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Abstract: Even though a considerable amount of research has been done in the area of corporate governance, little of such research is done on China. Inspired by its recent economic reforms, this research attempts to appraise the current state of corporate development in China and thereafter, propose a suitable corporate governance model that is applicable to Chinese companies. This study has provided a number of insights to be discussed in greater detail in following parts. It can be seen that both internal and external mechanisms in China are weak and are unable to serve as effective monitoring mechanisms. Therefore, we conclude that a performance-oriented approach will be more effective.
China, Corporate Governance
Abstract: This paper examines China's recent movement in negotiating and signing regional trade agreements (RTAs) in the context of the regionalism versus multilateralism debate in international trade law, focusing on the China-Hong Kong Closer Economic Arrangement (CEPA) and the proposed China-ASEAN Free Trade Agreement (CAFTA). The broader background is that the potential negative effects of regional trade arrangements like CAFTA conflict with the economic goal of the multilateral trading system of the GATT/WTO regime. Countries, however, have a variety of non-economic considerations in approaching RTAs, such as regional stability and national security. Furthermore, the literature suggests that the economic benefits to members of RTAs, although they vary depending on the circumstances, are at least apparent in some cases. This paper, after introducing the content and progress in the CEPA and CAFTA negotiations, discusses the geopolitical considerations under China's CAFTA approach. It also analyzes the legal status and WTO-consistency of China's RTAs. It concludes that, while multilateralism is still serves the long-term interest of trading nations for peace and prosperity, the multilateral trading system should accommodate regionalism in a fashion that strikes a balance between the economic and non-economic concerns of the various countries and the goal of broader liberalization in global trade and investment. China, as a rising trade power with global influence, has the responsibility to promote regional integration and global trade liberalization in the interest of the aforesaid balance.
China, WTO, RTA/FTA, Trade
Abstract: This paper, a chapter of a forthcoming book, provides an overview of the corporate law regime in China, focusing on the newly revised PRC Company Law. It briefly examines the history of China's corporate law development, the structure of the company law, sources of law in the corporate law, corporate governance, corporate finance, and corporate social responsibility in China. It also discusses, for a law and development perspective, the purposes, principles and general trend of direction of China's corporate law system.
corporate law, company law, China, PRC Company Law, law and development
Abstract: Trade regionalism, through regional cooperation and integration and in the form of regional trade agreements (RTAs), is rising globally, although Asia has jumped on the bandwagon only recently. Asian economic integration is the second-best approach which Asian countries unfortunately have to follow. In the process of integration, China and India, given the size of their population and population, as well as their central strategic position in international and regional relations, will inevitably play fundamentally important, and sometimes even dominating, roles. This paper argues that regional economic integration in Asia should first of all realize sub-regional integration in East Asia and South Asia, while linking up the two sub-regions with bilateral FTAs, among which the most important one should be a China-India FTA. Eventually, all the FTAs will be consolidated into one pan-Asian FTA. China and India must take the lead in promoting Asian economic integration. They are advised to lead the region to practice open regionalism (with however Asian identity) and conduct deeper integration. Lastly, it is suggested that Asian countries should, at this stage, establish an institution to develop (non-binding) common principles and guidelines for the sub-regional and bilateral FTAs.
regional trade integration, RTA, FTA, China, India, Asia
Abstract: This paper discusses the regulation of foreign investment in China's stock market. It starts with the development of financial markets in China, followed by a detailed introduction to the evolution of China's stock market and the regulatory regime. It then introduces the forms of foreign participation in China's stock market. It critically analyses the legal traps faced by foreign investors in the Chinese stock market, including the burdensome and ambiguous regulatory culture, markt frauds associated with the SOE reform, poor corporate governance, and the absence of effective judicial protection. It finally puts forward some reform recommendations.
financial markets, stock market, foreign investment, regulation and deregulation
Abstract: The independent director system came to China from the common law family, aiming to boost the corporate governance of Chinese listed firms. This article analyses the effectiveness of independent directors, with particular reference to the supervisory board in China. The effectiveness is evaluated by examining the legal framework, historical path, and empirical studies on both the effects and practices of these two organs. It argues that, compared with the supervisory board which can be regarded as a complete failure, the independent director system has made certain limited contributions the improvement of China's corporate governance. However, certain important reform measures should be implemented to enhance the independence of these directors and provide them easier access to corporate information and other facilities.
