It's always interesting and exciting for me to think about the future potential of China.

Gary Becker and Richard Posner speculate about its economic and political potential a bit on their blog. As I've been looking into their legal issues with intellectual property lately, I would like to note some things regarding the rule of law in China -- some posters on that blog have stated strongly pessimistic opinions about it.

China's constitution has been rewritten 4 times since the communist revolution. The latest one (although there have been many amendments) was in 1982 when Deng Xiaoping came into power and put the country on track to develop economically. This constitution explicitly states that no individual or organization is above the law, and that China commits itself to be a nation which respects the rule of law.

China's constitutions have always been more aspirational than legally effective, but this is not merely empty language. There is at least some commitment to the rule of law, and I believe the most important motivating factor there is China's extremely strong desire to be eventually respected as an equal of the western powers. This desire is unbelievably important to heal the scars of colonialism and impotence around the turn of the last century.

Along those lines, there is a concomitant desire of Chinese to develop economically, in order to be an economic and military equal to the western powers as well. Because of this motivation, I believe, China has substantially implemented all of the requirements of the TRIPS agreement (Trade Related Aspects of Intellectual Property Rights). In order to do this, they have gone from basically NO legal system to speak of in 1982 to a substantially complete and functional system in only just over 20 years.

Now, we cannot say yet that the system is quite effective, but how much can you expect in 20 years? It is somewhat effective, and is growing better all the time. China has been regularly responsive to the US and trade groups in amending and interpreting its IP laws, and more recently its enforcement of those laws. In December the Supreme People's Court issued a new Judicial Interpretation lowering the thresholds and increasing the penalties for trademark infringements and counterfeiting -- another in a long line of such responsive actions.

The basis for the rule of law in China is thin, and the concept of private law or tort law is very young, but the dual motivations described above, I believe, are doing a lot to convince the Chinese that understanding these concepts and becoming expert in their implementation is important to their station in the world. And furthermore, they see that it is essential to continue to promote foreign direct investment, the benefits of which have been incredible.

Since the 80's, China has been rapidly expanding its legal system and bureaucracy in order to handle its IP enforcement and litigation responsibilities. They were required to hire a huge number of judges, many of whom were taken from police forces or similar areas, since they had at least a minimum understanding of the law. But in recent years, especially in the larger cities, judges have become much more expert in their domains and have expressed a strong desire to be seen as competent, fair, well-educated, and as independent as possible within their system. This is clearly not the same as having a constitution or strong laws that require them to be so, but it is still extremely significant. These are trends that will continue in the years to come.

For instance, China recently instituted graduate school requirements of at least one year of legal education (if I recall correctly) for all judges. Those who were appointed before this requirement was instituted must still meet it over a period of time, while continuing in their position. Eventually, if they fail to complete the extra education they will be replaced.

There are still many challenges. Lack of transparency and local protectionism are the biggest. But I believe China's fundamental will to develop and become an equal player on the world stage will allow them to overcome these.

The real question then is how China will transition to a more democratic political system. Maybe I will leave that for a future post. ;)