By SHENG Hong, Director, Unirule Institute of Economics;

Translated by MA Junjie, Project Researcher, Unirule Institute of Economics.

This essay was first published in China on Financial Times(Chinese): http://www.ftchinese.com/story/001072954?full=y

I was amazed by a piece of news about the Ministry of Civil Affairs along with 8 other ministries issuing a policy document implementing a dual management system on social think tanks a few weeks ago. Be it 9 ministries or more, what these ministries are is executive branch of the government without legislative power. How can it be allowed to “issue” an “suggestion” and implement a dual management system on think tanks without enquiries and dual process? Isn’t it a violation of the legislation? Regarding the legislation, the Constitution of the People’s Republic of China stipulates that “the deprivation of citizens’ political rights,…” “only by drafting laws.” These “political rights” include the rights for “freedom of speech, of the press, of assembly, of association, of procession and of demonstration”, whereas laws are only drawn up by the National People’s Congress. According to the Legislation Law of the People's Republic of China（2015），“Departmental rules not based on a law, State Council administrative regulation, decision or order must not impair the rights of citizens, legal persons or other organizations, or increase the scope of their duties; and must not increase the power of that department or reduce that department's legally provided duties.”（Article80）.

This “Suggestion” is entitled “Suggestions on the Healthy Development of Social Think Tanks”. Going over it carefully, constraints and violations of citizens’ rights by the Constitution are easily spotted, especially vicious attack on Article 35 of the Constitution that protects “freedom of speech, of the press, of assembly, of association, of procession and of demonstration”. The “dual management system” in this “Suggestion” requires that social think tanks are overseen not only by the Ministry of Civil Affairs, but also by a superior operations department. It’s worth pointing out that the so-called “management” refers to “lawful registration, supervision and inspection, administrative execution, and scrutiny in checking the scope of operations”; it even requires that “approval must be obtained accordingly if the think tanks are involved in international communication and cooperation, issuing journals, running websites, and opening social media accounts such as Microblogs and WeChat public accounts.” That is to say, these ministries and departments are 100 percent in charge of whether a “social think tank” can, if at all, be established and have its only physical or online media platform. 

Apparently, it goes against Article 35 of the Constitution and constitutions a serious violation against the civil rights established by the Constitution. Accordingly, it can be seen clearly that these ministries and departments are trying to delegate more powers to themselves via this “Suggestion”, which is just what the Law of Legislation forbids. 

Some might say that under the framework of the Law of Legislation, administrative departments are entitled to set up their own departmental regulations. True that. But there are premises for doing so. First and foremost, it should not be against the Constitution or a superior law, “the legal force of the Constitution is the highest, and no laws, administrative regulations, local provisions, autonomous regulations, special regulations or rules whatever may conflict with it. ”(Article 87) and these regulations should be within the “power of that department”. As discussed before, this Suggestion does not only violate the Constitution and the Law of Legislation, but also its superior laws. Why so? The establishment of these ministries and departments are under the current legal framework, where as there is no such a superior law regulation the set-up and operations of “social think tanks”. And now that the Suggestion was issued to create a non-existent legal conception in order to regulation a non-existent legal term, which is obviously a violation of the superior law in the basic terms of law, and it surpasses the scope of a department’s powers.

In fact, the concept of “think tanks” is not a legal term. According to its definition, a think tank is an informal, symbolic way to address such an entities that normally falls into the category that includes research institutions within corporates, research agencies inside the governments, policy research organizations in universities, and research organizations in non-governmental and non-profitable organizations. If we dig a little deeper, a loosely connected network of scholars in the form of cafe gatherings can also be deemed a form of think tanks. When the word “think tank” is translated into Chinese, it literally means an entity of thoughts and wisdom, without any specific boundaries. Even in a legal entity, think tanks exist as a secondary entity. If such direct intervention is to be implemented on these secondary entities, it’s a rank violation of the rights to manage a corporate’s(governmental, commercial, or non-governmental) own secondary entities. In addition, registration and approval will also need new division within the government to be set up, and these divisions will be asked to address various inter-sectoral and ambiguous organizations. It’s against the Law of Legislation for these departments to set up such divisions in the first place, and without checks and balances, these divisions will deteriorate into competition for more budgets, which leaves only the society and citizens’ rights in harm’s way. And it’s not supposed to be determined by the administrative departments. 

