Lehman, Lee & Xu Article

Resident Blawgers

China Blogs

Quote of the Day

"The truth is rarely pure and never simple"

-Oscar Wilde

Less foreign-invested companies register in China in Q1

China reported about 11,000 new foreign-invested companies in the first quarter, down about 41 percent from the same period last year, said the State Administration for Industry and Commerce Tuesday.

Investment from the new foreign-invested companies totaled $26.68 billion in the first quarter, down about 46 percent from the same period last year, the administration said.

Registered capital of the new foreign-invested companies totaled $16.80 billion from January to March, down about 49 percent from the same period last year.

China has about 433,900 foreign-invested companies as of the end of March, down 0.23 percent from the end of last year, the administration said.

Investment from the foreign-invested companies in China totaled $2.35 trillion, about 1.23 percent up from December 2008, the administration said.

Original source: Xinhua
Source: China Daily

China Law 0 Comment May 15, 2009, 8:47 am


Developers need to make deposits before bidding for 4 sites

Yvonne Liu
May 13, 2009

The Beijing government launched a land application list system in the capital last week to avoid unsuccessful auctions of sites available for sale.
The local government placed four sites on its land application list last Tuesday.

Interested developers must now undertake to make a bid at or above the listed reserve price and make a pre-sale deposit of 200,000 yuan (HK$227,563) that will be forfeited if they do not join the bidding.

The four sites, located in the Daxing district, could be used for commercial or residential projects with total gross floor areas ranging from 75,403 to 457,961 square metres.

Reserve prices range from 228 million yuan to 1.4 billion yuan.

"The sites should be welcomed by developers," said Feng Changchun, head of the Centre of Real Estate Studies and Appraisals at Peking University.

"The district has potential for great change, as a light railway connecting it with the urban areas of Beijing is under construction," said Mr Feng.

Li Wenjie, a general manager at Centaline (China) in Beijing, believes the new system can ensure that a developer will join the tender and offer the reserve price of the site.

"Last year, we saw many sites withdrawn from the tender or auction owing to poor market response," said Mr Li.

"The new policy and the sites on offer can help the government overcome its previous unsuccessful land sales."

Most developers have put new land acquisition plans on hold since last year as a result of the poor sentiment in the real estate market. So far, bidding for development sites has not been as aggressive as was seen in 2007.

As a result, the local government had to withdraw several development sites from auction last year following a recurrence of insufficient bidders or offers regarded as too low.

A development site in the Tongzhou district in Beijing was slated for sale in November but was withdrawn from auction by the government as just two contenders bid for the site, failing to meet the minimum requirement of three bidders.

Richard Wang, an associate director of consulting and research at DTZ, said he believed the new land list policy could help the government reduce the risk of unsuccessful land sales. He, however, expressed surprise at the timing of the new system.

"This system is useful, particularly in a property market down cycle. But the property market is getting better now, and developers are interested in land acquisition again," he said.

David Hand, the head of the investment department for China at Jones Lang LaSalle, said the new system could improve pricing transparency.

"Applications to trigger a land sale, whether successful or not, will provide developers and property market practitioners with a greater indication of open market land and property prices," Mr Hand said.

But Yi Xianrong, a researcher at the financial research centre of the Chinese Academy of Social Sciences, said new policies were less important than sound relationships between the government and developers.

"On the mainland, local governments will not sell sites purely based on the details of the offers but rather their relationships with developers," Mr Yi said.

Source: South China Morning Post...

China Law 0 Comment May 13, 2009, 10:57 am


Daniel Ren in Shanghai
May 11, 2009

Beijing will require all companies to file details on employees' tax payments and will scrap tax preferences for unqualified companies after the mainland's revenue dropped in the first quarter of this year.

The State Administration of Taxation published a circular it issued to provincial-level tax authorities over the weekend, prodding those governments to "close the tax loopholes and increase ... revenue".

The watchdog also urged tax authorities at all levels to implement a reporting mechanism before the end of the year under which all firms would report personal-income-tax payments to government collectors.

Employers normally deduct income tax from workers' monthly salaries and turn in the money to tax authorities on behalf of individuals. But an annual summary statement of taxes paid by each employee is usually done only by government departments and public-service units, such as hospitals and schools.

"China is under pressure to boost government coffers after a decline in fiscal revenue," said Li Weiguang , a professor of public finance at Tianjin University of Finance and Economics. "But it all boils down to the efficient supervision of tax payments."
The body said it had collected 1.4 trillion yuan (HK$1.6 trillion) of revenue in the first quarter, down 6.9 per cent from the same period a year ago.

The nation's revenue dropped for the first time in 12 years last October, a result of policy-related tax cuts and the economic slowdown.

Economists predicted a posted deficit of between 500 billion and 800 billion yuan.

The expected budget shortfall also overshadows Beijing's massive stimulus package, which was unveiled late last year to combat the economic downturn.

The watchdog urged local authorities to review the preferential policies given to firms, and cancel the tax holidays and tax cuts awarded to "unqualified companies", though it did not define the term. It said it was studying a new, efficient collection system to ensure university teachers paid taxes on freelance income.

In 2006, anyone whose annual income exceeded 120,000 yuan was required to file payment details to tax departments, a move to stop evasion. Analysts said the tactic had failed.

Personal incomes of private business owners and self-employed professionals are normally low on company balance sheets while they pocket untaxed incomes through sleight-of-hand accounting.

"The loopholes will remain, and it won't be easy to work out an efficient mechanism in the near future to avoid evasion," a personnel director at a state-owned firm in Shanghai said. "Lots of people are still trying to dodge tax, and sometimes companies play a role, which makes the situation even worse."

