Law, Finance, and Financial Regulation in China

Poor statutory law in China

• General description
• China dismantled the formal legal system before the reforms (the Cultural Revolution) – uniquely bad
• Had to build legal system from scratch
• No protection to private property rights in the constitution until Apr 2004
• The corporate law (1994) was designed for SOEs
• silent on private ownership
• Cross country comparison
• Statutory law: below average (TEs) in shareholder protection
• Law enforcement (perception data): below average (TEs)
• Almost by any measurement China’s law is below average, some times far below average