This being said, from the perspective of due process, this Suggestion falls short of legitimacy. Firstly, it’s merely a “Suggestion” instead of a departmental regulation. According to the natural understanding of “suggestions”, they are no more than a one-sided opinion on certain issues, which can no way be considered a regulation of due process. According to Hayek, “suggestions are differed opinions of the feasibility of certain behaviors and actions”, in order to indicate “approval” or “dis-approval”(Law, Legislation and Liberty, China Encyclopedia Press, 2000, p18). Apparently, suggestions beg for discussion instead of forceful implementation. The reason why it becomes a handy tool for department to confuse with regulations is that, from experience, suggestions lowers people’s understanding and requirement for the drafting of regulations, which not only evades the due process of legislation, but also obtains the concrete power. For instance, the Document 38(38号文件) which established the monopoly in the oil and gas industry is a “Suggestion” of this nature, which entitles the Two Buckets of Oil(两桶油) omnipotent monopolistic power. 

Secondly, according to the Law of Legislation, due process is required even for drafting departmental regulations. This process entails “In the process of drafting administrative regulations, the opinions of relevant organs, organizations, people's congress delegates and the public shall be broadly heard. In gathering opinions, various methods may be adopted, such as panel discussion, evidence review meetings and hearings”. Apparently, this Suggestion did not follow such due process. How so? Should such panel discussion, evidence review meetings, and hearings be held, they would have been on the news. And yet, there’s no such coverage before the Suggestion was released. 

Thirdly, according to the Law of Legislation, “ The Rules of departments shall be subject to decision by the executive meetings of ministries or meetings of commissions. ”(Article 75) and “The rules of departments shall be promulgated by orders signed by the heads of the departments. ”(Article 76) There is no evidence suggesting that discussion was held and approved according to the Law of Legislation since there’s no coverage of them. We did not see how the nine ministers of the nine ministries sign it, either. This may well suggest that these departments and their heads were well aware that such a Suggestion was a violation of the Law of Legislation, and that’s why they chose such a way to issue this Suggestion without being held accountable. The result of such an act is that this Suggestion does not have any legal power according to the Law of Legislation. However, since no one is going to be held accountable, this Suggestion will only “bite” people’s constitutional rights viciously. 

Why a law by the departments without due process is more likely to be a bad law? According to the theory of public choice, “unanimity rule is the equivalent to Pareto criterion.”(Buchanan) It means that only by the consent of the stakeholders, a public decision is optimal. Even though it’s impossible to reach unanimity in reality, the consent of the majority still constitutes a basic rule for public decision making. On the other hand, laws as the literal depiction of the rule of justice, is extracted from the rules and values contained in conventions and traditions, which only emerged from the interaction of generations of people. The administrative departments make regulations which only reflect their factions’ interests and inclinations without the constraints imposed by the majority. They also make laws regardless of the influence of common sense and public morality on the society. All this makes it more likely that the laws made by administrative departments are bad laws. 

Of course, the incident reflects more than the issue of due process. The due process is there to guarantee that the “just behavioral rules” are carried out and obeyed. These rules are more authoritative and fundamental than constitutions, that is the way of the heaven, or the utmost justice. Constitutions are merely fragments of the way of the heaven put in ink. The freedom of expression stipulated in Article 35 of the Constitution has a solid foundation in the historical experience of humans’ thousands of years’ civilization. Such a freedom is underpinned by more solid civilizational traditions, which makes it right throughout history and across regions. In the Spring and Autumn Era, the King Li of Zhou got complacent in silencing his people, and the Duke of Shao proposed the timeless observation “It will cause more harm to stop the free flow of people’s thoughts than to stop that of the rivers.” Ever since the Zhou Empire, it was considered a felony and great wrongdoing for political leaders to suppress criticism and for departments to block the channels of petitions. It was the Americans who first put “freedom of expression” into their constitution, and well-known cases such as the New York Times v.s. United States proved that the First Amendment does have teeth. Everyone is but ordinary human beings who cannot avoid making mistakes. There is only one unforgivable mistake that’s “absolutely wrong”, that is suppressing criticism, cover up mistakes, and stick to the wrongdoings. In this sense, freedom of expression should be considered the utmost rule of justice for human beings. 

