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Bringing China Up to Code

Chinese Civil Law:

- 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
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
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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