On Sunday, December 18, I had the honor to deliver a keynote speech titled Zhejiang, Case Guidance, and China’s Global Economic Development at an international conference held in Hangzhou, capital city of China’s Zhejiang Province.  The speech turned out to be timely as on the same day, a Chinese Communist Party leader visited Alibaba, the e-commerce giant headquartered in Zhejiang.  The visit not only marked the first of this type since Alibaba faced serious regulatory investigations two years ago, but also occurred only two days after President Xi Jinping chaired the country’s economic working conference, at which China’s “platform enterprises” (e.g., Alibaba) were called upon to “show their talents in leading [the country’s] development, job creation, and international competition”.

Jointly organized by the Zhejiang Agriculture and Forestry University, Hangzhou People’s Procuratorate, Hangzhou Lin’an District People’s Procuratorate, and a leading law firm, the conference that I participated in focused on the development of the rule of law in China.  It featured discussions of a wide range of topics (e.g., development of rural areas, knowledge-based economy, etc.) conducted by nearly 70 officials, lawyers, and scholars.  In the following paragraphs, I will share the key discussion covered in my speech, with elaborations wherever appropriate.

China’s Global Economic Development

To effectively promote China’s economic development around the world, Chinese policymakers must consider foreign decision-makers’ perspectives.  A major challenge facing these foreign decision-makers is how to maximize the opportunities associated with China’s rise in the world, while minimizing the risks involved.  Ultimately, this is about how to increase foreign decision-makers’ confidence, which can only be built on solid evidence demonstrating progress.  It is, therefore, wise for Chinese policymakers to clearly show to foreign decision-makers what opportunities China has created and how the country helps minimize the risks involved.

“To effectively promote China’s economic development around the world, Chinese policymakers must consider foreign decision-makers’ perspectives.”

Undoubtedly, China has done a remarkably good job of promoting opportunities associated with China-related economic development inside and outside the country.  A few recent examples are illustrative:

• China’s opening up of its wealth management market has helped foreign financial institutions accelerate their growth in the country (see JV Between BNP Paribas & Agricultural Bank of China: Another Sign of Foreign Investor Confidence in China’s Wealth Management Sector);

• China’s import of fresh agricultural products from Africa has boosted more trade opportunities for farmers in Africa (see China’s First Import of Fresh Avocadoes from Africa Signals Closer China–Africa Trade (& Other?) Relations); and

• China’s potential accession to the Digital Economy Partnership Agreement will likely lead to more digital trade with current members (e.g., New Zealand, Singapore, and Chile) and prospective members (e.g., other Latin American countries that follow Chile’s footsteps to join the agreement) (see China is One Step Closer to the Digital Economy Partnership Agreement).

As for how China helps minimize the risks that foreign decision-makers may encounter, an exemplary example is an agreement reached by China and the United States, under which the U.S. Public Company Accounting Oversight Board (the “PCAOB”) was allowed to take an unprecedented step in Hong Kong to review select accounting firms’ audit records of Chinese companies listed in the United States (see Will a China-Assisted Inspection of Audit Records Save U.S.-Listed Chinese Companies?).  Finally, on December 15, the PCAOB announced that it “has been able to inspect and investigate audit firms in mainland China and Hong Kong completely” and, as a result, “investors are now more protected”.  Had China not reached this agreement to let the PCAOB conduct its review effectively, nearly 200 U.S.-listed Chinese companies could have been delisted.

All of the above developments signal progress, but they are not sufficient. 

Case Guidance & Related Progress

Foreign decision-makers need to have legal safeguards in China that can truly protect their legal rights and interests.  China’s Case Guidance System, which was formally established in 2010, has the potential to provide such safeguards.  This is because under this system, the Supreme People’s Court releases Guiding Cases on a regular basis to lay out guiding principles for courts across the country to follow when handling similar subsequent cases.  As such, the goals of having legal certainty and uniform application of law across the country are more likely to be accomplished.

“Foreign decision-makers need to have legal safeguards in China that can truly protect their legal rights and interests. China’s Case Guidance System […] has the potential to provide such safeguards.”

So far, 191 Guiding Cases have been released to cover a wide range of legal issues.  Nearly half of these Guiding Cases (i.e., 85 in total) were released in 2019 or afterwards, indicating that the Supreme People’s Court has accelerated its process in selecting suitable cases for reissuance as Guiding Cases.  This development is welcome as stakeholders, including Chinese judges and lawyers, have often expressed concerns that there are not enough Guiding Cases addressing ambiguous legal issues.     

Intellectual Property Guiding Cases & Zhejiang’s Role

Among the different types of Guiding Cases, those related to intellectual property and their application in subsequent cases matter most to many foreign decision-makers.  Therefore, progress in these areas will likely lead to more confidence and thereby facilitate China’s global economic development.

Among the existing 191 Guiding Cases, 31 (i.e., 16.2%) are related to patents, trademarks, copyrights, new plant variety rights, unfair competition and/or antimonopoly issues (collectively referred to by the Supreme People’s Court as “intellectual property Guiding Cases”).  Unfortunately, of the 85 Guiding Cases released since 2019, only nine (i.e., 10.6%) are related to intellectual property rights, suggesting that a quicker pace in the release of Guiding Cases is not taking place in the area of intellectual property.  Given that the revised Antimonopoly Law came into effect in August 2022 and many issues arising from this law are intertwined with intellectual property rights, the Supreme People’s Court should consider releasing more Guiding Cases addressing these issues.

As for the application of intellectual property Guiding Cases, an empirical study conducted by the SINOTALKS^® team shows that courts in China have rendered more than 50 judgments in which the courts explicitly discussed in their reasoning whether principles laid out in intellectual property Guiding Cases were followed.  More than half of these judgments were rendered by courts in Guangdong, Zhejiang, Shanghai, and Jiangsu, with the remaining judgments originating from courts in different regions. 

Zhejiang courts’ relatively active use of intellectual property Guiding Cases could help bolster their efforts to strengthen their online dispute resolution (“ODR”) mechanisms, if these mechanisms also refer to these Guiding Cases to offer more legal certainty (for more information about Zhejiang’s ODR development, see, e.g., Judge GE Jiguang & Dr. YAO Yao, The Shaoxing Online Dispute Resolution Model: A New Approach to Improving China’s Litigation Services System, 13 China Law Connect 21 (June 2021)). 

Armed with strong ODR mechanisms offering legal certainty to support international transactions, including cross-border e-commerce, Zhejiang will then be in a better position to facilitate China’s global economic development.

P.S. I want to thank David Wei Zhao for his research support during the preparation of this article.

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^† The citation of this article is: Dr. Mei Gechlik, My Keynote Speech at a Hangzhou Conference: Zhejiang, Case Guidance, & China’s Global Economic Development, SINOTALKS.COM, In Brief No. 27, Dec. 21, 2022, https://sinotalks.com/inbrief/2022w49-english-zhejiang-case-guidance-china-global-economic-development.

The original, English version of this article was edited by Nathan Harpainter.  The information and views set out in this article are the responsibility of the author and do not necessarily reflect the work or views of SINOTALKS^®.

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