Law Commons^™

Crowding Out Theory: Protecting Shareholders By Balancing Executives’ Incentives In France, The United States, & China, Palden Flynn

Northwestern Journal of International Law & Business

This paper explores the differences between executive compensation regimes in France, the United States, and China. It asks whether there is a link between state regulation of real options as a form of executive compensation and state regulation of shareholder protections. This paper argues that if a country regulates the use of real options as compensation, then that country is also more likely to have strong shareholder protection laws. This argument seems to be true based on a descriptive review of executive compensation law and shareholder protections in France, the United States, and China.

If it is true that countries …

Choice Of Law In Contracts: A Chinese Approach, Mo Zhang

Northwestern Journal of International Law & Business

This article attempts to emphasize that the choice of law analysis in China is distinct from that of other countries, despite the fact that many of the theories and approaches originate in Western countries. The underlying argument is that the ongoing economic reform in China has become a dramatic and driving force for change in the country. This change necessarily shapes the development of choice of law in China in a unique way, and also de. monstrates how China is getting closer to the rest of world while searching for the "China brand" theory and approach in this regard. What …

Cross-Border Securitized Transactions: The Missing Link In Establishing A Viable Chinese Securitization Market, Nicholas J. Faleris

Northwestern Journal of International Law & Business

This article proposes that asset-backed securitization in China could be jump-started by first focusing on cross-border (sometimes called transnational) securitization, and by establishing a dependable group of regional investors. Cross-border securitization transactions would enable China to experiment with various packaging of state-owned securities on a trial basis through a transaction-by-transaction process. Thus far, the focus has been specifically on reforming the legal infrastructure so that China eventually would be able to attract investors and capitalize on an emerging market. Rather than attempting to both build an infrastructure and attract asset-backed securitization investors with large, sweeping changes, the market would be …

The New Economic Constitution In China: A Third Way For Competition Regime?, Youngjin Jung, Qian Hao

Northwestern Journal of International Law & Business

This article will discuss the basic features of the competition regime China is ready to set up, as envisioned in its draft of the anti-monopoly law. By comparing different antimonopoly systems worldwide and their relevance to China's idiosyncrasies in its antimonopoly law, this article intends to promote a better understanding of China's emerging antitrust regime by providing illustrative comments and legislative suggestions. Part II of this article will focus on the economic and legal contexts of the drafting of the antimonopoly law in order to illuminate the unique priorities of the Chinese lawmakers. Part III will highlight the distinctive traits …

Corporatization And Privatization: A Chinese Perspective, Yuwa Wei

Northwestern Journal of International Law & Business

Although the enterprise reform in China has its own causes, it conforms to the current movement of commercializing public enterprises in a global sense. Thus, over the course of its enterprise reform, China has the advantage of drawing lessons and gaining wisdom from the experience of other jurisdictions. Consequently, China may achieve two goals, commercializing its public sector and standardizing the practice of its corporatized enterprises, at the same time. Meanwhile, the Chinese enterprise reform will provide an interesting case for comparative study, since the country is pioneering a different path in the process of corporatizing and privatizing its public …

Foreign Investment Companies Limited By Shares: The Latest Chinese Organization For Major International Ventures, Jim Jinpeng Zhang, Jung Y. Lowe

Northwestern Journal of International Law & Business

Foreign Investment Companies Limited By Shares ("FICLBS") is one of the most important recent innovations in the People's Republic of China's ("China") foreign-invested enterprises law. Since January 10, 1995, China has authorized use of the FICLBS and, for the first time, it more closely resembles major corporate organizations used by international foreign investors.! So far over eighteen FICLBS have been approved for operation through 1999, with combined actual foreign investment of USD 1.2 billion.2 FICLBS has the potential to be the ideal organization for major international investment in China after it joins the World Trade Organization. The FICLBS can issue …

Investing In China's Telecommunications Market: Reflections On The Rule Of Law And Foreign Investment In China, Leontine D. Chuang

Northwestern Journal of International Law & Business

The lack of clarity in China's investment laws has translated into an investment environment that is often uncertain, risky, and mired in red tape. In fact, there have been cases where foreign corporations have invested in joint ventures following what they thought to be all the requisite guidelines, only to find out after the money had exchanged hands that something was terribly wrong with the entire agreement. A perfect example of this is the birth, development, and eventual demise of the ill-fated China-China-Foreign (hereinafter "CCF") investment vehicles used for investment in China's telecommunications industry in the past few years. This …

