Law Guanxi: MNCs,state actors,and legal reform in China

Since 1978, China has opened itself to foreign direct investment and has undertaken significant legal reform, especially in the area of international commercial arbitration. I analyze the roles that foreign actors and state officials have played in changing Chinese legal institutions such as the Chinese International Economic and Trade Arbitration Commission (CIETAC) and personal relations, or guanxi. 1 ^1. La guanxi is a Chinese expression, meaning ‘to pull strings (to get things done)’. View all notes Foreign investors, attorneys, and non-governmental organizations are helping China to adopt formal commercial arbitral institutions that follow international norms. In that sense, foreign actors are contributing to rule of law in China. Yet, foreign investors also attempt to use guanxi to get around central regulations, thereby contributing to informal legal institutions. The combination of guanxi and formal legal institutions follows a model of path dependent institutional change. I use the terms, ‘layering’ and ‘bricolage’ to elucidate the ways that actors combine existing institutions with new legal forms introduced by foreign investors, attorneys, and NGOs.