According to the Lunar Calendar, 2016’s Spring Festival on February 8 marks the end of the Year of the Wooden Sheep and beginning the Year of the Fire Monkey. At this transitional time, Legal Current invited Chang Wang and Christopher Luehr, two Chinese law experts at Thomson Reuters, 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 coming year.

The scope of this review is limited to the legal and regulatory framework inside the People’s Republic of China and does not cover international law. For example, the South China Sea dispute could potentially be a significant issue in this year but it is beyond the scope of this review.

Reviewing the Year of Sheep

  1. Anti- Corruption Campaign

Last year saw its third year of an anti-corruption campaign targeting senior members of the Communist Party of China (CPC), government, military and state-owned company officials. More than 29,000 Communist Party officials have been investigated and disciplined, including Zhou Yongkang, Chair of the CPC Central Political and Law Committee; and  Ling Jihua, Chief of Staff to former President Hu Jintao and Guo Boxiong, Vice-Chairman of the CPC Central Military Commission and one of the top military commanders of the Chinese army.

  1. National Security Law

On July 1, 2015, the Standing Committee of National People’s Congress promulgated the National Security Law of the People’s Republic of China. The law includes an expansive definition of “national security” that outlaws threats to China’s government, sovereignty and national unity as well as its economy, society, and cyber and space interests. The new law is troublingly vague and touches nearly every aspect of public life in China.

  1. Counter-Terrorism Law

The Standing Committee of National People’s Congress passed the Counter-Terrorism Law on December 27, 2015. Critics claim the law employs a recklessly broad definition of terrorism, gives the government new censorship powers and authorizes state access to sensitive commercial data. Notably, the anti-terrorism law also includes a requirement that telecommunication and Internet service providers “shall provide technical interfaces, decryption and other technical support and assistance to public security and state security agencies.”

  1. End of the One-Child Policy

In October, the CPC reversed its decades-long one-child policy by announcing that all couples are now allowed to have two children. The policy change intends to balance population development and address the challenge of an ageing population. The proposal must be approved by the National People’s Congress before it is enacted.

Also, President Xi Jinping announced that China will provide nearly 13 million unregistered citizens – mainly illegally-born second children or “underground children” – with household registration permits or “hukou,” a crucial document that entitles Chinese citizens to government benefits such as medical insurance and education.

  1. Criminal Law Amendment 9

In August, the National People’s Congress Standing Committee adopted amendments to the Criminal Law and removed the death penalty for nine crimes, including smuggling weapons, counterfeiting currency and fabricating rumors to mislead others during wartime. The new law adds crimes related to cyber security, enhances protection of citizen’s personal information and assigns network security duties to Internet service providers. Counterfeiting passports, social security cards and driver’s licenses, organizing cheating on exams and bringing civil litigation based on fabricated facts for illegitimate interests are now listed as crimes under the new law.

The revised law also adds several items intended to crack down on terrorism. Those promoting terrorism and extremism by producing and distributing related materials, releasing information and inciting terror in-person or through audio, video or information networks will face more than five years in prison in serious cases. Those who instigate violent terror activities will also face the same punishment.

  1. Public Security Reform

The CPC began public security reform in 2015 with a  new plan that aims to improve the country’s security system by instituting a social credit system will be set up for citizens based on their ID number. The new plan also states that the system used for international manhunts for those who break the law, and the procedures for their repatriation and extradition, will be improved.

Most importantly, however, investigators will take lifelong responsibility for the cases they investigate. The heightened accountability aims to curb the corruption and abuse of power exposed in recent investigations into the Ministry of Public Security during the Zhou Yongkang era.

  1. Crackdown on lawyers and civil rights activists

More than 300 Chinese civil rights lawyers and activists have been targeted by police in an unprecedented nationwide crackdown that began in July. Civil rights lawyers, along with “underground” family churches not registered with the authorities, political dissidents, public liberal intellectuals and citizen petitioners have been targeted since 2012. As of January 2016, more than 30 lawyers and activists are still in custody and have been charged with criminal offenses.