China, corporate governance, independent directors, company law
Abstract: This paper studies the experiences of East Asian countries in conducting financial liberalization. Financial liberalization has two components, which are capital account liberalization and financial services liberalization. It is important to stress that the two components should not be confused, so are their respective consequences on a country's economic growth and financial stability. Both the theoretical and empirical studies have established that premature capital account liberalization was the direct cause of various financial crises, including the 1997-98 Asian Crisis. It is highly advisable that countries delay capital account liberalization or maintain capital controls before they put into place effective domestic regulatory framework and financial infrastructure. Based on the experiences of Malaysia and China in managing the Asian crisis, the paper argues that, in addition to having appropriately sequenced, gradualist reforms on capital account liberalization, a country should keep certain regulatory space for itself and maintain independently the financial policy-making power. However, financial services liberalization should not be retarded by these factors. An analysis of the four modes of GATT's services supplies suggests that trade in financial services does not necessarily involve massive capital flows and that financial services liberalization does not require abandonment of capital controls. Financial services liberalization improves the capabilities of a country's financial sector, enhances efficient capital reallocation, and brings tremendous benefits to consumers. Moreover, unlike capital account liberalization, trade liberalization in financial services will not contribute to financial instability and crises. The paper surveys the liberalization measures of financial services in selected Asian countries and concludes that more broad-based liberalization should be promoted. The paper argues that, however, it is understandable that a country wishes to provide certain protection to its domestic financial services sector at the initial stage of its development. After all, no country is born with a strong financial industry. However, the government providing protection should be wise enough to know at which point the protection should be terminated. In this regard, Singapore's experience of developing into a leading international financial center is an illustrating example.
Financial liberalization, Financial services, capital account liberalization, East Asia, China
Abstract: In the past decade, the proliferation of regional (free) trade agreements - often known as "trade regionalism", has posed serious challenges to the multilateral trading system and raised significant questions in international law as well. In the East Asia area, one of the most salient developments in trade regionalism is the negotiation on a free trade agreement between the People's Republic of China ("China") and the Association of Southeast Asian Nations ("ASEAN"), titled as the China-ASEAN Free Trade Agreement (hereinafter "CAFTA"). This paper is an effort to examine CAFTA in the context of international law. It provides a brief introduction to the development of the CAFTA proposal and the current negotiating process as well as the results achieved. It then considers the legal personality of ASEAN as an international organization as well as what impact this has on the legal nature of the China-ASEAN Free Trade Agreement.
FTA, international legal personality, China, ASEAN, international treaty
Abstract: The rapid rise of China is quickly reshaping the world economy. From the perspectives of trade and development, what explains China's remarkable growth? With respect to the nature and impact of its trade and investment policy, China remains a puzzle to many observers and continues to be topic for heated debate. The primary purpose of this paper is to provide an analysis of the evolution of China's foreign trade policy from a trade and development perspective. Examining some of the key developments in China's trade policy and regime, it argues that neither free trade nor protectionsim is the complete answer to development; in China's experience, a "pragmatic" trade policy requires a delicate balance between liberalization and use of industrial policy to support selected economic sectors.
China, international trade, foreign trade, trade policy, trade liberalization, trade protection
Abstract: For a long time the government of the People's Republic of China rejected the idea of universal human rights standards. In recent years, the Chinese government has been more willing to acknowledge, incrementally, the universal elements in the discourse and institutuions of human rights. This paper analyzes the official position of the PRC government on human rights protection, and discusses the possibility of applying universal human rights standards in China.
Human rights, international law, China
Abstract: China has achieved remarkable success in building the necessary institutions for a functional legal system. However, it seems that the Chinese government is more willing to nurture rule of law in some areas, while still striving to maintain excessive administrative discretion - namely rule of government officials - in other areas. Shareholders' litigation and anti-dumping investigation are two such contrasting examples. This brief will examine the evolution of shareholders' suits in China as well as the government's anti-dumping practice, analyze the different roles played by law and government officials therein and the reasons for such differences, and offer policy recommendations. By comparing the rule of law development in these two areas, this brief revisits the conventional law matters thesis in corporate governance and capital markets regulation, and its wider implications on law and development. Capital markets development follows the grow-then-law approach, namely legal changes have tended to follow, rather then precede, economic changes in China. Strengthened legal protection was a result of lobbying efforts of a growing domestic constituency comprising of both individual and institutional shareholders in China. The government's concern for social stability also explains why the political environment is becoming increasingly friendly to minority shareholders. Furthermore, industrial policy explains plausibly why the excessive use of administrative discretion is still a practice in anti-dumping investigations. The government would use anti-dumping to compensate industries whose interests are harmed as a result of China's WTO accession. The brief opines that, although China will continue its journey to rule of law, legal construction in China will be mainly driven by domestic political forces rather than external influences. The brief offers policy recommendations for further improvement.