At some state-owned companies, prepaid cards are given out for transport or store purchases, but as they are not salaries, they help workers avoid paying taxes on "extras".

Source:South China Morning Post

China Law 0 Comment May 11, 2009, 9:52 am

Defense lawyer jailed for verbally abusing judge

A female lawyer in Kunming, capital of Yunnan province, was jailed for 15 days and fined 10,000 yuan ($1,464) after she cursed some judges during a court hearing on Monday.

Surnamed Shang, the lawyer represented three defendants in a personal injury compensation case, when she expressed her dissatisfaction with a female judge.

The hearing had to be closed since Shang couldn't calm down.

Original Source: Chuncheng Evening News
Source: China Daily

China Law 0 Comment May 8, 2009, 9:41 am


By Li Xiaokun, Wang Zhuoqiong and Wang Huazhong

China and Mexico Monday agreed to send chartered flights to each other's countries to fetch their citizens, dampening a row that stemmed from Beijing's quarantine of Mexican nationals in the country amid the global H1N1 flu outbreak.

On Sunday, China Southern Airlines canceled a chartered flight meant to pick up more than 200 Chinese citizens stranded in Mexico as it could not secure landing permission from Mexican airports.

The plane finally left Guangzhou for Mexico City at 10 pm Monday and is expected to return to Shanghai at 9 am Wednesday, the airline said.

The second batch of Chinese medical supplies to Mexico is taken aboard a China Southern Airlines plane early yesterday morning. It touched down at Mexico City last night with 70 tons of supplies that included masks, gloves and disinfecting devices.

The Mexican government Monday accused China of singling out its citizens for forced isolation despite the fact they showed no symptoms of the virus.

A Mexican embassy official said that there were nearly 70 Mexicans quarantined across China - in Beijing, Shanghai and Guangzhou.

Some had traveled to China aboard the same flight that carried an infected Mexican man - Asia's first confirmed H1N1 flu case - who is now in a Hong Kong hospital.

Mexican Foreign Minister Patricia Espinosa called China's actions "unjustified" and warned Mexicans against visiting China.

China rejected the charge, saying it was not discriminating against Mexicans and called for Mexico to be "objective and calm".

"The measures are not targeted at Mexican citizens, and are not discriminatory. This is purely a question of health inspection and quarantine," Foreign Ministry spokesman Ma Zhaoxu said yesterday.

"China understands the Mexican side's concern for the rights and interests of its citizens in China, and hopes to jointly address the epidemic situation," he said.

The WHO's representative in China, Hans Troeddson, said yesterday the measures taken by Beijing are proper and do not violate current regulations.

"It's really up to each country and should be in accordance with their own regulations and legislation on public health and protection of the population," he said.

Zhong Nanshan, a renowned medical expert and member of the Chinese Academy of Engineering, also defended the quarantine measures.

Medical circles are still unclear over the pathology of the H1N1 virus, he said. "We're not sure whether H1N1 carriers transfer the virus before showing symptoms," Zhong said.

As such, quarantine for a certain period is necessary to check whether those monitored are infected, he said.

Shi Yinhong, a professor of international relations at Renmin University of China, said Mexican authorities' criticism of China's quarantine moves could slightly affect their relations.

"If the flu had broken out in China and other countries had taken similar action, I don't think Beijing would have complained," he said, pointing out that China has also quarantined its own citizens returning from Mexico.

"(But) we can understand the Mexican reaction, which has been affected by their domestic situation. Not many will mention it after two or three weeks," he said.

Most Chinese online users also support the decision to quarantine Mexicans.

A poll by major information portal Sina.com showed that 92.5 percent of 4,263 online users said the quarantine was "a necessary preventive method and had nothing to do with discrimination".

China offered $5 million in aid to Mexico last Wednesday - $1 million in cash and $4 million in medical supplies - the first country to send aid after the epidemic broke out. Mexican President Felipe Calderon received the Air China chartered flight carrying the supplies on Friday.

The second batch of aid material reached yesterday.

In China, the authorities have beefed up preventive measures.

The Ministry of Health (MOH) said yesterday although the mainland has not yet reported any cases of H1N1, there is a possibility of the virus making its way.

The General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ) said yesterday six more supervision teams had been sent to Shandong, Hebei, Sichuan, Jiangsu, Zhejiang, Hunan, Hubei and Shaanxi provinces to work with local authorities in epidemic prevention. It sent five teams to Beijing, Shanghai and Guangzhou in late April.

The World Health Organization (WHO) yesterday raised its tally of confirmed human H1N1 cases to 1,003 with 26 confirmed deaths. Twenty countries and regions have reported laboratory-confirmed cases so far. Mexico, the center of the outbreak, has reported 590 cases and 25 deaths from the virus.

Source: China Daily

China Law 0 Comment May 5, 2009, 9:08 am

China issues regulation punishing statistical fouls


China has issued a regulation to punish officials who forge or cover up data in statistical work.

The regulation, jointly published by the Ministry of Supervision, Ministry of Human Resources and Social Security and National Bureau of Statistics on the government website on Tuesday, will take effect on May 1.

It is the first such regulation in China, according to a media statement.

"Statistics reflect the trend of the country's social and economic development but there are acts violating law and discipline in statistical work in some regional governments and departments," the statement said.

These acts affected the quality of data, undermined information backup for the country's macro-control and damaged the image of the Communist Party and the government, it said.

The regulation with 15 stipulations sets out punishment measures, especially for officials who fake statistics or publish data against the country's rules and procedures.

Serious penalties including dismissal, demotion, or unspecified "criminal punishment", would be imposed on people who unlawfully change statistics or ask others to do so and those who take revenge on people who refuse to fabricate data or blow the whistle on illegal acts.

