China's rulers recently missed an opportunity to begin dealing with what I consider the most important long-term obstacle to the country's continued growth and stability—rule of law. A recent meeting of senior Communist Party officials concluded with lofty rhetoric about the rule of law, but did not alter a system that still places the Party above the law.
Why the Rule of Law Is Important
I am optimistic about China's medium-term economic prospects, within the context of expecting gradually slower year-on-year growth rates. This optimism is based in large part on the continuing evolution of government policy designed to embrace private enterprise and markets. My biggest concern, however, is that there has been little parallel evolution in China's governance and institutions.
China's economy and society are increasingly based on property rights: private companies employ 80% of the workforce, create almost all new jobs and are responsible for most investment and industrial sales; entrepreneurs and artists are creating new intellectual property daily; 85% of urban families own their home; and farmers have land-use rights. Yet the country lacks the rule of law, which is needed to effectively protect these property rights and ensure a fair, rules-based commercial environment.
This is already the source of many of problems. Corruption, weakness in industries dependent on intellectual property rights and the widespread theft of land from farmers—the main cause of protests across the country—are all consequences of the lack of rule of law.
In the near term, China can continue to thrive, as people find ways to navigate corruption and the opaque system, and as the Party works to reduce interference in the legal system by local officials. But as the pace of economic growth inevitably slows over the coming decades, China's unique form of authoritarian capitalism is unlikely to provide the necessary institutional support for a modern, market-based society.
What Is the Rule of Law?
There are many definitions of the "rule of law," but the World Justice Project provides one based on four principles: the government, as well as individuals, are accountable under the law; the laws are clear, stable and just, are applied evenly and protect property rights; the law-making and law-enforcement processes are accessible, fair and efficient; and justice is delivered by competent, ethical and independent authorities.
"In a society governed by the rule of law, the government and its officials and agents are subject to and held accountable under the law," according to the World Justice Project. "Modern societies have developed systems of checks and balances, both constitutional and institutional, to limit the reach of excessive government power . . . These checks and balances take many forms in various countries around the world: they do not operate solely in systems marked by a formal separation of powers .
What is essential, however, is that . . . no single organ of government has the practical ability to exercise unchecked power."
I would summarize the rule of law as such: Rather than being a power to be wielded by officials, the rule of law is a structure designed to limit the power of officials.
Embraced by the Party, at Least in Theory
The Communist Party has, in theory, embraced the concept of the rule of law. Several years ago, then Premier Wen Jiabao said, "The most important aspect of building a harmonious society is strengthening democracy and the legal system to promote social fairness and justice." And last month's Party meeting endorsed the concept of "ruling the country according to the law."
The Chinese constitution already calls for a system of rules and procedures to make the government accountable to the people. Article 5 of the constitution states that "no organization or individual may enjoy the privilege of being above the Constitution and the law." It is, however, clear that in practice, the law is a tool the Party uses to achieve its political objectives.
One key aspect of the rule of law is an independent judiciary, and Article 126 of the constitution calls for the courts to exercise judicial power independently and without interference by the Party. But the high degree of Party interference in the criminal justice system, and the almost complete absence of due process, is illustrated in Criminal Justice in China, a detailed study led by Mike McConville, a law professor at the Chinese University of Hong Kong, and published in 2011:
"In China's criminal justice system, the verdict of those cases which are prosecuted in court is never in real doubt. There may be an occasional finding of not guilty, but we did not encounter any such case and reports of such events are rare. Courts operate on a presupposition of guilt based upon the prosecution case file. What happens in the court hearing is largely incidental to verdict and the 'trial' is a trial in form only or, occasionally, functions to serve a wider social or political purpose."
