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China unveils draft law to allow fully foreign-owned enterprises (thehindubusinessline.com)
142 points by beefman 82 days ago | hide | past | web | favorite | 67 comments



The recent press release of Ai Weiwei comes to mind, perhaps particularly this:

> There are no clear laws, only interpretations of the law based on the Party’s interests. China is not a nation under the rule of law. China is a nation under the rule of the Party.

https://www.gardinermuseum.on.ca/ai-weiwei-releases-statemen...


Chinese constitution: "No state organization, social group or individual may force a citizen to accept or not to accept a religious faith, nor can they discriminate against either religious or non-religious citizens."

Chinese government has

- placed 1M muslims into internment camp

- forced muslims to eat pork and drink alcohol

- arrested muslims observing Ramedan

- placed muslims in "re-education centers" to forcefully convert them.

I don't trust anything this evil government says.


If you read the two paragraphs after that:

"The state protects normal religious activities. No one may make use of religion to engage in activities that disrupt public order, impair the health of citizens or interfere with the educational system of the state.

Religious bodies and religious affairs are not subject to any foreign domination."

The Chinese government justifies their actions in Xinjiang as an attempt to prevent extremism (terrorists disrupting public order) and prevent foreign extremist influence, so technically the government could claim its actions in Xinjiang are "protecting normal religious activities". The statement that "religious affairs are not subject to any foreign domination" could allow it to argue that it's free to define Islam however it sees fit, such that it could claim things like Ramedan are artifacts of foreign domination.

Note that the government is not arbitrarily oppressing muslims; the muslim Hui minority are not being locked up, as they haven't been pressing for independence. The Chinese government doesn't care about religion, what it cares about is stopping anyone who tries to resist it, such as separatists, and the separatists in Xinjiang just happen to be muslims, and the government sees their religion as a motivating factor behind their separatism.

Of course, this doesn't make it any more acceptable, I'm just pointing out that the Constitution as written gives the government a lot of leeway to do such things without technically breaching it.

Another line:

"Article 51. Non-infringement of rights

Citizens of the People's Republic of China, in exercising their freedoms and rights, may not infringe upon the interests of the state, of society or of the collective, or upon the lawful freedoms and rights of other citizens."

So the government could justify pretty much anything in the name of not allowing people to "infringe upon the interests of the state".


Here's some journalism on the matter: Washington Post: "China is creating concentration camps in Xinjiang. Here’s how we hold it accountable.": https://www.washingtonpost.com/opinions/china-is-creating-co...

NYTimes: "China Is Detaining Muslims in Vast Numbers. The Goal: ‘Transformation.’" https://www.nytimes.com/2018/09/08/world/asia/china-uighur-m...

"China’s Detention Camps for Muslims Turn to Forced Labor" https://www.nytimes.com/2018/12/16/world/asia/xinjiang-china...

https://www.nybooks.com/articles/2019/02/07/reeducating-xinj...

The parent comment calls this evil. Whole-scale internment of an entire population without any legal due process; resulting in deaths of those who resist; does fit the bill.


The Constitution of the Soviet Union guaranteed, among other things, freedom of speech.


As the Radio Yerevan jokes went:

Radio Yerevan was asked: "Is it true that there is freedom of speech in the Soviet Union the same as there is the USA?"

Radio Yerevan answered: "In principle, yes. In the USA, you can stand in front of the Washington Monument in Washington, DC, and yell, ´Down with Reagan!´, and you will not be punished. In the Soviet Union, you can stand in the Red Square in Moscow and yell, ´Down with Reagan!´, and you will not be punished.

And

Q: What is the difference between the Constitutions of the USA and USSR? Both guarantee freedom of speech.

A: Yes, and the US Constitution also guarantees freedom after speech.


Maybe the PRC's constitution does the same, but there are always exceptions, for example for national security.


The point is it doesn't matter what is on paper, it's enforcement that matters. China can write whatever it wants, but it's actions that count. They are implementing a social credit system and actively censoring all communication platforms, who cares what their constitution says?