Therefore, we come to understand the harm this Suggestion is going to do to the Chinese society and the people. The core of this Suggestion is that administrative departments are going to dictate what the social think tanks should study, what opinions there are, the data of field research and analysis, and even the conclusions. So whatever the administrative departments do not like or approve will not be studied or made public. These requirements assume that the departments are always and absolutely right, and that all the research and analysis in China should be evaluated by these departments. This assumption is by no means provable, because those who work in the departments are merely ordinary men whose rationality is limited, and the only difference they have from others is the power entrusted by the society to do a service to the people. The power they hold in their hand is capable of directly and coercively affect peoples rights arrangements and reallocate resources, and every mortal man can be tempted to abuse such a power. Therefore, those who are entrusted with this power, since they are more likely to be corrupted by it, should be put under more supervision and constraints. 

If we do follow the Suggestion set by the nine ministries and erase all the voices that are different from the departments’, which means no supervision and limits on the powers of the departments, disaster could take place as these administrative departments are bound to expand their powers. In the late 1950s, the Chinese Academy of Social Sciences was such an economic “think tank”, and a report entitled “Some Questions Regarding the Rural Communal Canteens” was written after some investigations of the rural communal canteens in Changli County, Hebei Province which was supposed to disclose the mistakes of the local practices. The report called for “voluntary set-up” of such canteens, and a division of the existent ones in order to feed the local families. However, the ideas in this report was widely different from those of the then political leaders. As a result, the report was suppressed.(ZHANG Shuguang, An Economic History of China, World Scientific Press, p124-128) The mistake of the communal canteens was not corrected, and along with the mistakes of the People’s Communes and the Great Leap Forward, millions of people died as a result. 

The suppression of different voices is not only a violation of the public’s rights to be informed, but also a great deception of political leaders. Those political leaders make decisions based on the false information from the departments, which only brings about more harm that’s magnified. China’s former chairman MAO Zedong once inspected Xushui County in Hebei Province. The local government officials covered the fact that there was famine going on, and later in the Beidaihe Meeting, where most of the biggest decisions were made, MAO Zedong even raised the question of “what should we do with the left-over food?” Such false perception of the reality led to the deterioration of the Great Leap Forward and the People Communes. When there was wide spread famine with great casualty, the common practice taken by almost all local governments were to cover it up, and suppress the communication of such news with coercion. For instance, “over 12,000 letters pleading for help were held by the local post office under the direct order of the local communist party committee in Xinyang, Henan Province.”(YANG Jisheng, Tombstone, Hong Kong Cosmos Books Ltd., 2008, p55) Some of the writers of these letters were persecuted. Judging from this, there is no way the data of the national statistics system was correct. This, in fact, constituted a total blockade of information from the political leaders. It was until the late 1960s that MAO Zedong learned about the truth about the Great Famine. And by then, millions had died. 

In fact, the suppression of different voices by this Suggestion will eventually hurt the administrative departments and the government officials that issue it. Any rational man will come to realize that the different opinions will help them in the end. Because they know that their rationality is limited. Therefore, they will cherish the mechanism that encourages the expression of different opinions and the principle of freedom of speech. By suppressing different opinions, one is made blind and deaf, thus resulting in false judgement of the situation and bad decisions. Another example is the criticism towards state-owned enterprises in recent years. Many administrative departments made their endeavors to suppress the study of state-owned enterprises and cover up the real data about them. Since 2006, data about the turn-over of profit and the subsidies for state-owned enterprises were removed from China Statistical Yearbook; as far as we know, some academic journals in the system were ordered not to publish any paper on state-owned enterprises.This is not a problem of microeconomics, but one of macroeconomics. According to Unirule research in state-owned enterprises, due to the mass scale and possession of state-owned resources, the inefficiency of state-owned enterprises resulted in a deduction of 5.4% of China’s GDP growth rate. (What Are We Talking about When We Talk about Supply-Side Reform?. FT Chinese, March 10th, 2016) Needless to say that great unfairness of social distribution and corporate corruption was a result of the state-owned enterprises’ monopoly, free possession of resources, and free use of state-owned land. The pandemic corruption of state-owned enterprises was exposed by multiple cases where high-level executives of these enterprises were prosecuted in the anti-corruption campaign. 

