Breaking down China’s legislative agenda 2022 (Part III)
In this newsletter:
Formulation of ①Emergency Response and Management Law (突发事件应对管理法), ②Public Health Emergency Response Law (突发公共卫生事件应对法), and ③Law on Ensuring Food Security (粮食安全保障法).
Amendments to ④Company Law (公司法), ⑤Enterprise Bankruptcy Law (企业破产法), ⑥Anti-Monopoly Law (反垄断法), ⑦Railway Law (铁路法), ⑧Mineral Resources Law (矿产资源法), ⑨Animal Husbandry Law (畜牧法), ⑩Law on Prevention and Treatment of Infectious Diseases (传染病防治法), and ⑪Frontier Health and Quarantine Law (国境卫生检疫法).
① Emergency Response and Management Law (突发事件应对管理法)
What does it do? The Emergency Response and Management Law, while nominally being newly drafted, is actually borne out of the active Emergency Response Law. According to an explainer by Xinhua, even though the ERL was instrumental in the battle against Covid-19, there were at times management lapses in regional responses to the pandemic. Furthermore, over the past two years, the government and the society have accumulated a wealth of experience and lessons in dealing with such a large scale public health crisis that the NPC felt it was necessary to codify some management regulations so that next time something like this happens China does not have to feel the stone to cross the river.
Though Covid was the primary driver for the ERML, the law covers emergency management of a wider range of emergencies, such as more traditional emergencies like extreme weather.
According to Minister of Justice Tang Yijun, whose ministry was tasked to draft the law, there are 6 goals of the ERML.
Draw clear boundaries of responsibility between different gov’t agencies and different levels of government.
Set up a clear and efficient channel of information so that information could be effectively and accurately communicated within the government and to the public.
Ensuring logistical support in the event of an emergency. Think of the makeshift hospitals that sprang up in dealing with covid.
Enhance professionalism in dealing with emergencies, including developing a scientific response mechanism and building professional rescue teams at different levels.
Create a government-society synergy, where civilians can lend their efforts in combating emergencies, such as lending their expertise, volunteering, or reporting on bad behavior by government officials.
Protecting the legitimate rights of members of society. The draft specifically stressed the protection of those most vulnerable, such as pregnant women, children, the elderly, the sick, and the handicapped. The draft also included language on privacy protection, undoubtedly as a remedy for personal information leaks during covid-tracing.
The NPC Observer has on its website a draft of the ERML and a helpful comparison between the draft and the active ERL. Here.
Where are we at? The predecessor of the ERML is the Emergency Response Law adopted on August 30, 2007. On December 20, 2021, a draft amendment went to NPC deliberation.
The bigger picture: The enactment of the ERL was originally prompted by the 2003 SARS epidemic. It played an important role in response to emergency incidents and has provided an institutional guarantee in the fight against COVID-19. However, in recent years, a few emergencies such as the 2008 winter storms, the 2008 Wenchuan earthquake, and the ongoing Covid-19 pandemic call for more effective legislation. Critics argue that “the law affords weak protections for individual rights and fails to provide for effective coordination and information-sharing among government agencies” in these incidents. In response to these problems, in March 2020, Li Zhanshu, Chairman of the Standing Committee of the 13th National People’s Congress, attended the symposium on “strengthening legislation and amendment for legal protection of public health” and tasked Vice Chairman Zhang Chunxian with leading a legislative workgroup, of which amending the Emergency Response Law constituted an important part. The amendment was part of the Legislative Work Plan on Strengthening the Rule-of-Law Safeguards for Public Health by the 13th NPCSC.
② Public Health Emergency Response Law (突发公共卫生事件应对法)
What does it do? The Public Health Emergency Response Law will be a special law to cope with public health emergencies. It helps effectively prevent, timely control and eliminate public health emergencies, protect public health and life safety, and maintain normal social order. It will replace the Regulation on Public Health Emergencies after it is enacted.
According to this Xinhua story, one of the new features of the PHERL will be an emphasis on using traditional Chinese medicine in treating illnesses.
Where are we at? Currently, there are three legal documents related to public health emergency response: the Regulation on Public Health Emergencies, the Law on Prevention and Control of Infectious Diseases, and the Emergency Response Law. Although these legislations provided legal frameworks on how the state should set about tackling public health emergencies, the development of society, economy, and technology called for updated legal codes to make the overall response more efficient. In a speech in June 2020 later published on Qiushi, Xi Jinping pointed out “It is necessary to improve laws and regulations on public health and advance the formulation of the Public Health Emergency Response Law and the amendment to the Law on Prevention and Control of Infectious Diseases.” On March 10, 2022, the Secretariat of the 5th session of the 13th NPC delivered a report on the handling of proposals put forward by NPC representatives, adding “formulating the Public Health Emergency Response Law” to the legislative agenda 2022.
