Thursday, August 6, 2015
With the kind permission of the author, I'd like to share Kerry Brown's take on how this whole mess might have happened:
I worked as the Head of Policy at UK Visas for six months in 2005. It was my last Foreign Office job, though the department was one shared between the Foreign Office and the UK Home Office. Since then I have been fully rehabilitated back into society! I have to say though, from knowledge from that period, that the Ai Weiwei visa case has all the hallmarks of a cock up. In some ways, it would be preferable had there been high level fiat about this, because at least it would have shown that someone, somewhere was making decisions.
The truth is that Entry Clearance Offices, at least in the British system have God like powers, and the only person who can overturn their decisions, in the end (as this case proves) is the Home Secretary. That means that often very junior and inexperienced visa staff, who are more often than not utterly clueless to the changing rules and regulations governing visa issuance, can make the most extraordinarily perverse judgments. The case I remember best from my brief, inglorious stint in this position (it was hard to do a job where the words in the job title were so completely at odds with the reality of what I was doing - there was, and I suspect still isn't, a visa `policy' - just mildly contained bedlam, so I spent my days reading Guy Debord and the situationists and gazing at the MI6 building gardens next door) was that of issuing work visas to people needed to come and be employed in UK abattoirs. Unsurprisingly, these positions were hard to fill with local staff, so at that time, for some reason, they were recruited from (I think) Ukraine. Staff before going out to post to be visa offices were told that unmarried, largely uneducated, young men from underdeveloped countries were the highest risk and the ones they needed to be most careful about issuing work visas too! (Needless to say, UK Visas resisted all attempts to include its work in relevant racial and gender equality legislation). However, it was precisely this demographic that tended to apply to come to the UK for six months to work in abattoirs.
All worked well, and the annual quota of abattoir workers were happily delivered, until a more pure minded, zealous visa official was sent to work in Kiev, and promptly turned down the whole batch of new applicants, causing chaos in the farming community in the UK reliant on this source of labour, who of course used their considerable clout to protest. It was to no avail though, The person who did the refusing was acting within the law, and there was no way that year any were let through. I think it was only resolved with them being offered some other tasty post to exercise their budding bureaucratic skills, and a more compliant official sent to replace them. .
So I can well imagine the scenario with Ai Weiwei. A visa officer with a sheen of knowledge of his case, mostly culled from the Daily Mail (still no doubt shipped by air freight to the post in Beijing), who sees this Chinese avante garde artist attempting to sully the pure morals of the Great British public, and deciding to make a silent majority stand by turning him down. His or her Entry Clearance Manager, probably a Foreign Office appointee with a bit more political sense, would no doubt have had the `discussion' when reviewing the refusal, and suggesting a compromise (the 20 days). We have, ladies and gentlemen, the final result - a classic, great British cock up. I can well imagine the weary sighs in the Chancery the morning this story broke, because as ever they would be left to clear up a mess which, in this case, I truly believe, was not of their making.
Oh that there had been sinister calculations about how to avoid Ai bashing into Xi Jinping during his September visit. Or at least some artfulness and signs of intelligent (albeit perverse) life. But no, I really don't think there was.
But I would be happy (and relieved) to be proved wrong.
Over the last month or so, the Chinese authorities have been engaged in a crackdown on rights lawyers of unprecedented ferocity. Here's Jerome Cohen in a Wall Street Journal article about it:
New York University law professor Jerome Cohen, one of the first American lawyers to work in China after the country opened up in the late 1970s, described the sweep as “insane.” China’s leaders “must be in desperate straits to engage in this extraordinary, coordinated attack on human-rights lawyers,” he said.
Strong words! In any case, after all that stuff at the Fourth Plenum about the rule of law and exercising power within a cage, you might think that the authorities, with the power to make law completely in their hands, would manage to abide by it, right? Wrong. There are of course many stories about lawyers and others being rounded up without proper procedures, but today I came across a particularly glaring example that exists in black and white and cannot be denied or explained away.
Take a look at the document below: it's a notice of "residential surveillance at a designated place", i.e., so-called residential surveillance where the police hold you at some place that is neither a nail nor your residence -- and we're not talking about a fancy hotel here. The suspect is the lawyer Xie Yuandong, and the suspected crime is that of "stirring up trouble".
The problem with all of this is that under Article 73 of the Criminal Procedure Law, which reflects a 2012 amendment designed to reduce police abuses of this procedure, "residential surveillance at a designated place" may be imposed on a suspect only for three crimes: “Where there is suspicion of the crime of endangering national security, the crime of terrorist activities, or the crime of receiving bribes in serious circumstances, and implementing residential surveillance at the suspect's residence could hinder the investigation, then upon approval by the next higher people’s prosecutor’s office or public security authority, residential surveillance may be implemented at a designated place of residence[.]" (对于涉嫌危害国家安全犯罪、恐怖活动犯罪、特别重大贿赂犯罪，在住处执行可能有碍侦查的，经上一级人民检察院或者公安机关批准，也可以在指定的居所执行。)
Thus, placing Xie in residential surveillance at a designated place is an open-and-shut violation of the Criminal Procedure Law and is nothing more than kidnapping. Of course, the whole problem could easily have been avoided had the authorities had the wit to fill in the blank for the suspected crime with one of the eligible ones. But this is exactly the point: the law means so little to them that they can't be bothered to understand or follow it even when it would be easy to do so.
[AUG. 8th UPDATE: The situation is a bit more complicated. See this follow-up post.]
I last blogged about this case in August 2014, when Peter Humphrey and Yu Yingzeng were convicted and sentenced in Shanghai on charges of unlawful acquisition of personal information of citizens. I had some preliminary comments on the case based on the trial transcript and some quick-and-dirty research. I've now had the chance to do much more extensive research and to look at the text of the judgment as well, and have written up the results. They pretty much confirm my initial take: that this was a case of selective prosecution, and the sentences were out of line with cases with comparable facts. Humphrey was sentenced to 30 months' imprisonment; no previous defendant in any of Shanghai's 92 cases had ever gotten more than 24 months. (For those not following this story, Humphrey and Yu were recently released and have gone to the UK.)
The abstract is below; the full paper can be found here at the Social Science Research Network site.
