[Working Paper Vol.6 for Building a Realistic Strategy for China] Building the Rule of Law in China and External Relations

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In recent years, one of the important objectives of the construction of the rule of law promoted by the Xi Jinping administration is to expand its influence in the construction of international norms. When dealing with the disadvantages caused by the extraterritorial application of the laws of other countries, including the United States, China will refer to the experiences of other countries, harmonize its own laws with international norms, In the midst of conflicts between actors, they are searching for ways to realize their own interests and values ​​in a way that is acceptable to the international community. At the same time, it is trying to lead the establishment of a framework for international rule of law cooperation in the Shanghai Cooperation Organization and countries along the Belt and Road. Considering the crossing of fronts in the international rule of law, the question of whether or not to support liberal democracy is meaningless. It would be realistic for both Japan and the United States to secure a forum for reconciling norm-building with China based on their own interests and values.

1. Construction of the Rule of Law under the Xi Jinping Administration

One of the characteristics of the administration under the Xi Jinping administration is the promotion of governance based on laws and rules. The policy of the rule of law became the main agenda of the October 2014 Plenary Session of the Party Central Committee[1], and at the 19th Party Congress in the fall of 2017, "the rule of law" was summarized as the "four aspects". It became one of the target groups to be considered [2]. And in January of this year (2021), the “Lawful China Construction Plan (2020-2025)” (hereinafter “the plan”) was announced[3]. On March 1 of the same year, the Qiushi published an important article by Xi Jinping, ``Resolutely follow the path of socialist rule of law with Chinese characteristics, and provide strong legal guarantees for the comprehensive construction of a modernized socialist country.'' was published [4].

The purpose of Xi Jinping to promote the rule of law is to strengthen the one-party rule system of the Communist Party in terms of politics. It can be said that the most important purpose of the establishment of the rule of law is to have a disciplined party stand at the forefront and achieve rule based on law, thereby extending the party's leadership to all organs of the central and local governments and to every corner of society. you can In terms of economy, it is necessary to build a disciplined market. On the one hand, the Xi administration is promoting the development of laws in the economic sphere and increasing administrative access to economic activities in order to improve the quality of economic development and achieve participation in the Comprehensive and Progressive Agreement on the Trans-Pacific Partnership (CPTPP). He set out policies to curb unjust interference and abolish unreasonable regulations on the non-public economy[5]. On the other hand, in March 2021, in the "Government Work Report" of the National People's Congress, Premier Li Keqiang proposed to strengthen regulations on financial holding companies and FinTech, strengthen crackdowns based on the "anti-monopoly law," As he stressed the need to prevent expansion, he is trying to regulate the uncontrolled management of giant private companies. All of these can be seen as movements aimed at forming a market based on laws and regulations.

In recent years, another objective of the construction of the rule of law has been attracting attention as a tool for developing foreign relations in an advantageous manner. The Xi administration is promoting the construction of an international framework for cooperation in the area of ​​the rule of law in order to counter moves by other countries to apply laws extraterritorially and to secure its voice in the establishment of international norms.

Therefore, in this paper, we will focus on the external aspects of the construction of the rule of law promoted by the Xi administration, and organize the current situation. However, since I am not a legal expert, I cannot go into the details of individual laws. Ultimately, I would like to analyze how the Xi administration is trying to use the rule of law in order to develop its foreign policy in an advantageous manner, and then consider how it should respond to China's movements.

2. China's Trends in the Construction of the Rule of Law

As mentioned earlier, one of the characteristics of the construction of the rule of law being promoted under the Xi administration is that it focuses on the construction of the rule of law related to foreign relations. . In particular, the 5th Plenary Session of the 19th Central Committee of the Communist Party of China (October 2020) advocated strengthening the rule of law in relation to foreign relations. After announcing a policy to promote the development of the rule of law both domestically and internationally in an integrated manner in order to protect sovereignty and core interests, the Xi administration's international strategy for building the rule of law has attracted attention both at home and abroad. .

In the lecture above, Xi Jinping said the following in relation to the construction of the rule of law abroad. In new fields such as space, the Internet, big data, and AI, many countries are trying to propose international rules in line with their own interests. Under such circumstances, China should also promote the rule of law in an integrated manner, both domestically and in its external relations. As part of this, domestic legal systems should be optimized, and legislation and legal reforms in key areas should be promoted in order to more effectively implement extraterritorial application of laws. At the same time, he said, human resources involved in the rule of law in foreign relations should be sent to international organizations, and they should actively participate in policy planning, rule design, and normal business operations by international organizations[6].

