the former People's Liberation Army (PLA) general, accumulated billions, a big proportion of which came from selling government positions. And there was no review mechanism to counter his deeds. Apparently those who bought their way up had to serve for XU’s interest. Another example is ZHOU Yongkang, the former security chief, who managed to establish a wide network of his home-boys. Word has it that ZHOU obtained over RMB 100 billion. It is impossible for him to obtain so much wealth without the help some mega companies, nor can he do this so smoothly that nobody knew. However, till the day of his fall, we have never heard of anyone who was involved in his case.


What’s more, when LIU Tienan, former Chinese politician and senior economic official, was reported by a real name whistleblower, some executives from the press office of the National Development and Reform Commission denounced it as “pure rumours and slanders”, and threatened that they would contact the network authorities and the police to deal with this report. LIU’s subordinates apparently did not know whether the report of their superior was true of false when they put the authority of the NDRC on jeopardy in order to “defend” their boss. In retrospection, the press office of the municipal government of Chongqing did just the same when it announced that WANG Lijun was taking a “vacation-style treatment”. The press office acted like it was a tool of BO Xilai as it assisted him in creating multiple false criminal cases during the time  of “singing the Red Army songs, and cracking down the criminals”. The whole municipal government of Chongqing acted like BO Xilai’s personal clan.


We can, therefore, make reasonable assumptions that it is not an accidental case for those sacked government officials to emphasise their loyalty to their superiors during selection and appointment, but it is a rather common rule. This can be seen in the fact that the convictions of the sacked government officials were not prosecuted for “appointing only their own men”. Hence, the current selection and appointment system for government officials has enhanced the intention for people to attach themselves to their superiors. Generally speaking, it becomes more and more common for civil servants to put their boss before the principles of the Constitution. This also explains why some think it is impossible for the effect of executive orders to go beyond Zhongnanhai, the symbol of the highest authority. Many government officials only use the man they personally trust so that their own interest can be sustained. When the orders from Zhongnanhai go against their interest, manoeuvres take place and punishment is rarely seen. The fact that many civil servants do not have the basic understanding of the Constitution showcased their lack of responsibility for the long-term interest of the country. This whole system is, therefore, in a very unstable status without consistent rules as those subordinates have their own subordinates. Loyalty, therefore, is only about the immediate bosses.


The “Banality of Evilresults from the personal attachment in Chinas civil service system


Since there is an inclination for civil servants to submit to their superiors, which led to the fact that they only listen to their bosses, it becomes impossible for criticisms based on constitutional principles to exist in various government departments. As criticism and public supervision are suppressed by the government, a total violation of Article 35 of the Constitution, the discourse within the system remains still and coherent.

Accordingly, when Mr. QIU He visited Dianchi, he instructed that a piece of land should be developed into a lawn. However, that piece of land has been sold to a private company, and the land certificate was issued. Mr. QIU inquired a municipal official and the answer he got was “Everything you say, Sir.” Similar examples are countless. As some government officials hold little respect for the Constitution, their respect for the laws is infinitesimal as the Constitution instructs people to obey the laws. I would like to believe there are still people in the government who maintain their integrity and help the government with critiques, but I also believe such people are outnumbered and their criticisms are not substantial.


There is also a strong inertia for suppression of those who criticise the government besides the emphasis for unconditioned submission. In the early 1950s, LIU Shaoqi, former chairman of China, advocated the propaganda of “the docile tools”. And the anti-rightist movement of 1957 was a crackdown of intellectuals. The persecution of PENG Dehuai, and the overhaul of senior government officials including LIU Shaoqi, was due to the criticisms against MAO Zedong’s mistake that led to the Great Famine. LIU Shaoqi was expelled from the party on his birthday, and he was strapped in bed during the last 60 days before his death. To use public violence against criticisms has become a Chinese tradition. At present, this is demonstrated by the removal of online criticisms of political power. Ironically, this rule also shows who have lost their political power. 


In the meantime, the suppression of criticism is the encouragement for adulation. We can sense the trend of adulation from the fact that many government officials made false statement in public as their subordinates knew but they did not dare to point out. For example, the silk banner given by the Forbidden City Museum to the police for their efforts in finding back the stolen items was an embarrassment as there was a false Chinese character on it. It was an obvious mistake, but no one dared, or cared to point it out. Certain procedures must haven been taken as the silk banner was a big deal. We can only imagine that after the directors of the museum approved the content of the silk banner, no staff had the courage to point out the fault. “The boss is always right”, has become an unclaimed rule in the party and government system of China. Once the senior officials have expressed their views, even if they are against the law and the constitution, these views get a good chance to become laws for the subordinates. However, it is nothing but a game of “play dumb” by the subordinates.


