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By Elizabeth M. Lynch, August 31, 2010

China marches on to be the global green tech leader

Originally Posted on Foreign Policy Digest

China no longer needs to worry about the U.S. as a serious green technology competitor because the U.S. just left the race. After a year-long impasse, Senate majority leader Harry Reid confirmed on July 22, 2010 that the Democrats would not be able to secure enough votes to pass the American Clean Energy and Security Act and, thus, would abandon any further efforts to do so.

But, in today’s globalized economy, rising powers like China are willing and readily able to capitalize on America’s missed opportunities. The climate change bill would have provided a coherent U.S. energy policy, directed investment to green technology and created much-needed American jobs. Instead, those investment and job opportunities will likely go to China. With China’s rapid expansion into the clean technology sector, the U.S. is being left behind and leaving many to wonder–will it ever be able to catch up?

BACKGROUND

Although the U.S. debate on climate change dwells on the prevention of environmental damage, the Chinese government focuses on the economics of climate change, emphasizing the direct link between clean technology and China’s energy security and economic competitiveness. Former Center for American Progress senior policy analyst Julian Wong explained in a recent testimony before the U.S.-China Economic and Security Review Commission that China’s emphasis on the economic upside of clean technology has imbued its energy policy with a greater sense of urgency, allowing the country to surpass the U.S. in many renewable energy industries.

With over 4,000 miles of track laid domestically, China is the leader in high-speed rail.  It has pledged $300 billion to bring high-speed rail to many parts of the country and is exporting its expertise to Turkey, Venezuela, Saudi Arabia and potentially, even California. Notoriously stingy at funding its rail system, the U.S., on the other hand, has pledged a relatively paltry $8 billion and has only one high-speed rail line. Instead of developing cleaner rail technology, the U.S. continues to develop carbon-intensive modes of transportation, investing in highways and air transit.

China has also become a global leader in the renewable energy sector. As the leading manufacturer of solar panels, China exports most of its solar panels overseas. As for wind, China installed the largest number of wind turbines in the world in 2009, expanding its wind capacity by 13 GW. By contrast, the U.S. only expanded its capacity by 10 GW in 2009. But, China’s prowess in renewables should not come as a surprise. In 2009, China invested $34.6 billion in green technology, making it the leader in renewable energy funding; the U.S. came in second, investing $18.6 billion.

Some critics argue that the Chinese government has an unfair advantage because an authoritarian system can funnel money easily to industries it wants to promote. The largest commercial banks in China are state-owned and–at the insistence of the central government–have provided ample low-interest loans to green technology companies. The U.S. market economy, on the other hand, cannot require American banks to give out favorable loans. Furthermore, China has used protectionist policies, like its “indigenous innovation” policy, to promote home-grown companies at the expense of foreign ones.

ANALYSIS

While some of these arguments are reasonable and should be addressed in trade talks with the Chinese, their importance in explaining the U.S.’ second-fiddle status is exaggerated. The criticisms serve only to obscure the real issue behind the U.S.’ downfall in the green technology sector – the lack of a coherent national energy policy. In the U.S., the climate change debate too often ignores the important role of government in promoting emerging industries within the capitalist framework and cooperating with the private sector. Silicon Valley, for example, flourished because of government support and its close ties to government, particularly the defense agencies. To attribute China’s competitive edge to its planned economy is to suggest that capitalism and free markets are what hinder the U.S. ability to be a viable competitor in the global green technology market. But, American history shows that government support bolsters innovation.

Capital will flow to where there is some level of certainty in investment. Venture capitalists are sinking their dollars into China’s green technology because the Chinese government has a crystal-clear policy, which it has backed by huge investments in renewable energy–sure signs of a government’s sincere commitment to promoting green tech. These investors are also receiving huge returns on their Chinese investments.  China’s richest person is now believed to be Wang Chuanfu, founder and chairman of BYD, a battery and electric car company in China.

Furthermore, it’s not just Chinese capital that is flowing. This September, Chinese wind turbine manufacturer Mingyang Electric will seek to raise $500 million in an initial public offering in the U.S. If the U.S. wants that capital to remain within its borders, the federal government needs to make an equally strong commitment to renewable energy. Until Congress passes some sort of legislation signaling its commitments to certain industries, capital–even U.S. capital–will continue to flow to China and green technology innovation in the U.S. will remain at a standstill.