Further more, administrative departments and their officials could suppress disclosure and criticism of their own corruption and abuse of powers. This seems to be in their favor, but the cover-up only leads them to commit more serious crimes which will eventually put them behind bars for bigger punishments. The cover-up and suppression lead the officials to believe that their crimes will never be exposed, and the unlawful income becomes lawful by not letting anyone know. However, all the assets gained by corruption is a moral burden and evidence  of crime. These officials cannot possible enjoy the unlawful income, and once exposed, they are proved criminals. This explains why when the corruption of officials were found, the embezzlement usually amounts to millions, even billions of Renminbi. 

How on earth did this Suggest come into being if it’s a violation of the Constitution, the Law of Legislation, its superior laws, and the due process? A realistic explanation is that it’s the common practice of administrative departments as always. Before the principle of “rule of the constitution” was proposed, these administrative departments could care less about the Constitution, let alone the constitutional documents—the decisions of the CPC congress. What’s unforgivable is that such a Suggestion was issued after the forth plenum of the 18th CPC congress. It was on this plenum that the CPC Central Committee came to the grave decision of “rule of the constitution” and the “rule of law”. The Decision of this plenum pointed out that “there has been an eminent problem of inclination and competition in legislation between the administrative departments,” that “there’s a lack of coherence between responsibility and accountability, and in practice, many departments are involved in one executive area while sometimes selective and biased execution of law is observed”; that “some government officials, especially some in the leading positions, are not equipped with the knowledge of law, suitable capabilities, and some violate the law knowingly, treat their order as edict, abuse power, and take embezzlements.” 

In order to address these issues, the Decision proposes that “the people of all ethnicities in the entire country, all State bodies and armed forces, all political parties and all social organizations, all enterprises, undertakings and groups must consider the Constitution as the basic behavioural norm, and bear the duty of upholding the dignity of the Constitution and guaranteeing the implementation of the Constitution.” “To persist in ruling the country according to the law, we must first and foremost persist in ruling the country according to the Constitution, to persist in governing according to the law, we must first and foremost persist in governing according to the Constitution.” It also emphasized that “We must make standardizing and restraining public power into a focus point, expand supervision strength, ensure that there must be responsibility where there is power, there must be supervision over the use of power, and that law-breaking must be punished, firmly correcting acts where laws are not followed, law enforcement is not strict, and law-breakers are not punished.” And it promised that “All acts violating the Constitution must be punished and corrected.”

These remarks suit the “Suggestion” and predicts what should be done to it. The issuance of the Suggestion showcased the inclination of legislation by departments. The nine ministries as “state bodies” failed to “uphold the dignity of the Constitution”, or “guarantee the implementation of the Constitution”. They also failed to persist in “rule of the constitution and rule of law”, instead, they used their power to go against the law. Therefore, the Suggestion should be taken seriously as an example to see how to “standardize and restrain” public powers, and how to “punish and correct” the violation of the Constitution. On the other hand, the significance of the Plenum is not about issuing such a Decision, but how to implement it. As we have seen, the past several Decisions of party congress brought about reforms to a certain extent. And the reason why most of these reforms failed to be satisfactory as those in the early ages of the Opening-up and Reform is that they failed to be implemented. For instance, the stipulation on the land institution in the Decision of the third plenum of the 17th Party Congress was good in word but incomplete in implementation, which led to the unresolved issues regarding the land institution. 