The case of Peter Humphrey and Yu Yingzeng, convicted in China on August 2014 on charges of unlawful acquisition of citizens’ personal information, raises important issues about Chinese law. A narrow but important issue is how Chinese law draws the line between lawful and unlawful acquisition of information, a practice routinely carried out by businesses and individuals. This article examines the trial transcript and judgment in the Humphrey/Yu case and finds that it sheds regrettably little light on what remains a murky question. A broader issue is whether the Chinese legal system can be counted on to operate in a fair and impartial manner. This article presents the results of a study of all reported cases in Shanghai (ninety-two cases) involving the same provision of the Criminal Law that was the basis of the Humphrey/Yu conviction. It finds that the Humphrey/Yu sentences are outliers relative to other cases with comparable facts. In particular, Humphrey’s sentence of 30 months’ imprisonment was by far the heaviest sentence ever meted out by Shanghai courts, even though the circumstances seem conspicuously less serious than those of many other cases where lesser sentences were imposed.
Thursday, July 30, 2015
More Catholic than the Pope: UK government states Ai Weiwei has criminal conviction in China (he doesn't)
In an astounding cock-up of monumental proportions (because it could so easily have been avoided by spending a few minutes searching around the web), the UK government has accused Ai Weiwei of lying on his application for a UK visa. In a letter issued to Ai, the "Entry Clearance Manager" for Beijing stated:
It is noted that in answer to the question on the visa application form on whether you have ever had any of the following in the UK or a different country:
- A criminal conviction, at any time
- A driving offence, at any time, e.g. for speeding or no insurance
- I was arrested or charged, and I am currently on or awaiting trial
- A caution, warning, reprimand or fixed penalty notice
- A court judgment, e.g. for debt
- A fine for breaking UK immigration law (called a 'civil penalty')
You have stated: 'No, I have never had any of these'. It is a matter of public record that you have previously received a criminal conviction in China, and you have not declared this.
The ECM goes on to say that Ai will be granted a visa, but for less time than he had applied for. He or she urges Ai to respond truthfully next time, and notes that there is a place on the form to explain any answers.
Let me be clear about my own view: It is not unreasonable for the UK government to ask these questions, and applicants should respond truthfully. It would, of course, be unreasonable for the UK government to treat politically-motivated criminal convictions as equal to a genuine criminal history, but that's not what's at issue here. If Ai had had a criminal conviction, he should have said so.
The problem is that Ai does not have a criminal record in China. It is most emphatically not a matter of public record that he has previously received a criminal conviction in China. Anyone who claims this should be asked to produce this public record. (After all, it's public, right?) It's rather astounding that when the Chinese government, for all its harassment of Ai, did not see fit to charge and convict him on criminal grounds, the UK government should step up to the plate and do it for them.
Some people say, "Oh, but didn't he have some tax troubles a while back?" And others respond, "Yes, but those were politically motivated." All beside the point. To the second group, I say that he should respond truthfully and then explain, even if only as a practical matter, given that not telling the truth about things that really are in the public record is just not going to work. To the first group, I say that the ECM did not state an objection to Ai's failures to mention (a) his 2011 detention, allegedly for investigation of tax issues, or (b) the assessment and fine levied as an administrative (not criminal) matter on his company (not him). The ECM's objection was to Ai's failure to state that he has a criminal conviction. But he doesn't have one.
The ECM might have been on firmer ground had he or she said something along the lines of, "Really? No 'caution, warning, or reprimand'? Ever?" I suspect Ai has received a lot of communications that would qualify. Of course they are politically motivated, but that's what the place on the form for an explanation is for. But that's not what the ECM said.
It's understandable that everyone's memory is a little fuzzy about what happened back in 2011. What's harder to understand is how someone could give legal effect to that fuzzy memory without bothering to take just a few minutes to google around to verify the facts. Even more disappointing is that the UK authorities seem to be digging in their heels and refusing to admit their mistake. A Foreign Office spokesman, confronted with questions on this issue, said, “This is a visa issue, where applications are decided by UKVI [UK Visas and Immigration] based on relevant legislation.” Yeah. thanks. We know it's a visa issue. And we know that UKVI is supposed to decide on applications on the basis of relevant legislation. Does the relevant legislation really call for decisions to be made on the basis of made-up facts?
By the way, if you think you've heard this kind of bland, bureaucratic non-answer before, you have. Here's Chinese Foreign Ministry spokesperson Hong Lei on questions about Ai's 2011 detention: “China is a country under the rule of law, and relevant authorities will work according to law.” And here's Chinese Foreign Ministry spokesperson Hua Chunying on questions about Pu Zhiqiang's detention: "The judicial authorities of China handle the relevant case in accordance with the law."
Well done, Britain!
POSTSCRIPT: I'm not yet willing to dismiss the theory that this is just a low-level bureaucratic cock-up: somebody thinks he's fibbing because they misremember; they ask their superiors what to do, precisely because they don't want to deny him a visa, not because they do; the superiors, who assume that their subordinates have got their facts right, say, "Well, just give him a slap on the wrist and tell him not to do it again."
AUGUST 6th UPDATE: Kerry Brown, formerly of the Foreign Office, has kindly permitted me to publish his take on how this might have happened.
Sunday, June 21, 2015
The Ministry of Industry and Information Technology (MIIT) has just issued a pronouncement stating that foreign investors will, in an exception from existing rules, be allowed to own 100% of companies engaging in e-commerce. Here's a post from the China Accounting Blog, which suggests that this offers an escape route for VIEs. (I think the post is incorrect in stating that the relaxation is limited to the Shanghai Free Trade Zone; the relevant language says, "On the basis of experimentation in the Shanghai Free Trade Zone, [MIIT] has decided to relax on a nationwide basis [the restriction on foreign ownership]" (我部决定在中国（上海）自由贸易试验区开展试点的基础上，在全国范围内放开在线数据处理与交易处理业务（经营类电子商务）的外资股比限制).)
I want to raise a different question: what authority does the MIIT have to relax this requirement? According to the MIIT's notice, the requirement seems to come from a State Council regulation, the "Rules on the Administration of Foreign Investment in Telecommunications Enterprises" (商投资电信企业管理规定). Or perhaps it can be found in the Guidance Catalogue for Foreign Investment, issued jointly by the National Development and Reform Commission and the Ministry of Commerce. As for the first, the MIIT has no authority to override a State Council regulation. As for the second, approval of foreign investment must come from the NDRC and the MOC, so if they aren't on board with this rule, the MIIT can't make them get on board. It's hard to believe we'd see this notice if other relevant ministries weren't on board. But if they are on board, why isn't this notice jointly issued with their signatures under it as well?
[UPDATE JUNE 22: Apparently it's not an exception to existing rules. The latest version of the Guidance Catalogue seems by implication to allow 100% ownership of e-commerce ventures - see Item 20 under "Restricted Industries" here.]
Monday, May 25, 2015
Here's a thoughtful piece worth reading: http://www.eastasiaforum.org/2015/05/25/glimpses-of-lee-kuan-yew/
Friday, May 15, 2015
Here's a follow-up to my post of a few days ago on the draft Overseas NGO Law:
First, there's a very good set of comments by a number of experts at the Asia Society's ChinaFile web site. These are fairly big-picture in nature and not article-by-article.
