OYCF 2000 Retreat Summary

"Perspectives" Staff

Perspectives, Vol. 2, No. 1

(Editor's Note: The Overseas Young Chinese Forum (OYCF), the publisher of "Perspective," held its second annual retreat during May 27-28, 2000 in Southbury, Connecticut, USA. During the retreat, more than 40 young Chinese professionals and students from all over the United States participated in constructive and thought- provoking discussion on various aspects of China's sustainable development in the new century. The following is a brief summary of the discussion. Each panel was summarized by the moderator, and some of the summaries have been revised by the speakers. The entire summary was edited by Tingting SHI and Bo LI.)

Panel 1: Education as a Fundamental National Policy (Speaker: Xiaodong LIU; Moderator: Hao ZOU)

Xiaodong Liu is a Ph.D. candidate in education at Harvard University. He opened the session with a brief introduction of China's educational development. First, Liu analyzed Chinese people's education level by gender and region, and noted a higher education level for male and for people in east-coast regions of China. He also illustrated Chinese government's educational expenditure vis-a-vis China's GDP over the past ten years, which shows a trend of continuing decrease. The Chinese government has spent much less on education (around 2-2.4% of GDP) than governments of developed countries such as the U.S. government (around 4-5% of GDP) in the past ten years (China Statistical Yearbook, 1991-2000; U.S. National Center for Education Statistics).

Liu then analyzed some characteristics of the Chinese educational system. For example, education in China is exam-oriented. The fate of a student is usually decided by a single, and extremely competitive, exam (such as the high school entrance exam of each city, or the National College Entrance Exam). Chinese educators emphasize moral education. Students are expected to be passive learners, and teachers usually aim only at feeding students with large volume of information.

The good news is that the Chinese government apparently has noticed the inadequacy of the current educational system and has started to carry out important educational reforms in the past decade. Through privatization and decentralization, a significant number of non-governmental educational institutions have sprung up at all levels. The private educational institutions have expanded the educational opportunities for Chinese people.

In addition, the government-run universities have also started to expand admission and introduce flexible admission systems. The government is planning to launch two college entrance exams (one in the spring and the other in the fall), which will be an improvement to the old one-exam-a-year system. Furthermore, a "three-plus-one" college entrance exam system will be introduced to replace the old system (six or seven subjects for all college applicants). The new system will only test a total of four subjects for all college applicants and allow the applicants to choose one exam subject in addition to the three required subjects (Chinese, mathematics and English).

At the same time, elementary schools and high schools begin to reduce the number of exams and cut the students' work load. New curricula are being developed to facilitate the shift from an exam-oriented system to an ability-oriented system. Liu also briefly noted some inevitable challenges facing China's educational reform.

Liu ended his presentation with a couple of questions. He led the audience to discuss the still existing problems of China's educational system, and asked whether or not China's educational system is facilitating the country's economic and social developments. Liu also led the audience to debate whether or not the Chinese government should shift its focus from higher education to basic education with the limited government resource, and whether or not further privatization is the route to take.

Panel 2: Environment and Sustainable Development: A Legal Perspective (Speaker: Alex WANG; Moderator: Duan WU)

Alex Wang just graduated from the New York University Law School with a J.D. and is going to join the New York law firm of Simpson Thacher & Bartlett. He first gave the audience an overview on the pollution problems that China is facing. The picture is grim: eight of the ten most polluted cities of the world lie within China's border; thirteen percent of the global CO_{2} emission is attributed to China; and the list goes on. Wang identified China's over-reliance on coal as one cause of serious pollution. China has felt the gravity of the social and economic costs caused by pollution. From the 1994 "Agenda for the Twenty First Century" to the recent increase of environmental spending by one percent of the GDP, China has been trying to address environmental problems plaguing its cities and countryside.

China has, however, fallen short in using its legal instruments to battle pollution and other environmental problems. Promulgated environmental laws have not been able to escape the common problems generally associated with Chinese law: broadness, vagueness and weak enforcement. Borrowing from his experience with environmental litigation in the United States, Wang pointed to the lack of private rights of action in China's environmental law (i.e., there is usually no standing for civilians to initiate environmental suits), an issue that the U.S. legal system has been struggling with but has had much more success.