People who leak data concerning State secrets, personal or family information and business secrets, as well as delaying reporting of statistics, would also face similar penalties.

It asks local supervisory bodies and the government to fully perform roles in cracking down on statistical corruption so as to safeguard the authenticity of statistical work.

Statistical corruption has been found in China for years to exaggerate local economic growth, which is often related to officials' promotion.

Earlier this month, Fujian province said last year it handled 754 cases concerning forging statistics and imposed fines up to about 1.38 million yuan ($203,000).

Source: China Daily

China Law 0 Comment April 30, 2009, 9:21 am

China regulates SOE share transfers

China's state asset watchdog said Thursday it will prohibit management staff of state-owned enterprises (SOEs) from transferring their shares in SOE affiliates and subsidiaries to their close relatives, its latest move to stop state assets ending up in private hands.

China issued a rule last October to forbid SOE middle and senior management officials to own shares in SOE affiliates, subsidiaries or other SOE-invested businesses, in order to curb state-asset losses. Those who already held such shares were ordered to transfer those interests.

The management staff are not allowed to sell the shares to their close relatives or the companies that the relatives control, said the State-owned Assets Supervision and Management Commission (SASAC) in a document, which made clear the details of the October rule.

Instead, the SOEs should be the first to buy those shares, whose prices should not exceed their audited net value in the previous fiscal year, said the SASAC.

Public discontent with state asset losses and privatization has been growing since share-holding reforms were launched three decades ago to introduce private ownership into SOEs.

SOE management ownership of equities in affiliates, subsidiaries and SOE-invested companies has led to problems, such as executives procuring products or services of those businesses at prices unreasonably higher than the market price, resulting in "state-owned assets losses in disguise," according to Zuo Daguang, director of the SASAC's Liaoning branch.

In order to contain insider-control and state-owned assets losses, the SASAC and the Ministry of Finance jointly issued a document in April 2005, forbidding management buyouts of large SOEs.

Thursday's document also specified the definition of the SOE senior and middle management staff, which include members of board of directors and supervisors. They were required to transfer shares in SOE affiliates within a year of the publication of the October rule or resign from their posts.

Source: China Daily

China Law 0 Comment April 20, 2009, 9:00 am

China publishes national human rights action plan

BEIJING, April 13 (Xinhua) -- The Chinese government published its first-ever working plan on human rights Monday, pledging to further protect and improve the country's human rights conditions.

The National Human Rights Action Plan of China (2009-2010), issued by the Information Office of the State Council, or Cabinet, highlighted various human rights goals that would be implemented in less than two years.

The 54-page document is divided into five sections: Economic, Social and Cultural Rights; Civil and Political Rights; Rights and Interests of Ethnic Minorities, Women, Children, Elderly People and the Disabled; Education in Human Rights; and Performing International Human Rights Duties, and Conducting Exchanges and Cooperation in the Field of International Human Rights.

"The realization of human rights in the broadest sense has been a long-cherished ideal of mankind and also a long-pursued goal of the Chinese government and people," the document stated.

In the future, China plans to continue to "raise the level of ensuring people's civil and political rights" through improving democracy and the rule of law.


The death of a Chinese man at a police station in Yunnan Province two months ago aroused public outcry for enhancing transparency and supervision of the country's detention system.

Their concerns were addressed in the second section of China's new human rights action plan, which stipulates principles for safeguarding detainees' rights and treatment.

Corporal punishment, abuse, insulting detainees or the extraction of confessions by torture will be strictly prohibited, according to the document.

"All interrogation rooms must impose a physical separation between detainees and interrogators," it stated, adding that a system for conducting physical examinations of detainees before and after an interrogation will be introduced.

Detainees, their families and society at large will be informed of detainees' rights as well as law-enforcement standards and procedures. Real-time supervision conducted by the people's procuratorate on law enforcement in prisons and detention houses will be intensified, according to the document.

"For detainees' convenience, complaint letter boxes should be set up in their cells and a detainee may meet the procurator stationed in a prison or detention house by appointment, if the former feels he has been abused and wants to make a complaint," it said.

Regarding the death penalty, the action plan stated it will be strictly controlled and prudently applied.

"Every precaution shall be taken in meting out a death sentence," and judicial procedures for death sentences will be stringently implemented.

"China adheres to the basic principle of a legally prescribed punishment for each specified crime, suitable punishment for each crime, criminal law equally applicable to everyone, public trials and statutory procedures," it read.

On the right to a fair trial, the document stipulated that "the information of open trials shall be fully released," and that courts "shall record or video their court sessions and major relevant trial activities, and establish audio-visual archives of trial work" for consultation.

"People's courts are required by law to give the reasons for cases that are not tried openly."

The action plan pledged to guarantee lawyers' rights to meet, correspond with and review files of persons in custody, as well as to conduct investigations and collect evidence.

"The state also guarantees the personal rights of lawyers and their right to debate or defend when they carry out their duties," the document stated.

It promised to improve government transparency through better disclosure of important information including revenue, expenditures and development plans.

On participation in political affairs, the government said the people's congress system, or legislative body, will be more widely represented by ethnic minorities, women, and farmers.

The government promised that "all channels are unblocked to guarantee citizens' right to be heard."

"Journalists' right to gather materials, criticize, comment and publish" will be ensured in accordance with the law. Citizens' right to use the Internet, in accordance with the law, will also be guaranteed.

The Chinese People's Political Consultative Conference, the country's leading political advisory body, will invite more social organizations to join to play a bigger role in reporting public opinions, according to the document.

"The channels for people to make complaints in the form of letters and visits will be broadened and remain unblocked," the document stated, vowing to establish a nationwide complaint information system and a state-level office to deal with complaints.

