China Drafts Laws for More Market-Oriented Economy

Times Staff Writer

Chinese officials Tuesday proposed legislation intended to provide a strengthened legal framework for a more market-oriented economy.

Three measures were submitted to the National People’s Congress that would establish rules for lawsuits against government agencies, authorize the Shenzhen Special Economic Zone to enact its own laws suitable for development of a market economy and systematize the internal procedures of the congress itself.

The congress is expected to approve these measures in its current 16-day annual session.

Li Hao, the mayor of Shenzhen, a booming Special Economic Zone adjacent to Hong Kong, was quoted Tuesday in the official newspaper People’s Daily as saying that the expected action by the congress will enable Shenzhen to enact a local legal system shaping its economic life along international norms.


Will Borrow Laws From Abroad

The mayor said that “in the course of setting up its laws, Shenzhen will systematically study from and borrow the laws of Hong Kong and foreign countries,” the newspaper said.

“This will enable Shenzhen to set up a market economy in keeping with international practice,” it quoted him as saying, “and also gain experience helpful to establishing this type of new order throughout the country.”

The “administrative litigation” measure submitted to the congress would establish rules for individuals and organizations bringing lawsuits against government agencies. It would allow challenges against the specific decisions of agencies or government employees but would ban attempts to overturn the rules on which decisions are based.


Wang Hanbin, a vice chairman of the congress, told delegates that drafting of the litigation measure is “a big event in establishing China’s legal system.”

The proposed law on internal procedures of the 2,976-member congress is aimed at codifying the legal basis for that body’s actions, Wang said.

The congress is theoretically the highest organ of state power in China, but in practice it does little more than discuss and endorse decisions made by the ruling Communist Party Politburo and the State Council, or Cabinet. The new law would not change this situation.

Peng Chong, another vice chairman of the congress, told delegates in a report Tuesday that in the next two years the State Council and the legislature’s 162-member Standing Committee, which has the power to enact laws when the full congress is not in session, will focus on drawing up and enacting additional legislation aimed at “rectifying the economy and deepening reforms.”

This will include measures providing clarified rules for banks, state-owned corporations and private enterprises, preventing unfair competition and setting standards for the use of price controls, Peng said.

Draft Laws to Protect Rights

He said the legislature will also prepare laws to “protect the rights of citizens and maintain public order,” including a press law, publishing law, mass organizations law and a law on public gatherings and demonstrations. Efforts will be stepped up to write laws concerning science and technology, education and working conditions for teachers, he added.

Until China’s pragmatic economic reforms began 10 years ago, the country’s economic and political life was controlled through commands handed down through the Communist Party structure. At any given level of society, party leaders reigned supreme, largely unrestricted by any written rules or regulations.


China is now engaged in a transition from a Stalinist type of “command economy” to a system making extensive use of market forces. In keeping with this change, it is trying to create laws and regulations capable of resolving conflicts and maintaining order in a society in which the word of party bosses is no longer the law.

Details of the press and publishing laws are being fiercely debated within the Communist Party and among intellectuals. It is still uncertain whether their immediate effect will be to promote greater freedom or impose more restrictions.

In a similar fashion, the full implications of a price control law are not clear. China has a two-tier price system, with some prices set by administrative agencies and others determined by free markets. This reflects the transitional state of China’s economy, which is based on a mix of central planning and market forces.

China’s leaders have said they are not prepared to abolish price controls in the next few years, but they emphasize that there will be no turning back to a rigidly planned economic system.

In discussions with delegates last week, Premier Li Peng said the government will use various methods, including administrative means such as price controls and central planning--and economic tools such as market forces and financial policies--to cool China’s overheated economy and bring inflation under control. Last year the official inflation rate was 26%.

“Administrative means will play a fairly important role now,” Li said, according to a report by the official New China News Agency. “But in the long run we will mainly use economic means.”