Third, here are some Chinese-language comments from the Shanghai 复恩社会组织法律服务中心.
Wednesday, May 13, 2015
The Chinese government recently released for public comment a draft of a proposed law on overseas NGOs. ("Overseas" is the standard translation for 境外, which means non-mainland, i.e., territories not under the direct control of the Chinese government, including Hong Kong and Macao as well as foreign countries.) The law's reach is very broad, prohibiting any activities within China by any overseas NGOs (meaning any organization that is neither governmental nor for-profit) unless they register with the police.
This goes way beyond making life difficult for NGOs now operating in China. It means that foreign universities, for example, can't have any "activities" in China unless they register with the police (and their registration is approved). It means that the Poughkeepsie Optometrists Association can't have its annual convention on the beach in Hainan without registering with the police. Oddly, it means that the US Chamber of Commerce can't (without registering) hire a consultant in China to do a marketing study, even though any of its for-profit members, or even the Department of Commerce itself, could. Can this result possibly have been intended?
Here are some links [see May 16 post for more links]:
China Law Translate: http://chinalawtranslate.com/en/foreign-ngo-draft-2/
China Law and Policy blog:
Prof. Jia Xijin 贾西津 (Tsinghua Univ.) (in Chinese): http://news.ifeng.com/a/20150511/43732232_0.shtml/
Saturday, April 25, 2015
I just read an interesting essay by Zhang Xingxiang, currently a Practitioner-in-Residence at Indiana U.'s Research Center for Chinese Politics and Business, about his life as an official in China.
I was struck by one observation he made:
Although government agencies were required to abide by the stipulations of laws and regulations, the enforcement of laws was a big headache in China. The law itself did not have intrinsic mechanisms to ensure its implementation. The State Council usually issued regulations or circulars which specifying how to enforce the law. Without that, most of time the law was just a written piece of paper posted on the wall but never seriously executed. The Constitution and Legislation Law stipulate the rank of legal instruments: among laws, regulations, rules, circulars and decisions, from highest to lowest. In practice, however, it went in a totally different direction. Whenever companies or individuals had a legal issue, they did not just look up the law, but sought decisions from a mayor, a governor of a province, or even the Premier because they knew such disposition was more effective.
Zhang is not the first to observe that the actual hierarchy of norms is virtually the opposite of the formal hierarchy of norms; in terms of actual binding force, for example, the Constitution is far weaker than a rule on, say, severance pay issued by an urban district labor department.
But the process he describes for compliance is also interesting and worth discussing, because it goes to the issue of how far even rule by law can prevail, to say nothing of the grander idea of rule of law. [Subsequent text inadvertently omitted in original post; added on April 25, 2015] Consider how the norms of securities or tax law, for example, are enforced in the United States. A great deal of reliance is placed on voluntary compliance by regulated parties coupled with occasional audits and other after-the-fact means of detecting and punishing non-compliance. But taxpayers and issuers can't possibly know all the applicable law. How do those who want to comply do so? They ask their lawyers. The government has cleverly managed to make the private sector pay for its own compliance efforts, and by and large it secures a high level of compliance.
But think about what must be true for this system to work. There must be law for lawyers to become expert in. In other words, there must be a reasonably predictable and unified system of rules. Ad hoc, discretionary decisions by government officials cannot supply this kind of legal environment. Thus, regardless of what we think of ad hoc decision-making from a fairness perspective, it's important to see that it renders impossible a certain mode of governance that has the advantage, among others, of being a lot cheaper.
Friday, February 20, 2015
The Feb. 16th isue of the Legal Daily carries three articles (see below for links) about administrative monopolies, prompted by the recent decision by the Guangzhou Intermediate People's Court against the Guangdong Department of Education for requiring the use of a particular brand of software in a contest. This was not only the first court victory against an administrative monopoly; it was the first time such a case had even been accepted by courts and made it all the way to trial.
Among the issues in the case were (1) the role of expert witnesses (they were allowed), and (2) whether the designation in a notice issued by the defendant of a particular piece of software constituted concrete administrative action or abstract administrative action. (Under the Administrative Litigation Law (ALL), one can sue for the former but not for the latter, but since this case was not brought under the ALL, I'm not sure why the distinction was considered important.)
The court found that the defendant's acts were indeed concrete administrative actions and that the defendant violated Art. 32 of the Antimonopoly Law (AML), which states:
Administrative agencies and organizations authorized with administrative powers of public affairs by laws and regulations shall not abuse their administrative powers by limiting, or limiting in disguised form, organizations or individuals by requiring them to deal, purchase, or use commodities provided by designated undertakings.
The reports don't say, however, what (if any) remedy the court provided beyond a mere declaration of illegality. Article 51 of the AML deals with the issue of remedies for administrative monopolies vaguely, but on one point it's pretty clear: courts can't order a remedy. The basic remedy is to hope that the offender's administrative superior will make it come into line:
The administrative agencies or organizations authorized with administrative powers of public affairs by laws and regulations shall be admonished by the superior authorities if they abuse their administrative power to eliminate or restrict competition; the individuals who are directly responsible shall be punished in accordance with the law.
This article shall not apply to cases in which other administrative regulations or laws provide for the regulation of the abuse of administrative power. The Anti-monopoly Enforcement Authority may propose suggestions to deal with in accordance with the law to the superior authorities.
(Translation credit for the AML provisions above: T&D Associates)
Here are some relevant reports:
Thursday, February 5, 2015
Saturday, January 31, 2015
Just when you start getting depressed about the way things are going in China, along comes Shen Kui (沈岿), a professor and former vice dean at Peking University Law School, to show that at least some of China's thinking people are not going to take the government's policy of intellectual anesthesia in higher education lying down. [Feb. 1 update: A previous version of this post had out-of-date information about Prof. Shen, identifying him as an associate professor and current vice dean.]
