According to the Lunar Calendar, with the close of the 2017 Spring Festival on January 28 the Year of the Fire Monkey ended and the Year of the Fire Rooster began. It also is time for our annual review and predictions of China’s legal system.

Chang Wang, chief researcher at Thomson Reuters, invited Vivian Wu, an internationally renowned Chinese investigative reporter to co-author an article to review the major legal events and developments in the People’s Republic of China (PRC) over the past year and predict the direction and trends of the legal system in the year to come.

Please note that the scope of this review is limited to the legal and regulatory framework inside the PRC.

2016 Reviews

One-child policy officially ended

On January 1, 2016, China’s notorious one-child policy officially ended. The controversial policy was introduced in 1979 and led to human rights abuses in its implementation and long-ranging, disastrous social consequences in gender inequality and labor shortages. Although families will still require government-issued birth permits or face the sanction of forced abortion, couples in China can now request to have two children. But the latest year-end statistics from Chinese media proved no signs of an immediate increase in the birth of newborns. Despite national efforts to increase birthrates, more and more middle-class couples in urban areas express no intention to have a second child due to continued cost-of-living increases, a poor outlook for education and medical care resources, and the deterioration of the natural environment.

The Establishment of “Jian Cha Wei” and Party Discipline

Last November, the Communist Party of China (CPC) announced the establishment of Monitoring/Supervisory Commissions (known as Jian Cha Wei) in selected municipalities and provinces, specifically Beijing, Shanxi and Zhejiang.

The CPC claimed this move was “an important political reform” aimed at strengthening supervision of administrative, party and government officials. Optimistic observers considered the new commission with its centralized powers might curb corruption and improve transparency with a system similar to the Independent Commission Against Corruption (ICAC) in Hong Kong and perhaps pave the way for political reform. But wary critics note that without the authority to supervise the party independently, the measure would merely consolidate CPC’s grip of power and extend the longevity of one-party rule.

Foreign NGO Law

On April 28, 2016, the National People’s Congress passed the Law on Administration of Activities of Overseas Nongovernmental Organizations in the Mainland of China (commonly referred to as the “Overseas NGO Law”). The law was met with wide skepticism and criticism.

The law, which took effect on January 1, will require that international NGOs, foundations and non-profit institutes present in China to register with the government. The new law will impact more than 7,000 organizations that up to this point have been operating in the country without officially-approved registration for decades due to the difficulty of acquiring the license.

With a claim to clean up the gray space and better order overseas organizations’ activities, the vague instruction of the new law, particularly measures to be implemented by public security authorities, are a source of concern. Critics describe it as a concrete measure for tightened control through coercive orders. For example, a foreign NGO is required to affiliate with a local state organ before applying for registration, regularly report the source of grants and finance income, and be subject to the supervision of daily activities from the local police, etc.  The new law also lists the scope of permitted activities and marks particular business (which include advancing the rule of law, human rights and labor rights protections, etc.) may not be tolerated.

Cyber Security Law

Despite criticisms, the National People’s Congress passed the new Cyber Security Law on November 7, 2016. As the first national law designed to combat hacking, information stealing, online fraud and other crimes on the Internet, it contains articles that require companies and individuals – including foreign entities doing business in China – to provide the Chinese government with potentially sensitive information related to their network infrastructure and software. IT service providers and operators will also be asked to assist with mandatory testing and certification of computer equipment, and cooperate with government investigators by providing full access to their data in cases that may involve national security and cyber crimes. The law will take effect in June.

Nie Shubin Exoneration

In a rare move to correct false and erroneous cases, The Supreme People’s Court, the highest court in China, exonerated Nie Shubin, a 20-year-old villager who was executed in 1995 by the Hebei Higher Court for the rape and murder of a woman in the province. Ten years after Nie was executed, however, Chinese media disclosed that Henan police had arrested Wang Shujin, a farmer who confessed to the rape and murder of five other women in Hebei, including the victim in the Nie Shubin case.

Nie’s family, with the support of journalists and lawyers, appealed for a new hearing in the case for more than 10 years, but efforts were hindered by bureaucracy and local protection by court and police authorities. The Supreme People’s Court eventually exonerated Nie in November and supported a request by his family for state compensation, but no further investigation into the responsible parties or examination into allegations of abusive interrogation or negligence by police was allowed.