The bigger picture: During the COVID-19 pandemic, many problems were revealed, such as inadequacy of a special law to deal with public health emergencies, large-scale shortages of medical protective equipment, ineffective distribution of anti-COVID supplies, inadequate protection for citizens’ privacy, blockage of transportation in the name of COVID-19 response, and spread of fake news on the internet to cause panic. All these problems have become the driving force for improving the legal framework of public health emergencies. The formulation of the Public Health Emergency Response Law can handle public health emergencies more effectively and maintain social order, said Zhang Tianren, an NPC representative.
Moreover, valuable experience of local governments in the COVID-19 response can be permanently reserved through legislation. For example, during the pandemic, the Shenzhen Special Economic Zone, Beijing, and Zhejiang have adopted or revised their local regulations on public health emergencies, providing the legislative experience for the formulation of the Public Health Emergency Response Law at the national level.
③ Law on Ensuring Food Security (粮食安全保障法)
What does it do? The law will be a centerpiece of a set of laws that are to ensure that China has sufficient food. It will regulate grain production and storage, and devise an early warning mechanism and responses. It will 1. improve the grain quality supervision system and clarify the division of supervision responsibilities in grain processing, raw and finished grain sales, and storage; 2. stipulate the grain saving and loss reduction in grain production, processing, reserve, and circulation; 3. promote the participation of market entities in the food emergency security system and improve food emergency management.
Where are we at? The formulation of the Law on Ensuring Food Security was listed in the 13th NPCSC Category I – one of the most important legislative tasks of the 13th NPCSC (2018-2023). The No. 1 Central Document in 2018 and 2019 all put forward specific requirements for the legislation. On October 14, 2019, the State Council issued the white paper Food Security in China, creating a sound social environment for the legislative work. Subsequently, on October 18, 2019, the National Food and Strategic Reserves Administration held a symposium in Anhui to solicit comments. During the 2022 Two Sessions, the legislation once again became the hot topic, with NPC representative Han Qiuxiang stating, “It is an urgent task to enact the law and establish a multi-dimensional food security emergency response system”.On May 6, an NPC statement said the law is set to be brought before the NPC for its first review.
The bigger picture: Food security is one of the highest priority issues for the CPC. As General Secretary Xi Jinping stressed, “Of all things, eating matters most, and food is the most basic necessity of the people.” Through enormous efforts, China is now capable of feeding one-fifth of the global population with only 9% of the world’s arable land and 6% of the freshwater resources (an introduction by Beijing Channel, please see: Footnoting Xi’s speech on food security). To establish a higher-level, higher-quality, more efficient, and more sustainable food security system, the law plays a vital role in providing legal guarantees for food security, advancing rural revitalization, and modernizing China’s capacity for food governance. Besides, the law serves as the guiding legislation to the existing law, such as the Law on Food Waste, which will be beneficial to creating a comprehensive legal environment on food security. Other related law on food security also includes the Agricultural Product Quality Safety Law and the Food Safety Law.
④ Company Law (公司法)
What does it do? The Company Law is dubbed one of the most fundamental legislations of China’s economy. The law regulates how companies organize and operate and have great power in shaping China’s market economy.
The law has been amended many times. This time around, several of the purposes of the amendment are listed as follows:
1. refine special provisions on state-invested enterprises; 2. improve the company establishment and exit system; 3. enhance intellectual property protection; 4. improve the protection of investors, 5. tighten the responsibilities of controlling shareholders and management personnel.
WeChat account 法盏 has released a comparison between the latest draft and the acting law, along with some analysis. It’s in Chinese though.
Where are we at? Since its enactment in 1993, the Company Law has already been amended five times – in 1999, 2004, 2005, 2013, and 2018 respectively. Among them, a large-scale amendment was made in 2005; while the 2013 and 2018 amendments made important changes to the capital system of companies. The latest draft was started in 2019 and published on December 24, 2021, for comment. As of two sessions this year, the amendment has been reviewed once by the NPC.
