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The World Bank Legal Review
China is in the long process of learning how to march to the rule of law. There are bound to be defects, problems, and loopholes in the legal system and in society as this process unfolds. For example, after drafting securities laws and regulations based on foreign models (introducing foreign law), listed companies with state assets are habitually interfered with by the state organs exercising power over them as state-owned enterprises. Based on these kinds of conditions, securities law and regulations operate differently than does the original model and their functions are very much restricted.
Traits and Effects of Legal Transplantation in China At this point, China has a relatively comprehensive legal system. Although the legal system needs to be developed and perfected, its role in promoting economic and social development and constructing a new legal and social structure is widely recognized. The system has borrowed and transplanted many foreign laws and legal mechanisms that have been integrated into the system and play a significant role in providing readily gained experience and shortening the process of lawmaking. Why have these transplants been successfully integrated into the Chinese system?
Integration of Transplanted and Aboriginal Concepts The modern Chinese legal system is built on Western legal patterns that have been transplanted on a grand scale. The traditional Chinese legal system (such as the Tang and Qing royal codes and legal apparatus) no longer exists in China. Nevertheless, the legal system has maintained certain traits, including strong nationalist and socialist characteristics. The traditional Chinese legal system, which lasted for more than 2,000 years, is an aboriginal legal system. The system was fundamentally transformed due to the formation of international markets and the effects of globalization. Although the legal culture and ideology of the system maintain a strong influence (both positive and negative), the Chinese structure and system have been entirely taken over. This transformation took place in the late Qing dynasty and early Nationalist Republic, when the royal “ancestor’s law and the traditional legal system” were abandoned and replaced by the Western legal system. Transplantation has since become a significant feature of the Chinese legal system.47 After the establishment of the People’s Republic of China in 1949, the new government of China abandoned the Western legal pattern and introduced the legal system of the Soviet Union. This massive process of transplantation ended in the early 1960s, when China broke away from the Soviet Union. During the disaster of the Cultural Revolution, the legal system modeled on the Soviet example was dismantled. With the ending of the Cultural Revolution, the Chinese government led by Deng Xiaoping 47 Zhou Shaoyuan, Chinese Legal Changes and Legal Transplantation in the 20th Century, 2 Chinese and Foreign Legal Science (1999).