In his testimony, Julian Wong raised the crucial point that, although the U.S. still leads China in green technology research and development (R&D), eventually, those R&D dollars will want to move to China, too. By its nature, R&D needs to be geographically close to its manufacturing base, as well as to the end users of its products. In fact, some U.S. companies–including important players like Applied Materials, DuPont, and IBM–have already begun to move their green tech R&D to China.

China has clearly surpassed the U.S. in key green technology industries and has established the economic infrastructure to lead the green technology market. Instead of trying to stay on the offensive, Congress has defensively decried China’s authoritarian government and indigenous innovation policies and aroused fear of China’s threat to American economic dominance. Aside from rhetoric, it is unclear what substantive actions Congress is taking to make the U.S. green technology sector more competitive. If the U.S. followed China’s example in passing green tech-friendly policies, it may be able to catch up. But, by ignoring that possibility and abandoning any hopes of climate change legislation, Congress has, instead, opted out of the green technology race. Unfortunately, the only losers in Congress’ ill-fated decision are the American public and the millions of Americans still out of work.

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By Elizabeth M. Lynch, August 2, 2010

As promised, on July 9, 2010, China submitted its proposal to join the World Trade Organization’s (WTO) Agreement on Government Procurement (GPA).  China’s government procurement market – in which the government purchases supplies and services to keep it running –is larger than the GDP of many small nations, accounting for $500 billion by some estimates, a size that makes many western companies salivate.  But China has no legal obligation to open its government procurement market to global competition.

Needless to say, the inability for foreign companies to access such a huge market has been a sticking point for many foreign governments in its dealings with China.  During May’s Strategic & Economic Dialogue (S&ED), Secretary of State Hillary Clinton raised the government procurement issue often.  By the end of the S&ED, China promised to submit an application to the GPA in July, its first submission since 2007 when China’s application was resoundingly rejected by other GPA member nations for being over-protectionist.  But the U.S. is not the only country with issues concerning government procurement.  German Chancellor Angela Merkel visited China in the beginning of July and market access was number one on her list of discussion topics with the Chinese leadership.  Even the U.S. Congress is threatening action, proposing the adoption of the “China Fair Trade Act of 2010” if China does not open its government procurement market.

So with all that pressure, will China’s 2010 revised offer to join the GPA open its markets to foreign corporations?

Don’t hold your breath.  While China responded to some of the criticism lodged against its 2007 application – it shortened the implementation period from 15 years to 5 and significantly lowered the monetary values of the projects and purchases covered to be more in line with other member states – its 2010 application does little to actually open its government procurement market.

In Annex I of China’s 2010 application, a larger number of central government agencies are covered compared to China’s previous application – 61 to be exact.  But the largest market – namely government procurement on the local level – is completely absent.  Annex II, which is to list those sub-central government agencies covered by the agreement, is left blank.  Additionally, China’s state-owned enterprises (SOEs) are also not covered by the GPA

More high rise aparment buildings in Shanghai

application.  Although a hybrid between a government-run organization and a private corporation, SOEs maintain good ties with the government, especially on the local level.  As Monday’s New York Times pointed out, many SOEs whose businesses are completely unrelated to housing development, such as the Anhui Salt Industry Corporation, have been the biggest players in China’s real estate construction boom.  This is largely due to the SOEs huge amounts of cash and their ability to endless borrow from government-run banks.   But under China’s 2010 GPA application, these SOEs would be allowed to ignore competitive bids from foreign companies.

Although this is a disappointment for foreign corporations looking to crack into China’s government procurement market, China’s current 2010 GPA application is at least honest in admitting to the fact that the central government might have a lot less control over the provinces than many thought.

This is especially true if central policies seek to disrupt the symbiotic relationship that exists between local governments and local SOEs.  As Reuters notes in its report on China’s GPA application, China’s provinces have had a long history of preferential treatment of local provincial industries, even at the expense of Chinese corporations from other provinces.  These local SOEs – like the Anhui Salt Company – employ hundreds if not thousands of local workers, and local SOEs are often more willing to partake in a “I-scratch-your-back-you-scratch-mine” economy.  Take for example the real estate auction mentioned in the New York Times article.  At a government-run public auction, Anhui Salt put in an offer that far surpassed other offers, unnecessarily bidding up the price that it would eventually pay for the land.  But that inflated price goes directly to the coffers of the local government.  And in some provinces, where the government’s balance sheets are more of charade than actual accounting, this extra income is important.  Needless to say, provincial governments are inherently protectionist of its local industries and the system the two have created.