Death of Wei Zexi and a Condemnation of Baidu

In April 2016, Wei Zexi, a 21-year-old student from Shaanxi province, died after receiving a failed experimental treatment for synovial sarcoma at a Beijing hospital.

In 2014, Wei was diagnosed with the rare cancer, and after receiving unsuccessful radiation and chemotherapy treatments, he learned of an alternative cancer treatment available at the Second Hospital of the Beijing Armed Police Corps, a state military-run hospital, on the Chinese search site Baidu. Wei went through four so called “immunotherapy” treatments at the hospital, which cost his family 200,000 Yuan (or $32,116), which all failed.

Prior to his death, Wei accused Baidu of promoting false medical information, denouncing the hospital for claiming high success rates for the treatment. Some Beijing journalists read Wei’s posts and launched a social media campaign to condemn Baidu and its notorious manipulation of search results, which were driven by commercial payments from illegal medical service providers. Amid critical coverage on state media, the Chinese Internet Administration Bureau also initiated an investigation of Baidu, which led stock prices for the search firm to drop significantly.

Lei Yang Case

Lei Yang was a young Beijing-based environmentalist who was found dead in May 2016 while in the custody of the Beijing Police in Changping District just hours after he left home for an airport pick up. Police notified Lei’s family that he had died of heart attack at the police station earlier that night after he was arrested on suspicion of soliciting workers for sex at a foot massage parlor. However, witnesses to Lei’s arrest later shared footage with the media and online of a brutal altercation between the man and police with five plainclothes police officers.

The suspicious death of Lei – who was also a father to a newborn and graduate from the renowned Renmin University –  trended on social media after his schoolmates publicized the details of his case.

The case also triggered a public outcry by those in the urban middle classes for an investigation into police violence and expanding police powers. In late December 2016, five law enforcement officers involved in the death of Lei Yang were released without trial after being detained for months. Prosecutors found these officers broke the law with an inappropriate use of force, delaying medical care and lying about Lei’s death. His widow claimed to accept government compensation (which observers speculated to be a record amount) but later dropped litigation amid tremendous pressure. In the end, Lei’s supporters regarded the outcome as a failure of political movement.

HK Constitution Article 104

In November 2016, China’s top legislators adopted an interpretation of Article 104 of the Basic Law of the Hong Kong Special Administrative Region (SAR) by a unanimous vote. The article stipulates: “When assuming office, the chief executive, principal officials, members of the executive council and of the legislative council, judges of courts at all levels and other members of the judiciary in the Hong Kong Special Administrative Region must, in accordance with law, swear to uphold the Basic Law of the Hong Kong Special Administrative Region of the People’s Republic of China and swear allegiance to the Hong Kong Special Administrative Region of the People’s Republic of China.”

This pledge of allegiance is not only the legal content which must be included in the oath prescribed by the Article, but also the legal requirements and preconditions for standing for election. Before assuming office, public officials, including law makers, must make their pledge of allegiance “sincerely and solemnly” and “accurately and completely,” and speak these words publically as a legal prerequisite.

This move came in response to a controversy that erupted last October after two pro-independence lawmakers in Hong Kong pledged allegiance to a “Hong Kong nation” and referred to China as “Chee-na,” a derogatory pronunciation of “China” used by the Japanese during the WWII. The officials also displayed a banner that read “Hong Kong is not China,” an action that escalated an already-intense political divide in Hong Kong between pro-democracy forces and Beijing central government. These two lawmakers were eventually disqualified.

Crackdown on lawyers and activists, Jiang Tianyong and others

A crackdown on human rights lawyers and activists that began in July 2015 reached its peak in 2016, with some lawyers sentenced to stay behind bars for subversion or inciting subversion. Among those detained late last year was Jiang Tianyong, a 45-year-old Christian lawyer who had been arrested several times before for offering legal aid to practitioners of Falungong, a banned cult in China.

