Bring­ing China Up to Code

Chi­nese Civil Law:

NewsChina - - CONTENTS - By Zhang Chun­sheng

China's Gen­eral Prin­ci­ples of the Civil Law (here­inafter re­ferred to as the Gen­eral Prin­ci­ples) pub­lished in 1986, which stip­u­lates the ba­sic prin­ci­ples for reg­u­lat­ing civil ac­tiv­i­ties, was of im­mense sig­nif­i­cance to the-then just started process of re­form and open­ing-up. By guar­an­tee­ing the equal sta­tus of nat­u­ral and le­gal per­sons in per­sonal and prop­erty re­la­tion­ships in civil law, the Gen­eral Prin­ci­ples met the ba­sic re­quire­ments for a mod­ern mar­ket econ­omy. Its en­act­ment laid the le­gal ba­sis for China's trans­for­ma­tion from a planned econ­omy to a mar­ket-ori­ented one.

In 1954 and 1962, China tried twice to draft a civil code, but both were dropped due to var­i­ous rea­sons, in­clud­ing po­lit­i­cal tur­moil. At that time, the coun­try's planned econ­omy meant the gov­ern­ment con­trolled the pro­duc­tion, dis­tri­bu­tion and prices of all goods and ser­vices. The gov­ern­ment owned all en­ter­prises and also planned agri­cul­tural pro­duc­tion and al­lo­cated all so­cial re­sources. Dis­tri­bu­tion to in­di­vid­u­als was made ac­cord­ing to one's per­for­mance at a job, which was as­signed. There were al­most no pri­vate busi­nesses. In this en­vi­ron­ment, a civil law code, which deals with pri­vate mat­ters, lacked the so­cial soil to take root.

In 1978, as re­form and open­ing-up be­gan, China's leg­is­la­ture de­cided to es­tab­lish a civil law sys­tem. Pri­mar­ily based on the Con­ti­nen­tal Law Sys­tem (or Civil Law Sys­tem), the Chi­nese le­gal sys­tem con­sists of writ­ten laws set down by the leg­isla­tive body and fol­lows the tra­di­tion of cod­i­fy­ing core prin­ci­ples and sep­a­rate reg­u­la­tions of a cer­tain law de­part­ment into a refer­able sys­tem. But at that time of mo­men­tous changes, the leg­is­la­ture found that mak­ing a com­plete civil code, to in­clude both ba­sic prin­ci­ples and sep­a­rate reg­u­la­tions (or branches) of civil law, was daunt­ing. It even­tu­ally took a flex­i­ble path – en­act­ing the sep­a­rate reg­u­la­tions of civil law suc­ces­sively in the first place be­fore the time was ma­ture to con­sol­i­date them into a civil code.

This has been re­garded a ra­tio­nal and wise de­ci­sion. In the wake of the en­act­ment of a se­ries of sep­a­rate reg­u­la­tions, China passed the Gen­eral Prin­ci­ples in 1986. Based on that, the Gen­eral Pro­vi­sions of the Civil Law was passed in 2017, con­sid­ered the open­ing chap­ter of a civil code. Jiang Ping, a pro­fes­sor at the China Uni­ver­sity of Po­lit­i­cal Sci­ence and Law who was a mem­ber of the draft team for the Gen­eral Prin­ci­ples, once said that China's civil code might have re­mained blank to­day if not for this flex­i­ble strat­egy.

What to Gov­ern?

In 1978, late Chi­nese leader Deng Xiaop­ing pointed out that China should es­tab­lish its own crim­i­nal law, civil law, pro­ce­dural law and other laws it lacked. He elab­o­rated that the re­la­tion­ships be­tween the coun­try and en­ter­prises as well as en­ter­prises and in­di­vid­u­als should also be reg­u­lated by law to solve the con­flicts be­tween them.

But it was a big chal­lenge to de­velop a civil law then. The first ques­tion was what so­cial re­la­tion­ships civil law should gov­ern. Since the found­ing of the Peo­ple's Repub­lic of China in 1949, the coun­try was un­der a planned econ­omy for sev­eral decades. Civil ac­tiv­i­ties were planned or ar­ranged by the gov­ern­ment with­out in­volv­ing much in­ter­ac­tion be­tween nat­u­ral per­sons and le­gal per­sons or be­tween the two.

In 1979, Peng Zhen, one of the prin­ci­pal founders of China's mod­ern le­gal sys­tem who led the Com­mis­sion of Leg­isla­tive Af­fairs (CLA), an or­ga­ni­za­tion in charge of le­gal af­fairs un­der Na­tional Peo­ple's Congress Stand­ing Com­mit­tee, shared his con­fu­sion with mem­bers of the CLA, ad­mit­ting that it would be a big project to deal with sev­eral lay­ers of so­cial re­la­tion­ships prop­erly with­out ex­pe­ri­ence from the past.