The government admitted that "China has a long road ahead in its efforts to improve its human rights situation," though unremitting efforts have been made to promote and safeguard human rights since the founding of the People's Republic of China in 1949.

The government said its action plan was framed in response to the United Nations' call for establishing a national human rights plan. It was also based on the essentials of the Universal Declaration of Human Rights and the International Covenant on Civil and Political Rights.

Source: Xin Hua News

China Law 0 Comment April 14, 2009, 8:41 am

Ruling on PCCW case next week

HONG KONG: The court will rule on the PCCW privatization case next Monday, High Court Judge Susan Kwan said after the second day of hearings into the matter.

PCCW Chairman Richard Li offered shareholders a buyout price of HK$4.2 per share to privatize the Hong Kong-based telecom carrier last December. The offer price was later increased to HK$4.5 due to opposition from minority shareholders. The Securities and Futures Commission (SFC) began to investigate the transaction after alleged vote rigging took place at the PCCW shareholder meeting on Feb 4.

Earlier, the SFC revealed in court that PCRD Deputy Chairman Francis Yuen had contacted Fortis' Regional Head Lam Hau-wah before the key vote on the PCCW privatization plan on Feb 4.

SFC lawyer Winston Poon told the court yesterday that the regulator found that Yuen had talked to Lam thrice on the phone before he acquired PCCW shares from the market on Jan 5.

When SFC quizzed Yuen and Lam, both claimed that they had forgotten the contents of their phone conversations, he said.

The link-up between Yuen and Lam was found to be suspicious given that the latter used to earlier assist Yuen at Fortis Insurance. However, they deliberately played down the relationship during the inquiry, Poon said.

Benjamin Yu, the lawyer who represented PCCW's major shareholder Starvest, earlier questioned the SFC investigation of Lam and Yuen, saying the probe was biased and incomplete. However, Poon did not agree with the contention.

Source: China Daily

China Law 0 Comment April 7, 2009, 10:10 am

Regulators target unqualified brokers

REGULATORS are cracking down on unqualified securities brokers after finding more than 60 percent hadn’t passed professional exams, domestic media reported yesterday.

The China Securities Regulatory Commission will introduce new rules next month demanding all brokers have standard qualifications and work for only one firm at a time, the China Daily reported.

Competitive practices “among brokers may harm the rights of investors and affect the development of the securities market. Therefore, it was necessary to regulate the market,” an unnamed regulatory official was quoted as saying.

Small securities firms hire low-paid, unregistered and uncontracted brokers on a commission basis and then distance themselves from them if investors complain, Xinhua reported.

Only 30,000 of China’s 80,000 securities brokers had passed the qualifying exams as of the end of October, the China Daily reported, quoting the regulator.

After the financial crisis broke, China took pride in its tightly regulated financial industry.

The Shanghai Composite Index lost 65.5 percent last year, the steepest annual loss in the market’s 18-year history.

Source: Shenzhen Daily

China Law 0 Comment April 1, 2009, 9:57 am

Court to announce verdict on city's biggest pyramid scheme

A Beijing court will announce verdicts on 28 suspects involved in the city's biggest-ever pyramid selling case Monday morning, the court sources said.

The Yilin Wood Company was accused to have swindled 1.68 billion yuan ($246 million) from investors by promising high returns on sales of woodland.

Original Source: Xin Hua
Source: Law Info China

China Law 0 Comment March 30, 2009, 9:01 am

Edward E. Lehman again listed in ‘Who’s Who’

China’s longest-serving director of a private law firm, Edward E. Lehman of Lehman, Lee and Xu, has again been selected for inclusion in the International Who’s Who of Trademark Lawyers and International Who’s Who of Business Lawyers, the result of independent research with clients and peers by the International Bar Association.

It was Mr. Lehman’s fourth consecutive listing in those categories by the prestigious publications.

"I am honored to again be selected by experts and my peers, and to be listed along with such an impressive group of attorneys," said Mr. Lehman, who co-founded the firm in 1992.

In announcing the latest list of Who’s Who, the publication’s Managing Editor Callum Campbell said those included are “the world’s leading practitioners” in their respective fields.

Beijing-headquartered Lehman, Lee & Xu has one of the oldest and largest intellectual property practices in China. It also serves as counsel to and advisor for wide range of multinational corporations, associations and governments. Its clients include Fortune 500 companies, non-governmental organizations, embassies and departments of nations, giant domestic enterprises and a scope of other businesses and individuals that mirror China’s remarkable growth over the past 30 years....

China Law 0 Comment March 19, 2009, 11:14 am

Expert: China should further increase export tax rebates

China should further increase its tax rebates to help exporters in time of the financial crisis, according to an economist with the Development Research Center of the State Council.

Zhang Xiaoji told China Daily on the sidelines of the annual sessions of the Chinese People's Political Consultative Conference (CPPCC) the recent increases of export tax rebates are not enough. They are not as strong as the measures taken by the government during the 1997 Asian financial crisis.

He said the export sector contributed about 20 percent of the total revenue of the country's manufacturing industry and provides 70 million to 80 million jobs. A 10 percent drop in export can reduce up to 10 million jobs.

Xu Xiaolan, another member of the CPPCC, also submitted a proposal for raising tax rebates on all export of manufacturing products.

Source: China Daily

China Law 0 Comment March 12, 2009, 11:38 am

Lawmakers approve insurance law

BEIJING -- The Chinese legislature approved last Saturday morning (Feb.28th, 2009) the Insurance Law which mandates the state regulatory body to prevent risky business operations of insurance companies.

The amended law says the State Council's insurance regulatory body has the right to order the insurance company's shareholders to stop affiliate company transactions that seriously harm the company's interests and undermine its solvency.