Jiang also had run afoul of authorities for aiding the wives of lawyers arrested in the so-called “709 Crackdown” – which refers to the date, July 9, 2015, when pressure against human rights activists began – appealing for fair judicial processes for some 250 lawyers detained. Chinese police confirmed the detention of Jiang in mid-December of last year, nearly a month after his family reported his disappearance under mysterious circumstances and called for international attention.

Execution of Jia Jinglong

Jia Jinglong, a farmer from Hebei province, was executed after the Supreme Court believed he had murdered a village party chief with a nail gun. The Jia Jinglong case sparked public outcry, and the man became a symbol of injustice faced by the poor and needy who dared to defy authorities.

The case began when village authorities demolished Jia Jinglong’s newly furnished home just 18 days before his wedding to make way for a new development project. Unfortunately, the episode led his fiancée to call-off the wedding. Soon after, in February 2015, Jia Jinglong plotted his revenge and vowed to kill the village chief whom he blamed the destruction of his home and planned marriage.

The Supreme Court reviewed the death penalty ruling leveled by provincial courts and approved the sentence, explaining that Jia Jinglong had used extreme measures that caused severe public fear. The execution was processed secretly amid public outcry and ongoing questions of whether the Chinese judicial system could safeguard basic rights of the lower class.

Foreign Investment Laws revisions

On September 3, 2016, the Standing Committee of the National People’s Congress passed the most significant revision of four laws regulating foreign investments in China, namely the Law on Wholly Foreign-Owned Enterprises, the Law on Sino-Foreign Equity Joint Ventures, the Law on Sino-Foreign Contractual Joint Ventures, and the Law on the Protection of Investment of Compatriots from Taiwan (“Revisions”). On the same day, the Ministry of Commerce (“MOFCOM”) issued the Interim Measures for Record-Filing Administration for Establishment of and Changes to Foreign-Investment Enterprises (“Record-Filing Draft”).

The Revisions and Record-Filing Draft, which took effect one month later in October, lifted previous requirements for administrative approvals on foreign, Hong Kong and Taiwanese investors. Rather, investors setting up ventures in the regulated areas don’t need to get approvals and can go through a record filing system at the local regulatory administration. This is a major departure from previous regulations, signaling an effort to create a more foreign-friendly business environment.

2017 Predictions

China faces the daunting task of controlling a rapid capital outflow to keep the Chinese currency stable, and at the same time, creating an investment climate conducive to foreign investment. Investors can expect relaxed bureaucratic procedures and incentives (tax and residency) to further inbound foreign investment.

Chinese authority will implement limited police reform to address the widespread public concern over police brutality and abuse of power and has promised standardized law enforcement procedures to restore public confidence.

The CPC also will continue its anti-corruption campaign as sentences for life imprisonment without parole and executions may becoming more common in high profile corruption cases.

Likewise, the CPC will tighten its control over the judiciary. In January, Chief Justice Zhou, the head of the Supreme People’s Court of China, said in a speech to legal officials in Beijing: “We should resolutely resist erroneous influence from the West: ‘constitutional democracy,’ ‘separation of powers’ and ‘independence of the judiciary.’” The legal system will remain an integral part of the CPC administrative system and a tool for the CPC to implement party policies.

Since efforts to crackdown on civil rights lawyers and activists began in earnest in July 2015, the campaign aimed to silence and punish civil rights lawyers will continue. The authority views the approach utilized by legal professionals to defend migrant laborers, ethnic and religious minorities, victims of land grabs, and political dissidents as subversive.

In the second part of 2017, the 19th National Congress of the Communist Party will be held in Beijing, which is the most important political event in the nation under Xi Jinping administration.

This year also marks the 60th anniversary of the Anti-Rightist Campaign instigated by Mao Zedong in 1957. The Anti-Rightist Campaign is the largest and one of the most merciless campaigns in China aimed at purging dissent and disobedience, leading to the political persecution of an estimated 550,000 intellectuals.

And finally, central authorities are making extreme efforts to maintain the stability of its control over the increasingly divided Chinese society amid intensified political environment and slow down GDP growth.

This post was written by Chang Wang, chief research and academic officer at Thomson Reuters, and Vivian Wu, International Cooperation Director for Initium Media – a Hong Kong-based news, features, and data journalism website.

 For more information about Chinese law, visit: Westlaw China and Practical Law China.