China Rolls Out Five-Year Outline For Government Under Rule Of Law

Wilmer Hale lawyers..Lester Ross (Beijing) and Tingting Liu (Beijing) write…

The Central Committee of China’s Communist Party and the State Council on August 11 jointly published the Five-Year Outline for Implementation of the Buildout of a Government under the Rule of Law (2021-2025) (the “Outline”), the second such document following an earlier one issued for the period 2016-2020.1   As the regulatory plan for the nation’s 14th Five-Year Plan period (2021-2025), the Outline sets the goal that by 2025 all government acts will be fully placed under the rule of law. The Party is determined to comprehensively build a law-based government that is open, impartial, clean, efficient and honest, with properly defined functions, statutory rights and responsibilities, as well as strict law enforcement.

We note, however, that in China “rule of law” often amounts to “rule by law”. The Outline from this perspective calls for major expansions of official access to data and of the regulatory state. While it is intended to curb the arbitrariness and unequal application of enforcement, it will actually call for an expansion of intrusion into the economy and society by the unified Party and government at the diktat of the Party. The recent multi-departmental crackdown on the platform, tutoring and other industries indicates that basic governmental policies may be arbitrarily imposed with little advance notice and opportunity for comment or redress, and only then be detailed in regulation. It is unclear how conducive this will be to economic growth and social harmony.

The construction of a law-based government according to the Outline will be implemented through the improvement of government function systems, law-based governance systems, administrative decision-making systems, and administrative enforcement. In contrast to the first such plan for the 13th Five-Year Plan period, the Outline added new proposals to improve the emergency response system, and to build a digital government in accordance with developments in technology.

The government will fully implement the system of lists of well-defined government powers. Market entry negative lists will be strictly implemented, and all sectors that are not on a negative list will all be deemed fully open to foreign investment. The government will promote the reform of administrative review and approval systems and assign additional administrative resources in all stages from pre-approval to oversight of compliance.

The Outline calls for continuous efforts to optimize the business environment under the rule of law. The government will create a law-based business environment that is stable, fair, transparent and predicable; provide equal protection to the rights of enterprises of all ownership types with respect to their property and independent operation in accordance with law, and prevent the abuse of administrative power to eliminate or restrict competition; improve national treatment together with the negative list management system for foreign investment; fully consult with enterprises and trade associations in the formulation and amendment of administrative regulations; strengthen and improve anti-monopoly and anti-unfair competition law enforcement; reinforce the inelastic binding force of the fair competition review system; and abolish regulations and practices that impede a unified market and fair competition.

Legislation will be strengthened in key areas including national security, technological innovation, culture and education, biosecurity, risk prevention, anti-monopoly, and the rule of law in relation to foreign parties. Research on legal systems relating to the digital economy, Internet finance, artificial intelligence, big data and cloud computing shall also be accelerated.

The Outline proposes to strengthen enforcement in key areas related to vital interests of the populace, such as food and drugs, public health, the environment, labor security, financial services, and education and tutoring. The Outline also calls for establishing and improving the punitive damages and large fines systems as well as a permanent disbarment system for serious violations of law. In the effort to improve the administrative enforcement system, the Outline calls for promoting cross-sectoral and interdepartmental joint enforcement, and interconnectivity on leads to illegal acts.

Efforts will be made to build a comprehensive digital government based on the rule of law. The government will establish and develop systems and rules for the application of technological means, including the Internet, Big Data, artificial intelligence and the so-called social credit system of rewards for good behavior and punishments for bad behavior, and further promote “Internet +” supervision and enforcement. Government and public service agencies will push forward the publication and sharing of their data while protecting national security, trade secrets, privacy and personal information.


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Originally published to Mondaq.