On Jan. 30, Minister of Education Yuan Guiren (袁贵仁) spoke at a conference on ideological and propaganda work in higher education, declaring that it was necessary "to strengthen control over the use of original-edition [i.e., not processed through some Party-controlled mechanism] Western materials. We must by no means allow materials that propagate Western values into our classrooms; it is absolutely forbidden for all kinds of speech that attacks and slanders the Party's leadership and blackens socialism to appear in university classrooms; it is absolutely forbidden to have all kinds of speech that violates the Constitution and the law spread in university classrooms; it is absolutely forbidden for teachers to complain and vent in the classroom and to transmit all kinds of harmful moods to students." (加强对西方原版教材的使用管理，绝不能让传播西方价值观念的教材进入我们的课堂;决不允许各种攻击诽谤党的领导、抹黑社会主义的言论在大学课堂出现;决不允许各种违反宪法和法律的言论在大学课堂蔓延;决不允许教师在课堂上发牢骚、泄怨气，把各种不良情绪传导给学生。)
In response, Prof. Shen posed three questions. The first is especially subversive, since it reminds us of the obvious and exposes the whole anti-Western-values campaign for the ridiculous charade that it is:
How do we distinguish "Western values" from "Chinese values"? As everyone knows, the specter of Communism that hovered over haunted Europe almost two centuries ago, after crossing mountains and seas to get to China, helped bring about the birth of the Chinese Communist Party; the Marxism that our current Constitution stipulates we must uphold, and the education in internationalism, communism, dialectical materialism, and historical materialism that the current Constitution stipulates we must undertake, are all from the West and have influenced China. There are countless examples of Western learning traveling east. Let me ask Minister Yuan, would it be possible for you to clearly delineate the line between "Western values" from "Chinese values"? (如何区分“西方价值”和“中国价值”？众所周知，近两个世纪前游荡在欧洲的共产主义幽灵“跨洋过海”来到中国后，才促成中国共产党的诞生；我国现行宪法规定必须坚持的马克思主义，必须进行的国际主义、共产主义、辩证唯物主义和历史唯物主义等的教育，也是源于西方，影响中国的。西学东渐的例子数不胜数，请教袁部长，是否可以请您清晰划出“西方价值”和“中国价值”的分界线?)
Here's his second question:
How do we distinguish "attacking and slandering the Party's leadership and blackening socialism" from "reflecting on the bends in the road in the Party's past and exposing dark facts"? No political party would dare to declare that it never did and never would make errors, and no society, whether socialist or capitalist, would dare to declare that it has no dark side. Let me ask Minister Yuan, would it be possible for you to clearly give us the standard for distinguishing between "attack" and "reflect", and between "blacken" and "expose darkness"? (如何区分“攻击诽谤党的领导、抹黑社会主义”和“反思党曾经走过的弯路、揭露黑暗现实”？没有任何政党，敢于宣布自己是从不会也永远不会犯错，也没有任何社会，无论是姓“社”还是姓“资”，敢于宣称自己是没有任何黑暗面的社会。请教袁部长，是否可以请您清晰给出“攻击”与“反思”、“抹黑”与“揭露黑暗”的区别标准？)
And finally, the third question:
How should the Education Ministry that you lead implement the policy of governing the country according to the Constitution and the law? If you have a clear and understandable answer to the above two questions, please publish another speech in good time; if you still don't have a clear answer, then please henceforth be cautious in your words and actions, because the Education Ministry that you lead relates to "the scientific and cultural level of the people of the whole nation" (Constitution, Art. 19), "the development of the natural and social sciences" (Constitution, Art. 20), and the citizens' "freedom to engage in scientific research, literary and artistic creation, and other cultural pursuits" (Constitution, Art. 47); in short, it relates to the renaissance of the Chinese people. If you casually talk about what can be done and what can't be done, then the least bit of incaution could mean a violation of the Constitution or the law. (如何让您领导的教育部贯彻执行依宪治国、依法治国的方针？如果您本人对以上两个问题已有明显易懂的答案，还请您适时发表另外一次讲话；如果您本人尚无明确答案，还请您以后谨言慎行，因为您所领导的教育部，关系到“全国人民的科学文化水平”（宪法第19条），关系到“自然科学和社会科学事业”（宪法第20条），关系到公民进行“科学研究、文学艺术创作和其他文化活动的自由”（宪法第47条），归根结底，关系到中华民族的复兴。您如果轻言什么可为、什么不可为，稍有不慎，就会存在触犯宪法、法律的可能性。)
Wednesday, January 28, 2015
Back in 2002, the China scholar (and my first teacher of Chinese) Perry Link published in the New York Review of Books what has now become, at least in the world of China studies, a famous essay: "The Anaconda in the Chandelier" [NYRB link | non-paywalled Word version]. In it, he explored the mechanisms of self-censorship, conscious and unconscious, that operate not just among Chinese--for example, the vague dread of crossing an unstated line--but also among foreigners who comment on Chinese affairs, including the fear of visa denial.
That anaconda seems to be present again today (I won't say visible, because one characteristic of the anaconda is that you don't see it) at the hearings of the US-China Economic and Security Review Commission (the USCC) on the foreign investment climate in China, particular as regards competition policy.
China's competition policy has been very much in the news in the last several months; I blogged last September about a highly critical report issued by the US Chamber of Commerce. But although a lot of people want to talk about it, there are also a lot of people who don't, and the presence of the anaconda is manifested by their absence from the hearings.
Here's where I must regrettably get a little mysterious. I know some people who know something about Chinese competition law. One of them, my colleague Bill Kovacic, a former chairman of the FTC, knows a lot about Chinese competition law and is testifying today. Another, however, commented (as slightly edited by me):
Bill will have the courage to say important things. No business wanted to go on the record. [Having been able to pre-read the comments of some panelists], I can tell you that that everyone who has a potential business interest (law firm and consulting firm) will really soft-pedal some procedural fairness issues as well as mention of some industrial policy.
Not having read the comments and not knowing enough about competition policy, I do not know whether witnesses are in fact pulling their punches. But there are some academics who really know a lot about Chinese competition law other than Bill Kovacic, and they are not on the witness list. Obviously, I am not naming any names, but in at least one case the person concerned turned down the opportunity to testify because of visa concerns related both to the content of the testimony and to the fact that it would be before the USCC, which is viewed by the PRC authorities as hostile. (Personally, I don't think that an academic would get on the visa blacklist just for badmouthing the NDRC before the USCC, but everyone has to make their own judgment in these things, so I'm not criticizing.) This is a real shame. Not only is the USCC being deprived of good information, but the Chinese government itself has, as they say in Chinese, lifted a rock only to drop it on its own feet (搬起石头打自己的脚): the threat of visa denial for testifying before the USCC will disproportionately drive away witnesses who are less hostile to the Chinese government, since the more hostile ones have presumably already decided to accept the consequences or are on the blacklist already.
Tuesday, January 27, 2015
The New York Times has a report today about a merger between Dentons and Dacheng, a Chinese law firm. According to the report, "[l]ike a number of other large law firms, the partnership will be structured as a Swiss verein, which allows for the companies to maintain separate profit pools." I would really appreciate comments on this post from knowledgeable readers, because I'm mystified by several aspects of the deal. I'll number the paragraphs for ease of reference in the comments.