There were dis­putes over what re­la­tion­ships it should reg­u­late. Court of­fi­cials held that civil law should reg­u­late only mar­riage, the fam­ily and prop­erty in­her­i­tance. But the ju­rispru­den­tial cir­cle be­lieved the con­cept of the civil re­la­tion­ship should be rather broad, at least to in­clude con­trac­tual re­la­tions and in­tel­lec­tual prop­erty re­la­tions.

In spite of that, mem­bers of the CLA were en­thu­si­as­tic about mak­ing a civil code. A team of over 30 ex­perts was soon or­ga­nized to work on the draft. Mean­while, Peng sug­gested that sep­a­rate reg­u­la­tions on the civil law should be en­acted si­mul­ta­ne­ously to play safe, re­al­iz­ing that it would be too dif­fi­cult to make a com­plete civil code all at once.

In 1982, the CLA, led by late Chi­nese leader Xi Zhongxun, Chi­nese Pres­i­dent Xi Jin­ping's fa­ther, pro­posed that sep­a­rate reg­u­la­tions of a civil law could get passed first if pass­ing a sys­tem­atic civil code was too chal­leng­ing, given the ur­gent de­mand for reg­u­la­tions. The le­gal tal­ents of the team were di­vided about this: some per­sisted in mak­ing a civil code while oth­ers held that sep­a­rate reg­u­la­tions should be re­leased ear­lier.

In the end, the com­mis­sion de­cided to pause draft­ing the civil code. The en­act­ment of sep­a­rate reg­u­la­tions of the civil law con­tin­ued. This de­ci­sion left some law ex­perts con­fused and dis­ap­pointed.

At that time, China's law cir­cles be­lieved the coun­try should make

a civil code as soon as pos­si­ble, be­cause it rep­re­sented the level of civ­i­liza­tion of a so­ci­ety, as Liang Huix­ing, a ju­rist who joined draft­ing the Gen­eral Prin­ci­ples, re­called in an ar­ti­cle.

But 20 years later, Liang saw wis­dom in the pause. “If we did make a civil code then, it would have been one that copied from the for­mer Soviet Union and re­flected the char­ac­ter­is­tics and re­quire­ments of the planned econ­omy, which was not in a po­si­tion to pro­vide a le­gal ba­sis for push­ing for­ward re­form and open­ing-up and de­vel­op­ing a so­cial­ist mar­ket-ori­ented econ­omy in China,” wrote Liang.

Stan­dard­iz­ing the Rules

A se­ries of sep­a­rate reg­u­la­tions in the civil law code were is­sued from 1980, in­clud­ing the Eco­nomic Con­tract Law, Trade­mark Law, Patent Law, Law on Suc­ces­sion and the Law on Eco­nomic Con­tracts Con­cern­ing For­eign In­ter­ests.

In the process, it grew in­creas­ingly ur­gent to stan­dard­ize the ba­sic rules that these sep­a­rate reg­u­la­tions have in com­mon, such as the ba­sic prin­ci­ples for civil ac­tiv­i­ties, the def­i­ni­tion of civil sub­jects, le­gal per­son sys­tem, civil rights and civil li­a­bil­ity.

The prob­lem prompted some le­gal spe­cial­ists to pro­pose draft­ing a civil code again. Af­ter re-eval­u­at­ing the pos­si­bil­ity, the leg­isla­tive body con­cluded that a fun­da­men­tal law was in need for the reg­u­la­tion of all kinds of civil re­la­tion­ships, but still, the time was not yet ripe for a civil code.

In 1985, the CLA started to draft gen­eral prin­ci­ples for a civil law as a sub­sti­tute. In De­cem­ber that year, the leg­isla­tive body held a con­fer­ence in Bei­jing to dis­cuss the draft of the Gen­eral Prin­ci­ples. At the con­fer­ence, le­gal ex­perts and ju­di­cial of­fi­cials reached con­sen­sus, viewing it as a nec­es­sary and fea­si­ble step to set some gen­eral prin­ci­ples for a civil law at that time.

But soon af­ter, a dis­cus­sion on eco­nomic law was held in Guangzhou, Guang­dong Prov­ince, by the Eco­nomic Law Re­search Cen­ter of the State Coun­cil and the Chi­nese So­ci­ety of Eco­nomic Law. It turned out to be one against the draft of the Gen­eral Prin­ci­ples. Dur­ing the con­fer­ence, some schol­ars par­tic­u­larly crit­i­cized Ar­ti­cle 2 of the draft, which stip­u­lated that China's civil law aimed to reg­u­late the prop­erty and per­sonal re­la­tion­ships be­tween cit­i­zens, be­tween le­gal or­ga­ni­za­tions, and be­tween the two.