As a civil servant, there seem to be too many reasons to “put the bosses before the Constitution”. It is impossible to fight the institution and the traditions all by oneself. Many would give in and believe it is not a big deal. However, it reminds me of Hannah Arendt’s concept of the “banality of evil”. This concept was created when Arendt referred to Adolf Eichmann’s deportment in the Jerusalem trial. Eichmann defended himself by “executing the order from his superiors”. This induces a philosophical issue, that is, whether a man should be held accountable for his crime when he was instructed to execute the order from his superiors. If the man is just conducting a small evil, it is still possible that multiple small evils may accumulate to a massive crime. Such crimes have resulted in the death of over 6 million Jewish people during the Second World War. (Hannah Arendt, Eichmann in Jerusalem: A Report on the Banality of Evil, Shanghai People’s Press, 2014)


Therefore, the “banality of evil” may be more horrifying as it has consumed thousands of lives without a slight sense of guilt. Arendt pointed out that the fact that every man was sinful meant no one was a criminal (p. 57). And the Nazis made use of people’s tolerance for small evil in order to conduct the Holocaust (p. 63). In retrospect, during MAO’s time, people were brainwashed to be a small “screw” for the party and “implement the order no matter whether you understand it or not”. This is a clear case of banality of evil, which led to the great famine of the 1959 resulting in the death of millions. Thanks to the banality of evil, MAO has successfully made a fool of Chinese people for decades. Nowadays, even when we try to hold MAO responsible, not a single person who “implemented the order” stands up and admits his or her responsibility. This shows how appalling the “banality of evil” is.


Arendt’s proposal was “to eradicate the word ‘submission’ from our morality and political thoughts” (p. 71). It is because “when we talk about submission of adults, we are actually talking about the organisation, authority, or law that require submission of the adults.” (p. 70) “Support” means “consent”. In a country of people’s sovereignty, theoretically all its laws, institutions, and leaders should have the consent of its people. And the constitution should be the very basic and sustainable institution that has the consent of the people when specific laws are not basic, and institutions and leaders are not sustainable. When certain leaders and superiors violate the constitution, they are no longer the objects of people’s consent, which means the people should turn to the constitution. Therefore, the right thing to do is to “transcend the superiors and resort to the Constitution”.


The Basis of Rule of Constitutionshould be Transcending the superiors and resort to the Way of Heaven


Some may say that the current Constitution of the PRC is also flawed, and mistakes may occur when people resort to the Constitution. Of course there are flaws in the Constitution as it is man-made. Besides, the current Constitution has not been drafted or amended in due procedures by public choice. However, the content of this Constitution is still the best so far in Chinese law system. It includes the protection of the freedom of citizen’s body, expression, religious beliefs, and property, though not completely implemented. When we talk about the constitution, we are not referring to a specific constitution edition, but rather the “way of heaven”(天道). So we should “transcend the superiors and resort to the way of heaven”. 


From the perspective of an individual political party or leader, it is impossible to gain general political consent from the people. But a political leader should understand that the highest national recognition and political consent concern the recognition of the constitution. Only when a political party or leader upholds the constitution, shall it or he benefit from the recognition of the constitution. This requires more than words, but actions. We should know that the reason why the effect of executive orders barely makes it beyond Zhongnanhai is that the people inside determine so. They are the true causes. It is because the people inside Zhongnanhai neglect the Constitution that people outside of it see the Constitution in the same way. For instance, the merger of the China North Railways and the China South Railways did not take into account the Anti-Monopoly Law. The leaders neglected the laws and the Constitution to such extent. We cannot assign too much blame on those local government officials who throw journalists behind bars when Article 35 of the Constitution is commonly ignored and online criticisms are regularly removed and deleted by the order of the authorities.


Only by upholding the constitutionalism, can we really keep the whole system consistent and eradicate the personal attachment while breaking the anti-constitutionalist interest groups. To illustrate, the interests of different people may be conflicting, but the understanding of the constitutional principles are similar. The implication of cronyism twists these principles and the public power may be used to violate human rights and property rights, which in turn will weaken the credibility of the government authorities and result in low administrative efficiency. Without the appeal of the sense of justice by the recognition of the constitution, it is impossible to ensure the efficiency of administration only by violence of the power. When everybody, at least the civil servants, insists in transcending the superiors and resorting to the way of the heaven, and when the ruling party and its leaders uphold the constitution and implement constitutionalism, it will be a reality for the effect of executive orders to go beyond Zhongnanhai and to have a country ruled by the constitution.


It seems to be difficult, but in fact it is not. Even ordinary people in old China were capable of doing so. For example, when a child misbehaves and defends himself by saying “it was XXX who told me to do so.” The mother would argue, “If you were asked to kill, would you do it?” This is a question for the integrity and self-esteem of oneself. There was caution in Chinese tradition against the “banality of evil”. There is the old saying “Do not do evil things though they may be insignificant. Do not give up good things though they may be minor matters.”


