The Rule-Governed State : China's Labor Market Policy, 1978–1998

Abstract: Max Weber (1864–1920) suggested that capitalism and free markets tend to produce a characteristic form of governance – the rational-legal bureaucracy. In view of China's transition from central planning to a market economy, we should ask ourselves how these changes have affected its governance. Has the role of law been enhanced as China moves closer to the market?While former analyses of Chinese politics have tended to emphasize the importance of ideo-logy, organization, or informal personal relations in describing Chinese policy-making, this thesis examines the formal legal framework that has developed since 1978. It makes a distinction between discretionary and rule-governed states and considers three aspects of rule-governance, i.e., the coverage, the contents and the enforcement of new regulations. China's labor market policy between 1978 and 1998 is chosen as a case study to test the hypothesis on rule-governance and four policy areas are selected for examination – wages, employment, social insurance and the resolution of labor disputes.The thesis concludes that Chinese labor policy has become more rule-governed on all three dimensions, but to varying degrees. The legal framework has expanded considerably in coverage and the contents of most regulations correspond with formal legality. On the other hand, although the enforcement of labor policy has been strengthened, it remains rather weak and varies across both regions and ownership forms. Legal enforcement is not as ineffective as some observers claim, however. The implication of this thesis is that the market transition has enhanced the role of law. Although rule-governance does not equal rule-of-law in the Western sense, it places certain constraints on political authorities and provides a sense of predictability for enterprises and workers. The transformative effects of rule-governance should not be underestimated. If the Communist Party loses its monopoly on political power, a rule-of-law regime might eventually emerge.