Foreword: The Rocky Road Toward The Rule Of Law In China: 1979-2000, James Hugo Friend

Northwestern Journal of International Law & Business

This Twentieth Anniversary Issue of JILB again has a symposium on law in China entitled China Revisited: Examining the Rule of Law After Twenty Years." The impetus for the 2000 China Symposium is the unprecedented integration of China into the world economic community, evidenced by China's imminent entry into the World Trade Organization ("WTO").2 The road to China's integration into the WTO was paved by the U. S. Senate's recent vote, "the most significant advance in U.S.-China relations since President Nixon's 1972 visit,'13 which grants China permanent normalized trade relations without annual Congressional review. Although the Senate approval was expected, …

Bird In A Cage: Chinese Law Reform After Twenty Years, Stanley Lubman

Northwestern Journal of International Law & Business

When I wrote in 1979, it was easy to summarize the state of Chinese legal institutions because they were so sparse. Although a judicial system had been created on the Soviet model in the 1950s, it had been politicized by the end of that decade after a brief period of liberalization, and then further wrecked by the Cultural Revolution. A new period of institution-building began in 1979; reconstruction of the courts began and the law schools, closed for a decade, reopened. Most fundamentally, the policies of the Chinese leadership seemed to promise, as I noted then, "attempts to conceptualize and …

Enforcement Against Counterfeiting In The People's Republic Of China, Daniel C.K. Chow

Northwestern Journal of International Law & Business

Although the discussion in this Article is limited to counterfeiting in China, many of the issues discussed are endemic to the Chinese legal system as a whole, and apply also to other intellectual property rights, such as copyright piracy and patent infringements. Moreover, many of the themes raised in this Article also illuminate the current state of the nascent Chinese legal system as a whole and how its capacity is tested as it continues the struggle to keep pace with China's many economic reforms and accompanying social changes. Part I of this Article begins with a review of the enforcement …

Perspective: Foreign Direct Investments In China - Practical Problems Of Complying With China's Company Law And Laws For Foreign-Invested Enterprises, Anyuan Yuan

Northwestern Journal of International Law & Business

Foreign investors in China face a legal system and legal issues that are very different from those found in the United States. This article seeks to illustrate some of the important differences in China's corporate law that govern or affect foreign investors' interests. The purpose of this article is to help foreign investors become aware of legal problems and investment risks in creating a foreign-invested enterprise in China. This article also proposes changes to existing Chinese laws that will more reasonably accommodate the legal concerns and protect the legal interests of foreign investors (as well as incidentally benefiting domestic Chinese …

Chinese Law, Trade And The New Century, Robert C. Berring

Northwestern Journal of International Law & Business

China crammed a great deal of political activity into the 20th Century. In the year 1900 the Q'ing Dynasty still ruled the remnants of an ancient empire. The Q'ing conspired with rebels in the Boxer Rebellion in the hopes of expelling all foreigners from Chinese soil and returning to splendid isolation. In the year 2000 China is a superpower balancing communist theory and a capitalist market that is about to join the World Trade Organization. The intervening years saw warlords, democrats, fascists, Marxists and all stripes of communists leading the world's largest nation. As China enters the new millennium of …

Integration Of International Financial Regulatory Standards For The Chinese Economic Area: The Challenge For China, Hong Kong, And Taiwan, Lawrence L.C. Lee

Northwestern Journal of International Law & Business

This article initially reviews the current development of financial services that converge regulatory systems around the world. Along with focusing on banking and securities, this article assesses financial systems and regulators within China, Hong Kong, and Taiwan respectively. The evaluation of the CEA's financial system is based on recommendations issued by the Basle Committee. In addition, with respect to the principle of national treatment, this article evaluates the operations of foreign financial institutions in the CEA. In the future, participation in the WTO will enable the CEA to experience greater growth and increase its participation in the internationalization of financial …

China's Tax Preferences To Foreign Investment: Policy, Culture And Modern Concepts, Zhaodong Jiang

Northwestern Journal of International Law & Business

In conclusion, policy-making in China is subject to the leadership's perception of problems and solutions. Taxation must reflect political and economic concerns and closely follow policy choice. For the Chinese, the objective, economic value to foreign businesses should not be as important as the Chinese sincerity and friendly sentiments that the preferential meas- ures symbolize. While the Chinese do refer to modern concepts such as ef- ficiency or equity, they tend to apply their own interpretation and understanding.