There were such traditions, as were there people who behaved this way. For example, when OUYANG Xiu, politician in Song Dynasty, was serving WANG Shu, then governor of Xijing, an army deserter was caught. According to the law, WANG Shu should sentence the deserter to death. And OUYANG Xiu was against the decision and argued that there got to be some reasons. He suggested the deserter be sent back to the army, yet WANG Shu disagreed. At last, OUYANG Xiu had the final word as he was in charge. (WANG Shuizhao, CUI Ming, A Biography of OUYANG Xiu, Tianjin People’s Press, 2013, p. 56) I believe it was because OUYANG Xiu had the courage to transcend his superiors, even his emperor, and resort to the way of heaven that he made the right decision. “It is the Jianguan (谏官, the government official who’s in charge of criticising and providing suggestions to the emperor) who argue with the emperor in the court. Even though the Jianguan is inferior in status, he acts what he says. By doing so, he conducts the way of the heaven.” (p. 66)


The Shiren (士人, scholars) spoke out in regard to the selection of government officials. For example, BAI Juyi spoke against the appointment of TUTU Chengcan as a general for three times. OUYANG Xiu also joined hands with other Jianguan to stop an appointment of XIA Song as military affairs commissioner. In Ming Dynasty, the Jianguan group criticised the emperor for appointment of personnel without due procedures. These government officials who were selected without due procedures were called “Chuanfengguan”. During Mingxianzong Emperor’s times, over 500 Chuanfengguan were sacked; 3500 Chuanfengguan were sacked in Mingxiaozong Emperor’s times; and over 300 Chuanfengguan were sacked in Mingshizong Emperor’s times. (ZHANG Wei, The Supervisory System of Ming Dynasty, Wuhan University Press, 1993, p. 137) That is because the Jianguan believed that “the government positions and titles are the instrument of the public”, which should not be traded for “personal interest”. (ZHANG Wei, 1993, p. 133)


Even in the darkest times of MAO Zedong when criticisms were heavily suppressed, there were still people who followed the way of the heaven. PENG Dehuai was a good example. Few people know about DENG Zihui. When MAO had the utmost power, DENG Zihui insisted that the program of people’s communes and the public canteens were wrong. In 1961, the dreadful outcome of the great famine began to show. DENG Zihui met MAO Zedong twice to request that the land and agricultural productivity should be sublet to households in order to deal with the declining living standard and tattering national economy. However, his suggestions were rejected by MAO Zedong. DENG Zihui was the first secretary of the party in Zhangjiakou. He took liberty and listened to the people and dismissed the public canteens against huge political pressure. He also wrote twice to MAO Zedong to restate his appeals only to be rejected. He was politically persecuted. There was a farmer named YANG Weiming who wrote an article entitled “Observation of the Current Situation” where he insisted the same. He, along with two others, was publicly humiliated and persecuted before they committed suicide.


It is with these people who put their lives for the way of heaven that the Chinese civilisation can be proud to stand in the world. It is this spirit of “transcending the superiors and resorting to the way of heaven” that we have the basis for the “rule of the constitution”. A successful constitutional state is one that considers the awareness of constitutionalism as the basis. What was key to the Protestant Reformation was summarised by Martin Luther that every ploughboy should read and interpret the Bible by themselves instead of listening to the priests, because they were responsible to God for their soul. Therefore, every man of belief is a priest. During the colonisation times in the US, “education was done mostly by reading the Bible and newspapers at home”. (John Eidsmoe, Christianity and the Constitution, Central Compilation & Translation Press, 2010, pp. 18-19). We have to admit that “resorting to God” constituted the basis for the success of American constitutionalism.


From the perspective of the ruling party and its leaders, as long as they base their political legitimacy on the constitution and the way of the heaven, they would not fear that every ordinary man understands the Constitution and the way of the heaven. And they will be more popular, because the Constitution covers the biggest constitutional consensus. Now with the principle of freedom of expression and the variety of the methods of expression, it will not be possible to “start from fooling the people, end with fooling the emperor” by closing the information flow and confusing the awareness of constitutionalism. The only people that can be fooled are themselves. When it comes to the “emperor”, from the political aesthetics perspective, even Louis XV said that “we are now ruling a free and generous people with glory and honour.” One of his ancestors put it in an even clearer way: “We’d rather speak to a free man than a slave.” (Alexis de Tocqueville, The Old Regime and the Revolution, the Commercial Press, 1992, p. 154) Freedom means that people can resort to the way of the heaven by their free will.


April 29th, 2015

SHENG Hong, Director of Unirule Institute of Economics

 

Current Events

Unirule Master Thoughts Class(2014) 5th Session Held in Beijing

April 11th to 12th, Unirule Master Thoughts Class(2014) 5th session was held in Beijing. This session was joined by Professor CHEN Zhiwu from Yale University and Professor LEI Yi from Chinese Academy of Social Sciences.

On the morning of April 11th, Professor CHEN Zhiwu spoke on “What Is Finance?” Many people misunderstood the meaning of financing. If we make a comparison between a society with financial system and one without, perhaps we’d get a better understanding of finance. Even though problems come with the financial market, so do personal rights and freedom to choose, which makes a completely different story.

Finance in the narrow sense refers to banking, insurance companies, securities, stock market, bond market, future market, and the options market, etc.. Finance in the broad sense refers to a variety of transactions. Professor CHEN Zhiwu used examples such as the option to raise kids for old ages, the old virgins in Guangzhou, and the bond between women to live together and rely on each other in Guangzhou, in order to illustrate the inter-temporal transactions. However, credit may become a big issue in such transactions. Professor CHEN shared his observation of the development over the last three decades in China and mentioned the transition from a society of acquaintances to a society of strangers. In the past, people relied on friends when they moved to a new place, but now transactions can be conducted via money. The transitions in this sense has led the bank to issue more notes, otherwise, the changes in the social structure will lack the support of money. As the demand for money increases, modern finance has made the “invisible finance” more visible.For example, in the past, people depended on the support of their relatives and friends for financial causes, but now more interpersonal credit system has been established, such as the insurance companies and the pension system.

