Pasekoff on Wu, “China, Inc.”

Laura Pasekoff

Corporations and International Law

March 4, 2018

 

The speaker for the March 2, 2018 session of Corporations and International Law, Spring Semester 2018, was Professor Mark Wu, a professor who joined us from Harvard Law School.  Professor Wu joined us to discuss two pieces of his writing.  The first was a 2016 journal article entitled, “The ‘China Inc.’ Challenge to Global Trade Governance.” The second was a discussion note written specifically for this seminar discussion, called, “Blurred Lines and the Invisible Hand: How Ought International Law Respond to Informal, Non-Collusive Actions in a World of Complex Inter-Firm Dynamics.”

 

At the beginning of the speaker session, Professor Wu gave a few opening remarks to ground the discussion.  He elaborated on the idea that the current state of international law and political economy is a product of the cold war, particularly the formal way we think about State Owned Enterprises (SOEs), in terms of both ownership and control.  Professor Wu noted that we often juxtapose the concepts of the Western free market economy with the Soviet-style command economy.  However, China, Professor Wu argues, has left this duality behind in favor of establishing a unique, un-replicable economic model, which refuses to fully acquiesce to the Western idea of what economies “should” look like.  Professor Wu then went on to point out the difficulty of truly defining what makes an SOE, suggesting that in the Chinese economy, where all large firms are tied to some extent to the Chinese Communist Party (the CCP, or the Party), firms exist on a spectrum of state control, rather than being fully state controlled or fully private.  Additionally, on a continuum between a free market economy and a command economy, China itself exists somewhere along the spectrum, rather than being firmly rooted at either extreme.  Economies, Professor Wu said, are not a one-sized fits all social system, and the Chinese system does not conform to our post-cold war ideas.  But, this lack of conformity poses a problem.  Our current legal rules were developed in line with this post-cold war conception, and so the existing rules and institutions are insufficient to fully address the problems posed by Chinese economic structures.

 

Then, Professor Wu contextualized our present mentality historically, pointing out that the modern state-vs-non state mindset could itself be an anomaly.  Getting China to “play by the rules,” then, may be futile if the concepts underlying the rules themselves are themselves flawed.  Professor Wu argued that the modern Western conception limits us to the idea that SOEs cannot work, because we are influenced by a relatively short span of modern history rather than understanding them in light of their overarching historical development and form.

 

The question and answer portion of the session extended over numerous topics, ranging from discussion of the hypothetical posed in the discussion note, to clarifications of economic and political power.  One question I thought was particularly interesting was whether there is a public interest in divorcing the Party from the Chinese state.  Professor Wu noted two opposing academic opinions on this point: Chinese liberals, he said, have suggested divorcing the party and the state.  However, the party also offers a check on state power, for better or for worse.  The Party in many ways addresses short term political thinking and bottom-up governing.  However, just as there is a checking mechanism by the Party, there is also a chilling mechanism.  I found this portion of the discussion particularly intriguing in light of the recent removal of term limits in China.

 

This was of course only one of numerous interesting questions.  Other questions ranged from human rights concerns, to the current state of anti-dumping rules in the WTO, and even “What do we have SOEs at all?”  Professor Wu did an excellent job of answering each of the questions in detail, expanding the discussion, and clarifying confusion economic points.  Sincere thanks to Professor Wu for his time.

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