Corporate Governance in China: the Role of the state and ideology in shaping reforms

Publisher:
Thomson Sweet and Maxwell
Publication Type:
Journal Article
Citation:
The Company Lawyer, 2007, 28 (7), pp. 204 - 211
Issue Date:
2007-01
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China is an emerging economic powerhouse in the 21st century. Two decades of economic reforms have transformed China from a centrally planned system into a rapidly expanding economy with double digit growth rates. Yet there are a number of challenges, Chen notes that: ââ[I]t is unrealistic to expect that in the next twenty years China will become like Japan - which has thrived through its adoption of American-ledWestern capitalism. Instead, it is likely that the PRC will take a few decades to find a balance between Western free-market enterprise and the historical influences of communism, nationalism, and onfucianism.ââ1 In comparison, law reforms have been less straightforward. Amending existing laws and enacting new laws are not sufficient to meet the mounting demands of rapidly growing businesses in China competing on a global scale. Problems like the lack of clarity and inconsistent legislative provisions are common in Chinese business laws. More important, many laws resemble a ââpiece mealââ endeavour or a ââpatchyââ attempt to enact effective and efficient regulations. Given that Chinese legislators transplant laws from developed Western nations and modified them to satisfy domestic political agendas, the outcomes would be wishful thinking at best. Corporate governance is an alien concept for China. Therefore it is understandable that legislators look towards developed Western nationsâ governance laws and codes as benchmarks for China. However, the recently enacted laws appeared to be riddled with inconsistencies. Moreover governance practices have deviated from the adopted models due to the ideological and cultural differences between China and Western countries. It is under this prevailing state of affairs that this article will attempt to examine the contextual influences as well as the key elements in shaping Chinese corporate governance laws and practices in the post-privatised telecommunications sector.
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