Such changes has made money more and more important. The monetisation has greatly enlarged everyone’s freedom. In the past, people had to carry quilts and food when they traveled. Now that everything can be bought with money, the freedom of people is enlarged. What’s more, the monetisation has also lifted people from their social status. In the past, only party cadres could enjoy the comfortableness of the first class trains coaches, but now with payment of money, such convenience can be enjoyed by anyone.(To read more)

 

 

 

Unirule Macroeconomic Report Q1 of 2015 Released in Beijing

April 22nd, Unirule Macroeconomic Report on the first quarter of 2015 was released at Unirule Institute of Economics. This press conference was held by Professor GAO Yan, Deputy Director of Unirule. Professor ZHANG Shuguang gave a report on the economic performance of China with the title of “Economic Growth Slows Down with Good Prospect for Restructuring”.

 

 

Unirule Master Thoughts Class(2014) 6th Session and the Commencement Held in Beijing

May 10th to 11th, Unirule Master Thoughts Class(2014) 6th session and the commencement ceremony was held in Beijing. Professor ZHOU Qiren from National School of Development at Peking University(NSD) and Professor ZI Zhongyun from the Chinese Academy of Social Sciences attended the ceremony.

On the morning of May 10th, Professor ZHOU Qiren spoke on “Mobility, Concentration and the Economic Growth”. Professor ZHOU presented his observation of the urbanisation over the last two years. He thought there were two things that mattered the most, i.e., mobility and concentration. By comparing and analysing the data of US, UK, Japan, France, and Russia, he concluded that the population moved to cities and a rather big proportion of the economic contribution was made by a comparatively small proportion of the land.

In regard to the understanding of cities and the density of population, Professor ZHOU made an example from Manhattan, New York. He mentioned that the density of Manhattan in the night soared to 27,000 per square meters, whereas that of the day accounts dozens of thousands. The annual GDP per square meter accounts to USD1.6 billion.Such high density of population and the massive economic activities are attributed to the reasonable city planning: the compounded night light index of Manhattan ranked among the top cities in the world, the traffic planning was remarkable where a turning can be expected in a minute’s drive and an avenue in two to three minutes, which constituted about 120 crossings in total for Manhattan. Americans learned to plan their cities in the fashion of grids from Europeans as the grids themselves facilitates the fast mobility of goods and services, as well as information.As there was no main road in Manhattan, the underground transportation system is highly developed. Professor ZHOU Qiren concluded that Chinese were used to the low density of cities in planning whereas the urban development required high density in order to facilitate the high speed exchange of information, goods, and services.

Some people believed that high density would lead to crowdedness and congestions, and Professor ZHOU thought this was a false statement. Thanks to the low density, the city would have to sprawl in a larger area, making the cost for commuting higher. The so-called “sleeping cities” would spring up where people work in a place and live somewhere else, which resulted in traffic congestions and low efficiency of life utilities in the cities.

Professor ZHOU Qiren thought the concept of urbanisation in China was incoherent with that in other countries. Professor Zhou thought several steps should be taken as urbanisation in the Chinese sense focused mainly on the planning and zoning in terms of administration. He thought the next step should be to put the status of the cities as administrative zones first, and then to stress the importance of people, and to let entrepreneurs do what they are best at. Only when a proper stage is provided for people can we expect cities to play a proper role in the development in the nest one or two decades. (To read more)

 

News

MAO Yushi Interviewed by Global News, Canada


Recently, Mr. MAO Yushi, Honorary President of Unirule, was interviewed by Global News, a major Canadian media. Three issues were talked about during the interview.


Firstly, Mr. MAO Yushi expressed his opinion on the slowdown of China’s economy. He thought it was difficult to maintain a 7% GDP growth. The main threats to the economic stability come from the real estate bubble and the bad loans from banks. However, it is acceptable to have a 5% GDP growth compared to the economic situations in other countries. Should China’s economy embrace a hard crash, as “the Chinese government handles massive resources, it can be dealt with, though there will be seminal influences.”


Secondly, Mr. MAO Yushi articulated his opinions on the anti-corruption campaign. He confirmed the celebrated outcomes of the campaign, but thought it was impossible to eradicate corruption. Because “corruption is a comprehensive issue. It has a lot to do with the politics, freedom of speech, and the education level of citizens.” Corruption exists in most developing countries. According to Transparency International, China’s ranking is not the worst.


Thirdly, Mr. MAO Yushi talked about controversies concerning himself. He said” those controversies are not in terms of academics, but mostly in regard to my comment on MAO Zedong”. One of the main reasons is that “people hold different historic records and information, that’s why we differ in looking at MAO Zedong”. With the suppression of the history by the authorities, few young people know what really happened back then. “But I am confident that truth will come out soon.”

 

2015 Unirule “Lexiang Youxue” Hangzhou Spring Break 
 

May 16th to 18th, Unirule “Lexiang Youxue” Spring Break was held in Hangzhou. This trip was organized by the Unirule China Entrepreneur Research Center(UCERC). On the morning of May 16th, a seminar on “The Austrian School of Economics and Entrepreneurship” was held at Xingdu Hotel in Hangzhou. Professor MAO Shoulong, Professor ZHU Haijiu and Professor ZHANG Xukun attended this seminar and made keynote speeches.