- There have been previous deals between Chinese and law firms that were announced as mergers--for example, between Mallesons and King & Wood--and I don't know the details of those, or whether this one uses the same model. But it does raise interesting questions about whether it really makes sense to call this a "merger" as opposed to a simple agreement to share certain kinds of business.
- First, the report says that the firms maintain separate profit pools. It's a strange merger where the two parties don't merge their revenue streams and profit calculations.
- Second, if they maintain separate profit pools, then it pretty much follows that they are going to maintain separate decision-making structures. Dentons will continue to decide what clients Dentons will take, how much to charge, etc., and Dacheng will do the same for Dacheng. I don't know this for a fact, but it would be very unusual to separate profits from decision-making power. Again, a strange merger where decision-making remains separate and not unified.
- Third, surely Dacheng has not disappeared as a Chinese business organization. Foreign law firms--and although I know almost nothing about the Swiss verein, I'm pretty sure it's Swiss--cannot practice Chinese law, so there has to be a Chinese business entity that remains in existence to engage in the practice of Chinese law. A strange merger where the supposedly merging entities remain in existence.
- Fourth, some jurisdictions have rules forbidding lawyers from sharing certain aspects of law firm operations with non-lawyers. I suppose any rules against sharing profits are taken care of by the separate profit pools. I don't know if China has rules about Chinese firms sharing control with foreigners. Again, if the firms are sharing neither profits nor control, in what world does it make sense to call their arrangement a "merger"? The report also speaks of "a unified compensation system." Will that amount to profit-sharing, and is that allowed by all the relevant jurisdictions?
- Finally, how much information will be shared between the "merged" firms? Will they develop a unified client database that all attorneys can access? This raises serious issues of information security. It is an unfortunate fact that if the state security folks show up at Dacheng's offices and demand access to information that Dacheng attorneys can access, Dacheng attorneys are in no position to say no. If client information is vulnerable in this way, will Dentons clients feel comfortable about that?
Comments welcome and indeed earnestly solicited.
Saturday, January 24, 2015
I want to add one more point about VIEs to my post from yesterday on the draft Foreign Investment Law (FIL) (it was late and I forgot to include it before hitting the "Publish" button).
Let's not forget that as this law goes through the discussion and review process before its enactment in final form, there's going to be a lot of politicking, which is another word for people trying to protect their financial interests. What kind of treatment for VIE structures best serves the interests of existing VIE structures? The answer is: grandfather in the existing ones and bar new ones. It's easy to imagine that in some industries, companies with access to foreign financing can be in a competitively superior position to companies without such access. If foreign financing is forbidden in those industries, then companies that manage to access it despite the prohibition are clearly in better shape to dominate.
Take Alibaba or Baidu. In both cases, the offshore parent--a Cayman Islands company listed in the US--is controlled by Chinese citizens. This means that as the FIL is currently written, it is a Chinese company, not a foreign company. Poof! The illegal (or at least very dicey) foreign investment in a prohibited industry disappears; it's now Chinese investment.
Of course, this result doesn't protect Alibaba and Baidu from competition from other Chinese investors who raise money via controlled offshore companies, since the competition's offshore vehicle would also count as Chinese. But it does protect them from competition from VIE structures that are not controlled by Chinese, since the government now seems more serious about not allowing such structures to exist. I wonder what's going to happen to Sina.com? The last time I looked, its shareholding was widely dispersed and there was no controlling shareholder.
UPDATE JAN. 24: Check out Paul Gillis's China Accounting Blog post on winners and losers. In fact, check out all his posts on this issue.
Friday, January 23, 2015
On January 19th, China’s Ministry of Commerce ("MOFCOM") released a draft of a new Foreign Investment Law (“Draft FIL”) for public comment. It also released an official explanation of the draft (“Explanation”). (Here is the MOFCOM press release with links to both.) The Draft FIL proposes very far-reaching changes in how China handles foreign investment. It also specifically addresses the issue of Variable Interest Entities. The latter point has attracted a great deal of commentary to date, but some of that commentary has overlooked important details, so please don’t forget to read Section V at the end.
I. Structure of foreign investment regulation
The Draft FIL fundamentally changes the way China handles foreign investment. First, it proposes a default norm of national treatment for foreign investment. Second, it abolishes the general requirement for MOFCOM approval and establishes a negative list principle. Third, it abolishes the special corporate vehicles for foreign investment.
A. National treatment for foreign investment
The Draft FIL proposes a default norm of national treatment (国民待遇) for foreign investment, stating, “When foreign investors invest in China they shall enjoy national treatment” (Art. 6). The Explanation states that this language manifests the principle of a “pre-establishment national treatment” (准入前国民待遇), meaning that (except where otherwise specified in law), foreign investors may make investments on the same terms as Chinese investors, without being subject to additional approvals or sectoral restrictions.
Note that, at least as glossed by the Explanation, the Draft FIL’s promise of national treatment does not exclude post-establishment discrimination (for example, charging foreign investors or their Chinese enterprises more for utilities once the factory is set up). Compare the notion of “pre-establishment national treatment” with the language of Art. 3, Para. 1 of the 2012 US Model Bilateral Investment Treaty: “Each Party shall accord to investors of the other Party treatment no less favorable than that it accords, in like circumstances, to its own investors with respect to the establishment, acquisition, expansion, management, conduct, operation, and sale or other disposition of investments in its territory.” The Explanation’s understanding of national treatment is much narrower.
Whether the drafters really intended to leave open a space for post-establishment discrimination is hard to say. It’s worth noting that China has made what seems to be a promise of post-establishment national treatment in important areas in its WTO Protocol of Accession. But I don’t see anything that would prevent China from, say, imposing different tax rates on foreign and foreign-invested enterprises.
B. Abolition of investment approvals; establishment of negative list
As part of its implementation of the national treatment principle, the Draft FIL abolishes the general requirement of government approval for all foreign investments. Instead, it establishes a default principle that foreigners may make any investment that domestic investors may make, and in the same way. Setting up a company will still require approval from the local Administration of Industry and Commerce, for example, but that’s true for domestic investors as well. What is gone is the general requirement of approval from MOFCOM and the National Development and Reform Commission. Nobody is going to be examining joint venture contracts or company articles of association any more. Instead of ex ante review, we have a system of ex post reporting.