The regulatory body could restrict rights of insurance company shareholders if they carry out risky capital operations, the law says.

The revised law will take effect on October 1, according to a statement issued by the National People's Congress (NPC) Standing Committee's bimonthly session which ended last Saturday.

Original source: Xinhua
Source: China Daily

China Law 0 Comment March 5, 2009, 10:19 am

Insight from McKee of LL&X crucial to franchising forum

Using insight from Matthew McKee, franchising law specialist at Lehman, Lee & Xu, the most recent session of the trade show Franchising and Licensing Asia heard that “China is now the largest franchise market in the world.”

The theme of the show titled “Franchising, China and the 2008 Olympics: Is the time right?” relied heavily on a report authored by McKee and published in China Law and Practice in June 2008.

“The 2008 Olympic Games further expanded this market,” McKee noted in his report. “In respect of merchandizing, BOCOG (Beijing Organizing Committee of Games) utilized the franchise model to an unprecedented level. China’s IP laws have been in substantial compliance with international standards for several years now, but enforcement has been a problem. The Olympic Games forced the Chinese government to implement the groundwork for effective IPR protection.”

Lehman, Lee & Xu, one of the nation’s top-three law firms, is counsel to the China Chain Store & Franchise Association (CFFA).

The conference held in Singapore also heard a CFFA report noting “franchising in China has grown significantly, particularly in food and nutrition stores, specialty gift shops, Chinese fast-food and casual dining, fitness and beauty services, education and training, renovation, housing intermediaries, car services and hotels.”

The report also states that 63 percent of new businesses in 2006 adopted franchising.

Beijing-based McKee said that while numbers cited predate the "current economic storm, franchising in China remains a growing area.”

“Despite the economic gloom worldwide we are still seeing investors look at the franchise model in China. I envisage that this trend will continue,” he said....

China Law 0 Comment March 4, 2009, 10:15 am


Workers at abandoned foreign-owned factories who are owed wages do have rights to file suit under existing laws and regulations in China, according to Jerry Wong, a specialist in labor law at the Shenzhen office of Lehman, Lee and Xu, one of the nation’s top law firms.

"With the current global financial downturn increasingly impacting exports, there have been cases of improper divestment by foreign companies operating in the Pearl River Delta," Wong said. "Such sudden evacuation leaving behind factories, equipment, debt and wages in arrears without liquidation and bankruptcy is clearly illegal."

He noted that the Ministry of Commerce, the Ministry of Foreign Affairs, the Ministry of Public Security and the Ministry of Justice have together issued an important notice establishing guidelines in how to file grievances against fleeing foreign owners.

"The notice says that once the improper divestment happens, Chinese parties should promptly file a case with the People's Court or Public Security Bureau," Wong said. "Even though the foreign party has fled abroad, authorities can move to extradite them or implement a civil judgment pursuant to the judicial support agreements signed between China and foreign countries."

"With this recent notice, we do have a strong opinion that once the improper divestment happens, damaged parties should immediately file a case with the authorities in order to at least decrease their losses."

He added that while China’s Labor Contract Law requires foreign-invested enterprises (FIEs) to pay into the social security system, the law does not otherwise increase labor costs.

"Some FIEs that fled have said the law increases their labor costs, but that is not the case," Wong said. "Their problem is that they have been unable to adapt to changes in the industrial structure and markets."

He added that "FIEs who only purchase cheap labor at low environmental costs" were having problems before the onset of the global economic crisis.
"Of course now they are even more affected," he said.

Source: Press Room of Lehman, Lee & Xu

China Law 0 Comment February 26, 2009, 10:31 am


By David Cowhig

On the village level, Miao customary laws and regulations operate in parallel with and reinforce provincial and national regulations according to recent book by two Guizhou University scholars. Here is capsule summary of one of them:
Miao Customary Law and PRC State Laws Seen from the Perspective of Legal Diversity A Field Study in the Ethnic Miao Nationality Region of SW Qiandong Prefecture 法律多元视角下的苗族习惯法与国家法——来自黔东南苗族地区的田野调查[Falu duoyuan shijiao xiade miaozu xiguanfa yu guojiafa laizi qiangdong dongnan miaozu diqu de tianye diaocha] by Xu Shaoguang 徐晓光 and Wen Xinyu 文新宇, published Guizhou, December 2006, Guizhou Minzu Chubanshe (Guizhou Nationalities Publishing House). Xu Shaoguang is a professor at the Law School of the Guizhou Minorities University. Wen Xinyu, an ethnic Miao and native of Leishan County, is an assistant researcher at the Guizhou Academy of Social Sciences and graduate of the Law School of the Guizhou Minorities University.

The Miao do not have a written language so their laws and legal tradition is passed down through word of mouth, especially during gatherings at special memorial markers and through songs. Customary law enacted over the centuries covers a wide range of issues including marriage, libel, theft, murder, land boundaries, mountain land use, forest rights, and extortion. Miao have used gatherings for legislation and setting up boundaries to A organize themselves regionally as in 1937 when thousands of Miao rallied to oppose high taxes and impressments of Miao into Chiang Kal-shek's KMT army. For the past several hundred years, rich forest resources brought more attention to the Miao areas of Guizhou and the increasing imposition there of Chinese law and written contracts, although Miao traditional law continued to function at the local level. During the Qing Dynasty (1644 - 191 central government officials in Miao areas left village civil disputes to traditional laws and often deferred to customary law in handling serious criminal cases as well.