While many believe that the Chinese central government, with it authoritarian rule, can force provincial level governments to act a certain way, China’s 2010 GPA application reflects that there are actually limits.  It also hints that China might be more of a federalist system than originally thought.  Although the U.S. is a member nation of the GPA, because the federal government cannot mandate state government behavior when it comes to government procurement, states have to affirmatively agree to the join the GPA.  In the U.S., only 37 states are signatories to the GPA; the federal government can’t force states to comply with the GPA.  Similarly, China’s 2010 application and the fact that the central government apparently cannot force provinces to sign on to the GPA, raises the question if China is in fact a de facto federalist system.

At any rate, given the absence of SOEs and local governments from China’s GPA application, expect the 2010 offer to be rejected again.  What will be interesting is how loudly the U.S. will object when 13 states have yet to sign on to the GPA.

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By Elizabeth M. Lynch, July 28, 2010

A worn out Senate Majority Leader, Harry Reid

The past week has provided closure to two issues China Law & Policy has been following  for the past few months.  Last week, Senate majority leader Harry Reid announced that the Democrats would not be moving forward on the climate change bill that had been sitting in the Senate for the past year.  Although the bill had the potential to completely reorganize the U.S.’ energy policy, the Democrats were unlikely to get the votes necessary to pass the bill and opted not to try.

The death of the climate change bill raises serious questions about the U.S.’ ability to compete with China on green technology.   The Chinese government has made major and obvious commitments to green technology, attracting capital from around the world.  Without a coherent energy policy, don’t expect investors to seek out green technology opportunities in the U.S.  Until the U.S. has a more coherent policy, anticipate the continued flow of capital to China.

As if the failure of climate change legislation was not enough, the Senate announced yesterday that it would not take up the DISCLOSE Act, the House of Representatives’ response to the Supreme Court’s decision in Citizens United v. FEC, a decision that expanded corporations’ speech rights in U.S. elections.  As China Law & Policy wrote soon after the decision, Chinese companies, some of which have ties to the Chinese government, could use the loophole of their U.S. subsidiaries to donate to U.S. campaigns. China Law & Policy testified before Congress in May on the legislation – the DISCLOSE Act – as it was being considered by the House of Representatives.  Looks like we won’t be testifying before the Senate anytime soon.

Gees, did Harry Reid just have the worst week ever?

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By Elizabeth M. Lynch, July 9, 2010

Lady Gaga from the Pokerface Video

Originally Posted on The Huffington Post

In just over two years since her debut of “The Fame,” Lady Gaga has come to dominate the airwaves, profoundly impacting pop culture throughout the world.  With her sold-out concerts in New York City this week, China Law & Policy asks the question that everyone wants to know the answer to: yeah, you might be famous in the U.S, but are you big in China?

Mao Zedong once said “the revolution is not a dinner party.”  In China right now, it’s a dance party and Lady Gaga is the DJ.  In malls throughout the country – from cosmopolitan Beijing to the smaller city of Zhengzhou –  the addictive beats of Lady Gaga’s  electro-pop boom incessantly.   And China’s youth adores her, at least the ones I talked to.  They might not understand all the words to her songs but they get her message – “different”, “unique”, “rebellious” – all adjectives used to describe her by the students I interviewed.

Chinese pop star, Da Zhangwei, copies Lady Gaga's Muppets outfit

Lady Gaga’s videos and music are just as popular in China as they are in the U.S.  And as in the U.S., her fashion has sparked imitation across China.  Because it is bizarre, Lady Gaga’s style is copied by Chinese pop stars in a sort of homage to her (click here for a side-by-side comparison montage).  Average people want to achieve her style as well.  On China’s nationally syndicated talent show “Ni Zui You Cai” (“You’re the Most Talented”), dance performances to her music are common (check out this number to “Poker Face”) and when judges on the show compare a singer or dancer to Lady Gaga, the audience explodes in a raucous of cheers, excited just to hear her name.

In fact, Lady Gaga is so popular right now that her name is barely ever translated into Chinese characters, much to the chagrin of Chinese officials (if it is translated, it is usually translated as 雷帝嘎嘎 (“Lei Di Ga Ga”), meaning “Thunder Emperor Gaga”).  Even for Michael Jackson and Madonna, their names are almost always translated into Chinese characters.  But for Lady Gaga, her English name is not only brazenly used by the Chinese youth but has become a part of Chinese slang; nowadays, Chinese young people no longer use the phrase “Oh My God” to express surprise or amazement; instead internet chat rooms and regular conversations are filled with “OMLG!” – “Oh My Lady Gaga!”

