Friday, February 19, 2010

Li Zhuang’s Sentence: Support for or Death of the Rule of Law in China

By Julia Zhu

China's eventful 2009 ended with another controversial episode: a record-length trial in the widely observed case of Li Zhuang, a prominent criminal defense lawyer from Beijing.

Earlier this month,  Li Zhuang was convicted of falsifying evidence and jeopardizing testimony after his client, Gong,  a suspected gang leader, who was caught in a massive crackdown in Chonqing, said the lawyer told him to lie after he was tortured by police.

Li Zhuang was sentenced to two and a half years in prison by the Chongqing court.

Li’s sentence has triggered a heated debate in China. Support for Li’s conviction came mainly from the general population. The anti-corruption campaign has been very popular among Chongqing residents, who report years of terror living under the control of violent mob factions in collusion with police and local government officials. It is, therefore, not surprising that many residents harbor no sympathy for a lawyer defending an individual who has harmed the public interest and view the lawyer's conviction as a sign of progress within the legal system. The overwhelming majority of internet comments in China expressed anger at Li for "rescuing" a heinous criminal and making big money so doing.  They believed Li acted to impede justice and that he should be punished for it.

On the other hand, many lawyers and legal scholars cite this case as an example of the lack of protection afforded to lawyers in recent years. They strongly questioned the legitimacy of the reported evidence and Article 306 of criminal law, which provided the basis for Li's arrest. Article 306 stipulates that lawyers must not "destroy or forge evidence, help any parties destroy or forge evidence, or coerce or entice witnesses into changing their testimony in defiance of the facts or giving false testimony." This vaguely-worded provision, according to the Global Times, "makes the Chinese mainland defense lawyer into something of an endangered species."

One main issue the court debated was whether Li’s client had, in fact, been tortured.  Judging from various news reports, neither the defense nor prosecution convincingly established their claims. Consequently, whether Li Zhuang had attempted to fabricate evidence of his client's torture remains unclear.

However, Li Zhuang's arrest ,conviction and sentencing raises serious questions about legal procedure and the protection of the fundamental rights of lawyers in China.  Among the more troubling due process aspects of this case are the extremely short period between his arrest and sentencing (arrested 22 days after he was retained by the client, tried 16 days after his arrest, and sentenced 9 days after trial), the lack of corroboration of Gong’s testimony, which Gong claims he made in exchange for a less severe sentence in his own case, and reports that no witnesses actually testified at the trial, with witness testimony obtained by prosecutors merely read aloud into the court record in violation of China's Criminal Procedure Law.

Subject to these serious due process issues, the legal issues were vigorously debated by both the prosecution and defense at trial and the entire trial was open to the public.

The public debate on the rule of law, due process and lawyers' rights, as well as the increasing emphasis on the importance of separating the public's emotional response to an individual case from an analysis of legal procedure, has been especially promising, as it suggests an increasing public interest in defining what a country ruled by law should look like.

Wednesday, January 27, 2010

What to do? What to do? What to do? What to do?
What to do about Overproduction?
by Edythe Huang

Too much of a good thing may not be quite so wonderful.  Since the EU Chamber of Commerce in China released a report in November, economist and financial watchers have been busy throwing in their two cents about "Made in China."  In case you have not been paying attention or did not think that the EU Chamber of Commerce's recommendations to the Chinese government about how China should run its economic affairs were important or were just too busy celebrating the holidays, here's a recap. In late November the EU Chamber of Commerce took it upon itself to highlight the problem overproduction of manufacturing goods was creating both in China and the "rest of the world."  In their report, they made a series of recommendations which included redistributing national income from companies to households, removing subsidies for energy and other outputs, forcing companies to slash capital expenditure, raising interest rates, and reforming the fiscal system to give local governments more power.