During the three days, various activities were taken, such as a tour on the lake,  a birthday party for Professor MAO Shoulong, a tour to the old temples, and seminars and roundtables with scholars. (To read more)

 

Unirule Received Student Delegation from the University of Oklahoma

May 18th, a student delegation of 23 people from the University of Oklahoma visited Unirule Institute of Economics. Professor SHENG Hong, Director of Unirule, introduced the history and development of Unirule Institute of Economics upon request. A roundtable on the influence of Chinese culture upon its economy was set up. (To read more)

 

Unirule 10-D Spatial Simulation Planning Model (SSPM)

The Unirule 10-D Spatial Simulation Planning Model (SSPM) is a mathematical and computational model based on economics. It is developed by a Unirule research team led by Professor SHENG Hong. SSPM is designed to simulate the development scale, economic density, industry distribution, resource constraints, ecological preservation, institutional influence, policy effect, and the evolution process in the next ten to twenty years or even longer period for a region. SSPM provides reference for the regional economic development strategy making, which can be directly adopted in the planning on regional economic development, population, land use, industry development, townships, water and ecology.

So far, SSPM has been adopted in the industry planning of Qianhai Area, Shenzhen, and the economic development planning of Yangcheng County, Shanxi Province.

Learn more about the SSPM

 


Current Researches/ Consulting

Improving China’s Implimentation and Supervision Institution of the Constitution

At present, research on the implimentation and supervision institution of China’s constitution is insufficient. Multiple problems exist in the current studies, such as the lack of a cultural perspective, and empathetic understanding of China’s political tradition; a lack of authentic Chinese perspective and an indulgence of Westernized framework of analysis; and a lack of reflection of the reality and the existing political framework.

 

The research on China’s constitution review institution should put the protection of civil rights and constitutional construction first, with a reflection of China’s reality and take in the advantages of external researches. A plausible research approach is as follows: 1. This research ought to provide a right relief mechanism; 2. It should take into account that China is a vast country with imbalanced regional development realities which foster unique and differentiated conceptions of the law and politics in general; 3. It should be built upon the current constitutional structure and take into account the interactive system of the power of the party, the National People’s Congress, etc. in order to make it a progressive research, which can enable the elements of constitutionalism to supplement the current constitutional framework; 4. Scrupulous examination should be given to constitutional practices in other regions and cultures, especially those influenced by the Chinese culture or with a similar institutional set-up, such as Taiwan and France; 5. Observations should be made in regard to the traditional Chinese institutions, such as the institution of the expostulation system (“谏议制度”, or giving advice),  supervision system, and the institutions established in this light, e.g., Taiwan’s Control Yuan.

 

Improving Entrepreneurs' Survival Environment: Abolishing Death Penalties in Relation to Fund-Raising Cases in China

In recent years, environment for private enterprises has been taking a deteriorating turn, which attracts attention from the media and the academia. The causes are complex and multi-faceted, including: 1, the abuse of powers by government officials as the government powers expand; 2, “the private-owned deteriorating with the state-owned advancing” (guojin mintui) worsens the picture where the survival environment for private enterprises gets more and more squeezed; 3, external demands of enterprises decrease while internal cost increases; 4, financial suppression escalates with the industrial restructuring and updating lagging behind; and 5, the fluctuation of macroeconomic policies by the government poses uncertainty for production and investment. Moreover, many innocent entrepreneurs were labeled and persecuted for their “gangster behaviors” by the policy and law enforcements in Chongqing city, which was just a glimpse of similar occasional “gangster crashing” movements in the country. Many entrepreneurs are suppressed and sanctioned in the name of “illegal fund-raising”. According to active law, the court can sentence entrepreneurs to death penalty with this charge.

 

Unirule Institute of Economics is planning to undertake research on the problems of the crime of “illegal fund-raising” and specific methods to abolish this charge.

 

It is fit for Unirule to carry out this research project. Unirule Institute of Economics is a non-profit, non-governmental organization, which focuses on institutional economics with expertise in economics, laws, and politics. It has been dedicated to independent research on China’s institutional reforms and public policies as well as the reform of private finance. In 2003, 2011, and 2013, Unirule held seminars on the cases of Mr. SUN Dawu, Ms. WU Ying, and Mr. ZENG Chengjie. These seminars have been very influential before and after the close of the cases.


Unirule Institute of Economics has undertaken research projects in corporate finance and private finance in recent years. Over the years, Professor FENG Xingyuan has been carrying out pioneering research on private finance and private enterprises. He has gained rich experience and published many publications and papers on relevant topics, including “Report on the Freedom of China’s Corporate Capitals”, “Report on the Survival Environment of China’s Private Enterprises 2012”, research on the risks of private finance, etc. In August 2013, Professor FENG Xingyuan and his research team completed and released the “Report on Private Enterprise Fund-Raiding in West Hunan and the Case of Mr. ZENG Chengjie”, which analyzed and assessed the process, nature, problems, and causes of a series of events and proposed policy recommendations concerning the fund-raising activities in West Hunan and the case of Mr. ZENG Chengjie.

