SOAS Research Online

Abstract

This research is aimed at analyzing the legal aspects of state enterprise reform in the People's Republic of China. It attempts not only to explain relevant laws and regulations in the context of China's complex economic, social and political environments, but also to reveal the basic nature and the practice of these laws and regulations. Since the late 1970s, considerable efforts have been made by the Chinese authorities to use formal laws and regulations to adjust different and often conflicting interests emerging in the course of the programme of reforms, and, in particular, to reshape and protect the rights and interests of state enterprises. Among the most noteworthy of the efforts at state enterprise reform are the official conferment of legal personality and management rights to state enterprises, the establishment of a director responsibility system, the adoption of a bankruptcy law, and employment of the contracting system for settling the government -- enterprise relationship. These attempts have had some effect, and state enterprises have gained the capacity to act as independent legal entities. Furthermore, state enterprises, in some places and from time to time, have come to possess a certain degree of autonomy which was impossible prior to the reforms. Nevertheless, these efforts have not been as effective and authoritative as they were designed and expected to be. Many enacted laws and regulations have not been followed in practice. Indeed, in many respects, they are readily undermined or even completely disregarded. The relevant laws and regulations are strongly policy-oriented. Being the mere embodiment of state policies, they can be easily undermined as a result of policy changes. The ineffective application of many laws and regulations is due less to the defects in their legal and technical provisions than to the ambiguity and uncertainty of the policies underlying state enterprise reform.