Abstract
ABSTRACTChina’s rapid growth in the absence of autonomous legal institutions of the kind found in the west appears to pose a problem for theories which stress the importance of law for economic development. In this article we draw on interviews with lawyers, entrepreneurs and financial market actors to illustrate the complexity of attitudes to contract, corporate and financial law and economic growth in contemporary China. In the case of product markets, we find that business relations are increasingly characterised by a mix of trust-based transacting and legal formality. Financial markets are less like their western counterparts, thanks to the preponderant role of government in asset allocation, and a lack of transparency in market pricing. Overall, China’s experience does not suggest that law is irrelevant or unrelated to growth, but that legal and economic institutions coevolve in the transition from central planning to a market economy.
Highlights
What has been the contribution of the legal system in general, and of contract, corporate and financial law in particular, to economic growth and development in China? The Chinese experience of rapid growth in recent decades appears to contradict the claim that ‘law matters’ for economic development.1 It seems to be the case that China incompletely recognises the security of contract and property rights which new institutional economics identifies as D
China’s rapid growth in the absence of autonomous legal institutions of the kind found in the west appears to pose a problem for theories which stress the importance of law for economic development
In this article we draw on interviews with lawyers, entrepreneurs and financial market actors to illustrate the complexity of attitudes to contract, corporate and financial law and economic growth in contemporary China
Summary
Others refer to it as a ‘rule by law’, see e.g. R Peerenboom, China’s Long. The interview data provide evidence that attitudes to trust and law are changing as the market economy develops and deepens, and that a transition from guanxi-based transacting to a more formal, legally-driven approach to contracts is taking place, unevenly across industrial sectors and regions. Closer attention should be paid to identifying in which respects China’s trajectory is distinct from that of other countries undergoing industrialisation, and those aspects of its experience which may not be so very different after all
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