It clearly doesn't matter what is written down. To go back to the original quote:

> There are no clear laws, only interpretations of the law based on the Party’s interests. China is not a nation under the rule of law. China is a nation under the rule of the Party.


In reality national security is interpreted and enforced in such way that all free speech is a threat.


Not defending China's level of freedom here, but our system in the West is increasingly moving in that direction. Our governments increasingly interpret national security and public safety unreasonably broadly to curtail basic freedoms


Certainly there have been cases in the West where free speech are curtailed due to concern or anxiety over national security. But while you guys are traveling north from Hawaii , we are already in the Arctic.


No, it is not, at least if by West you mean to include the United States. There has never been a point in US history where we have been more free to say anything and everything.


Any garauntee in the constitution is meaningless since the judiciary in China is not allowed to use it as a way to invalidate law. The party itself gets to decide whether they are following the constitution or not, imagine if Trump could make his executive orders without worrying about federal judges throwing them out.


Heck even the party has had issues with the judiciary at lower levels (things that didn't involve the party) where they found judges with limited education making strange decisions based on flawed logic, and of course low level corruption.

While I'm sure they don't have any intention of making the judiciary independent, there were signs that even party members were a bit dismayed by some of the decisions if only because they were worried about public perception. I belive they talked about launching some educational efforts.


Judges aren’t really that prestigious in China because they are dwarfed in power and influence by officials, so as a result it doesn’t attract the best people.


Yeah that is the impression I got too. Just another job to get if you're connected, but not really a good one.

The result is a bit predictable.


He's... not wrong. But it's important to realize that rule of law is an Anglo legal and cultural invention. Rule by humans is the default, 'natural' way of organizing human behavior, and innovations over that have to be iterated slowly. We simply cannot expect Western philosophical concepts, as great as they are, to simply be transplantable in other parts of the world just cuz it worked so great for us.

Or does Mr. Weiwei expect the Chinese Communist Party to willfully give up power in order to put itself under a legal regime?

Even Europe has moving slowly away from rule of law towards rule by international technocratic bureaucracy, borne out of the need to make a historically extremely heterogenous landmass peaceful. The UK was never going to be part of that tribe, it's fine with its rule of law.


> He's... not wrong. But it's important to realize that rule of law is an Anglo legal and cultural invention.

And Dutch, Norwegian, Danish, Swedish, German (speaking), Finnish, Latvian, Estonian at a minimum. The rule of law is very much not an Anglo thing. Outside North(Western) Europe where the rule of law absolutely was a thing you’d be pretty hard pressed to deny that it was never present in Iberia, particularly Aragon, Italy or the entirety of both Latin and Orthodox Christendom. Hell, the Ottoman Empire’s kanun law was based on... canon law.

A government of laws, not men was an ideal dating back to Rome and indeed much earlier. But Christianity preserved Roman law. There were clearly areas that approached rule of law more and less closely but the idea that it’s an Anglo thing is historically ignorant to a ridiculous degree. How closely any particular state approached it varied a great deal, France and Hungary weren’t Prussia or Russia but they certainly weren’t England or Holland either.

If you want to learn more about the various ways premodern societies ordered themselves Francis Fukuyama, Origins of Political Order, is a great place to start.


Having laws, is not the same thing as having the rule of law.

Rule of law refers to something quite specific. That at the very precipice of organizing principles of society, the people at that precipice, are themselves governed by law.

Rule of law means we don't have to worry about Trump turning America into a dictatorship. If you have to worry about your leaders running away with power, then you don't have rule of law.

The idea that Germany, of all countries, has the rule of law is absolutely laughable. This is the country that started WW2 for lebensraum. Everything Hitler did was totally legal. But he still was an autocrat. This is because Germany did not have the rule of law.

Maybe after WW2 Germany figured out how to make sure their leaders can't seize total political control. I'd have to go look. But there's no way under the sun they had it before.


> The idea that Germany, of all countries, has the rule of law is absolutely laughable. This is the country that started WW2 for lebensraum. Everything Hitler did was totally legal. But he still was an autocrat. This is because Germany did not have the rule of law.