I get why Lady Gaga is popular in China.  She’s so deliciously “plasticy” – her music and her fashion – and plasticy is big in China.  The drama that she brings is also attractive to a culture where “melodrama” does not carry a negative connotation. Her music videos like “Paparazzi” and “Telephone,” with their overly emotional acting and vindicated female characters, are more like a Chinese soap opera than anything you would see in America.

But there has to be something more than just the plastic melodrama.  If that is all it took, Lindsay Lohan or Paris Hilton would be huge in China (they are not).  So what is it about Lady Gaga that she appears to be the biggest star in China right now?  I’m no expert on pop culture, so I sat down and discussed the issue with my friend and self-proclaimed Gaga expert, Tom Cantwell.  “She’s popular in China because she is accessible” says Tom.   Her music is simple-lyric dance music with addictively catchy beats behind the simple words (“bang bang, we’re beautiful and dirty rich” with a beat supporting each word).  That’s the appeal of dance  music – its simplicity – and also what makes it universally loved. Think about it, there is a reason why Wham!, the British dance duo, was the first Western music group to perform in China back in 1985 and why someone like Jay-Z, with his more intricate melodies that are purposely off the beat, is not widely popular outside of a small hip-hop fan-base on the Mainland.

Tom went on to say, “Yes, her music is accessible but so is her fashion.”  Accessible?  She wears no pants half of

Gaga fan with cans in her hair await the Today's Show Free Lady Gaga Concert, July 8, 2010

the time and muppets the other half.  “Of course.”  As Tom explained, someone like Beyonce, who is beautiful and dresses in the highest of fashion, is absurdly inaccessible for the average person in both the U.S. and China.  But Lady Gaga creates outfits, making her fashion style achievable with some imagination.  “I can just imagine a Chinese girl in some factory town, inspired by Lady Gaga, putting tin cans on her head” Tom said.

That sentiment was echoed in my conversations with the Chinese young people I spoke to.  While everyone mentioned Lady Gaga’s music, what they really stressed was her fashion.  Although each mentioned that Chinese culture was still too traditional for Lady Gaga’s fashion to be widely copied in China, there was a tinge of envy in their voices, one young man even commenting that he looked to others to have the “courage” to copy her style.  And that’s what is most interesting about this Lady Gaga phenomenon in China; for all the talk in the West about the Chinese youth not being taught to be “free thinkers,” their love for Lady Gaga demonstrates that they do have an independent streak in them.  One that appreciates and respects differences and the absurd.  And just good, fun dance music.

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By Elizabeth M. Lynch, July 2, 2010

Google's Chief Legal Officer, David Drummond

Originally Posted on The Huffington Post

The long, publicly drawn-out saga of Google in China continues.  And at this juncture, one wonders why.  On Monday, Google’s Chief Legal Officer, David Drummond, posted a blog entry to share with the world Google’s new troubles in China.  Drummond announced that in order to acquiesce to Chinese officials’ demands and guarantee that the Chinese government renew Google’s Internet Content Provider (ICP) license, Google would change certain aspect of its Chinese website, Google.cn.  This certainly is a different Google than the one just six months ago that had its guns blazing.

Back in January, after Google’s servers were hacked by an attack likely originating in China, Google announced that it would no longer censor its results on its Chinese search engine, Google.cn.  While the two issues – hacking and censorship – seem to have little to no relation to each other, Google successfully played up its moral stance against China’s internet censorship in the West and became the darling of the Western press for maintaining its motto of “don’t be evil.”  A few questioned Google’s sincerity (see here) and wondered if Google would have taken such a moral stance if its withdrawal from the largest internet market in the world had a greater impact on its profits.  In general however, Google was heralded as upholding freedom of speech and human rights.

But Google’s pull-out from China did not mean that it shut down its Google.cn site.  Instead, in order to conform with Chinese law and also with Google’s promise not to censor search results, Google redirected all traffic from Google.cn to Google.com.hk, a website locate in Hong Kong and thus not subject to the censorship rules of the Mainland.  Visitors to Google.cn would be automatically redirected to Google.com.hk.  But this doesn’t mean that a search on Google.com.hk, when conducted from the Mainland, is free from censorship.  The results from such a search are in fact censored – it’s just that Google itself is no longer doing the censoring; instead, China’s internet technology does the censoring (for an explanation of the different types of internet censoring in China see here).

