The Role of Law in China's Economic Development

In Thomas Rawski and Loren Brandt (ed.), China’s Great Economic Transformation (Cambridge University Press, 2008): 375-428.

27 Pages Posted: 30 Jan 2006 Last revised: 26 Jul 2014

See all articles by Donald C. Clarke

Donald C. Clarke

George Washington University - Law School

Peter Murrell

University of Maryland - Department of Economics

Susan H. Whiting

University of Washington - Department of Political Science

Date Written: 2008

Abstract

本文的中文版本:http://ssrn.com/abstract=2470907

This paper surveys China's legal system in the economic reform era. We analyze the role of law in the economy, assessing whether China's formal legal system contributed to those expectations of stable and predictable rights of property and contract that are prerequisites for growth. The paper begins by detailing legal developments. The relationship between legal and economic development was bidirectional - a coevolutionary process. We then examine three spheres of activity - property rights, agreements to trade, and corporate governance - asking whether law plays an important role, how that role has changed, and what the current problems are. Common themes arise. First, there have been profound changes, with law playing an increasingly important role. Second, formal legal institutions have not made a critical contribution to China's remarkable economic success. This latter conclusion leaves open the question of which mechanisms generated the necessary expectations of reasonable returns from decentralized economic activity. We briefly reflect on mechanisms other than law that might have produced such expectations, for example, the role of local Communist Party officials. However, lack of empirical information suggests this is a topic for future research.

Keywords: China, institutions, law, property rights, contracts, corporate governance

JEL Classification: P20, P26, P30, P37, N45, K00, K20, K40, D02

Suggested Citation

Clarke, Donald C. and Murrell, Peter and Whiting, Susan H., The Role of Law in China's Economic Development (2008). In Thomas Rawski and Loren Brandt (ed.), China’s Great Economic Transformation (Cambridge University Press, 2008): 375-428., Available at SSRN: https://ssrn.com/abstract=878672 or http://dx.doi.org/10.2139/ssrn.878672

Donald C. Clarke (Contact Author)

George Washington University - Law School ( email )

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Peter Murrell

University of Maryland - Department of Economics ( email )

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Susan H. Whiting

University of Washington - Department of Political Science ( email )

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United States

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