I suggest you read more history and novels originally written in German from before the 1900s. The fact that Germany became a dictatorship is hardly dispositive of having the rule of law historically and generally. Germany, more than any other part of Europe was full of lawyers, and the law mattered to a great extent historically. The Holy Roman Empire was full of independent cities, free cities that had charters and were well aware of their rights and defended them and burghers who were keenly aware of the distinction between them and peasants and who engaged in self-rule in the same way as the Dutch did. The fact that it was the militaristic Prussian who unified Germany is a contingent fact. Even Prussia was absolutely a state governed by the rule of law. The Nazis coming to power no more shows that Germany did not have the rule of law than Andrew Jackson defying the Supreme Court to send the Five Civilised Tribes on the Trail of Tears does, or Lincoln suspending habeas corpus, or Roosevelt completely upending the constitutional order and ruling for four terms does.

But at the most basic level, just read this and try and tell me with a straight face that the rule of law was not a German thing.

https://en.wikipedia.org/wiki/Rechtsstaat

> Rechtsstaat is a doctrine in continental European legal thinking, originating in German jurisprudence. It can be translated into English as "rule of law", alternatively "legal state", "state of law", "state of justice", "state of rights", or "state based on justice and integrity".[1]

> A Rechtsstaat is a "constitutional state" in which the exercise of governmental power is constrained by the law,[2] and is often tied to the Anglo-American concept of the rule of law, but differs from it in that it also emphasizes what is just (i.e., a concept of moral rightness based on ethics, rationality, law, natural law, religion, or equity). Thus it is the opposite of Obrigkeitsstaat or Nichtrechtsstaat (a state based on the arbitrary use of power),[3] and of Unrechtsstaat (a non-Rechtsstaat with the capacity to become one after a period of historical development).[4]

> In a Rechtsstaat, the power of the state is limited in order to protect citizens from the arbitrary exercise of authority. The citizens share legally based civil liberties and can use the courts.


You are mistaking laws, and legal culture, with the rule of law. I am very aware of the Germanic / Prussic love for law. Sure, they created an elaborate philosophy that thought it held it's rulers to its exacting standards. And maybe a bunch of them played along.

But it was all tossed out the window the second the Germans found it convenient to let a dictator whisper sweet nothings into their ear.

That's the difference. Not in the fictions the common folk tell themselves to help them feel better. But in what actually happens when some ambitious army officer or legislator or populist upstart decides to grab the brass ring. Is your society's legal systems and political customs and culture enough to render them impotent? No? Then you don't have rule of law. You have rule by whatever's got popular legitimacy at the time.

What keeps the Pentagon from surrounding Washington DC with troops and declaring a state of emergency and anointing a dictator? Why aren't Americans even remotely afraid of this possibility, even though military overthrow is something that happens all the time? Rule of law. Why do many Commonwealth countries still to this day accept Queen Elizabeth as their sovereign head of state, even though she has no power other than to make phone calls? Rule of law and respect for the history and events that got them there.

Rule of law means that a country's population, first and foremost, values political stability over all else. Not that you can just get some smart people to jot down a few lofty principles. Rechtsstaat? Should be in the dictionary under 'farce'. The Soviets used those same principles to railroad people in show trials. Kangaroo court.

This is not an abstract concept. Nations have their states coopted by their militaries and demogogues all the freaking time. Why doesn't it happen in Anglo countries, or if it does, is short-lived and useless? Rule of law. Once a society has it, they will defend it to the death. Americans weren't the most well-trained bunch in WW2, but we made up for it in sheer, murderous bravado.


I am not aware of a single successful military coup in German history. Germany was ruled by a dictator for 12 years. The US tossed out its constitution when they found it convenient, see the New Deal. They tossed out treaties when they found them convenient, that’s the entire history of US westward expansion.

Nations may have their states Cooper by militaries and demagogues all the time but no German speaking state was taken over by a junta and Germany was taken over by a demagogue because it was impossible to form a government without one. Hitler did not follow rule of law but neither that no more reflects on the fact that overwhelmingly all the German speaking lands have and did for the great mass of their history than Jackson, Lincoln or Roosevelt show that American rule of law is a farce.