Any deviation from this default principle must have a source in law (i.e., rules issued by the National People’s Congress or its Standing Committee), administrative regulations (i.e., rules issued by the State Council), or a State Council decision (Art. 22). The deviation must be listed in a special catalog of special regulatory measures (特别管理措施目录) (“Special Catalog”). The Special Catalog will, it seems, replace the current Guidance Catalog for Foreign Investment, which specifies the sectors in which investment is forbidden, restricted, or encouraged (all non-listed sectors being classified as “permitted”). An important difference between the Special Catalog and the Guidance Catalog is that the Guidance Catalog did not do away with the foreign investment approval process itself. It was instead more of an instruction to the approving entity on how to manage its business. By contrast, investments not covered by an exception in the Special Catalog are (at least presumptively) not subject to foreign investment approval at all (Art. 26).
The Special Catalog will list prohibited investments and restricted investments. Restricted investments are of two types: (1) those that exceed investment limits set by the State Council, and (2) those that are in certain sectors. Investors in restricted investments must apply for foreign investment approval (Art. 27), submitting a variety of materials set forth in Article 30. The Draft FIL sets out a variety of rules regarding the approval process, including the nice touch that where the approval authority does not notify the applicant of any deficiencies in the application within five working days, the application is deemed accepted for review and the clock starts ticking on that process (Art. 31). This may not be very meaningful, since the approval process remains discretionary, and so it remains necessary for the applicant to please the reviewing authority regardless of what formal deadlines may have passed.
The fact that non-restricted investments are not subject to the above foreign investment approval process seems to create some problems with other parts of the Draft FIL. Article 34, for example, deals with the interaction between foreign investment approval and national security review. Where the reviewing authority discovers a potential national security issues, it should refer the project over to the relevant body for national security review. But if the project never comes before the approval authority, how does the state ever become aware of a potential issue? I discuss this further below in the section on national security review.
C. Abolition of special corporate vehicles for foreign investment
When China first opened up to foreign investment in the post-Mao era, there was no general company law and the government was not ready for such a law, so China had to invent special corporate forms for foreign investment: the equity joint venture ("EJV"), the contractual joint venture ("CJV"), and the wholly foreign-owned enterprise ("WFOE", and collectively, the "Three FIEs"). With the promulgation of the Company Law in the early 1990s, it became theoretically possible for foreigners to invest in regular companies, and eventually it became actually possible as well (subject to various restrictions and approval requirements).
Adding to the complexity of the system was the problem of the degree to which Company Law requirements should apply to the Three FIEs if they were not specifically contradicted by applicable law. (For example, the WFOE Law says nothing about a Board of Supervisors for WFOEs; the Company Law requires one. Should the WFOE Law's silence on the issue be considered a gap that can be filled by the Company Law, or is it an affirmative silence representing a legislative intention that WFOEs not be required to have any corporate governance institution not called for by the WFOE Law?)
The Draft FIE Law gets rid of this problem entirely by simply abolishing the Three FIEs. All foreign investment must use one of the general statutory vehicles for business associations. In practice, this will likely mean a company under the Company Law (that is, a company limited by shares (股份有限公司) or a limited liability company (有限责任公司)) or a partnership under the Partnership Law.
As a policy matter, this seems to me a sensible approach that should be applauded. There is a minor procedural fly in this legislative ointment that deserves some attention. Anyone reading Article 170 might think that the organizational laws for the Three FIEs will disappear when the Foreign Investment Law comes into effect. Not quite. Existing EJVs, CJVs, and WFOEs have three years to convert to a new corporate form, but before they do so they still need some kind of governing law, so they will still be governed by the applicable statutes (that is, the Equity Joint Venture Law, the Cooperative Joint Venture Law, and the Wholly Foreign-Owned Enterprise Law respectively) (Art. 157) and presumably the various regulations promulgated by innumerable government bodies that put flesh on the bones of those statutes. What is a bit odd is that the legal regime for the Three FIEs will have to remain frozen for up to three years, since the laws under which any regulations are promulgated will have disappeared.
II. National security review
The Draft FIL makes all foreign investments potentially subject to a national security review. This review can be triggered by a foreign investment approval authority when it spots a potential issue. But as we have seen, the whole point of the Draft FIL is to put large swaths of foreign investment outside of the review process. How, then, are non-restricted investments with national security implications to come to the attention of the authorities?
One route is self-reporting (Art. 50). This is the approach taken by the United States for CFIUS review: “Despite the voluntary nature of the notification, firms largely comply with the provision, because the regulations stipulate that foreign acquisitions that are governed by the Exon-Florio review process that do not notify the Committee remain subject indefinitely to divestment or other appropriate actions by the President.” Very possibly firms investing in China would take the same approach.
The relevant review body can also initiate an investigation sua sponte (as can CFIUS). In fact, just about anyone can suggest that a national security review is needed, although curiously the suggestion is supposed to be made to the foreign investment review authority, which is completely uninvolved in a non-restricted transaction (Art. 55).
III. Ex ante review replaced by ex post reporting
Chapter 5 of the Draft FIL, starting at Article 75, deals with the reporting system. As noted above, the ambition of the Draft FIL is to generally replace a system of before-the-fact approval with a system of after-the-fact reporting. This places much less of a strain on administrative resources—authorities can concentrate their attention on regulated parties who actually violate the rules (or are suspected of doing so) and not have to spend time on every potential violator of the rules, i.e., every single regulated party. It is the sign of a more confident administration, and is more consistent with a system of predictable rules: after-the-fact reporting works best when those reporting who wish to be compliant with law can self-assess their compliance as they go along.
The one problem here is that the reporting requirement seems to go too far, again possibly as a result of careless drafting. Article 93 sets forth a reporting requirement for all foreign investors—this includes individuals—who own less than 10% of a listed company. The report needs to be submitted only once a year, but nevertheless is going to be exceptionally onerous for any individual investor who is just taking a flutter on the Chinese stock market. Do the drafters really desire or expect that all investors who buy stock in Shanghai-listed companies through the Shanghai-Hong Kong Stock Connect program will file annual reports with all the required information for each stock they own?
IV. The control rule
The Draft FIL contains an important control rule. First of all, foreign entities controlled by Chinese investors can, at least in some circumstances, be considered Chinese domestic investors (Art. 45). Second, Chinese entities controlled by foreigners are considered foreign investors (Art. 11). Both these rules deserve some discussion.
The first rule, which converts Chinese-controlled foreign investors into Chinese investors, will be discussed much more extensively below in the section on VIEs. Here I just want to point out a nice consequence possibly unintended by the drafters. Think about why Chinese money likes to go overseas to form a corporate entity, only to have that money come back to China to fund an investment. This round-tripping used to be explained by all the special benefits—tax breaks and the like—that foreign investors got in China. But those special benefits have pretty much disappeared. What explains it now? I think the answer is that Chinese investors are seeking foreign corporate law. Chinese corporate law has traditionally been quite rigid. It’s improving—China recently got rid of its silly minimum capital requirements—but it still has quite a way to go before it can accommodate the complex and sophisticated financing structures that are possible under the corporate law of other countries.