The audience responded with a heated session of questions and comments. Many pointed to the institutional limitations in environmental law enforcement when environmental accountability is not resolved. Some of the possible solutions that were discussed during the session included institutional reforms (democracy, rule of law), citizen movement, media as a watchdog, international solutions (diffusion of institutions, WTO), new industries (such as recycling), technology transfer, structural changes in the economy, educational efforts, further population control and demographic management.

Panel 3: Information Technology and Entrepreneurship (Speaker: Jingjun CAO; Moderator: Ian ZHAO)

Jingjun Cao's remarks involved three themes. In Cao's own words, the three themes are "what do I do," "why am I here" and "questions for all of us."

On the first theme, "what do I do," Cao is an entrepreneur. He graduated from Beijing University of Aeronautics and Astronautics in 1987. In 1991, Cao came to the United States and was soon drawn into the field of man-machine interaction. He found it easier to make the computer behave like human than to make it think like human. In 1998 Cao founded J.J. Mountain, Inc. The company develops software tools called Distributed Intelligent Animagent System for various e-commerce companies, so that these companies can deliver their services in human-like interactive format to consumers' desktop, create a better consumer experience, learn more about the consumers, and eventually provide truly personalized services.

On the second theme, "why am I here," the question that drew Cao to this retreat was the same question that puzzles many Chinese intellectuals: what is China's future? As Cao observed, although most Chinese want their country to be prosperous as well as democratic, they often subconsciously assign different priorities to these two objectives. The desire of a strong nation often weighs much heavier than the ideal of a democratic country. Cao deemed it important to state the priorities explicitly. Unstated yet different priorities for prosperity and democracy are the cause of many fruitless arguments that could have been otherwise avoided.

On the third theme, "questions for all of us," Cao's experience in the Silicon Valley gives him a unique perspective to see the American society. He illustrated how the U.S. government and society provide excellent conditions for entrepreneurship and the resulting economic boom. As Cao understood, the American society has a layered structure, with society and culture at the bottom. The middle layer consists of the government and laws, providing structural support for the top layer: individuals and business organizations. Businesses operate within certain environment that the government provides. The government influences businesses only indirectly through legislation and law enforcement. Businesses and individuals in return influence the government and law-making process indirectly. This mechanism provides a well-balanced structure to prevent drastic socio-economic swings that can be very destructive.

The environment for Chinese businesses is different. It is a blocked structure rather than a layered one. The biggest block is the government, starting from the bottom and stretching all the way to the top. The government dictates and enforces the rules that all businesses are supposed to follow, while the government itself is also a major business player. In fact, the government monopolizes a large number of lucrative industries. Is this a healthy system? Furthermore, the society and culture are missing from the Chinese picture. The government mandates social and cultural norms.

Cao then posed a question to the audience: instead of adopting the western political and legal system, is it worthwhile to explore the possibility of designing a unique Chinese approach that is based on the current societal structure, and of improving the current structure to make it work (i.e., to bring in economic prosperity)? Cao believes that simply transplanting the western political and legal system to China would not work because the fundamental structures of the two societies are very different.

Panel 4: Village Elections (Speaker: Ying SHANG; Moderator: Zhimin WEN)

Ying Shang is a Ph.D. candidate in political science at Harvard University. Her presentation combined her own research with those of others. According to Shang, the legislation on Chinese village elections dated back to 1982, but the nationwide implementation did not start until 1990. Official statistics show that over 90% of Chinese villages have carried out village elections at least once. Due to the difficulty of a nationwide survey in China, the consequences of the grass-root democracy are not clear, and case studies have shown mixed effects of the village elections on social stability, economic development and local cadre corruption. It is also unclear how enthusiastic the villagers are about this change. In most of the model villages, villagers participate more actively, while villagers in non-model villages are less enthusiastic.

Shang listed three most frequently asked questions about the Chinese village elections. First, what made rural areas step ahead of the cities in political reforms? Second, why is it so difficult for the democratic reforms to be expanded to higher levels of the government? Third, will the rural political reform become the catalyst for full-fledged reforms of the large political system in China?