Now though, Google’s make-shift solution has raised the ire of the Chinese government and Google fears that its ICP license is at stake.  Under the Telecommunications Regulations of the People’s Republic of China (PRC), every website that operates inside the borders of China, must obtain an ICP license.  Thus, Google.cn, which is housed within China’s borders, needs an ICP license; but Google.com, the U.S.-based search engine which is accessible on the Mainland, does not need an ICP license since it is housed within the U.S.  If the Chinese government does not renew Google.cn’s license, then the site will be shut down and will no longer exist.

What the Chinese government doesn’t like, at least according to Google, is the automatic redirection of traffic from Google.cn to Google.com.hk.  So to appease the Chinese regulators, Google has changed it so that there is no longer an automatic redirection; instead, Google has added a line on Google.cn stating in Chinese that the site has been moved to Google.com.hk and the if the user clicks anywhere on the page, he or she will be redirected to Google.com.hk.  So instead of an automatic redirection, it now takes a simple click.  According to Google, it needs Google.cn so that Mainland users will know that they can access a Chinese-language search language at Google.com.hk (Mainland users can in fact access Google.com, the U.S.-based search engine, but its interface is in English, not Chinese).

But will this change make a difference?  While technically there is a distinction between an automatic redirection to the Hong Kong-based site and a quick click of the mouse on the Google.cn website to get there, in reality it is more of a distinction without a difference.  Will the Chinese government find this distinction acceptable and renew Google’s license?  Or will it reject Google’s license renewal application?

If the Chinese government does reject Google’s ICP license renewal application where does this leave Mainland internet users?  Basically in the same place that they are in now, causing one to ask Google, what’s the big deal?  Contrary to popular belief, Chinese internet users have access to Google.com, the U.S.-based site, as well as direct access to Google.com.hk.  A search by a Mainland user on either of these sites will produce the same Chinese government-censored results.  If the Chinese government rejects Google’s application, the only difference will be that Google.cn, the Mainland-based site, will be shut down and will no longer exist.  So unless a Mainland internet user knows to go to Google.com or Google.com.hk, he or she will likely turn to the Chinese-based search engine, Baidu.com.  Since the start of “the troubles” between Google and the Chinese government in January, Baidu has increased its market share of internet users, from 58.4% to 64% of the market.  Google’s market share in China, with the automatic redirection to Google.com.hk, has decreased from 35% to 30% (see Rebecca MacKinnon, June 30, 2010 Congressional Testimony, p. 7).

Although Google’s loss of the search engine market share in China was likely inevitable since Baidu benefits from its close and special relationship with the Chinese government, it’s still important for Google to maintain its Google.cn website in China and have some sort of a toe-hold in the country for future development especially.  Currently only around a third of China’s population are internet users, causing internet companies to salivate at the potential profits in China.  Other Google applications, like Gmail and Google Earth (Google’s mapping tool), could also bring in huge amounts of revenue.  Google Earth is particularly promising since China has begun to make efforts to provide its population with accurate online maps.  In fact, this past June, Google applied for approval as one of China’s officially-licensed internet mapping companies.  But as of July 1, such approval does not look likely.  The Chinese State Bureau of Surveying and Mapping just issued a list of mapping companies it deems of “high quality,” a prerequisite for approval.  Google is not listed.

Google potentially has a lot to lose, at least profit-wise, by continuing to take a hard-line against the Chinese government, and that might explain its current change in demeanor and willingness to acquiesce to the Chinese government.  But Google’s attention to its business interest should not come as a shock; in fact, that’s likely what caused it to pull-out of China in the first place. A   corporation’s raison d’être is to maximize profits for its shareholders.  Regardless of what Google might say — that its goal is to “not do evil” — it is ultimately responsible, under law, to its shareholders.  And that’s the way it should be.  Society should not rely on corporations to act as stand-ins for its values.  It is the role of governments, individuals and non-governmental organizations (NGOs) to advocate on behalf of human rights and society’s moral values.  Corporations are not there to police themselves; others must do it for them.  Individuals and NGOs have the ability to shine the media spotlight on corporations’ morally-offensive behavior, calling for boycotts and effectively raising the economic cost of conducting undesirable business practices.