Miao customary law sets aside village forest land as a community resource that is protected and managed. The rich forest resources in the Miao areas were one of the reasons for strong Han immigration and conflict in the nineteenth century. With the founding of the PRC in 1949, Miao traditional, man-made forest lands were mistakenly considered to be virgin forest and so became state property whereas they were actually well-managed resources. The removal of the forestlands from the management under Miao customary law and their effective opening to anyone's use as "state or local collectivity assets?' led to serious conflicts during the l980s. For example, from 1981 - 1987 in the Miao county of Jinping alone, there were over three thousand forest land dispute that led to nine riots, three deaths and 86 people seriously injured. During the l990s, many Miao villages in the Qiandong Miao and Dong Autonomous Prefecture re-established traditional regulations and fines relating to forest management that had previously been in effect for hundreds of years.
Traditional customary Miao law, operating in parallel with PRC law, has proven effective in restoring order to forest management. Offenders are typically fined cows or pigs which they must contribute to a feast enjoyed by all the villagers. (see Xu and Wen below, pp. 122 - 132).

During the past 30 years of opening and reform, Miao traditional law has again come to play an important role in resolving village disputes. The authors caution "we should uphold Marxist dialectical materialism, and study [traditional law] and keep the part of it that represents a good popular traditions and reject the part of it that is feudal nonsense." Village disputes are solved by debate in front of all the villagers, sometimes checking whether a duck's eye is intact after cooking to determine if the accuser or the accused should win. Once the verdict is decided, everyone shares in the feast as a pledge that the dispute is settled and the village rules will be obeyed. If a solution is available under Miao law, Miao generally will not take their cases of a PRC state court, even in instances where the punishment would be much lighter under PRC law.

A survey of people fined under Miao traditional law generally told researchers "our village rules were made by everyone, including me. Therefore they must be carried out." (Xu, p. 82). The authors write that the "PRC Village Council Organization Law" allows villages to make regulations as long as they do not conflict with the PRC constitution, laws and regulations and even gives villagers the right to fine themselves. (Xu, pp. 80 - 83) The authors remark that they recall how for decades China has tried to implement the rule by law in the countryside yet has failed, yet in their studies of Miao villages they see how PRC laws are routinely ignored but are then deeply impressed how villages very conscientiously respect Miao customary law. (Xu, p. 85) The authors note that the revival of customary law and village self governance has made possible the revival of clan power, with the problems that brings, although clans can sometimes play a useful role in solving dispute in the current transitional period before rule by law can be fully established in the villages.

A review of this book in Chinese is at www.cqvip.com/onlineread/onlineread.asp?ID=25029636 ...

China Law 1 Comment February 20, 2009, 1:09 pm


The environmental history of China during the 1990s and early 2000s has not been a picture of responsible industry. While in the books China’s environmental laws are strong, in practice they are frequently ignored. Every year there are cases of human-caused ecological disasters.
In the far southeastern part of Sichuan province, for example, mining more magnesium has taken its toll on local communities and the environment. Runoff from the regions hundreds of mining projects has contaminated the water with heavy metals and other mining toxins, killing crops and putting the health of local people at risk.

Thanks to: china-environmental-news.blogspot.com for their article on Sichuan's situation.

In another example from September 2008, Yangzonghai Lake in neighboring Yunnan province was found to contain high levels of arsenic in the water. Several companies bordering the lake were found to be responsible, and were fined accordingly. Despite such measures, the continuing occurrence of such cases is an obvious sign that noncompliance is the primary issue in rural environmental protection.
In order to improve rates of compliance, prevent ecological disasters, and protect people’s health, Yuxi, a city in Yunnan, has created a specialized law enforcement group tasked with tackling environmental law enforcement in Yunnan province. For Yunnan, China’s most biologically and geographically diverse province, the creation of the task group is an investment in the province’s natural resources.

Thanks to: www.greenlaw.org.cn for linking to environmental news.

However, in the past such local law enforcement agencies have had similar responsibilities and nonetheless failed to enforce environmental laws. Often such local agencies must have the approval of local officials to carry out investigations, and officials in the past have been more than willing to ignore environmental concerns in favor of economic growth and local favoritism. The test will be to see whether this new agency is given a new degree of independence to carry out its charge.
If the issues of favoritism, bribery, and other forms of corruption do not allow the agency to be effective, a national enforcement body with complete independence may be the only real solution.

By Bryan G. Davis

China Law 0 Comment January 19, 2009, 10:51 am



BEIJING -- Chinese lawmakers will debate eight bills and several cabinet reports, including one on China's response to the international financial crisis, during a six-day, bi-monthly session which starts Monday.

The Standing Committee of the 11th National People's Congress, or the top legislature, is expected to review draft amendments to the earthquake precautions and disaster relief law, the patent law, the criminal law and the insurance law at its sixth meeting. It will also consider social insurance and tort liability law drafts.

The draft law on arbitration of rural land contract conflicts and draft amendment to the law on statistics will be tabled at the session for the first reading.

Lawmakers will also discuss four cabinet reports dealing with: the implementation of the 11th Five-Year Plan; measures to cope with the international financial crisis and maintain stable, healthy economic growth; measures to stabilize consumer prices and efforts to control water pollution.

Two international pacts are due to be ratified during the session: the pact on joint military exercises held by Shanghai Cooperation Organization members and the pact on criminal judicial assistance between China and the United Arab Emirates.

Source: China Daily 2008-12-22...

China Law 0 Comment December 22, 2008, 4:15 pm

Bracing for China Monopoly Law

China's first anti-monopoly law goes into effect on Aug. 1, and attorneys at global firms are trying to figure out how it will affect their clients, particularly multinational corporations with significant market share there. There are also concerns about whether politics will play a role in the implementation of the new law. Joey Zhu, from Lehman, Lee and Xu’s Shanghai office, considers that “the promulgation of the anti-monopoly law will be a new age for the regulation and amelioration of Chinese market economy”.