The bigger picture: Lots of eyes are on these amendments, as whatever changes the law undergoes are expected to have a great impact on how companies operate. During its comment-seeking period ending on Jan. 22, 2022, a total of 705 people submitted nearly 5000 suggestions. While the stated purpose of the amendment is to enhance the business environment, experts expressed mixed responses to the draft. In a review, Kangda Lawfirm said the draft made improvements on several fronts but lagged behind in others, while a PKU law professor voiced his disappointment as the proposed amendments did not meet his expectations.
⑤ Enterprise Bankruptcy Law (企业破产法)
What does it do? According to the current law (adopted in 2006), the Enterprise Bankruptcy Law was formulated for the purpose of regulating the procedures for enterprise bankruptcy, fairly settling the credits and debt, safeguarding the legitimate rights and interests of creditors and debtors, and maintaining the market order of the socialist economy. CUPL professor Li Shuguang has a very comprehensive essay on the direction he believes the amendments should move in, the main gist being that the bankruptcy law should lower its threshold, and expand to cover a wider variety of market entities, and better facilitate the reorganization of companies, especially SMEs. The state-run Legal Daily also has a more authoritative piece outlining some of the fallacies of the current bankruptcy law.
Where are we at? China enacted the nationwide Enterprise Bankruptcy Law in 1986 for trial implementation and enacted the current law in 2006. In 2021, the NPCSC carried out a law enforcement inspection and researched the bankruptcy problems of financial institutions, listed companies, SOEs, and private enterprises to advance the amendment work. Now a new draft is in the making. On May 6, the NPC said the amendment is among those planned to be taken up for review this year.
The bigger picture: The Covid pandemic has posed a lot of hardship for many companies, and has cranked up the urgency to amend the bankruptcy law. As the reorganization system under the current law features unclear applicable subjects, insufficient application motivation, and high procedural costs, companies facing bankruptcies simply close shop rather than seek reorganization.
⑥ Anti-Monopoly Law (反垄断法)
What does it do? The law seeks to prevent and curb monopolistic conduct, protect fair market competition, enhance economic efficiency, maintain consumer interests and public interests, and promote the healthy development of the socialist market economy.
For the Request for Public Comments on the Bill to Amend the Anti-Monopoly Law, see here.
One notable addition in the amendment is the clauses against monopolistic behavior of internet companies, especially the platform economies. This is in line with the national campaign to crack down on internet companies since 2020. Another feature is the significant rising in penalties if a company is found to gain a monopoly. For instance, the penalty for the concentration of undertakings was half a million yuan under current laws, in the amendment, the fine could go up to 5 million.
The overall direction for the amendment is stricter regulation and supervision, along with more steep penalties. Here is a more comprehensive analysis of the amendment.
Where are we at? The current Anti-Monopoly Law (AML) came into effect in 2008 and the amendment work started around 2017. On October 23, 2021, the latest draft version, the Draft Amendment, was published to seek public comments by the NPCSC. Compared to previously released draft versions, the Draft Amendment does not make a substantial change to its articles, yet the liabilities for all types of illegal practice are largely increased. On November 18, 2021, the national anti-monopoly bureau (“Anti-monopoly Bureau”) was inaugurated in Beijing as the specific department dealing with anti-monopoly issues.
The amendment focuses on the following three aspects: 1. Expressly prohibiting hub-and-spoke cartel and provide for the same legal liabilities for both the hub and spoke. In some previous cases, the hub was not penalized due to the lack of clear rules in the AML; 2. Abuse of data, algorithms, technologies, and platform rules that lead to the imposition of unfair restrictions on undertakings is expressly listed as abuse of dominant market position; 3. If certain monopolistic behaviors caused detriment to public interests, the procuratorates can bring civil litigation against it.
The bigger picture: The Anti-monopoly Law is the basic legal system of the market economy. With the development of the socialist market economy, problems have been revealed in the law enforcement of the current Anti-monopoly Law, such as insufficient penalties for monopolistic behaviors. With the rapid development of new business models such as the platform economy, in particular, large platform enterprises have abused their advantages in data, technology, and capital to implement monopolistic behaviors and conduct disorderly expansion, which hinders fair competition, inhibits entrepreneurship and innovation, disrupts economic order, and harms consumers. As President Xi Jinping said, “Over the years, the problem of disorderly expansion of capital has become more pressing, some platform economy and digital economy have seen barbaric growth without due regulation, which has brought many problems. We need to expedite the revision of the anti-monopoly law, anti-unfair competition law, etc.” (an introduction by Beijing Channel, please see: Xi on China's legal system: achievements and shortcomings). Against this backdrop, it is urgent to improve the anti-monopoly system and strengthen anti-monopoly supervision by amending the Anti-Monopoly Law.