Governments can and should pass laws that are economically punitive to corporations that conduct morally-offensive

Tiananmen Square Protests, Spring 1989 - before the Government Crackdown

activities, making such actions too high of an economic cost to that company.  In fact, in terms of internet and technology, the U.S. already has such regulations.  Known as the Tiananmen Sanctions, and passed after the 1989 Tiananmen Square protests, Congress can deny export licenses to those U.S. companies that sell “crime control and detection instruments and equipment” to China (Congressional Research Service, “China: Economic Sanctions,” p. 2).  But these sanctions are never used.  U.S. companies like Cisco, Oracle and Motorola have provided Chinese state security forces with the technology necessary to police the internet.  Aside from a few articles in the U.S. press, these transactions have received little to no censure.

China’s internet censorship should not be condoned.  But Google is not the champion of our moral values, nor should it be asked to be.  The responsibility lies with us, through our elected officials and through our own actions.  But so far it appears that society is more willing to hide behind the mask of Google’s actions, seeing its pull-out from China as some moral victory instead of a business dispute.  This is unfair to Google, detrimental to the Chinese people and undermines the values which we hold dear.

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By Elizabeth M. Lynch, June 29, 2010

In our June 2, 2010 post – “A Paper Tiger?” – we discussed China’s newly adopted “Regulations on the Exclusion of Illegally Obtained Evidence in Criminal Cases.” At that time, the Regulations were not publicly available and we based our analysis on a summary of the regulations published in the state-run media by Prof. Fan Chongyi, a noted criminal procedure expert at the China University of Politics and Law.

Last week, the Chinese government finally publicly issued the “Regulations on the Exclusion of Illegally Obtained Evidence in Criminal Cases” (English translation courtesy of DuiHua Foundation; Chinese version here).  These Regulations do not portray the sophistication found in Prof. Fan’s analysis, showing that perhaps Chinese legal academia is more progressive and more committed to legal reform than the Chinese government.  This shouldn’t be surprising.  In order for these Regulations to really have an impact, it was necessary to bring on board China’s Ministry of Public Security (MPS) and Ministry of State Security (MSS), two police bodies that, as in most cultures, are inherently conservative and do not like their investigative powers reined in by the law.  While the Regulations are a step forward, it is a bit disappointing that they do not go as far as we had originally hoped.

In addition to some of the issues noted in our previous post, the Regulations raise some of the following issues:

• Will a Chinese court ever conduct an investigatory hearing as to the legality of the confession? Articles 6 and 7 of the Regulations govern the burden of proof when raising the issue of a confession gained through torture.  Similar to the law in the U.S., under the Regulations, the defense has the right to raise the issue of a confession obtained through torture but must offer a sufficient factual basis for the court to order a hearing on the matter.  Similarly, the Chinese regulations places a minimum burden on the defense to offer some factual basis for its claim; Article 6 calls for the defense to provide the name of the person who performed the torture, the time the torture occurred, the place, the manner and the content of the torture in order for the court to call for further investigation.  If the defense can offer that minimal evidence, the court assumes that the confession was obtained illegally and the burden of proof switches to the prosecutor to offer evidence or testimony that the confession was obtained legally as required by Article 7.

But Article 6 and 7 provide no standards for the evidence.  For the defense, Article  6 requires that some “leads” or “evidence” be provided to the court.  While the Article 6 offers some examples of what the leads or evidence could be, does the defense have to provide all of those examples?  If so, how would a defendant know the names of his interrogators?  There isn’t necessarily a polite introduction aspect to an interrogation. Will a defendant, after a few rounds of torture, even remember the time and the place of the torture?  Likely the few pieces of evidence a defendant would be able to offer is the manner and content of the torture.  But it is unclear if just those two pieces of evidence would be sufficient for the court to switch the burden of proof to the prosecutor.

If the court does happen to order a shift in the burden of proof, Article 7 is similarly silent on the sufficiency of evidence a prosecutor needs to provide to show that the confession was gained legally.  In fact, Article 7 is even less clear on what that evidence should be offered and provides little guidance as to what a judge should consider and the weight of any evidence.  Would a court find a signed statement from one of the interrogators stating that there was no torture enough evidence?  Article 7 does state that audio and video recordings could be sufficient, but does not mandate this type of evidence.  If Article 7 had mandated that the prosecutor provide video or audio evidence of the interrogation, then the Regulations would be a huge step forward in preventing torture during an interrogation.  Perhaps in practice courts will de facto require such evidence, giving more bite to the Regulations.  But nothing in the Regulations themselves currently mandate video or audio evidence.