It is important to implement the Decisions, and it’s not that difficult. As Confucius said, “They are determined to be sincere in what they say, and to carry out what they do.” However, it is just the very basic requirement for clever “small men.”(They are obstinate little men. “言必信，行必果,硁硁然小人哉”) If such a small man cannot even meet the basic requirements, then he’s not clever, but foolish. He’d shame himself. Anyone with a humble pursuit of honoring himself should be able to keep his words and carry out what he does. If a group of people issue a public promise with due process and, once and again, fail or refuse to keep their words, then they can hardly be trusted. Therefore, it concerns the credibility of a Chinese Communist Party member and the party as a whole to implement the Constitution which was directed by the Chinese Communist Party in the first place. It concerns keep the integrity of those who voted for the Decision of the fourth plenum of the 18th Party Congress to implement it to the fullest. This is the basic requirement for a political group to carry out public governance. 

History will prove once and again the importance of correcting the error done by the Suggestion by the nine ministries. This concerns whether a society and a government is able to guarantee that its public power comes from the power of the people it governs, and whether it’s capable of making good law. The practical form of practicing the power of the people comes from the consent of each and every one of the people, which could also be transformed into representative delegation. When the administrative departments begin to legislate, it means they are making the decisions that are supposed to be made by the people or its representative bodies regarding public affairs. In terms of the purpose of setting up administrative departments, they are merely for the execution of the law legislated by the people’s representative entities. If violation of the Constitution is done by these administrative departments in the form of drafting laws by themselves, then the rights of the people are contaminated by these administrative departments. On the other hand, the bad laws made by these departments will cause more general and severe harm to the society and the people. 

If the Chinese Communist Part means to implement the Decision of the fourth plenum of the 18th Party Congress, then it is a must to correct the constitutional violation by these departments. The so-called “establishment” of an institution was only right when it brings good results and becomes institution afterwards. From the perspective of institutional evolution, there has never been a good institution before hard problems are solved first; on the contrary, institutions are made to address problems. Therefore, concerning the Suggestion by the nine ministries, the CCP Central Committee should establish a constitutional review mechanism to correct the wrongdoings. How to do this? The State Council can abolish the Suggestion by quoting the Constitution and the superior laws. However, in order to enlarge the influence, the Central Committee of Discipline Inspection of the CCP should request a constitutional review of the Suggestion by the nine ministries to the National People’s Congress, and a special committee should be commissioned by the Congress to carry out constitution review of the Suggestion.

This proposal is legally founded. Firstly, the CCP is the ruling party, and it has a role to play in the institution evolution of China. In the Decision of the fourth plenum of the 18th Party Congress, the CCP had vowed to push forward “rule of the Constitution”, and there has been a lack of symbolic cases for it to do so. Whereas the Suggest puts forward a good case for such purposes so that the CCP can come forward and prove to the people and the world that its promise was more than just words. And the Central Committee of Discipline Inspection of the CCP would be honoring the Constitution and the due process if it requests a constitutional review. It will also boost its leadership. According to the Constitution, the National People’s Congress as China’s legislative body is entitled to undertake constitutional reviews. Article 62 and Article 67 of the Constitution stipulate that the National People’s Congress has the power to “oversee the implementation of the Constitution”, which naturally include the power to inspect and correct any violations of the Constitution. 

When administrative departments cross their scope of power, there is Constitution. With the Constitution, any violation of it will be exposed to the public. Now that the Constitution is hanging, it means there’s lack of implementation, and that it acts like the Sword of Damocles for those who dare to cross the line. Even though there is no usual measures to implement the Constitution, the principles representing the way of the heaven and the utmost justice is all included in the Constitution which should hold the power to intimidate whatever delusional belief that they can escape the constitution review. No rational society refuses the right rules that have been proven right time and again. The first amendment of the US Constitution was once hanging after it was enacted. However, Suprem Court Justice Oliver Wendell Holmes, Jr. brought about concrete influences in Abrams v.s. the United States in 1919. There will be a first time in every society, and I expect the first time of such act anxiously for contemporary China.