⑦ Railway Law (铁路法)
What does it do? The latest draft contains three major revisions: 1. clarify the policy of comprehensive development and utilization of railway land (铁路土地综合开发利用政策); 2. define the system of management and supervision to the railway industry (the system was formed after removing the Ministry of Railways and establishing National Railway Administration and a limited company China Railway in 2013); 3. incorporate the mechanism of railway public welfare transportation subsidy (铁路公益性运输补贴机制) into legal terms to encourage social capital to invest in railway construction.
Perhaps a point the public is more concerned about is the added clause against disruptive conduct in the cabin, such as forcefully occupying other passengers’ seats, which often happens on Chinese trains, as passengers are allocated to specific seats by their tickets.
For the differences between the latest draft and the current law, see here.
Where are we at? The Railway Law was firstly enacted in 1990. The law was amended in both 2009 and 2016 without substantive changes, and the draft released in 2019 by the National Railway Administration is the first large-scale amendment in three decades. In May 2021, the draft was completed by the Ministry of Justice and issued for public comments once again.
The bigger picture: The comprehensive development and utilization of railway land have long been a problem in the railway industry because it concerns the attribution of income as well as the development scope between the railway company and local government. To resolve such problems, the State Council issued two opinions to support the comprehensive development and utilization of railway land in 2013 and 2014 – the Opinion on Reforming the Railway Investment and Financing System and Accelerating Railway Construction and the Opinion on Supporting the Comprehensive Development and Utilization of Railway Land. Despite the efforts, the progress was far from satisfactory due to a lack of matching policies by local governments, insufficiency in coordination between the railway company and local government, and delayed railway land development and operation. It was until 2019 that the large-scale amendment was made to regulate the comprehensive development and utilization of railway land in legal forms.
⑧ Mineral Resources Law (矿产资源法)
What does it do? The Mineral Resources Law is the national law governing the prospection for and extraction from mines in China and the registration of mining rights.
For the latest draft, see here.
Where are we at? The Mineral Resources Law was promulgated in 1986 and amended in 1996 and 2009. On December 7, 2019, the Ministry of Natural Resources published the Opinions on Several Matters Concerning Promoting the Reform of Mineral Resources Administration (for Trial Implementation), followed by two years’ pilot implementation in six provinces of the Reform Plan for Mining Rights Assignment published by the State Council in 2017. On December 17, 2019, the Ministry of Natural Resources issued a draft amendment for public comments through January 15, 2020.
The bigger picture: Since 2015, Fang Guan Fu (“放管服”), or “reforms to streamline administration and delegate power, improve regulation, and upgrade services” has become one of the major tasks of the Chinese government. In order to implement the Fang Guan Fu in the mining industry, the government has been committed to facilitating the investment process, modernizing its management system, and ensuring freedom in the trade of mining products. The draft amendment aims to fulfill these requirements in legal forms, regulate the mining industry, and boost its development.
⑨ Animal Husbandry Law (畜牧法)
What does it do? The law regulates the production and business operations of stockbreeding, ensures the supply, quality, and safety of livestock and poultry products, protects and reasonably utilizes the genetic resources of livestock and poultry, cultivates and promotes fine livestock and poultry varieties, vitalizes the livestock and poultry seed industry, uphold the legitimate rights and interests of the animal husbandry producers and business operators, prevent public health risks, and promote the high-quality development of animal husbandry.
Per Xinhua, 3 main features of the amendments are 1. Raise the health standards of slaughter houses; 2. Improve protection of grassland by encouraging more scientific grazing practices; 3. Introducing market intervention mechanisms to protect livestock farmers from unstable prices.
For the latest draft, see here.
Where are we at? The Animal Husbandry Law was promulgated in 2006 and amended in 2015 for the first time. The latest amendment was part of the Legislative Work Plan on Strengthening the Rule-of-Law Safeguards for Public Health by the 13th NPCSC. On October 23, 2021, a draft amendment was published for public comments.