The problem with organizing abroad now is that doing so has significant costs, one of which is that you are counted as a foreign company and subject to restrictions on foreign investment. In counting foreign companies controlled by Chinese as Chinese companies, the Draft FIL considerably lowers the barriers to Chinese investors taking advantage of foreign organizational law to engage in investments right back in China.
The second rule converts foreign-controlled Chinese entities into foreign investors. This seems symmetrical with the first rule, but in fact does not seem to have been thought through and may be a drafting error. It would make more sense to say that a Chinese entity subject to foreign control is a foreign-invested Chinese entity, not an actual foreign investor. Article 15, for example, defines control through contracts as a type of foreign investment. If a foreign company controls a Chinese company through contracts, then according to Article 15 it has invested in the Chinese company. Why not then simply consider the Chinese company to be a foreign-invested company?
The state makes certain decisions about how it wants to regulate entities with foreign investment—and very possibly subject to complete foreign control—that are organized under Chinese law (for example, WFOEs). It’s hard to see any reason for treating a Chinese company differently simply because the foreign control is exercised through contracts instead of through direct investment. Indeed, the whole point of the actual control test is to say that these are essentially the same and should be regulated the same way. If the contractually-controlled Chinese company is treated as a truly foreign investor, that has all sorts of bizarre consequences. Perhaps it cannot hire employees directly and must instead do so through a labor service company. Perhaps it cannot even engage in business in China—foreign companies engaging in production must set up a Chinese subsidiary.
There is also a possible problem with the definition of “control”. It’s defined in Article 18. But whenever Article 18 talks about proportionate ownership or control of anything, instead of talking about “more than half” or “a majority”, it consistently uses a concept of “half or more”. Chinese speakers all know about the ambiguity of the term yishang (以上); the Draft FIL specifically states that it includes the number preceding it, so every time Article 18 speaks of “50% yishang” or “half yishang”, it must, by the terms of the Draft FIL itself, be interpreted as “50% or more” and “half or more”. This means that under the Draft FIL, two opposed parties could both be deemed in control of an enterprise.
Although neither the Draft FIL nor the Explanation specifically use the term “Variable Interest Entity”, it is absolutely clear that the Draft FIL intends to address the issue. (The Explanation states, “The issue of foreign investors obtaining control rights over domestic enterprises through a series of contracts has received widespread attention.”) What will happen to existing VIEs? What about VIEs in the future?
Let’s recall the basic problem of VIEs: they are an attempt to get around restrictions on foreign investment in particular industries, most notably telecommunications and the internet. They do this by setting up a series of contracts between a wholly domestic Chinese entity (“DCE”), which holds the operating license, and a foreign-invested/foreign-controlled Chinese entity (“FCE”). These contracts mimic the effects of ownership, assigning control and risk to FCE. Money is supposed to flow from DCE to FCE, and thence offshore to FCE’s foreign parent company (“Parent”), and thence to shareholders of Parent.
Chinese contract law is quite clear: contracts to achieve an unlawful purpose are invalid. We even have a recent Supreme People’s Court case right on point telling us so. The disclosures in the “Risk Factors” section of the Alibaba prospectus—by no means unique—do not exactly exude confidence in the robustness of their fundamental corporate structure: “If the PRC government deems that the contractual arrangements in relation to our variable interest entities do not comply with PRC governmental restrictions on foreign investment, . . . we could be subject to penalties or be forced to relinquish our interests in those operations.”
Despite their obvious illegality, VIE structures have been permitted to openly raise funds abroad and operate in China. It is impossible to believe that somehow the Chinese government did not know that Alibaba, or Sina.com before it, was raising funds abroad, or how it was doing it. Like so many technically unlawful practices before it, the VIE structure works—until it doesn’t.
Have we now reached an “until it doesn’t” moment? It’s not entirely clear.
Let’s leave existing VIEs aside for the moment and start with future VIEs. We can imagine three kinds of VIE structures: (1) those in which Parent is actually controlled by Chinese individuals (“Chinese-controlled parent” or “CCP”), (2) those in which Parent is actually controlled by foreign individuals (“foreign-controlled parent” or “FCP”), and (3) those in which the issue of control is not clear. I include category (3) for the sake of completeness and shall discuss it no further. Finally, assume existing law remains unchanged, and that foreign investment in industry X is restricted or prohibited.
For CCP VIE structures, there may be no problem. This is because the control rule, discussed above, may make the VIE structure unnecessary where you have a CCP: even though the CCP is a foreign company, it can be treated as a wholly Chinese entity and lawfully invest directly (without having to use fancy contractual structures) even in sectors where foreign investment is restricted. According to Article 45, if a foreign investor is actually controlled by Chinese investors, it can, when applying for foreign investment approval, at the same time apply to be treated as a Chinese investor.
Note, however, that the actual-control test does not help you if you are trying to invest in a prohibited sector—or at least that’s what Article 45 implies by its mentioning only restricted investments. This may be an unintended drafting oversight; I can’t think of a strong policy reason for using an actual-control test when considering investments in restricted areas, but not when considering investments in prohibited areas. Part 3.3 of the Explanation, in discussing the actual-control test for status as a Chinese investor, does not seem to consider the distinction important; it notes that one suggested path for existing VIE structures in restricted or prohibited sectors would be for them (assuming Parent is controlled by Chinese investors) to seek treatment as a Chinese investor. In any case, the point is that in some cases Chinese-controlled offshore entities can count as Chinese investors and therefore can invest directly in industry X, instead of indirectly through a set of contracts that try to mimic the effects of direct investment.
For FCP VIE structures, it looks like bad news. (Remember, I’m still talking about entities that might be created in the future, not existing entities.) Article 11 lists who counts as a foreign investor, and adds that any domestic Chinese entity controlled by any entity on that list also counts as a foreign investor. Moreover, Article 15 defines control through contracts as a type of foreign investment covered by the law. Thus, there could be no onshore Chinese entity—no DCE—that could hold an operating license in an industry in which foreign investment were prohibited; by virtue of the control exercised over it, the DCE would cease to be a DCE and would become not just a FCE, but an actual foreign investor.
What about existing VIE structures? The consensus of commentators such as Practical Law and the Jun He law firm—and even Dan Harris of the China Law Blog, who thinks the Draft FIL is a death sentence for VIEs—is that somehow the system will let existing VIE structures continue, if only because shutting down the likes of Sina.com and Alibaba is unthinkable.