It's easy to make laws, it's the interpretation and implementation that's the real test.


It's frustrating to consider how that same standard applies to the USA.

We certainly have enough laws that everyone is a criminal and selective enforcement perverts the idea of justice.

Of course, I'm not saying things are equally as corrupt as they are in China, but we're definitely on the same spectrum. Maybe the difference is, in the USA, "The Party" includes both big business AND the government.


> but we're definitely on the same spectrum

That is absolutely ridiculous.

USA has an independent judicial system, investigations of government behaviour via congressional committees, oversight over consumer impacts via Bureau of Consumer Protection, oversight over corporate governance via SEC. China has none of this.

I would also refer you to the Corruption Perceptions index: https://www.transparency.org/cpi2018

USA has a score of 71/100 and for China it is 39/100.


You wrote about the federal government

Now how about the 55+ autonomous regions in the US where only the richest get to afford their rights all the way up to a Federal appeal's court.

There are user experience problems impacting a large swatch of the population. I would bet that you aren't exempt from them even if you don't experience it, I'd also bet that would also have a great experience in China and not experience their problems either.


"the 55+ autonomous regions in the US where only the richest get to afford their rights in a Federal appeal's court."

What are you talking about???


takes bunch of money to take a case all the way up federal courts.

Peter Thiel, verbatim: "If you're a single-digit millionaire like Hulk Hogan, you have no effective access to our legal system."


Is that true? I'd like to see some statistics. I've known many people who have 'accessed' state courts (like Hogan did, btw). It doesn't cost much to file a lawsuit. It all depends on the state, of course. Plus, there's no way that Hogan was a single-digit millionaire.


The states and territories have to be treated separately, they are all structured completely differently, have completely different checks and balances of different efficacy and have as many civil rights nuances as any separate country.

The luxury of the Federal umbrella isn't accessible to the vast majority of the population that becomes ensnared in the whims of any particular state.


It is always a spectrum. America is hardly perfect, but rule of law in the states is much more developed than in China. Especially constitutional law, which the CCP sees as a western abomination (so the Chinese constitution garauntees freedom of speech, religion, and so on, but is meaningless because the judiciary is not a check on the party).


You only have to look at China's religious "re-education" camps to know that the government in no way defers to the Constitution or any other laws.


"Article 51. Non-infringement of rights

Citizens of the People's Republic of China, in exercising their freedoms and rights, may not infringe upon the interests of the state, of society or of the collective, or upon the lawful freedoms and rights of other citizens."

So the constitution, even if followed perfectly, technically only guarantees such rights when they don't interfere with the interests of the state.


Sure. It basically means “the right is guaranteed, unless we don’t want to”.

Which makes it meaningless in practice.


The US has an independent and democratic justice system. They are not on the same spectrum.


In principle, yes, but the proliferation of broadly defined crimes has made the formal guarantees much less valuable than they might otherwise be. In current US law, especially federal criminal law, prosecutors have a huge amount of discretionary power, and the discretion itself, i.e. who they choose to investigate and charge and who they don't, is subject to very weak judicial oversight (they can more or less only get in trouble for it if they're dumb enough to say on the record something like, "I looked for something to charge this person with because they're black"). And if a federal prosecutor does decide they want to charge you with something and is willing to spend resources on a fishing expedition, they're pretty likely to find some charge that will stick.


What are some broadly defined crimes I should be careful not to commit?


Well, one that got a bit of press recently is making false statements which I found out about when they got Flynn for it [0]. I thought it was interesting, because the test for lying is 'is it material to the case', so there might be no crime but if you mis-remember some relevant fact while explaining the situation to government a crime suddenly comes into existence. Particularly when you are up against entities that potentially have a better idea of your online and call activity than you do and have lawyers with a better understanding of what 'material' means.