The bigger picture: When the law was promulgated in 2006, animal husbandry had become the pillar industry of the rural economy and an important source of increasing income for farmers and herdsmen, with the gross value exceeding RMB 1.4 trillion, accounting for over 30% of the gross value of agriculture, said Wang Zhicai, the then Chief of the Animal Husbandry Department of the Ministry of Agriculture. However, in recent years, many new situations and new problems arose during the development of animal husbandries, such as bird flu, swine fever, and COVID-19. In response to the weaknesses of animal husbandry, the draft amendment focuses on the following six aspects: 1. protect the genetic resources of livestock and poultry; 2. support self-generated innovation of the livestock and poultry seed industry; 3. develop the grassland animal husbandry; 4. guide the development of livestock and poultry farmers; 5. ensure stable supply and prices to maintain a balance between supply and demand of livestock and poultry products; 6. standardize the prohibited areas for livestock and poultry breeding.
⑩ Law on Prevention and Treatment of Infectious Diseases (传染病防治法)
What does it do? The law is one of the three legal documents related to public health emergency response. It seeks to prevent and control the outbreak and spread of infectious diseases, ensure the life safety and health of the people, prevent public health risks, and safeguard social stability and national security.
For the latest draft, see here.
Where are we at? The Law on Prevention and Treatment of Infectious Diseases was promulgated in 1989 in response to the 1988 Hepatitis A caused by contaminated seafood clams. It underwent a large-scale amendment in 2004, a year after the outbreak of Severe Acute Respiratory Syndrome (SARS), and a small-scale one in 2013. In October 2021, the National Health Commission released the draft amendment for public comments, which was also part of the Legislative Work Plan on Strengthening the Rule-of-Law Safeguards for Public Health by the 13th NPCSC. The draft amendment is mainly targeted at the experience and weaknesses in the combat against COVID-19.
The bigger picture: The promulgation and large-scale amendment of the Law on Prevention and Treatment of Infectious Diseases were all followed by the outbreak of infectious disease. In 1989, the deliberation of the law was completed in only two months, rarely seen in the legislative work of the NPCSC. A very important reason behind the high efficiency is the massive outbreak of infectious diseases in the late 1980s, such as the 1986 hemorrhagic fever caused by rat infestation in Shandong Province and the 1987 leptospirosis caused by floods in Sichuan Province. Particularly, the 1988 Hepatitis A caused by contaminated seafood clams, which lasted for five months with the highest confirmed cases exceeding 10,000 in a single day, brought enormous pressure to the medical and epidemic prevention system. Therefore, the Law on Prevention and Treatment of Infectious Diseases was promulgated to summarize the experience in the fight against these infectious diseases. Then the 2003 SARS epidemic and the subsequent highly pathogenic avian influenza (HPAI) outbreak in 2004 triggered the first amendment.
As a major public health emergency, the 2020 COVID-19 pandemic has spread faster and wider than any other since the founding of the PRC and has proven the most difficult to contain. This is because more people traveled compared with the 2003 SARS epidemic: The high-speed railway has not opened in 2003, but in 2019, the total mileage has reached 35,000 km; the handling capacity of airports open to air traffic nationwide has surged from 174 million in 2003 to 1.351 billion in 2019 (see here for references). Besides, the growing population density in urban areas also posed a severe threat to epidemic prevention and control. To respond to this new situation, the National Health Commission decided to make another large-scale amendment to the law in 2021, to provide an institutional framework and make the country more prepared for the outbreak of infectious disease.
⑪ Frontier Health and Quarantine Law (国境卫生检疫法)
What does it do? According to the present law, the law is formulated for the purpose of preventing infectious diseases from spreading into or out of the country, preventing and controlling cross-border transmission of public health hazards, protecting people’s life safety and health, and building a community of health for mankind.
For the latest draft, see here.
Where are we at? The Frontier Health and Quarantine Law was promulgated in 1986 and amended three times in 2007, 2009, and 2018. The latest amendment began in 2020 when the State Council incorporated the revision into the legislative agenda in 2020. In July 2020, the General Administration of Customs published the draft amendment for public comments. The amendment was also part of the Legislative Work Plan on Strengthening the Rule-of-Law Safeguards for Public Health by the 13th NPCSC. The first round of deliberation is tentatively planned for 2022.
The bigger picture: Many weaknesses of the current law were revealed since the outbreak of the COVID-19 pandemic, such as lack of risk management, ineffective information-sharing mechanism, and in particular, dishonest reports of COVID-related information by people entering the country. However, in the current Frontier Health and Quarantine Law, the penalties for behaviors in violation of regulations but not causing the spread of quarantinable infectious diseases or causing danger” were only warnings or fines, too minor to intimidate parties involved. For the summary of the opinions and suggestions of NPC representatives and experts published on the NPC website, see here.
This newsletter was put together with the help of Cui Qi, a graduate student at China Foreign Affairs University who interns for this newsletter.