Resolving Commercial Disputes In China: Foreign Firms And The Role Of Contract Law, Roy F. Grow

Northwestern Journal of International Law & Business

It is not my intention to explicate China's Foreign Economic Contract Law (FECL), the Joint Venture Law (JVL), or the Foreign Enterprise Income Tax Law (FEITL). The analysis of these codes has been done in great detail by others.' Instead, I will examine the actual behavior of the most important actors governed by this set of laws-the Chinese and foreign enterprises that work with one another and which must find ways to resolve their competing claims. In this study, I will examine the tension between Chinese and foreign firms by focusing on several specific and limited questions having to do …

Public Law, Private Actors: The Impact Of Human Rights On Business Investors In China Symposium: Doing Business In China, Diane F. Orentlicher, Timothy A. Gelatt

Northwestern Journal of International Law & Business

Should companies invest at all in countries, like China, where severe human rights abuses are pervasive? If they do invest, should they restrict their operations to areas of the country that have a comparatively good human rights record? Are there basic principles that transnational companies should observe to ensure, at a minimum, that they do not become complicit in a host government's abrogation of universally-recognized human rights? Should such principles be enforced by Executive or congressional fiat, or should companies take primary responsibility for policing themselves? How can companies that wish to factor human rights considerations into their business decisions …

Chinese Traditions Inimical To The Patent Law, The Symposium: Doing Business In China, Liwei Wang

Northwestern Journal of International Law & Business

These phenomena remind us of a common view that China's modernization of science and technology is "burdened by a number of constraints, primarily constraints in traditional culture and in the Marxist-Leninist one-party state." 5 More specifically, in discussing the patent law of the People's Republic of China (PRO), Beaumont claimed that the "two-fold problem in stimulating innovation" is "a residual mistrust of innovation as a result of years of foreign imperialistic colonization," and of "finding ways to encourage and reward innovation which are congruent with Marxist thought."6 This article asserts that China's traditional culture is probably as inimical to patent …

Pudong: Another Special Economic Zone In China?-An Analysis Of The Special Regulations And Policy For Shanghai's Pudong New Area, Bin Xue Sang

Northwestern Journal of International Law & Business

The Open Door Policy instituted in the late 1970s marked the beginning of economic reform in the People's Republic of China ("China"). Leading these reforms was the establishment of five special economic zones i and the opening of fourteen coastal cities.2 These special economic zones ("SEZs") and coastal cities, located along the east coast of China, serve as "windows" to attract foreign investment and technology.' So far, each of the five SEZs and the fourteen coastal cities has been successful in achieving these goals.

China's Evolving Company Legislation: A Status Report, Preston M. Torbert

Northwestern Journal of International Law & Business

As China's economic reforms have progressed, however, the need for a company law has become apparent. The two principal reasons are, first, the need to reform existing state-owned enterprises and, second, the need to create a means for foreign investment in reformed state-owned enterprises. For political reasons, there appears to be no perceived need for the company law to encourage larger privately-owned enterprises.

China's Reform Of Aviation: A Signal Of The Siginificance Of Competition Under Law, Barry Kellman

Northwestern Journal of International Law & Business

What will China be like at the millenium's close? China may be the most changing nation on Earth, with few definite landmarks to guide analysis of political and economic developments. One's perspective is important: up too close, one sees the eddies of intrigue which occasionally topple someone in high office; too far back, one can miss the extraordinary significance of what is happening in China at this point in history. This discussion has limited goals. Under examination is the strikingly anamolous introduction of competitive economic forces into a high-technology service sector: aviation. The approach of this examination is to inquire …

China's Foreign Economic Contract Law: Its Significance And Analysis, Zhang Yuqing, James S. Mclean

Northwestern Journal of International Law & Business

Postrevolutionary China did not trade with the West prior to the announcement of its "open door policy" in 1977, when one-fifth of the world's population joined the mainstream global trading system. Since then, China's trade has increased dramatically, particularly with the United States. China's need for trade regulation and control resulted in the Foreign Economic Contract Law' ("FECL") in 1985. Through an understanding of the FECL's provisions and East-West trade characteristics, the practitioner may become an effective advisor to clients who trade with China or who are considering doing so.

Like Bamboo Shoots After A Rain: Exploiting The Chinese Law And New Regulations On Sino-Foreign Joint Ventures, Zhang Yuqing

Northwestern Journal of International Law & Business

The purpose of this Article is to describe the general legal framework for establishing an equity joint venture in China, and to analyze the effect of these laws and regulations on Sino-foreign equity joint ventures. In order to make this Article of most practical use, a discussion of the recently promulgated Chinese laws and regulations is included.