For more information see http://www.law.com/jsp/article.jsp?id=1202422835203


China Law 0 Comment July 15, 2008, 10:42 am

National Tourism Administration repeals regulations

On June 10, 2008, the National Tourism Administration has announced that it will appeal the following regulations:

Interim Regulations on Tourist Complaints

Date announced: June 1, 1991
Replaced by: "Procedures for Interim Compensation on Travel Agent Quality" (National Tourism Administration Decree No. 7) and "Ordinance on Travel Agent Management Rules" (National Tourism Administration Decree No. 16)

Interim Procedures for Pilot Sino-Foreign Joint Venture Travel Agencies

Date announced: December 2, 1998
Replaced by: "Travel Agency Management Ordinance," State Council Decree No. 334

Travel Agency Management Personnel Qualification Regulations

Date announced: May 8, 1997

Source: Gov. cn Laws and Regulations (Chinese)

China Law 0 Comment June 18, 2008, 11:33 am

"Small" Money Buys "Big" Peace

Government-issued awards have played a substantial role in promoting social cohesion and stability in a formerly restive Anhui county.

According to Legal Daily, the Justice Bureau has found in a survey that issuing financial awards to community mediators who resolve social disputes in Jinping county has reduced crime rates, property disputes, and civil suits. The awards range from RMB 200 to RMB 500 depending on the impact of the dispute on the community.

Between the period of January and March, RMB 69,800 was awarded to 349 meditators who successfully solved community disputes.

Source: http://www.legaldaily.com.cn/0705/2008-06/02/content_871013.htm (Chinese)


China Law 0 Comment June 5, 2008, 10:27 am

Early advice is good advice

All readers of this blog should be aware we are one of the foremost intellectual property law firms in China. I do not say this for self-promotion but rather because I want talk about one of the most common things we see in our daily practice – the failure by organizations to register their trademarks in China.

We are constantly engaged by clients to prevent abuses of their trademarks in China. Unfortunately, many clients assume that, since they have registered their trademarks in other jurisdictions, their trademark is protected in China. We have had clients who have engaged in business in China for several years based on this assumption. This becomes a significant problem when someone else decides to profit from the client’s ignorance and registers the mark. Usually, the sole reason why these people register trade marks is so that they can blackmail the legitimate business.

If we become aware of this early, there are legal mechanisms available to remedy the situation – this comes at cost that could have easily been avoided. However, worse is when considerable time has lapsed and the client’s rights are barred by statute. This makes it extremely difficult to achieve an effective solution for the client that does not involve purchasing the trademark from person who has registered it, and nobody likes meeting a blackmailers demands.

This reiterates the importance of obtaining comprehensive legal advice prior to venturing into China. Not considering intellectual property issues when establishing your presence will leave you open to a sea of troubles at a later date; troubles that could have easily been avoided by seeking some prudent legal advice.


China Law 0 Comment May 7, 2008, 4:35 pm

NDRC to Post Policy Information Online

Consistent with its aim of improving transparency in the government's policies, the National Development and Reform Commission has launched an initiative to post government policy on its website (Chinese). Any information not available on the website can be requested by submitting the NDRC's information request form (Chinese), which the NDRC guarantees will be responded to within fifteen business days.

Source: Xinhua/China Daily


China Law 1 Comment May 5, 2008, 5:10 pm

Cafferty and CNN

A controversial issue in the last few weeks in China has been the comments made by CNN commentator, Jack Cafferty, where he labeled the Chinese as “thugs and goons”. In late April a group of Beijing lawyers instituted legal proceedings claiming that Cafferty’s comments “seriously violated and abused the reputation and dignity of the plaintiffs as Chinese people, and caused serious spiritual and psychological injury to the plaintiffs.” MSNBC

Under China’s case management system the case still needs to be accepted by the court. Many people have laughed off the claim as a frivolous suit with little grounds of success – a mere publicity stunt. However, those with a more thorough understanding of Chinese defamation law recognize that it is not as hopeless as it first seems.

Article 101 of the General Principles of the Civil Law provides that insult or slander that harms individuals or citizens is prohibited. The Explanation of the Supreme People’s Court Regarding Some Questions in the Trial of Cases Concerning the Right of Reputation outlines three situations in which defamation will be found: (1) where the content of news reports is “seriously mistaken” or, in the case of critical news reports, where the “basic content” of such reports is incorrect, and such mistakes or inaccuracies result in harm to reputation, (2) where insulting or slanderous language results in harm to reputation, or (3) where unauthorized revelation of personal details causes harm to reputation

Accordingly there is no doubt that a person can bring a claim in respect of the publication of false and derogatory material in China. Further, in the case of a claim based on points 2 and 3 above, it appears that the truth of the comments will not provide a defense to the claim.

The interesting issues in this case, if it is accepted and ultimately litigated, will be whether expressions of opinion can infringe Article 101, and whether an individual has standing to bring a claim where the expressions are directed at a large group. Chinese

Chinese law does not provide a fair comment defence to defamation and, as such, the prevailing view is that an opinion may be defamatory for the purposes of Article 101. Whether an individual can bring a claim for defamation of a group is not clear.

If this case is accepted by the court (it may not be for political reasons) then it may answer some interesting questions about the state of China’s defamation laws.


China Law 0 Comment May 5, 2008, 12:07 pm

China Labour Bulletin on Labor Arbitration Law

The e-bulletin released by China Labour Bureau on the new Labor Arbitration Law on April 23, 2008 may be of interest to our readers:

The report is based on a detailed analysis of three work-related injury and illness cases handled by CLB as part of its Labour Rights Litigation Programme. In one case it took an injured worker over a decade to get any disability compensation. In another, it was only after a migrant worker died of leukaemia that his parents were partially compensated for the family's massive medical bills. And a former gemstone worker suffering from silicosis only received compensation after a high profile official intervention. He died six months later.

