Business / Economy

Rule of law crucial to development of market economy

(Xinhua) Updated: 2014-10-27 17:17

BEIJING -- China's new blueprint to advance the rule of law is crucial to the development of a market economy and is set to have a far-reaching impact on China's economic growth, analysts and financial institutions have said.

The ongoing reforms and the anti-corruption drive, which will eventually enable the market to play a "decisive" role in resource allocation, should be guided by and accompany a better rule of law, experts said.

Rule of law topped the agenda of the 4-day Fourth Plenary Session of the 18th Central Committee of the Communist Party of China (CPC), which ended on Oct 23.

It was the first time that a plenary session of the CPC Central Committee had taken this topic as its central theme.

In the blueprint, the Party declared sweeping judicial reforms while emphasizing the role of the Constitution in China's legal system. It also aims to improve judicial independence, promote procedural justice, professionalize judicial officers, and build a law-abiding government.

Ma Huaide, professor and vice-president of China University of Political Science and Law, said the rule-of-law principle is essential in safeguarding the process of implementing the historical reform plan which was rolled out by the CPC last November.

Any laws and regulations in conflict with reform measures should be revised in a timely manner, so as to guarantee that all reforms should be conducted in accordance with the laws, Ma said.

Chinese leadership has been pressing ahead with "revolutionizing the government itself", as Premier Li Keqiang put it, and intensifying efforts to simplify administration and delegate powers to the lower levels, which are parts of broader efforts to promote reforms and stabilize economic growth.

Ye Tan, an independent financial commentator, said judicial independence and justice are the foundation for further development of the Chinese market economy.

"Judicial corruption is the source of corruption in the Chinese market," she said. "(Improving) judicial independence is the most important reform, as judicial corruption is the most dreadful one."

According to a communique following the plenum, China is to pilot a kind of circuit courts set up by the Supreme Court and separate judicial and administrative jurisdictions to ensure the independence of the judicial system.

There won't be a real financial sector under a market without rule of law, and risks of the capital market are set to rise if the market is disturbed by unfairness in the rule of law, Ye said.

Inadequate implementation of the rule-of-law principle tends to raise systematic risks in the economy, as the efficiency falls and project approval costs rise, she said.

Overall, the communique shows the Chinese leadership is trying to set up a framework, objectives and implementation for a more independent and empowered judiciary and legislative systems in China, the Japan-based Nomura Securities said in a note.

"The rule of law is set to improve," it said.

"This is an important step for promoting the rule of law in China which is important for long-term sustainable growth. The challenge, however, is implementation."

Lu Ting, chief China economist with Bank of America Merrill Lynch, said messages from the communique had slightly beat market expectations on legal reforms.

However, markets might still see uncertainty on specific details to be announced a few days later, and might question the implementation of these reforms, he said.

There is a "long and bumpy way to go towards a real rule of law", Lu said.

Rule of law crucial to development of market economy

Rule of law crucial to development of market economy

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