They ar­gued that this word­ing made all prop­erty re­la­tion­ships sub­ject to civil law and de­nied the func­tion of eco­nomic law, namely the eco­nomic laws and reg­u­la­tions that gov­ern the com­mer­cial and eco­nomic re­la­tion­ships emerg­ing in the coun­try's macroe­co­nomic man­age­ment. Some could not ac­cept that the passed sep­a­rate reg­u­la­tions, such as the Eco­nomic Con­tract Law and Trade­mark Law, were re­garded as part of civil law, in­sist­ing that they came un­der eco­nomic law.

Gu Ming, an in­flu­en­tial fig­ure in eco­nomic law who was then di­rec­tor of the Eco­nomic Law Re­search Cen­ter of the State Coun­cil, pointed out at the meet­ing that a so­cial­ist com­mod­ity econ­omy, which is planned based on pub­lic own­er­ship of the means of pro­duc­tion, re­quired a new le­gal de­part­ment that re­flected its char­ac­ter­is­tics. He re­garded eco­nomic law as the most suit­able one.

This dis­cus­sion re­newed the his­tor­i­cal dis­putes be­tween eco­nomic law and civil law in the coun­try that started in 1979 af­ter a na­tional sym­po­sium was held in Bei­jing. Some ex­perts am­pli­fied the role of eco­nomic law, which, they be­lieved, should reg­u­late so­cial re­la­tion­ships be­tween gov­ern­ment or­gans, en­ter­prises, pub­lic in­sti­tu­tions and other so­cial or­ga­ni­za­tions and cit­i­zens, and civil law only needed to gov­ern prop­erty and non-prop­erty re­la­tion­ships be­tween cit­i­zens.

But other le­gal schol­ars be­lieved all hor­i­zon­tal eco­nomic re­la­tions, in­clud­ing prop­erty re­la­tion­ships be­tween so­cial or­ga­ni­za­tions, be­tween so­cial or­ga­ni­za­tions and cit­i­zens and be­tween cit­i­zens, should be reg­u­lated by civil law.

The de­bate be­tween eco­nomic law and civil law, as pro­fes­sor Jiang noted, re­flects “the dis­pute over the di­rec­tion of China's eco­nomic de­vel­op­ment – whether to re­main planned or mar­ket-ori­ented – and the ar­gu­ment over the role of plan­ning and the role of the mar­ket in the re­form of the Chi­nese econ­omy at that time.

Not­ing the con­tra­dic­tory opin­ions, Peng Zhen, who was then chair­man of the NPC Stand­ing Com­mit­tee, de­manded the leg­isla­tive body hold a sym­po­sium for eco­nomic law ex­perts and in­vited them to speak freely about the draft of the Gen­eral Prin­ci­ples. They par­tic­u­larly sought out Gu Ming and lis­tened to his opin­ion.

At that time, China had just started re­form and openingup and so­ci­ety was braced for change and un­cer­tain­ties. Gu elab­o­rated that a so­cial­ist so­ci­ety like China was dom­i­nated by pub­lic own­er­ship in­stead of pri­vate own­er­ship like in cap­i­tal­ist coun­tries. So there re­mained fun­da­men­tal ques­tions to clar­ify as to how to stip­u­late own­er­ship in law, which should not get fixed too early with “gen­eral prin­ci­ples.” He be­lieved that eco­nomic re­la­tions be­tween le­gal per­sons should be reg­u­lated by eco­nomic law.

Af­ter study­ing Gu's sug­ges­tion, the leg­isla­tive body put for­ward a re­port which wrote that the eco­nomic re­la­tions be­tween le­gal per­sons – par­tic­u­larly non-state-owned en­ter­prises – that had equal sta­tus, such as in eco­nomic con­tracts, were hor­i­zon­tal eco­nomic re­la­tions and thus fea­si­ble to be reg­u­lated by civil law. Such pro­vi­sions, the re­port added, were made to meet the re­quire­ments of re­form to the eco­nomic sys­tem, de­crease ad­min­is­tra­tive in­ter­ven­tion into eco­nomic man­age­ment and strengthen the law's abil­ity to man­age the econ­omy.

Mean­while, the re­port stated that the re­la­tion­ships the civil law were to gov­ern, a main point of con­tro­versy in eco­nomic law cir­cles, were re­vised to “prop­erty re­la­tion­ships and per­sonal re­la­tion­ships be­tween civil sub­jects with equal sta­tus, that is, be­tween cit­i­zens, be­tween le­gal per­sons and be­tween cit­i­zens and le­gal per­sons.”

