'Quack Corporate Governance' as Traditional Chinese Medicine – The Securities Regulation Cannibalization of China's Corporate Law and a State Regulator's Battle Against Party State Political Economic Power
51 Pages Posted: 14 Jun 2013 Last revised: 20 Nov 2014
Date Written: June 13, 2013
From the start of the People's Republic of China's (PRC) "corporatization" project in the late 1980s, a Chinese corporate governance regime subject to increasingly enabling legal norms has been determined by mandatory regulations imposed by the PRC securities regulator, the China Securities Regulatory Commission. Indeed, the Chinese corporate law system has been cannibalized by all-encompassing securities regulation directed at corporate governance, at least for companies with listed stock. This Article traces the path of that sustained intervention, and makes a case – wholly contrary to the "quack corporate governance" critique much aired in the U.S. – that for the PRC this phenomenon is necessary, appropriate, and benign. That analysis in turn reveals a great deal about the following: the development of Chinese law and legal institutions after 1979; China’s contemporary political economy; the true identity of the firm under the PRC "corporatization without privatization" program; the normative character and function of corporate law across increasingly globalized capital markets; and the ways in which state intervention may protect against state abuse of power and enable greater private autonomy. For analysts of China’s contemporary political system, this article uncovers a new identity of the Chinese party state’s "fragmented authoritarianism," where a central government agency has instituted pre-enforcement designs that systematically constrain the economic and directorial power of the PRC's most powerful, formally non-governmental, political economic actors. This Article is the edited version of a paper originally given at the Fifth Annual Symposium of the Adolf A. Berle, Jr. Center on Corporations, Law & Society, or "Berle V".
Keywords: corporations, corporate law, corporate governance, securities regulation, China, PRC, Chinese law
JEL Classification: G18, G28, G34, G38, K22, K23, N25, N45, P26, P30, P34
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