The Draft FIL actually leaves the relevant article (Article 158) blank and refers to the reader to the Explanation. Part 3.3 of the Explanation offers three proposals for dealing with existing VIE structures and asks for public input, making it clear that nothing is set in stone (or at least, that’s what they want you to think). Here are the alternatives:
1. “Foreign investor enterprises [note: not “foreign-invested enterprises”] exercising control through agreements [i.e., involved in a VIE structure] who report to the State Council’s department in charge of foreign investment that they are subject to the actual control of Chinese investors may retain their structure of control through agreements, and the relevant entity may continue to undertake business activities.” (实施协议控制的外国投资企业，向国务院外国投资主管部门申报其受中国投资者实际控制的，可继续保留协议控制结构，相关主体可继续开展经营活动) Note that this option involves reporting, not applying.
2. “Foreign investor enterprises exercising control through agreements should apply to the State Council’s department in charge of foreign investment for confirmation that they are subject to the actual control of Chinese investors; after confirmation by the State Council’s department in charge of foreign investment that they are subject to the actual control of Chinese investors, they may retain their structure of control through agreements, and the relevant entity may continue to undertake business activities.” (实施协议控制的外国投资企业，应当向国务院外国投资主管部门申请认定其受中国投资者实际控制；在国务院外国投资主管部门认定其受中国投资者实际控制后，可继续保留协议控制结构，相关主体可继续开展经营活动) Note that here an application and approval is required, not simply a self-report.
3. “Foreign investor enterprises exercising control through agreements should apply to the State Council’s department in charge of foreign investment for access permission [准入许可; this is the term used throughout the Draft FIL to mean, in effect, permission to invest]; the State Council’s department in charge of foreign investment shall, in consultation with relevant departments, make a decision based on an overall consideration of the actual controller of the foreign investor enterprise and other elements.” (实施协议控制的外国投资企业，应当向国务院外国投资主管部门申请准入许可，国务院外国投资主管部门会同有关部门综合考虑外国投资企业的实际控制人等因素作出决定)
Let’s consider existing VIE structures with a foreign-controlled offshore parent. By definition, they are dead in the water under the first or second alternatives. Their only hope is the infinitely flexible third alternative, which gives total discretion to government authorities over whether to grandfather them in. The authorities can (if they wish) consider matters other than actual ownership.
Now let’s consider existing VIE structures that have a Chinese-controlled offshore parent. First, we can apply the same analysis (with the same caveats) we applied to future VIE structures with a Chinese-controlled parent: perhaps they don’t even need a VIE structure any more. If for some reason they want to keep a VIE structure, clearly alternative 1 is the best for them. Alternative 2 is more troublesome, but if they are truly Chinese-controlled, things should come out all right in the end. Alternative 3 is the most worrisome for them; they have in effect to re-apply for permission to be doing what they’re doing, and permission isn’t guaranteed; Chinese control is only one element for the authorities to consider.
(Incidentally, on the question of whether corporate organizations that don’t need a VIE structure have the option of keeping it, it’s worth remembering that many VIE agreements provide that if there is a change in law such that the VIE structure is no longer necessary and a conversion to direct ownership is possible, the various parties are obliged to do whatever is necessary to effect that conversion. I’m not holding my breath on that one.)
Finally, a thought about all the energy we are spending on looking at the law. It seems a bit odd to be worrying about what the Draft FIL says about the legality of VIE structures or to say that it somehow makes them illegal. As I argued at the beginning of this discussion, they are already illegal. Hardly anyone denies this. And yet the authorities have permitted them to exist, and indeed to flourish, right under their noses. Back in the 1990s we saw the same thing with the CCF structure: a prohibition on foreign investment that was openly violated through a too-clever-by-half contractual arrangement. That arrangement worked just fine until it didn’t. Then it was resurrected in the form of the VIE structure, which we are now told is being made illegal, or—given that it’s already illegal—at least is not fine any more. Is there any reason to think that the pressures that produced the CCF and VIE structures, despite their being clearly prohibited, won’t survive this new purported prohibition and give us yet another transparent workaround?
* * * * *
JANUARY 24 UPDATE: I forgot to include some comments about the possibly anti-competitive aspects of the Draft FIL's treatment of VIE structures. I've just written a separate blog post on that here.
 “Except as otherwise provided for in this Protocol, foreign individuals and enterprises and foreign-funded enterprises shall be accorded treatment no less favourable than that accorded to other individuals and enterprises in respect of:
(a) the procurement of inputs and goods and services necessary for production and the conditions under which their goods are produced, marketed or sold, in the domestic market and for export; and
(b) the prices and availability of goods and services supplied by national and sub-national authorities and public or state enterprises, in areas including transportation, energy, basic telecommunications, other utilities and factors of production.”
Friday, January 16, 2015
It may seem incredible, but apparently the authorities believe that the rights of Chinese lawyers need to be even further restricted. Thanks to Joshua Rosenzweig for his translation of, and commentary on, an open letter signed by more than 500 Chinese lawyers in opposition to proposed changes to the Criminal Law that would criminalize such acts as “insulting, defaming, or threatening a judicial officer or participant to the litigation after being told by the court to stop” and “engaging in other acts that seriously disrupt the order of the court.”
Wednesday, January 14, 2015
While the Chinese government has never accepted the principle of separation of powers, it has (in the post-Mao era) allowed a space for a limited conception of judicial independence. In that conception, the courts as an institution should be independent of political pressures - officials outside of the court system should not pressure them, and they should not yield to such pressures. Within the court, on the other hand, it has always been part of the system that the views of individual judges who hear cases can be overridden by senior judges and the Adjudication Committee.
It seems that now even this limited conception of judicial independence (which did not actually function in practice in any case) is under attack, although the attack has yet to rise to the level of an unambiguous Party position. Here's an excellent article by Qian Gang of the China Media Project on recent developments: Who gave "judicial independence" a death sentence?
Tuesday, December 9, 2014
On Saturday I posted links to position papers by both China and the US on China's South China Sea claims. Here's an analysis of the dueling papers.
Sunday, December 7, 2014
Displaying a level of control freakery that probably reminds many women of their f'irst husband, the Chinese government has banned puns. I am not making this up. Here are some reports:
- "Punning banned in China" (Language Log)
- "No laughing matter: China's media regulators ban puns" (L.A. Times)
- "Chinese Government Moves To Crack Down On Puns" (The Guardian)
- "Nowhere to Pun Amid China Crackdown" (WSJ China RealTime Report)
- "Like a pun in a China shop" (Chicago Tribune) (weird humorless headline that contains no pun and uses an old expression apparently only because it contains the word "China" in it)
The Language Log blog has posted a translation by David Moser of the relevant document from the State Administration of Press, Publication, Radio, Film, and Television, whose acronym sounds like flatulence in a Don Martin cartoon.