Help or Hindrance: China's Institution of Public Redress (via China Law Mailing List)


China Law 0 Comment April 30, 2008, 8:58 am

Legal updates

Quick post with a couple of law updates:

Stamp tax has been reduced from 0.3% to 0.1% in order to encourage trading activity.

Political Bureau of CPC has ratified its five year anti-corruption plan. (I love that the government still does five year plans here.) Keywords in the plan: prevention, punishment, and education.

Macau has placed a moratorium on new casino building.

Statement: Shanghai Tobacco Regulation Office to introduce smoking ban (Chinese) to include all public indoor areas, including workplaces, taxis and government buildings.

Taiwan residents now eligible to sit for mainland exams. Details of eligibility and application process have not yet been announced, which is why we sat on this for a bit before posting it to the blog, but we'll post them later.


China Law 0 Comment April 29, 2008, 11:20 am

All draft laws now public

The National People's Congress has vowed to publish all draft laws in order to invite public participation and comment. According to China Daily,

"The draft laws will be published on our official website (www.npc.gov.cn). If they're closely related to the interests of the people, the drafts will also be published on major newspapers," the Committee said.

Unfortunately, it appears that the draft laws are currently being published only in Chinese.

The latest draft law to be published for public comment is the Food Safety Law, introduced on April 20, 2008.

Other draft legislation for which the NPCC is currently soliciting public comment on its website:

- Water Pollution Restrictions Amendment Bill
- Employment Promotion Law


China Law 0 Comment April 21, 2008, 4:44 pm

State Council Approves IPR strategy suggestions

China Daily reported that the State Council approved the intellectual property strategy suggestions developed by the Standing Committee of the CPPCC National Committee on Wednesday. The original suggestions posted to SIPO's website are here, but here's a quick rundown of the seven points in the document by China Law Blawg:

1. The goal of the national development strategies of intellectual property (IPR) rights in should be compliance with international treaties and agreements that is suitable for the China’s current conditions.

The purpose of scientific development of China's intellectual property (IP) strategy is to:

- Strategically promote adjustments to the economy
- Establish the rule of law and a market
- Promote the development of advanced production capabilities

2. Formulate a unified code of IP research: a comprehensive and systematic study of IP lawmaking. Coordinate existing IP laws and related regulations. Increase protection against unfair competition.

3. Draw from foreign experiences on judicial protection by establish a unified IPR Court of Appeal, and promote administrative and judicial coordination.

4. Optimize integration of administrative resources and unify coordination between administrative bodies. Adopt Hong Kong’s approach as a guide to IP protection and for guiding and supporting SMEs in the role of IPR.

5. The formulation and implementation of the IPR strategy must be easily understood: the national IP development strategy should be a model for the establishment and execution of industry’s IP strategy.

6. Improve the training of intellectual property professionals. Increase conferral of master’s and doctoral degrees in IPR, and increase faculty specializing in IPR. Establish "intellectual property personnel training bases." Create IP courses in science & engineering university departments.

7. Enhance IPR awareness. Reach out to all levels of the government, to the science and technology sectors, and to the general public.

Considering that the proposals explicitly stated that they're looking to foreign experiences on intellectual property legislation, it seems likely that SIPO will solicit comments on any upcoming legislation regarding an IPR Court of Appeal, as they've done on other regulations involving significant international interests. China Law Blawg will keep you updated if we hear anything about it.


China Law 0 Comment April 11, 2008, 2:22 pm

Inter-Pacific Bar Association (IPBA) 18th Annual Conference, April 28-30 in Los Angeles

From the ABA International China Committee Co-Chair Michael Burke:

I would like to extend an invitation to register for the Inter-Pacific Bar Association (IPBA) 18th Annual Conference (www.ipba2008.com) on Monday, April 28 in Los Angeles. The Section of International Law is a cooperating entity for the IPBA Annual Conference, and is co-sponsoring an exciting program on Antitrust issues in Asia. Some of you may know that the IPBA's President-Elect is Jerry Libby, a former Chair of the Section of International Law.

The IPBA is comprised of approximately 1500 senior level attorneys from all over the world who share a common focus on Asia-Pacific related business law. The IPBA expects between 800-1000 total delegates for the Annual Conference. The majority of conference delegates are from key Asian trading partner countries that represent influential firms and government agencies within their respective countries.

The Section of International Law is co-sponsoring (with the ABA Section on Antitrust Law) the program "Asia-Pacific Antitrust Law: Redefining the Rules of Engagement" that will be held at 3:15 on Monday, April 28. There will be 38 other panel sessions which feature 225 speakers from over 25 jurisdictions worldwide. To see a full listing of panels, please visit http://www.ipba2008.com/concurrent_sessions.html.

Evening social programs include a gala at the world renowned Getty Center and an "IPBA in Hollywood" gala on the Sony Pictures Studios back lot. For accompanying persons, private functions have been arranged at the Getty Villa, Huntington Museum & Gardens, and Chanel's flagship store on Rodeo Drive. Learn more at www.ipba2008.com.

I encourage you to register for the IPBA Conference. You may do so online at www.ipba2008.com. For more information, please contact the conference organizers at info@ipba2008.com or 310-478-0170.

Edward Lehman will be speaking on the panel Balancing Interests: Insolvency Reform in the Asia-Pacific Region on Tuesday, April 29, at 3:45pm. We hope to see you there!

China Law 0 Comment March 26, 2008, 5:35 pm

« 1 2 3 4 5 6 7 »