But realistically, the problem is that America has more laws than anyone can read and has also developed a secret legal apparatus so has case law on the books that essentially nobody is allowed to know about [1]. Since an American can't possibly know what the law is, it seems like a stretch if they claim to be following it. Particularly if they do something off the beaten track like run a business, live overseas (byzantine tax system), talk to government officials (see above) or communicate with other people using the cell phones or internet (I think teen sexting laws in the US might be a federal crime, for example, which is sometimes a nasty shock to many minors).

Also note that for all this stuff the tests involve dangerous legal words like 'reasonable' and 'contemporary adult community standards', which we all think we know what we mean up until it turns out that they mean something slightly different to everyone and the lawyers have very different standards to on some topic. Everyone is unreasonable on something, hopefully there not on something there is a law about, eh?

[0] https://en.wikipedia.org/wiki/Making_false_statements

[1] https://en.wikipedia.org/wiki/United_States_Foreign_Intellig...


All you have to do is say "I take the fifth".


I have repeated it 5 times in a variety of different tones. I still don't know all the law that governs a US citizen, and they would still likely apply to me if I was in America :P.

You've missed the point. If someone puts a bear trap just outside my door it is easy to avoid - just hop over it. That doesn't change the fact that there is a bear trap outside my door. The whole point here is there are so many laws on the books that just talking to a federal agent is potentially incriminating, which is what is being part of what is being acknowledged by pleading the 5th immediately and getting a lawyer.

Also, if I don't know about the bear trap, there is a very high chance I will get caught in it even though it is easy to avoid.


Well in my local city before (Troy, MI) it was illegal to spit on the ground. Apparently it was a law designed to be selectively enforced to allow police to target who they want.


True, the points raised here is that the cost is to most is prohibitively costly to make it not so.

Take the simple case of fighting a speeding ticket the cost of fighting it is so much above the cost of paying it that to most people there is not differnce to having a man in a suit say pay this or else without any evidence or compliance with a law in a dictatorship.

Parent law shake downs is another example of little difference between a patent shake down in a western country and an oligarch

Now obviously it isn’t doom and gloom and it’s all the same. But also for most people living in a democracy or a dictatorship there isn’t much impact to their lives


> democratic justice system.

You say this like it's a good thing. The democrats are losing their minds because of all the judges being appointed by Trump. You still elect sheriffs and prosecutors like it's the wild west.

Instead of being beholden to nobody, the pillars of your justice system are held up by whichever lobby or wealthy individual wants to spend the most money on getting people elected.

https://www.washingtonpost.com/graphics/2018/politics/trump-...

https://www.reuters.com/article/us-usa-court-trump-judges/tr...


This is silly. In China it's nearly LITERALLY both government and big business. You cannot be a big business without the government saying so, and most of the business leaders are party members.

This is a far cry from in the states, where while crony capitalism is an issue -- it isn't the actual law like in China when it comes to large firms and the amount of state intervention.


So true and yet what effective difference does that make to a person earning avg income to 10x avg income ? What is the difference between that and oh say Halliburton There is a distinction that say google/Facebook founders can take a position opposing the government so what is achieved ?

Ok maybe I’m in a mood ;)


And the Chinese govt can also have a thousand different ways other than law to harass foreign-owned companies. that said these law means nothing to real business in long-run, but just a response which attempts to fool the US govt for stopping the trade war.


This time though the US plan on having a mechanism to allow them to swiftly punish china for using those abilities unlike before. Quartley reviews and what not with mandatory tariffs.


If a company is in China then I assume most of the employees will be Chinese as before.


And.... would you believe them? Would a corporation sink billions into there knowing full well they can come up with arbitrary laws to get their way? How about if there is a war fought, would you believe that they won’t sieze all the assets? How about getting money out of their country? And how about subjecting your company to the inevitable corporate espionage that will happen? Would their court system actually protect your company? Hmmmmmmm


Yes they already do that. Even Taiwanese companies like foxconn and HTC.


The China of today seems less safe than the China of ten years ago though. Are foreign companies making big investments lately?


Yes, Apple had done as well as an investment into Didi. You'll notice a lot of western brands in China from Mars (M&M), Nestle, General Motors, etc.


The Apple investment was almost three years ago, were the others more recent?

https://www.reuters.com/article/us-apple-china/apple-invests...


