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The More Law, the More...? Measuring Legal Reform in the People's Republic of China

SCID Working Paper 59





This paper starts by evaluating the state-led legal development in China during the reform period, focusing on the building of a body of substantive laws, legal institutions, processes, and the clarification of roles for institutional actors. It proceeds to examine the relationship between legal development and economic growth. In particular, it questions the notion that more formal legal institutions, rules and trained personnel are synonymous with the greater respect for the rule of law that seems to be necessary for economic growth. The complexity of the Chinese situation are under-appreciated by many observers who underestimate the difficulties of improving legal measures that are "best practices" and work well in Western countries in a "top-down" manner in China. Any analysis of the impact of the law on Chinese economic development must consider the extent to which laws can perform well only when they are societally generated. Moreover, China's situation is complicated further by the Communist Party's exemption of itself from formal and informal legal constraints. At a theoretical level, this paper calls for broadening the inquiry as to why law matters to the economy, beyond simple devotion to the rule of law. In this context, a priority for research is to examine the interplay between formal rules and informal norms, and to assess their interaction within the Chinese society.