Chinese Law Prof Blog

Editor: Donald C. Clarke
George Washington University Law School

Saturday, November 7, 2009

New CSRC rule on avoidance

I've recently started following (and recommend) the Wall Street Journal's China Real Time Report blog. The other day it reported on a new rule of avoidance promulgated by the China Securities Regulatory Commission. Officials who leave the CSRC cannot work for regulated parties for a period of three years (senior officials) or two years (others) (Chinese source here). A problem, however, is that apparently the rule is not enforceable by any third party. The only way it can be enforced seems to be via the CSRC's giving a hard time to violators and their employers if they ever need action on something from the CSRC (the rule itself speaks of "giving the cold shoulder to" (冷淡对待) such people). This could be effective in many cases and is a cheap enforcement mechanism. On the other hand, if the problem is that people who leave the CSRC for the private sector are valuable because they have friends and contacts remaining in the CSRC who will do them favors, how can we be confident that those friends and contacts will follow the "cold shoulder" rule?

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