The policy of promoting the construction of the rule of law was also clearly stated in the "plan" mentioned earlier. It includes improving the legal system related to foreign affairs, strengthening legal services related to foreign affairs, and ensuring the legitimate rights and interests of Chinese citizens and legal persons abroad and foreign citizens and legal persons in China. provide guidance to domestic and foreign economic and trade cooperative enterprises to strengthen compliance and raise awareness of legal risks; accelerate the construction of legal systems for extraterritorial application; The policies set forth include the evolution of international exchanges and cooperation[7], the active participation in the formation of international norms, and the promotion of the formation of a fair and rational international norm system.

Based on the above policy, on March 8, 2021, in a report at the Standing Committee of the National People's Congress, which is responsible for legislative functions in China, Chairman Li Zhanshu stated that as a policy for fiscal 2021, Focus legislation on relevant areas, address sanctions, interference and long-arm jurisdictions, develop a legal toolbox to address issues and prevent risks, and develop a systematic and exhaustive legal toolbox. He proposed to promote the formation of a foreign-related legal system[8].

In the following, we will discuss how China has dealt with extraterritorial application of the law under the policy indicated in Xi Jinping's lectures and "plans," and how China has moved toward judicial international cooperation. I would like to give an overview of recent developments, focusing on whether they have progressed.

The issue of extraterritorial application of laws has become an important point of contention in the field of competition law, etc., along with the globalization of economic activities. In other words, even if a cartel is agreed outside the country, if it violates the free competition economic order of the country, it is gradually recognized that domestic legal provisions concerning cease and desist orders and surcharge payment orders can be applied. It came to be shared between people. Since then, similar reasoning has come to be widely used in securities law, tax law, trademark law, copyright law, patent law, information law, law against bribery of public officials, etc., sometimes for political or security purposes. It has come to take on a strong character as a means to achieve. Regarding the extraterritorial application of the law, there is a background that the tendency of abuse by the United States in particular has been regarded as a problem. See, for example, the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001. (2001), Dodd-Frank Wall Street Reform and Consumer Protection Act (2010), U.S. Lawful Use of Offshore Data Clarification Act” (2018) can be said to be a typical example that has generated controversy both domestically and internationally. If countries abuse the extraterritorial application of domestic laws based on their own national interests or political objectives, it could undermine fairness and lead to international disputes. Therefore, the question of to what extent and to what extent extraterritorial application should be allowed has always caused debate both within and outside the country.

Based on this background, China's response to a series of export control measures, including the extraterritorial application of the law, taken by the United States against China in the process of the confrontation between the United States and China becoming apparent in recent years. could be said to have been generally cautious and passive [9].

The United States fined Zhongxing Telecommunications (ZTE) a total of $1.19 billion for violating US sanctions against Iran and North Korea. For repeated reports, the company was placed on the Entity List and a 7-year ban on parts exports by American companies was announced (lifted in July of the same year). In December 2018, Meng Wanzhou, vice chairman and chief financial officer of Huawei Technologies Co., Ltd., was detained in Canada at the request of the United States for providing false explanations to financial institutions regarding transactions with Iran. The incident involved a visit to the United States by executives or individuals suspected of violating U.S. sanctions or export control laws, or a visit to a country with which the U.S. has a mutual legal assistance agreement. It showed that there is a risk of being detained when visiting. In May 2019, the United States listed Huawei Technologies Co., Ltd. and its affiliated companies on the Entity List[10], as well as being complicit in China's military-civilian integration strategy, complicity in human rights violations in Xinjiang and other countries, and the South China Sea. Many Chinese companies have been added to the list, citing their complicity in the military bases of China.