Probably, but I’m not Google. Feel free to research yourself.


I don't particularly care one way or the other, I was simply asking for evidence of your assertion that it does happen lately. Playing devil's advocate I think it's sometimes called.

>>>>> Would a corporation sink billions into there knowing full well they can come up with arbitrary laws to get their way?

>>>> Yes they already do that. Even Taiwanese companies like foxconn and HTC.

>>> The China of today seems less safe than the China of ten years ago though. Are foreign companies making big investments lately?

>> Yes, Apple had done as well as an investment into Didi. You'll notice a lot of western brands in China from Mars (M&M), Nestle, General Motors, etc.

> The Apple investment was almost three years ago, were the others more recent?


Misnomer here, wholly foreign owned companies were there there for more than a decade. What the law is said to do is to remove "qualitative distinctions" in between 3 foreign owned company types.

It will not end the prohibition on foreign ownership in restricted industries.

What it will do is that the state will not be allowed to say "you can't do that, but we will let you do it in a joint venture"

Now, the question in between doing a JV and setting up an own company is up to an applicant in every industry.


Here's another gem of a 'law', Constitutional no less:

"Article 35 of the 1982 State Constitution proclaims that "citizens of the People's Republic of China enjoy freedom of speech, of the press, of assembly, of association, of procession, and of demonstration.""

[1] https://en.wikipedia.org/wiki/Constitution_of_the_People%27s...


"Article 51. Non-infringement of rights

Citizens of the People's Republic of China, in exercising their freedoms and rights, may not infringe upon the interests of the state, of society or of the collective, or upon the lawful freedoms and rights of other citizens."

So technically those rights may only be exercised when they don't "infringe upon the interests of the state".


So what's the difference between WFOE's (Wholly Foreign-Owned Enterprises[1]) and the new fully foreign-owned enterprises? WFOE's have existed for a while.

[1] https://en.wikipedia.org/wiki/Wholly_Foreign-Owned_Enterpris...


Ironically it seems in the comments that making this law means no difference, if so whats the point of a trade war.


Great question. My own reactions over the past months have been something along the lines of (1) "Not the best execution, but maybe we'll see some positive change..." -> (2) "Cool, looks like things may actually change!" -> (3) "Wait a minute, I don't trust that this is real... so what's the end game??"


If the trade war concludes in a deal, more realistically there will likely be some improvement, while abuses in the national interest will also continue.

Let's assume the worst case scenario however, that there is an expectation and result of zero improvement. The goal would be to push supply chains out of China by increasing political concerns and costs. Business hates chaos and risk in the supply chain. Whether some of that shift ends up being back to North America and Europe, or all of it goes to other nations in Asia that will never be the potential threat that China is, it's all a net gain strategically for the US and Europe.

Indonesia + Vietnam + Bangladesh + Philippines = ~620 million people.

Brazil + Mexico have 340 million (larger than the US). India has 1.3 billion. Nigeria has 190 million people.

There are plenty of other places to consider when it comes to allocating investment for overseas manufacturing (depending on what you're making). It will take time and cost money to alter supply chains, however that is always an inevitability. Every few decades supply chains get remade due to cost changes, political issues, and so on.


Good work Trump. The one thing I absolutely love about his administration is the pressure on China. Didn’t back down from all the pressure from literally every group. His method works, he’s getting concessions. The TPP at its best would be 1/100th as effective and would have taken 20+ years to implement. Our cyberwar truce was a joke policy.


His method works

Okay, can you list real, permanent, verifiable changes as a result of his "method" (whatever that is)?

Anyone can get empty promises, empty laws that have no teeth etc for PR purposes...


No, he is not. He's still getting an empty hand dealed by the dealer.


Why would you ever believe anything China says? Their game is clear and obvious at this point. Avoid that country like the plague if you care about the longevity of your business.


Foreign Owned Enterprises, like the one Erik Prince is setting up to help train armed government law enforcement authorities in Xinjiang province?

https://www.nytimes.com/2019/02/01/business/erik-prince-xinj...




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