Interaction between law and administration in the regulation of foreign investment in the People's Republic of China and Taiwan :
[Thesis]
Lee, Chin-Tarn James
an examination of informal sector in Chinese legal development
University of Warwick
1992
Ph.D.
University of Warwick
1992
This study focuses on the interaction between the state law and administrative practice in the regulation of foreign investment in China since the late imperial time. From the incorporation of modern capitalism into China in the mid-nineteenth century, the analysis develops along the changing relationships between the state legal modernization and survival of traditional law during the process of the end of the old order. Following the explanation of the failure of bureaucratic capitalism in the Republican period (1911-49), a discussion on the socialist transformation expelling foreign investment (1949-78) is elaborated. Hence, an overview of the limits of state law in Chinese political economy can be estimated, with some degree of accuracy. After 1949 one party-state was established in the People's Republic of China (the PRC) and Taiwan. This study explains the interaction between the systems of formal law and informal law, and the process of rationalization of legal procedures for the control of foreign investment in both regimes. Then, even after the Cultural Revolution in the PRC and the impact of industrialization in Taiwan, a continuing tension between traditional Confucian ideology and the state in both regimes remains clear in the dual characters of both law and bureaucracy. A close examination of law and administrative practice of foreign investment in the PRC and Taiwan shows that the statutory law has its positive and formal existence with the limited function. The state law has assumed its role in initial attempting to liberalise the economy to foreign investment, which develops the First Wave of the Encouragement of Foreign Investment. However, the major contradictions in the process of liberalisation come out of the administrative and business practices, which require a further opening up the economy and the statutory guarantee. Consequently, the legal mechanism is better equipped in the Second Wave of the Encouragement of Foreign Investment through the rationalisation of both legislation and procedure. Nonetheless, the reaction from both administrative discretions and business practices explores the limits of the state law. This study concludes that the over reliance on informal relationships predates the party-state system in both the PRC and Taiwan, or the party-state structure has not diminished their role but reinforces it.