China: Creating a Legal System for a Market Economy

32 Pages Posted: 26 Feb 2008

See all articles by Donald C. Clarke

Donald C. Clarke

George Washington University - Law School


Since the early 1990s, China has come a long way in legislating the foundational rules for its reformed economy. Virtually all of the important areas-contracts, business organizations, securities, bankruptcy, and secured transactions, to name a few - are now covered by national legislation as well as lower-level regulations. Yet an important feature of a legal structure suited to a market economy is missing: the ability of the system to generate from below solutions to problems not adequately dealt with by existing legislation. The top-down model that has dominated Chinese law reform efforts to date can only do so much. What is needed now is a more welcoming attitude to market-generated solutions to the gaps and other problems that will invariably exist in legislation. The state's distrust of civil-society institutions and other bottom-up initiatives suggests, however, that this different approach will not come easily.

Keywords: China, transition economies, economic regulation, economic reform

JEL Classification: G38, K11, K12, K20, K40, L50, N25, N45, O53, P20

Suggested Citation

Clarke, Donald C., China: Creating a Legal System for a Market Economy. Asian Development Bank, 2007, GWU Legal Studies Research Paper No. 396, GWU Law School Public Law Research Paper No. 396, Available at SSRN:

Donald C. Clarke (Contact Author)

George Washington University - Law School ( email )

2000 H Street, N.W.
Washington, DC 20052
United States


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