Chinese Corporate Law Developments and Go-Global Policy

Abstract

While in many countries we observed a privatization of many businesses, China adopted a different personal way called ‘corporatization’, i.e. “entails restructuring state enterprises, adopting the corporate form, and instituting stock ownership and trading without necessarily relinquishing the state’s controlling interest in the means of production” (Art & Gu, 1995). It worth mentioning the particular efforts to improve the economy which led to thirty years double-digit GDP growth and continuous growth at a high 6% - 7% still today 1 . Many changes took place and many new regulations have been introduced to achieve such remarkable results, in particular, the “enormous effort at reforming state enterprises” is a never-ending activity and in fact nowadays there is much discussion on how to keep improving those firms’ efficiency, effectiveness and increase performance. Although nobody knows how China will look like in twenty years, as inquired by (Ramo, 2014) or further future, we can guess that it will fundamentally contribute to the worldwide economy and its international business might represent a paramount model for other economies. How the modernization pro-market trend can be advanced if at the same time the Party role keeps being crucial in directing business? The answer we think stands in the unique idea of “Socialist modernization”. Some also question how such policies can cohere with capital market that is becoming more international. In our view, it is especially the increasing international exposure that will lead to Corporate Governance improvement in China and will adjust possible distortions. In order to compete internationally, the best practices must lead. We observed how great advances in China’s economy have been paired and supported by amazing social and legal improvements, most of them related to the Internationalization. In fact four periods and policies marked the success of China of the last fifty years, all involving an always increasing Chinese international exposure: the “Open door policy”, the WTO accession, the Beijing Consensus, the Belt and Road Initiative and China International M&A activities. China President Xi Jinping confirmed the national goal several times, the latest at the inaugural China International Expo in November 2018 2 claiming China’s goal to “deepen international trade and economic cooperation, promote Belt and Road Construction and advance economic globalization”. Both, in Chinese private corporations and State-owned enterprises the Party organizations are established to “implement the Party’s principles and policies, guide and oversee” to implement the big picture of the Socialism with Chinese characteristics.