For the first question, regarding why rural areas are ahead of the cities in political reforms, one of the explanations in the literature is that the Chinese village elections have largely been a top-down reform, mainly propelled by the state. The ambivalence and indecisiveness of the state have limited the extent of the grass-root political reform. There are also other explanations in the literature. For example, some argue that decentralization has resulted in a deteriorating relationship between the local cadres and the peasants, which calls for immediate changes. In addition, some argue that rural political reforms are easier to control than political reforms in the cities.

For the second question, regarding why it is difficult to expand democratic reforms to higher levels of the government, some scholars blame the state administrative system. It is local cadres' responsibility to implement state policies, which include taxation and family planning. Now that village elections have reduced the authority of local cadres (such as township and county officials, who are not elected in a truly democratic way), it becomes harder for local cadres to implement state policies, and the local official resistance against truly democratic elections runs high. Several other scholars, however, disagree with this explanation. They find the village elections to actually improve the cadre-mass relationship and help the implementation of state policies.

For the third question, regarding whether or not village elections can become the catalyst for large-scale political changes in China, there has not been any consensus either. Some scholars perceive a more promising future, and they argue that the demand for legitimacy from below will push the reform upward. Other scholars are more pessimistic, and they argue that the existing political institutions have become the main obstacle that prevents effective village elections and further reforms.

Panel 5: Building a Nation with Rule of Law (Speaker: Bo LI; Moderator: Hua SHENG)

Bo Li, an attorney at the New York law firm of Davis Polk and Wardwell, discussed in this panel an important issue for China's sustainable development in the new century. For many Chinese people, law has become a recognizable vocabulary, but its intricacy is yet to be appreciated.

Li first explained the meaning of rule of law. Rule of law means that there is an autonomous legal order, and it has three important aspects. Firstly, rule of law means that laws form an effective system to regulate and constrain government power. In this sense, rule of law is an institutional realization of liberalism. The western legal tradition is Roman, not Greek, because the Roman legal system contained the notion of "limitations" on government power, while the Greek notion of "law" did not have such connotation. Secondly, rule of law means procedural or formal justice. Rule of law requires that legal disputes between government and individuals, and between individuals, be resolved through some pre-determined, publicly announced, fair and transparent procedures. If this kind of procedure is followed, then justice is achieved and there is rule of law. Rule of law emphasizes fair process and fair procedure, not the actual outcome. Thirdly and lastly, rule of law requires equality before law.

Li also clarified the difference between "rule of law" and "rule by law." While "rule of law" places law above everyone including the rulers, "rule by law" finds law captured by rulers' self-interest because laws are an instrument of the rulers. As a result, "rule by law" is in fact "rule of person."

Building a rule-of-law nation faces daunting challenges in China. In such a large nation with a long history of "rule of person," deeply rooted traditions, culture and morality often override law. Overly emphasized concerns over efficiency, a result-oriented culture and a lack of enforcement mechanisms make it hard to build trust in, reliance on and adherence to procedural rigor. Li also mentioned a few other obstacles to rule of law in China, which include the political structure and institutional drawbacks.

Panel 6: The Growth of Legal Profession in China (Speakers: Qi LI, Xin LI and Wenjun QIAO; Moderator: Jie SHEN)

This panel consists of three practicing attorneys from China. Qi Li is one of the founding partners of Fangda Partners, a renowned law firm in Shanghai. He has just spent one year working as a foreign attorney for a Wall Street law firm. Xin Li served as deputy director of the law department of NORINCO, a Beijing-based industrial company. He is currently an in-house counsel with the United Technology Corporation. Wenjun Qiao, a Shanghai litigator known for his convincing victories in several high-profile cases, is a young partner of the Pudong Law Office in Shanghai.

The three attorneys discussed the rapid development of the Chinese legal profession in the last decade. They recalled the early days of their legal career in China when lawyers were regarded as state legal workers and all law firms were state-owned. Now, in less than twenty years, private law firms have not only out-numbered state-owned law firms (if not completely replaced them), but have also grown into a powerful industry, actively participating in transforming different aspects of the Chinese society. Chinese lawyers' resolve to use legal means to protect their clients' rights and interests have played a pivotal role in reforming the Chinese legal system. For example, Shanghai lawyers have pushed for improving the enforcement of cross-jurisdiction judgments.