1983 Amendment To The Export Administration Regulations: The Status Of Export Controls To The People's Republic Of China , John Yo-Hwan Lee

Northwestern Journal of International Law & Business

This Comment will, first, briefly sketch the history of the United States export policies towards China. Second, it will analyze the current controls over exports to the PRC in light of the 1983 amendment to the export regulations. Third, it will discuss the historical impact of the new amendment on the Sino-American relationship. Lastly, it will conclude that the 1983 Amendment establishes an appropriate and prudent export policy towards the PRC at this time, although in order to accomplish the ultimate goal of significantly increasing exports to the PRC, the United States must take further measures.

Commentary On China's New Patent And Trademark Laws, A , L. Mark Wu-Ohlson

Northwestern Journal of International Law & Business

In anticipation of the formulation of a patent and trademark law by the legislative organs of the People's Republic of China ("PRC"), attention in Chinese legal literature has frequently focused in recent years on the function of patent and trademark laws in China's Marxist economy. To a large extent, these recent writings focus on the paradox of incorporating into a socialist legal system laws with grant to individuals exclusive ownership rights to intellectual property. The manner in in which this paradox is resolved will no doubt mold the future of industrial property law in China.

United States Policy Regarding Technology Transfer To The People's Republic Of China, Elizabeth M. Nimmo

Northwestern Journal of International Law & Business

This Comment will focus on the nature and likely effect of the new United States export licensing rules regulating the transfer of technology to China. Part I will address the history and development of United States export control policy to China. Part II will discuss both the ideo- logical debate over the appropriate China technology transfer policy, and the general licensing procedures under the United States Export Admin- istration Act. Part III will analyze the substantial changes in and practi- cal effect of the new licensing guidelines for China, and the policy reasons behind the changes. Part IV will assess …

Book Review: China's Economy In Global Perspective. By A. Doak Barnett

Northwestern Journal of International Law & Business

China'a Economy in Global Perspective surveys China's prospects as it enters the international community in its quest for rapid economic expansion. In analyzing the changes in China's economic relations with foreign countires, Barnett ponders both the internal and international implications of China's new policies. Beginning with the changes in China's domestic policies, he shows how change in China's international economic relations have led to increased foreign trade and acquisition of advanced technology from abroad. Mr. Barnett then discusses the prospects for continued growth in China's foreign trade and absorption of new technology, as well as the problems and opportunities for …

Trade With The People's Republic Of China: Current Status And Future Prospects, J. Mishell George, Damian T. Gullo, Daniel D. Stein

Northwestern Journal of International Law & Business

Since the normalization of diplomatic relations with the People's Republic of China (PRC) in 1979, U.S. trade with China has developed rapidly. In particular, 1980 saw significant developments in the institutional framework of U.S.-China trade relations, with the signing of several new trade-related bilateral agreements and a number of high-level visits in both directions.2 At the same time, China has begun to update its domestic legal system as it plans to integrate more fully into the international economic order.3 The last year has also witnessed the cancellation of certain large development projects, and delay in the implementation of others, as …

Ventures In The China Trade: An Analysis Of China's Emerging Legal Framework For The Regulation Of Foreign Investment, William P. Alford, David E. Birenbaum

Northwestern Journal of International Law & Business

In this Article, Messrs. Alford and Birenbaum examine laws and regulations recently promulgated by the People's Republic of China to govern the conduct of business and investment in China. After establishing the cultural, historical, bureaucratic and developmental contexts within which the authors believe these laws and regulations must be understood, they comprehensively examine and discuss the new legal pronouncements.

New Developments In Law In The People's Republic Of China, Stanley B. Lubman

Northwestern Journal of International Law & Business

Recently, Chinese leaders have begun to promote the development of legal standards andformal legal institutions for China. In this article, Mr. Lubman explores the background and current status of the role of law in China and assesses its relationship to China's economic development, domestic politics, and international economic relations. Mr. Lubman suggests that students of Chinese law must create new theoreticalperspectives to study the new developments.

China's Changing Constitution , Jerome Alan Cohen

Northwestern Journal of International Law & Business

In 1978, the People's Republic of China promulgated its third constitution since the communist revolution. In many respects, the new constitution reflects the attitudes andpolicies of Peking's current leadershp. In this article, Professor Cohen analyzes the changes wrought by the new constitution in property relations, restraints on executive power, and the protection of individual liberties by comparing it with its predecessors.