 

Business Ethics Declaration of Chinese Entrepreneurs

Over the last three decades, China’s economy has been embracing rapid growth with entrepreneurs being a key drive. The biggest and most significant structural change is the rise of entrepreneurs who constitute the pillar of the society nowadays. Today, the biggest, and the youngest group of entrepreneurs are going international, bridging China and the world.

However, because of the abnormal political, social and ideological environment of China for the last five decades, Chinese entrepreneurs happen to be widely confused and for the last thirty years, the emerging group of entrepreneurs has been suffering from severe anxiety over identity:

Firstly, due to the long time anti-market ideological propaganda by the authorities, many entrepreneurs believe they have the “original sin”. They are led to believe that their profits are based on exploiting the workers, which further leads to their confusion and anxiety over the ethical justification of their fortune and profits.

Secondly, this anti-market ideology also affects the public; leading the public to envy the fortune of entrepreneurs while disrespect them since their deeds are “unethical” and “dishonest”. This public opinion, in return, affects entrepreneurs’ self-identity. They, therefore, can’t convince themselves of the contributions they make to the society, or identify themselves within the social hierarchy.

Thirdly, Chinese entrepreneurs, especially those whose enterprises have gone international, are bothered with this severe identification anxiety. Chinese people stand out in entrepreneurship, so do Chinese enterprises. But what are the driving forces behind? Thanks to the long time culture break-up from the traditions, and the anti-tradition propaganda, Chinese entrepreneurs find it hard to comprehend and identify their cultural and social roles. This leads to the chaotic and restless mental state of entrepreneurs. This also results in the lack of a cultural supportive pillar for enterprise management in China.

“Business Ethics Declaration of Chinese Entrepreneurs” aims to provide answers to the anxiety over identity for Chinese entrepreneurs, to re-identify them by providing authentic and orthodoxical conceptions, to help them mature their thoughts and corporate social responsibilities.

This research project is committed to establishing a value system for Chinese entrepreneurs. To confront the anxiety over identity for Chinese entrepreneurs, this project provides answers to the three questions below:

1.Do Chinese entrepreneurs have the “original sin”?
2.What do Chinese entrepreneurs contribute to the society?
3.How do Chinese entrepreneurs gain respect?

 

An Economic Research of Chinese Urban Smog Management

The issue of smog has been on the spotlight in China that no matter government officials, ordinary citizens, or journalists and the press have expressed serious concern and anxiety towards it. Unirule Institute of Economics takes on this research topic and is conducting an economic research on China’s urban smog management.


The urban smog is attributed to multiple factors with many interest parties involved, which also makes it an economic issue. Unirule seeks to find a solution to the management of smog by the design of institutions from an economic point of view.

 

 

Fairness and Efficiency of Financial Resource Allocation

The first scale problem of the fairness and efficiency of financial resource allocation is whether the overall tax bearing standard falls within the optimal interval, whether the design of tax kinds and the mechanism will harm the development of the economy. The second scale problem is whether the expenditure structure of the existing financial resource allocation, especially transfer payment, obeys the principal of justice, and the efficiency of financial expenditure especially the general administrative costs.


Unirule Institute of Economics is going to undertake research on the fairness and efficiency of financial resource allocation with the emphasis on the second scale problem. In order to fulfill the ideal of justice in a society, the involvement of financial resource allocation is one of the methods, and a universal one. A state can promote justice by implying financial expenditure in two ways: the direct and the indirect way. When applying the direct way of implying financial expenditure measures to promote justice, financial expenditure is directly distributed to individuals to fill the gap of incomes between individuals.

 

Among the financial expenditure items of China are pensions and relief funds for social welfare, rural relief funds as well as social insurance funds. The indirect way is by governments' increase in expenditure used for supporting agriculture and villagers, construction of infrastructure, education and medical treatments. This research is on the justice of financial resource allocation and it deals mainly with whether the transfer payment of financial resources obeys the second rule of Rawls's theory of justice, which states that when violation to the first rule has to be made, resource allocation can be towards the poorest group of people. Besides the justice issue, efficiency is also involved in the financial resource allocation. The administrative costs of China have long been above the average standard of other countries in the world, therefore, a big amount of public financial resources are wasted (trillions of RMB per year as estimated). In regard with the efficiency issue of the financial resource allocation, this research deals mainly with the change of ratio of administrative costs by government agencies (in addition to other costs, such as medical treatments of government officials covered by public budgets, and housing subsidies) of financial income. The reform of the fiscal and taxation system is one of the core issues in China's on-going reforms. This research aims not at a comprehensive examination of the fiscal and taxation system, but a specific aspect which is the "fairness and efficiency of financial resource allocation", and evaluating the status quo of China's financial resource allocation.

Research on China's Urbanization on the Local Level

Urbanization is one of the most essential economic and social policies of the new administration. The emphasis of this policy is posed on medium and small cities as well as townships. As noticed, there are thousands of industrialized townships in China with their social governance lagging far behind their economic development.


Firstly, a big population is located in between the urban and rural level, which can't transform into citizens. Hundreds of millions of people have left their villages and moved to commercialized and industrialized towns. They are in industrial and commercial occupations and it is highly unlikely that they would go back to their villages. However, they are not entitled to local Hukou registration, which further leads to the deprivation of various rights, for example, the right of education.

