Lifting the Veil: Transparency in China

New Legislative Procedures

Immediately following China's accession to the WTO, the State Council promulgated two regulations clearly aimed at streamlining China's lawmaking process, The Regulations on Administrative Regulation Formulation Procedures and The Regulations on Legal Code Formulation Procedures. These two regulations supplement the PRC, Legislation Law, which is more focused on enactment of central government laws by the National People's Congress and its Standing Committee.

Both Regulations stipulate that all new and amended administrative regulations and codes must be published in the Gazette of the State Council or relevant local governments 30 days before their implementation. The Regulations for the first time allow, but do not go so far as to require, competent legislative bodies, when drafting regulations or rules, to solicit comment from relevant authorities, organizations and civilians, or hold public hearings. By way of example, the People's Bank of China recently circulated a draft of the Administration of Foreign-funded Financial Institutions Regulations Implementing Rules to foreign-funded financial institutions for comment before its formal promulgation.

The Regulations on Recordal of Regulations and Legal Codes (Recordal Regulations) also issued by the State Council immediately following China's accession to the WTO, require that all regulations and rules adopted by departments of the central government, special economic zones, regional legislatures and local governments be registered with the Legal Affairs Office of the State Council. The Recordal Regulations establish a process of judicial inquiry whereby government agencies, social organizations, enterprises and citizens may request the Legal Affairs Office to review and examine relevant regulations or rules if such regulations or rules are believed to conflict with a central government law. In light of the increasing authority given to local governments to formulate implementation rules and procedures for centrally issued laws, the Recordal Regulations clearly set the stage for China to at least begin to implement its commitment of publishing all legislation and establishing a single enquiry point.

Notification and Enquiry Centre

In line with China's WTO transparency commitments, the Ministry of Foreign Trade and Economic Cooperation (MOFTEC) established the PRC WTO Notification and Enquiry Centre (Enquiry Centre) and issued provisional rules for detailed enquiry procedures. The provisional rules provide that all WTO members, domestic and foreign enterprises alike, and individuals may consult with the Enquiry Centre to gain information on laws and regulations concerning the trade of goods and services, intellectual property rights, foreign exchange controls, and measures pertaining to judicial rulings, administrative decisions and other issues. The Enquiry Centre is mandated to reply in writing to an inquiry within 30 days, or under special circumstances within 45 days, provided that an explanation for the delay is provided with the response. The provisional rules also require the response to include information regarding the authority in charge and contact point at the state level or lower level that is charged with implementing specific administration action relevant to the enquiry.

Complaint and Consulting Centres

The newly established National Coordination Office for Foreign Investment Enterprises Complaint Centres under MOFTEC coordinates work by Foreign Investment Enterprises Complaint Centres established by the provincial and municipal governments (Complaint Centres). The Complaint Centres, upon request, review administrative actions that have an impact on foreign investment enterprises (FIEs). For instance, the Shanghai FIEs Complaint Centre Rules prescribe that any FIE that believes its legal rights have been infringed by specific administrative actions may raise a claim with the Complaint Centre. The Complaint Centre will, after examining the relevant actions, issue a formal opinion and propose a rectification plan to the relevant authorities if the specific administrative action is found to be in violation of law.

Conclusion

Only time will tell whether these attempts by the Chinese government to legislate transparency and introduce various institutional reforms will bear fruit. But one thing is certain: for transparency to replace opacity as the norm in China's legal system, the Chinese government must encourage its numerous departments and administrative functionaries nationwide not just to accept the transparency tenets in principle. They must be prepared to conduct their day-to-day work in a manner that dispels the mystery and impenetrability that has long enshrouded China's lawmaking and regulatory authorities.

By Mitch Dudek
and Alex Wang

Jones, Day, Reavis & Pogue,
Shanghai