This pro­vi­sion re­flected two ba­sic prin­ci­ples of civil law: First, the sub­jects of com­mod­ity-money re­la­tions, which ac­count for the ma­jor­ity of civil re­la­tions, have equal le­gal sta­tus and rights; sec­ond, civil law mainly reg­u­lates prop­erty re­la­tions be­tween sub­jects with equal sta­tus, and re­la­tions that in­volve un­equal sub­jects, such as the coun­try's man­age­ment of the econ­omy and, re­la­tions be­tween the State and en­ter­prises, would be reg­u­lated by eco­nomic law.

Af­ter the draft of the Gen­eral Prin­ci­ples was agreed by the Sec­re­tariat of the Com­mu­nist Party of China (CPC) Cen­tral Com­mit­tee, the work­ing body of the Po­lit­i­cal Bureau of the CPC Cen­tral Com­mit­tee and its Stand­ing Com­mit­tee, the dis­putes over eco­nomic law and civil law con­tin­ued. But Peng per­sisted, say­ing that aca­demic de­bate was not a rea­son to stop mak­ing gen­eral prin­ci­ples for civil law. In April 1986, the Gen­eral Prin­ci­ples even­tu­ally were passed.

The en­act­ment of the Gen­eral Prin­ci­ples is re­garded as a great break­through in China's le­gal his­tory. In the mid-1980s, the planned econ­omy sys­tem was about to change, but the goal and di­rec­tion of the re­form on China's econ­omy was not yet de­ter­mined.

Ba­sic Prin­ci­ples

In that era of change, the Gen­eral Prin­ci­ples rec­og­nized and guar­an­teed the civil con­duct be­tween sub­jects with equal sta­tus in the form of law and set “equal­ity” as its fun­da­men­tal na­ture, es­tab­lish­ing ba­sic prin­ci­ples such as equal­ity, vol­un­tari­ness, fair­ness, mak­ing com­pen­sa­tion for equal value, hon­esty and cred­i­bil­ity to guide civil ac­tiv­i­ties, and en­cour­aged mar­ket di­ver­si­fi­ca­tion. These prin­ci­ples fit the ba­sic re­quire­ments for a mod­ern mar­ket econ­omy and pro­vided a le­gal ba­sis for China's trans­for­ma­tion from a planned to a mar­ket econ­omy.

In ad­di­tion, the spirit of democ­racy in the law­mak­ing process is im­pres­sive. When le­gal ex­perts held a meet­ing in Guangzhou to op­pose the draft of the Gen­eral Prin­ci­ples, the Party and gov­ern­ment lead­er­ship did not crit­i­cize the con­fer­ence but asked the leg­isla­tive body to lis­ten to their ad­vice in­stead. The brain­storm even­tu­ally led to the re­vi­sion of the so­cial re­la­tions the civil law should reg­u­late, which is re­garded as a more ac­cu­rate sphere.

More than 30 years have passed. Some de­fects in the Gen­eral Prin­ci­ples are ob­vi­ous against the evo­lu­tion of civil law to­day. For ex­am­ple, when men­tion­ing a le­gal per­son's right to dis­pose of his or her per­sonal prop­erty and real prop­erty, it used “prop­erty own­er­ship and prop­erty rights re­lated to prop­erty own­er­ship,” which was lengthy, in­stead of di­rectly us­ing “prop­erty rights.” Some reg­u­la­tions are marked with the stamp of the planned econ­omy and do not fit a mar­ket econ­omy. But these are short­falls that can be ex­plained by the lim­i­ta­tions of that pe­riod.

China's civil law has pro­gressed since then, most im­por­tantly. Re­vi­sions have been made to the Gen­eral Prin­ci­ples and sep­a­rate reg­u­la­tions of civil law have been per­fected. In 2015, China again put en­act­ment of a civil code on the agenda. In 2017, China passed the Gen­eral Pro­vi­sions of the Civil Law, which con­sti­tutes the ba­sic frame­work of China's civil law sys­tem and lays the foun­da­tion for a com­plete civil code ex­pected to come out around 2020.

Peng Zhen and rep­re­sen­ta­tives of the Na­tional Peo­ple’s Congress dis­cuss a draft of the Gen­eral Prin­ci­ples of the Civil Law, Novem­ber 1982

The Com­mis­sion of Leg­isla­tive Af­fairs holds a con­fer­ence in Bei­jing to dis­cuss the draft of the Gen­eral Prin­ci­ples of the Civil Law, De­cem­ber 4, 1985

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