China’s rule of law in New Era: the rise of regulation and formalism

Jiafu An, Wenxuan Hou, Yun Zhang

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    Abstract

    China’s financial development and economic growth is achieved under weak legal institutions. The literature attributes this counter-example of law–finance–growth nexus to (a) alternative mechanisms in China such as incentives, reputation and relationships and(b) a well-functioning xinfang system with common law features.In recent years, China has made increasing efforts to strengthen its rule of law. The Communist Party of China (CPC) has taken the lead by launching a far-reaching campaign against corruption, establishing a system of inspection tours, and promulgating a large number of regulations. We argue that using regulations to complement laws is effective: CPC has enough bureaucratic prowess to crack down on corruption whereas the courts are subject to sub-version by powerful interests. We also discuss the drawbacks of this approach: regulations aiming at ex ante control of corruption substantially increase procedural formalism and limit the discretion of local governments and state-owned enterprises.
    Original languageEnglish
    Pages (from-to)313-318
    JournalJournal of Chinese Economics and Business Studies
    Volume17
    Issue number3
    Early online date30 Sep 2019
    DOIs
    Publication statusPublished - Oct 2019

    Keywords

    • Anti-Corruption Campaign
    • China
    • procedural formalism
    • regulation

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