The Chinese government has publicly expressed strong condemnation of these US measures. At a press conference on August 4, 2020, Ministry of Foreign Affairs Spokesperson Wang Wenbin said, "The United States' suppression of related companies on the grounds of national security is baseless and just a pretext. Companies do business in the United States according to market principles and international rules, and they comply with American laws.If the United States restricts and suppresses these activities under false accusations, it is a complete political game. I have to say," he said.[11]

In addition, as a direct response to the extraterritorial application of foreign countries including the United States, the Ministry of Commerce announced in January 2021, "Measures to prevent inappropriate extraterritorial application of foreign laws and measures , which set out a rule that the Chinese government could issue a ban on Chinese companies and citizens complying with the "improper extraterritorial application" of foreign laws and measures. In June 2021, the "Anti-Foreign Sanctions Law" was passed and enacted by the Standing Committee of the National People's Congress (NPC) and came into force on the same day. Article 3 of the same law stipulates that "a foreign country violates international law and basic norms of international relations, uses various pretexts or based on its own laws to deter or suppress China, or discriminate against Chinese citizens and organizations." In the event of "interfering in China's internal affairs by taking such restrictive measures," China reserves the right to take corresponding countermeasures.

Furthermore, in September 2020, the Ministry of Commerce announced the "Rules on the List of Unreliable Companies" based on the "Foreign Trade Law", "National Security Law" and other relevant laws and regulations. There, trade with "foreign companies, etc. that harm the development of national sovereignty and interests" and "foreign companies, etc. that have caused serious damage to the legitimate rights and interests of Chinese companies, etc. by suspending transactions or discriminatory measures", A wide range of sanctions were established, including investment, visa and criminal penalties. Furthermore, in October of the same year, the “Export Control Law” was adopted (enforced on December 1, 2020), stating that “organizations and individuals outside the People’s Republic of China may violate the export control provisions of this law, prevent proliferation, etc. Anything that interferes with the performance of international obligations and endangers the national security and interests of the People's Republic of China shall be dealt with according to law and its legal responsibilities shall be investigated” (Article 44). In addition, the Chinese authorities have the authority to conduct investigations to confirm the end-use and users of the export destination (Article 17); (Article 45) [12].

Regarding such a response by China, concerns have been expressed both inside and outside the country that the scope of sanctions and regulations will expand, depending on the definition of "national security" by the Chinese authorities. It can be said that it is passive and cautious.

I would also like to point out that China has always emphasized cooperation with third countries regarding the extraterritorial application of its domestic laws. As mentioned earlier, there is not necessarily an international consensus on the specific scope and degree of extraterritorial application of domestic laws. Each country has taken countermeasures against the abuse of extraterritorial application by the United States[13]. China is trying to secure its voice in the construction of the international order by referring to the countermeasures of other countries and cooperating with countries that share the same interests.

In particular, what China seems to be referring to in recent years is France's response. For example, the United States has applied long-arm jurisdiction to foreign corruption and imposed large fines on French companies such as Airbus, Total, and BNP Paribas. Corruption Countermeasures, Economic Life Modernization Law” (hereafter, “Sapan II Law”) was established. The law includes provisions prohibiting the dissemination of confidential information to prevent investigation of company trade secrets by US judicial bodies prior to French judicial bodies. By setting stricter standards than the US Foreign Corrupt Practices Act and the UK Bribery Act, we have created an environment that allows us to respond more proactively to long-arm jurisdiction[14]. An article published in the state-run Xinhua News Agency's weekly magazine Lao Wang praised France's response to the enactment of the Sapin II Act as an effective example of countering the long-arm jurisdiction of the United States.[15] ].

In addition, following the withdrawal of the United States from the Iran nuclear deal and the reintroduction of sanctions against Iran, France asked the EU to require EU companies to comply with any requirements of specific extraterritorial law. For reasons such as requesting renewal of blocking out prohibition, competition neutrality, antitrust, data protection, etc., American high-tech companies are the main targets of extraterritorial application of their own laws, and companies such as Google, Microsoft, and Apple It has imposed large fines [16], the Economy and Finance Minister Bruno Le Maire proposed a “national strategy cloud” when the “Cloud Law” was enacted in the United States [17], and the French National Assembly announced in June 2019 China took note of the report ``Laws and Measures to Reestablish French and European Sovereignty and Protect Companies from Extraterritorial Jurisdiction'' in July[18]. It is used as a reference for policy making.

Of course, there will be differences in the operation of law and the values ​​that support it, between a country that advocates a so-called liberal democracy and China that advocates a socialist system under a one-party dictatorship. However, as Tian Xu (Shanghai Institute of Political Science and Law) summarized[19], there is a trend in recent years in the Chinese legal community to pursue the realization of unique Chinese values. , there is a group of scholars willing to accept the EU legislative model, especially in the area of ​​civil law[20]. As far as China's movements and internal discussions regarding the long-arm jurisdiction of the United States targeting Chinese companies are overviewed, there is enough room for discussion for China to cooperate with other countries in shaping the international order in this area. seems to have been left behind.