Secondly, public governance in such industrialized and commercialized towns, in general, is at a rudimentary level. The number of officially budgeted posts is asymmetric with the population governed, which leads to the employment of a large number of unofficially budgeted staff and unjustified power to govern. There is a lack of financial resources for the local government to carry out infrastructure construction or to provide public goods sufficiently. Thirdly, the urbanization results in imbalanced development of the structure of society. Since the industrialized and commercialized townships are unable to complete urbanization, urbanization in China has basically become mega-urbanization which is dominated by administrative power. Local governments centralize periphery resources with administrative power and construct cities artificially, which impedes townships and villages from evolving into cities by spontaneous order. Fourthly, industry upgrading can't be undertaken in those industrialized and commercialized townships and the capacity for future economic development is greatly limited. The industry upgrading is, in essence, the upgrading of people. Enterprises ought to draw and maintain technicians, researchers, and investors, to meet their needs for living standards, which cannot be satisfied by townships. Similarly, the lagging urbanization reversely sets back the cultivation and development of the service industry, especially the medium and high-end services.


Unirule Institute of Economics is going to carry out research on urbanization of China on the local level, aiming at improving public governance of the industrialized townships, optimizing the urbanization methodologies, and improving the "citizenization" of migrant workers, therefore further pushing social governance towards self-governance and democracy.

 

Research on the Public Governance Index of Provincial Capitals

At the beginning of the year 2013, Unirule conducted field survey, including more than 10 thousands of households in 30 local capital cities. According to the field survey, the Public Governance Index was derived. The main conclusions of the PGI report as below:


Three statements summarize the status quo of public governance in provincial capitals. Firstly, public services have generally just gotten a pass. Secondly, protection to civil rights is disturbing. Finally, governance methodologies need improvements. These statements point out the solution: the structure of the society needs to be altered from that with a government monopoly to a civil society with diverse governance subjects. The ranking of provincial capitals in the public governance assessment from the top to the bottom is as follows: Hangzhou, Nanjing, Urumqi, Tianjin, Chengdu, Shanghai, Beijing, Nanchang, Xi'an, Xining, Shijiazhuang, Wuhan, Guangzhou, Yinchuan, Hohhot, Chongqing, Shenyang, Changsha, Jinan, Kunming, Nanning, Haikou, Fuzhou, Guiyang, Harbin, Hefei, Changchun, Zhengzhou, Taiyuan and Lanzhou.

Generally speaking, all provincial capitals are graded comparatively low in the three public governance assessments from 2008 to 2012. Even those that ranked the highest in performance have just barely passed the bar of 60 points. Few provincial capitals with poor public governance got over 50 points.


There is a certain amount of correlation between the changes of ranking and improvements in public governance in provincial capitals. In the short term, should the capital cities be willing to raise their rankings, they can achieve this by increasing transparency in government information and civil servants selection, encouraging local non-governmental organizations, or promoting wider participation in local affairs. There is but a weak correlation between public governance and the local GDP level. However, a strong correlation exists between the rankings and the equity of local fiscal transfer payment. That is to say, a region gets a higher ranking in public governance if subsidies to local social security, medical care, education and housing are distributed more to the poorest residents in that region. On the contrary, a region's ranking falls if such resources are distributed with prejudice to the groups with high incomes. This phenomenon shows that equity is of significance in the assessment of the government by the people.


When residents are not satisfied with medical care, elderly support system, water supply and electricity supply, the situation can be improved when they complain to the government. But when similar situations take place in public transportation, environment greening, heating systems, and garbage management, whether by collective actions or filing complaints to government agencies, residents can hardly be satisfied with what the government does.


According to the three public governance assessments carried out from 2008 to2012, we discovered that the Gini coefficient of residents in provincial capitals was decreasing and the income fluidity was improving. From 2010 to 2012, citizens' comments on protection of civil rights are deteriorating, especially in terms of property and personal security. The request for freedom of speech is also increasing. For the moment, citizens in provincial capitals have a low evaluation on the cleanness and honesty of local governments.

 

Research on Disclosure of Government Information


Room for reforms is getting narrower as the opening-up and reforms deepen. It also leads to a more stabilized vertical mobilization of the demographic structure with the conflicts in the distribution of interests exacerbating. A collaborative system centering the political and law system and involving close cooperation between the police, courts, petition offices, and the city guards (Chengguan) is developed to deal with social unrest. This system is operated by local governments and finalized as a system of maintaining stability (Weiwen). There have been Internet spats over the amount of Weiwen funds. It is unsustainable to maintain such a Weiwen system, and the disclosure of government information is the most significant approach for this end. The essence of public governance is to dissolute conflicts instead of hiding and neglecting them. And one way to achieve this is by sufficient communication. Public and transparent appraisement and supervision cannot be achieved without transparent government information, otherwise the result will be the exclusion of citizens from public governance.


