The Political Economy of China’s Business Organisation Laws and its Implications for Legal Transplantation: Evidence from the Venture Capital Industry

18 Pages Posted: 14 Dec 2020

See all articles by Zhang Chi

Zhang Chi

The University of Glasgow

Date Written: December 14, 2020

Abstract

Forty years of market-oriented legal reform with strong state control in China has reshaped the relationship between government and market participants. Based on case studies of Chinese business organisation law - the law of corporations, business trusts and limited partnerships - this article aims, first, to reveal how the economic function of business organisations in the common law world has been deeply changed by strong state power in China, and, second, to explore a political economic theory for improving the performance of enterprise law in transitional economies. It proposes an economic model illustrating how the way transaction costs are distributed inside and outside enterprises for protecting investors may impact economic efficiency and social justice. This article concludes that different forms of enterprises serve as specified legal vehicles of wealth management for different social classes, therefore, the artificial convergence of business organisations will erode equality of opportunity in wealth management for society as a whole.

Suggested Citation

Chi, Zhang, The Political Economy of China’s Business Organisation Laws and its Implications for Legal Transplantation: Evidence from the Venture Capital Industry (December 14, 2020). Australian Journal of Asian Law, 2020, Vol 21 No 1, Article 07: 113-130, Available at SSRN: https://ssrn.com/abstract=3748250

Zhang Chi (Contact Author)

The University of Glasgow ( email )

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