Chinese Legal Reform: The Case of Foreign Investment (review)

After nearly twenty-five years of China's open-door policy encouraging foreign investment and trade, the scholar's bookshelf on foreign-investment law in China has become rather crowded. China's entry to the World Trade Organization in 2001 stimulated a renewed wave of interest in the ways that China's legal system has responded to and sought to manage expanded foreign investment relations. While there are many practical "how-to" volumes available, too few attempt to explain the development of China's foreign-investment regulatory regime in terms of legal culture and practice. Yan Wang's interesting contribution attempts to fill this gap. Sponsored by the East Asian Economic and Business Series of the European Institute of Japanese Studies, her book addresses China's foreign-investment law in light of historical, policy, and legal-culture conditions. Her opening chapter sets forth the broad contours of legal reform in China since 1978, emphasizing the salient points of institutional change while also paying significant attention to legal culture. She goes on to examine the shifting policy contexts for foreign-investment law and the limits these pose for enforcement and predictability. These sections alone make the book worth reading, as Wang deftly navigates among the wide range of secondary sources available on these subjects to provide a useful summary of the institutional and behavioral limitations on the Chinese legal system today. Also provided by way of background is a very short overview of international law regimes against which China's foreign-investment law may be compared. Although it touches usefully on the rule regimes that are associated with the International Centre for the Settlement of Investment Disputes (ICSID) and the Multilateral Investment Guarantee Agency (MIGA), this chapter is a bit too short to add significantly to existing knowledge.

The sections that follow address, respectively, the broad objectives and frameworks for China's foreign-investment law regime, investment restrictions and incentives, and the differing mechanisms and policies supporting the management autonomy of foreign investors. A concluding chapter examines the current status of contract law. In contrast to the analysis of institutional and behavioral limits on China's foreign-investment law regime in the previous chapters, the latter sections include much dated material and are somewhat less useful. Wang includes extensive treatment of the "Catalogue Guiding Foreign Investment," issued in 1998. However, a revised "Catalogue" was issued in 2002 and was in the process of public discussion and drafting well before the publication date of Wang's book. In a similar vein, much of Wang's treatment of China's entry into the WTO is written in the future tense, despite the fact that her book was published after China's accession. A similar problem arises in the discussion of contract law. Wang spends considerable time explaining the PRC's Economic Contract Law and the Foreign Economic Contract Law as though these were still in effect, and then suggests that these "will be replaced" by the [Unified] Contract Law from October 1999—an odd formulation for a book published in 2002. Moreover, the discussion of the [Unified] Contract Law does not include discussion of the critically important interpretation issued in 1999 by the Supreme People's Court addressing a variety of issues on the formation and content of contracts. Finally, Wang's treatment of the "Rev Power" case revisits familiar issues, which have long been superceded by more recent and useful analyses of challenges to arbitration proceedings in China.

In the rapidly changing context of China's foreign-investment law regime, these kinds of anomalies are to be expected, and perhaps are unavoidable. No doubt the limitations of copyediting and production prevented more complete updating of the author's material, but these flaws nonetheless weaken the overall utility of the book. The author might have avoided the problems of including dated material by linking these and other time-limited examples to the conceptual points that are made to great effect early in the book. The...