Based on their practicing experience, the attorneys discussed the practice areas and organizational structure of modern Chinese law firms as well as law departments of large corporations. Much of the discussion was focused on comparing the Chinese legal profession and its U.S. counterpart. In addition, the speakers also briefly discussed law practice in Chinese government as well as in China offices of foreign law firms.

Panel 7: Decentralization and Institutional Change (Speaker: Li-an ZHOU; Moderator: Jin CHEN)

Decentralization is considered the most significant and most effective measure in China's economic reform program. It resulted in the emergence of non-state economic sector, which has been the main driving engine behind China's impressive economic growth. While decentralization gave local governments incentives to develop their own economy and enlarge their sources of tax revenue, it also provided them a mechanism of mitigating the conflicts of interest between supporting TVEs and maintaining the SOEs. It's often neglected that the growth of a non-state sector can hurt the performance of the state sector, which has been a major source of government revenue for a long time.

Li-an Zhou is a Ph.D. candidate in economics at Stanford University. In his remarks, Zhou mainly tried to evaluate the pros and cons of decentralization in China's economic reform.

The basic content of the decentralization is that different layers of government are becoming financially responsible for themselves. The fact that decentralization stimulated the development of non-state sector is surprising, since the expansion of non-state sector would squeeze the profit margins of the state-owned enterprises (SOEs). The central government's attitude towards non-state sector is ambivalent. On the one hand, the central government recognizes the important role of the non-state sector in driving the national economy; on the other hand, it has to consider the negative externalities of the non-state sector, which competes against the state sector for capital, raw materials and markets. Local governments can reduce the externalities by urging non-state sector to sell their products to the markets outside their jurisdictions. Because of the prospect for channeling out the negative externalities, the local governments have the stronger incentive to promote the non-state sector than the central government.

This tendency has also caused a number of problems. For example, when the central government needed to curb high inflation in the early 1990s, some local governments maintained their high growth with the expectation that other local governments would follow the instructions from Beijing to slow down the economy. This typical free-riding scenario contributed to the persistently high levels of inflation during that period. Another example is the notorious local protectionism, which has made cross-jurisdiction business disputes difficult to resolve. In addition, Zhou argued that duplication of construction projects, local judicial protectionism, rampant spread of low-quality and fake products, official corruption, and a large number of predatory fees imposed on private businesses by local governments, etc., are all related to the process of decentralization. By linking these problems with decentralization, Zhou tried to illustrate the transient nature of the current form of economic reform.

In short, decentralization played a very positive role in early stages of the economic reform. It allowed the high-growth non-state sector to thrive in the old planning system. Now, however, it is time to weaken the economic power wielded by local governments and enhance the role of the nationwide integrated market.

Panel 8: Party-State and Social Movements (Speaker: Yang SU; Moderator: Hai WANG)

Yang Su is a Ph.D. candidate in sociology at Stanford University. In his remarks, Su attempted to divide the states in recent world history into three categories: modern state, party state and post-modern state.

A modern state tends to repress social movements rather than to treat them as a legitimate voice, though the level of repression may vary across different states. The state machines, including the police, military, judicial system and so forth, are used as legitimate weapons against social movements. State and social movements awkwardly stand on two opposite sides. Examples of modern states include the United States in the 1960s and China after the cultural revolution.

A party state, in contrast, is the other extreme in terms of handling social movements. Mass social movements or even social unrests are encouraged by the state. They are used by the state to influence the political structure and achieve its goals. To achieve this purpose, state machines are usually delegated to the mass movements. Social movements are mingled with party-state politics. A good example is China in the Cultural Revolution.

A post-modern state is the newest invention in human history, which emerged only in the past two decades or so. In this type of state, social movements are nearly independent. The state acts as the guardian both of social order and of citizens' freedoms of speech and association. The state no longer possesses absolute power over social movements. Neither can the state use social movements as a political vehicle to achieve its goals because the state also bears the responsibility to maintain social order. As a result, social movements are usually independent of state influence. An apparent example is today's United States.