                Here are a few of my favorite reactions to the report --

                There's the typical accusation of protectionism:

"The claim is purely to defend their own interests.  These countries welcome Chinese exports when they cannot produce enough goods for their industrial and consumer needs during a good economy, but then these same countries limit Chinese exports amid an economic recession. . .  It's a double standard." -  Zhou Shijian, senior analyst with the Sino-US Relations Research Center of Tsinghua University. (reported by China Daily) 
                There's the typical blow off, this is not a big deal and it is going to go away on its own:
"The problem is just short term. . . It will disappear when the Chinese economy regains momentum." - Li Wei, analyst from Standard Chartered China, stating that overcapacity will be solved when China's domestic demand goes up. (reported by China Daily)
                There's the typical reassurance:
"China's exports in 2010 will grow, and there's no doubt about that," vice-minister of commerce Zhong Shan told a forum at the University of International Business and Economics in Beijing.
                There's the typical overreaction, claiming the problem is even bigger than the public thinks:
Daniel H. Rosen of the Wall Street Journal pointed out that overcapacity is not just a problem in the areas highlighted in the report: iron and steel, cement, electrolytic aluminum, glass, coal chemical, polysilicon and wind power equipment.  The problem is not only that there are too many manufactured goods; there's too much of everything in China, that is, except the important things such as doctors, teachers, and jobs overall. 
                There's the typical focus on ulterior motives (not that this is not notable):
All Roads Lead to China blogger Richard Brubaker noted one reason for the EU Chamber of Commerce's disapproval and note of China's overproduction: "Equally interesting is that while US exports have benefitted from the current situation, the EU has not.  That as the dollar has sunk, the Euro “peg” to the RMB has gone the wrong way for most of the EU making its goods and services more expensive."
                And finally, there's the well thought out acknowledgement of the complexity of the problem:
Michael Pettis, professor of finance at Beijing University, wrote a very good opinion piece in the Financial Times.  In the article, he highlighted the frightening scale of excess capacity occurring in China, and the foreign producers' fears of the impact of China's growing surplus.  He recommended, nay warned, China that if there will be an economic crisis in the trading system if China did not expand its exports in 2010.  On the other hand, he underlines the problem of his own solution, the rest of the world simply cannot absorb the surplus capacity and neither can the ordinary Chinese because ordinary Chinese are not earning enough to absorb the capacity because they are too busy paying for a system that gives the benefits to making products, not consuming them. 
I do not know if Party officials read the Financial Times, but they seemed to be listening to Michael Pettis.  After a month of very little comment on the EU Chamber of Commerce Report, XinHua came out with an exclusive report with Premier Wen Jiabao on the topic.  Surprisingly, or perhaps not, Premier Wen seems to agree with Professor Pettis.  He acknowledged that industrial overcapacity has been a global issue that is caused by both current global trends and long-existing problems with the imbalanced economic structure -  words which seem to come straight from Michel Pettis' article.  

Where does that leave us?  Well, everyone seems to agree that there is a problem.  What that problem is exactly and how to resolve it is a different issue all together.  What is agreed upon?

(1) There exists a complex problem with the fundamental structure of the economy in China that is based upon some "imbalance." 
(2) This problem is an international problem.  

That is all economists, financial analysts, international organizations, bloggers, financial journalists, international diplomats and the Chinese government can agree upon.  After that, it's a free for all.  The Chinese are saying that Western governments, the EU and the US in particular, are enacting protectionist measures during an economic crisis.  Western governments are yelling back that the Chinese governments hands are unclean- they are manipulating currency and creating more than the world can consume, but worst (and my favorite accusation because it always comes out at the end to add an extra punch), the Chinese are not even taking care of their own people who bear the burden of this problem.  

 At least we agree there is a complex problem, well, except for Li Wei.  Now how are we going to fix it? Premier Wen Jiabao has said that the problem is being worked on.  The Chinese government is channeling excess capacity into new fields.  The latest 1.18 trillion RMB stimulus package is being spent on affordable housing projects, construction of infrastructure, and improving people's livelihoods. That sounds nice, especially the part about improving people's livelihoods.  But I fear I'm a bit more cynical than that.  I'm afraid Premier Wen Jiabao proposal is simplistic at best.  I am not criticizing the good intentions of the Chinese government nor am I stating that areas highlighted by Premier Wen are not respectable areas upon which to improve.  I just do not think that the limited strategy described by Premier Wen is enough to satisfy the complexity of the problem.  For example, Premier Wen stated that the Chinese plan to spend stimulus on affordable housing projects.  Sounds great.  However, China is already dealing with an excess of developed real estate.  By building more affordable housing, which is great for common Chinese, the result is more properties left empty and more overcapacity.

I do not have a solution.  I'll leave that to the disagreeing experts.  But one thing is for sure, the devil is in the details and this is a problem where the details are going to make all the difference.