Chinese law, shareholder litigation, anti-dumping, law and development
Abstract: The construction of the rule of law in China has become an international concern. This article discusses the impact of WTO accession on China's legal reform in the context of the rule of law jurisprudence. It discusses the "thin" / "thick" theories of the rule of law, arguing that the Lon Fuller's "thin" theory of the rule of law is a suitable model in the Chinese context. It sees that the "thin" version creates possibilities for the realization of any "thick" theories of the rule of law, including a liberal democratic version, albeit a sudden jump to this "thick" version is neither pragmatic nor even possible. China's urgent task at this stage is to build the requisite institutions to facilitate the establishment of a "thin" rule of law. Compliance with WTO obligations can directly help achieve this goal in terms of transparency, impartial application of laws, and judicial review.
Jurisprudence, rule of law, China, transition countries, WTO, Legal reform
Abstract: The regulation of public offering of shares adopts a merit-based model. This short essay provides a comprehensive examination of the legal framework of initial public offering of shares in mainland China, focusing on the required substantive and procedural conditions, the sponsorship system, the underwriting system, the price consultation system, as well as the role of the China Securities Regulatory Commission (CSRC), which is the principal regulator of China's securities markets, in the IPO process. Readers are advised that a few changes have been brought to the IPO law after this paper was published in 2009 but the spirit of the merit-based model remains intact.
IPO, securities regulation, securities markets, corporate finance law, China
Abstract: - This article examines regulatory cooperation and competition on securities markets development between Hong Kong and Mainland China, focusing on the regulation of listing of PRC firms in Hong Kong, the impact of PRC capital account control on Chinese portfolio investment in Hong Kong, and cross-border cooperation - or the lack thereof - on securities law enforcement.
- The relationship of regulatory cooperation and competition between securities markets in Hong Kong Mainland China must be understood in its political context, in particular the special relationship between the two sides under the ‘One Country, Two Systems’ formula.
- Regarding cross-listing of PRC firms in Hong Kong, Hong Kong’s better regulatory regime seems to serve as a bonding mechanism for improving corporate governance of the PRC firms. However, a revised interpretation of the bonding effects might be needed given that the road to listing in Hong Kong for a significant number of the PRC firms was under strict political control of the Chinese government.
- Mainland China’s foreign exchange control laws severely limit free flow of Chinese capital to Hong Kong, although Hong Kong is already heavily dependent upon portfolio investment from the Mainland.
- A more imperative problem is the lack of cooperation between the regulators for law enforcement against wrongdoers in corporate scandals involving H-share and Red-chip companies. This fundamentally stems from the structural differences between the political and legal systems in the two jurisdictions.
- In the long run, the policymakers on both sides must prepare for challenges arising from the inevitable further economic integration between Hong Kong and Mainland China, including the possibility of establishing a common market.
- Hong Kong’s future as an international financial centre is tied to its capability to maintain and improve its regulatory environment that can both strengthen its economic and financial integration with the Mainland markets and continue to attract international investors.
Securities markets, securities enforcement, cross-listing, internatinal financial centre, Hong Kong, China, SFC, CSRC
Abstract: This book chapter offers a comprehensive review of the free trade agreement between China and ASEAN ("ACFTA"), focusing on the rules concerning tariff reduction (including the Early Harvest Programme), trade in services, dispute resolution, as well as the progress on the negotiations on trade-related investment. It also critically analyzes the nature of the ACFTA from the perspective of ASEAN as an incomplete international organization or one without full international legal personality.
FTA, RTA, China, ASEAN, Early Harvest Programme, trade dispute resolution
Abstract: China's exchange rate regime has been an international concern for years, and is possibly one of the chief reasons for causing a trade war between the United States and China. Critics have alleged that the current Chinese RMB practices add unfair advantages to Chinese exports, and are hence a violation of international law. This paper aims to study China's exchange rate regime in the context of international law and economic relations. It will examine the legality of the regime under the law of the World Trade Organization (WTO) and the International Monetary Fund (IMF). It will also explore the international relations aspects of China's exchange rate policies and practices, aiming to explain why China has been resistant to international pressure to revaluate its currency, mainly from the perspectives of trade liberalization and economic development.
Exchange rate, China, RMB, Exports, International law, Economic relations, WTO, IMF, Currency, Trade liberalization, Economic development
Abstract: The purpose of this paper is to construct a suitable model of corporate governance for China's listed companies that were formerly state-owned enterprises (ie listed SOEs). The paper first identifies the corporate governance problems in China's listed SOEs. It is then followed by an examination of the suitability of the insider/outsider systems of corporate governance as a model for China's listed SOEs in light of China's current political, economic and social conditions. Drawing from the Singapore's model of corporate governance for its government-linked companies, the paper concludes with a proposal to adopt the Singapore's Temasek model as a system of corporate governance for China's listed SOEs.
SOE, Corporate Governance, Insider, outsider system, Temasek model
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