Unirule Institute of Economics has been undertaking research on the disclosure of government information since 2011. This research is carried out not only from the perspective of the regulations for the disclosure of government information which evaluates whether governments of various levels are obeying the regulations and their performances, but also by examining information disclosure laws in developed countries while looking at the status quo in China. There are seven aspects where government information disclosure can be improved, namely, information disclosure of government officials, transparency of finance, transparency in the decision-making mechanism, transparency in administration, transparency in public services, transparency of enterprises owned by local governments, and transparency in civil rights protection.

 

Upcoming Events

Unirule Master Thoughts Class(2014)

Now Unirule Master Thoughts Class(2014) is open for application. In today’s world of information explosion, even though we are living in the “information ocean”, two problems emerge. The first problem is the insufficiency of useful information. Useless information is everywhere and it mislead people, while condensed, useful and objective information is very scarce. The second problem is as we step into the mobile computing era, people get used to superficial reading habits instead of in-depth reading and thinking. These two problems have severely influenced people’s ability to extract, digest, and innovate. This Class integrates the best minds in China in the academic world. Their thoughts and insights will benefit you in ways you cannot even imagine.

Masters: CHEN Zhiwu, HE Guanghu, HE Weifang, LEI Yi, MAO Yushi, QIN Hui, SHENG Hong, SUN Liping, ZHANG Shuguang, ZHANG Weiying, ZHOU Qiren, ZI Zhongyun
Modules: Economics, Social Transition, Legal Affairs, Inernational Affairs, History, Philosophy
Schedule: Semester(6 months) starts on November 8th, 2014,
Tuition:  RMB 35,000 per person

Mr. LI Yunzhe +86 137 1835 3757, liyunzhe@unirule.org.cn;
Ms.JIN Qianqian +86 186 0081 6278, jinqianqian@unirule.org.cn

 

Unirule Biweekly Symposiums

Unirule's Biweekly Symposiums are known in China and throughout the world for their long history of open and in-depth discussions and exchanges of ideas in economics and other social sciences. Over 380 sessions have been held and over 15,000 scholars, policy makers, and students, as well as countless readers on the web, have directly and indirectly, and participated in the Biweekly Symposium for close to 20 years.

Biweekly Symposiums begin at 2 p.m. every other Friday and are free and open to the public.

Schedule
Biweekly Symposium No. 524: 8th May, 2015
Biweekly Symposium No. 525: 29th May, 2015

 

Previous Biweekly Symposiums

Biweekly Symposium No. 522: Political Legitimacy and China's Political Development

Lecturer: Professor YU Jianrong

Host: Professor SHENG Hong, Director of Unirule Institute of Economics

Commentators: LEI Yi, ZHOU Xiaozheng, YUAN Gang, JING Yuejin, DUAN Demin, ZHANG Shuguang

Professor YU Jianrong thought the political development of Chinese society is a debatable issue, which is sensitive and influential.

After years of sociological research, Professor YU came to two conclusions: firstly, China will embrace seminal political change in the next ten years; secondly, as long as the party sticks to the right track and conducting reforms, China will be able to go through the transition smoothly. If China stops reforms, or steers to the wrong path, or loses its tempo, blood-shedding unrest may occur.

He introduced his reasoning. The political legitimacy refers to the basis of ruling There are four sources of legiticy. Firstly, violent revolution and the jungle rule may serve as a source of legitimacy. Secondly, god grants power to kings and emperors. Thirdly, the family origin may serve as a source for legitimacy. And lastly, democracy and rule of law.

The commentators and audience discussed with Professor YU about the possible options China has for the future after Professor YU analyzed the different stages of the Party’s development.

 

Biweekly Symposium No. 523: The Paradigmatic Innovation of the Economy and Rule of Law

Lecturer: Professor JI Weidong

Host: Professor ZHANG Shuguang, Chairman of Unirule Academic Committee

Commentators: GAO Quanxi, WANG Jianxun, SHENG Hong

  

Professor JI Weidong thought the development of China’s rule of law was mainly pushed forward by the economic research in China. After the establishment of the socialist market economy in the 1990s, one of the slogans back then was the economy of the rule of law, which later facilitated the civil and commercial laws, and the judicial reforms.

He also emphasized that the power of the state in China was extremely strong. As the rule of law is a restrictive institutional design for the power of the state, then what is the motive and reason for the state to accept such an arrangement? The modernization process of the European countries started from the feudal era where the power of the kings were constrained by the power of the church, which guaranteed the objective conditions for advocating the rule of law. But in China, the modernization process was promoted by the central government and the power and capacity of the government was very strong. Why would the government put constraints on itself? Of course the public pressure works to some extent, but what’s more important was competition.

Professor JI Weidong thought three competitive factors made China go to the rule of law. The first factor is the marketization. Once the competition mechanism comes to work with the market economy, it is of critical important to have a fair order and fair competitions. Then the problem of rules and orders will come into being. So, marketization will push forward China’s rule of law. Secondly, the divergence of the interest groups will occur as the market distinguishes the weak from the strong, the laborers from the investors. The competition between those interest groups will have to be expressed somehow. Certain standards of justice have to be created. Therefore, the objectivity, neutrality, and justice of the government will have to be addressed. A last factor is the democracy within the party.


Editor: MA Junjie
Revisor: Hannah Luftensteiner

 

Comments? Questions? Email us at unirule@unirule.org.cn

20141110


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