  1. The Case of Pu Zhiqiang

Pu Zhiqiang, the most respected and outspoken civil rights lawyer in China, was taken into custody in May 2014 after he attended a private gathering to commemorate the 1989 Tiananmen tragedy. After 19 months in custody, he was finally charged with “picking quarrels and provoking trouble” and “inciting ethnic hatred,” and found guilty after a three-hour “trial” on December 22. Pu was sentenced to a three-year suspended prison sentence and released to “residential surveillance.” Pu also will lose his attorney license.

  1. The Case of Gao Yu

In April, 2015, Beijing’s high court convicted journalist Gao Yu of leaking state secrets and sentenced her to seven years in prison. The authorities accused Gao based on the transmission of an internal document of the Communist Party of China, even though the same document had already been posted online. Eventually Gao’s sentence was reduced to five years and she was released on medical parole, but her conviction stands.

  1. The Cases of H.K. Booksellers

Five staff members of Causeway Bay Books, an independent bookstore, went missing from October to December 2015 as backlash over the firm’s publication of books highly critical of Chinese leaders. While three of them disappeared from mainland China, one disappeared from Thailand, and another from Hong Kong. Also two of the staff members are not Chinese citizens: Gui Minhai is a Swedish citizen and Lee Bo is a British citizen. Chinese authorities have admitted they are currently in Chinese custody. 

Predicting the Year of Monkey

  1. Anti-corruption Campaign

The Anti-Corruption Campaign will slow down. China’s institutionalized corruption and abuse of power are caused by the monopoly of political power and the lack of an independent judiciary. As long as the Communist Party is in total control of all aspect of social life and cannot be held accountable for any wrongdoings, the epidemic corruption cannot be adequately addressed.

  1. Cyberspace Sovereignty

Chinese officials recently drafted a new Cybersecurity Law setting out a framework for China’s cybersecurity regime and responding to the needs set out in the National Security Law to ensure “safe and controllable” systems and data security. Despite the fact that many internationally popular websites, including Youtube, Facebook, and Twitter remain blocked by the “Great Firewall,” more foreign companies are accepting the arguments and demands of the Chinese authority regarding China’s “cyber sovereignty” in order to gain access to the large and attractive Chinese market.

  1. Outbound Investment

Chinese companies will continue to make foreign investments and acquisitions not only in real estate and manufacturing sectors, but also in the realm of film and media in an expanded employment of “soft power.” For example, the Alibaba Group recently acquired The South China Morning Post; the Wanda Group purchased Hollywood studio Legendary Entertainment; and Visual China Group acquired Corbis. These Chinese “cultural takeover” maneuvers are part of the “Grand Foreign Propaganda” strategy to present foreign audiences with a positive image of China.

  1. Borderless Chinese Law Enforcement

Absent pressure and action from foreign powers, the exercise of Chinese police control on perceived dissidents, including non-Chinese nationals, outside of mainland China will continue.

  1. Regulating Financial Market

More regulations will be promulgated to deal with serious financial market issues, including interest rates, RMB devaluation, capital outflows, stock market fluctuation, wide-spread financial Ponzi schemes, etc. While these measures may provide temporary improvements, they skirt the deeper structural defects of the Chinese financial system.

  1. SEOs Reform

Reformation of state-owned-enterprises (SEOs) will continue in an attempt to help stop the decline of the Chinese economy. The change will be slow and the Chinese government and CPC will continue to be heavily involved with these companies, but SEO structure and practice will likely transform in the face of growing economic pressure.

  1. Hukou Reform

Household registration permits, or “hukou,” policies will relax and allow for greater freedom of movement for residents between rural and urban locations.

  1. Patch Measures on Air Quality

Instead of broad and sweeping reforms, the government will continue to employ temporary, but largely insufficient patch measures to deal with air pollution, food safely, drug safety and hazardous materials.

  1. Regulating Foreign NGOs

Greater regulations, including a new law, will be placed on NGOs operating in China, with particular restrictions imposed on foreign NGOs and their employees.

  1. Foreign Divestment

Some major foreign-owned companies will begin divesting in China and moving operations outside of the country. This will occur in response to increasing frustrations with unclear laws, inconsistent regulatory interpretation, and rising labor costs.

This post was written by Chang Wang, chief research and academic officer at Thomson Reuters, and Christopher Luehr, associate project manager at Thomson Reuters.