In addition to dealing with extraterritorial application, China is also focusing its efforts in the area of ​​external rule of law in building an international cooperation framework centered on China. The above-mentioned “plan” also includes promoting the construction and improvement of an international commercial court centered on the promotion of international cooperation for the construction of the “One Belt, One Road”, The policy was to jointly establish a federated arbitration mechanism.

In addition to working as a practical arbitration institution, I have been working hard to build a framework to strengthen international cooperation among the legal profession. For example, in December 2016, in the framework of the Shanghai Cooperation Organization, the Shanghai Cooperation The SCO Lawyers Service Alliance was established. In addition, within the “One Belt, One Road” framework, since 2015, various organizations bearing the name of the project have been established, such as the “One Belt, One Road” Legal Research Cooperative Innovation Center and the “One Belt, One Road” Legal Research Service Center. . In December 2019, the All-China Bar Association established the “One Belt, One Road” Bar Association as the first international bar association registered in China. The members of the association and the president, vice-president and secretary-general of the federation were elected. As a result, Wang Junfeng (Ph.D. in Jurisprudence from the University of California, Berkeley, Chairman of the All-China Bar Association, Chairman of the Administration Committee of Beijing Jindu Law Office, Representative of the 13th National People's Congress of the People's Republic of China, National People's Congress) Vice President of the Chinese Law Society, Vice President of the China International Economic and Trade Arbitration Commission, Special Superintendent of the Supreme People's Court of China), Gregory Vijayendran (President of the Bar Association of Singapore), Shant Kumar, Elect (Prashant Kumar, President of the Indian Bar Association), Zhang Xuebing (Master of Law, China University of Political Science and Law, Master of Law, Duke University, USA, Vice President of All China Bar Association), Lee San-hee hee, LL.B., Yonsei University, President of the Korean Bar Association) was elected Vice President. Kang Yu (Kang Yu, Master of International Law, University of Nottingham, UK, Senior Advisor and Deputy Secretary General of International Affairs of the All China Bar Association, Former Deputy Director of International Cooperation Bureau, Ministry of Justice of the People's Republic of China) was elected as the first secretary-general. . The secretariat was located in Beijing. At the time of its founding, it consisted of 85 members, including bar associations, law firms, legal institutions, and individual lawyers from 36 countries and regions. It is said that it has reached the point where it counts the number of group and individual members [21]. In an interview in July 2021, Kang Yu expressed his intention to use all channels to actively cultivate overseas members of the federation and continuously expand the federation's "sphere of international friendship." [22].

3. How to Interpret China's Trends and How to Respond ) and the 20th Congress of the Communist Party of China (autumn 2022), which is a politically important period. In addition, the Winter Olympics will be held in Beijing (February 2022). Under these circumstances, the Xi Jinping administration will curb the hardening of international criticism of the Middle Ages, while responding to the extraterritorial application of laws by the United States and other countries and decoupling in some areas. We must make steady progress toward the formation of an international environment. At that time, along with technological development, it will become increasingly important to strengthen our influence in the area of ​​international rule of law.

As mentioned above, China has responded in various ways to the disadvantages caused by the extraterritorial application of the laws of other countries, including the United States, but it is clear that the global market is advantageous to China's development. I understand. In addition, focusing on the fact that there are complex axes of conflict between nations and even within the United States regarding how extraterritorial application should be, it is necessary to create a space where one's own interests and values ​​can be realized in a form that is accepted by the international community. Heading. In addition, referring to the experiences of other countries, we will coordinate the laws and regulations of our own countries with international norms, and develop an environment to strengthen our voice in the formation of international norms. Japan is trying to lead the construction of a framework for legal cooperation.

Considering the conflicting front lines in the international rule of law, the slogan of whether or not a particular value, such as liberal democracy, is superficially endorsed, is unlikely to be of much use. It can be said that a realistic policy toward China would be for both Japan and the United States to secure a forum for reconciliation of norm-building with China based on their own interests and values.

(2021/12/07)

*This article is also available in English. [Shaping the Pragmatic and Effective Strategy Toward China Project: Working Paper Vol.5] China's Approach to the Development of Rule by Law and Foreign Relations

Footnotes