• Is a prosecutor able to delay the trial indefinitely? Interestingly, Article 7 also offers the prosecutor the opportunity to postpone the trial so that he or she can obtain more evidence to show that the confession was obtained legally. In accordance with the Regulations, the prosecutor would request a postponement under the Article 165 of the Criminal Procedure Law (CPL).  However, Article 165 of the CPL contemplates three different situations in which a trial could be delayed, two of which are applicable in a case where a prosecutor needs more evidence to prove the legality of a confession: (1) the need to notify a new witness to appear in court or to obtain new physical evidence and (2) when the public prosecutor discovers there is a need to conduct a supplementary investigation.  Only the latter situation contains a one-month time restriction (see CPL Article 166); postponement due to the need to notify witnesses or obtain new physical evidence does not have a time restriction.  While CPL Article 165(2) seems most applicable to situations where a prosecutor requests more time to obtain evidence to show that a confession was obtained legally, a court could postpone a trial on the grounds found in CPL Article 165(1), especially if the court is pressured by the Chinese Communist Party, through an adjudication committee, to give the prosecutor more time to obtain enough evidence to convict.  Until courts have greater independence, expect outside influence in politically-important cases.  Articles 8 and 9 of the Regulations also allow a postponement in the trial for further investigation: Article 8 is at the request of the court and Article 9 is at the request of the prosecutor during the trial.  Neither Article 8 nor Article 9 reference any portion of the CPL which would limit the time of the postponement.  In fact, the language in Article 9 is very closely aligned with the language found in CPL Article 165(1), which does not limit the time length or the postponement.
• Does the appeals process offer greater protection from illegally-obtained confessions? Article 12 contemplates an appeal process and creates an incentive for the defense to raise the issue of an illegally-obtained confession at trial.  Under Article 12, if the defense alleges that the defendant’s confession was obtained through torture, the court refuses to investigate the allegation, and the court uses the confession as a basis for a conviction, then on the appeal – or what is known in China as the “trial in the second instance” and the court retries the case – the appellate court must conduct an investigation.  This appears similar to the U.S. system of raising an objection on the trial level in order to “preserve” the issue for appeal.  But looking more closely at Article 12, a lot more elements are required to preserve the objection.  In the U.S., filing a motion to suppress evidence or merely objecting to an issue at trial, even if overruled, is enough to preserve the issue for appeal and if properly preserved, the appellate court must re-examine the trial court’s decision.  But in China, under Article 12, it’s not enough that the issue is raised and overruled, the confession must also be a basis of a conviction to require the court of the second instance (the appellate court) to investigate the circumstances surrounding the confession.

In addition to using the confession as a basis of the defendant’s conviction, the court of the first instance must also have rejected the defense’s request to conduct an investigation; in other words, the court must have found the evidence provided by the defense under Article 6 of the Regulations insufficient to switch the burden of proof to the prosecutor and conduct an investigation under Article 7 of the Regulations.  But if the court in the first instance conducts the investigation and finds that the prosecutor offered enough evidence to rebut the defense’s allegation, on appeal, the court in the second instance is not required to re-investigate the issue of the legality of the defendant’s confession.  Given the loosey-goosey parameters of the evidence required of the prosecutor under Article 7, the trial finding the prosecutor’s evidence sufficient is likely.

Article 12 mandates that court of the second instance conduct an investigation if the three elements found in Article 12 are met.  But there is nothing in Article 12 that forbids the court of the second instance to investigate the allegations of illegality if less than all three of the elements of Article 12 are present; there is just nothing that requires it.  In fact, CPL Article 186 gives the appellate court the power to reexamine all issues in a case, even if outside the scope of the appeal or protest.  So ultimately, it is within the power of the court in the second instance to conduct an investigation concerning a defendant’s confession, regardless of the elements of Article 12.

• What about cases outside of the formal criminal justice system? Flora Sapio, an expert in Chinese criminal law, noted in her analysis of the new regulations that the Regulations apply only to formal criminal cases; the Regulations offer no protection to individuals in criminal-like situations, such as Re-Education Through Labor (RETL) and drug rehabilitation, both administrative cases, not criminal ones.  The new regulations offer no protection to individuals being tried in these areas of law.

The “Regulations on the Exclusion of Illegally Obtained Evidence in Criminal Cases” were drafted in order to better implement the Chinese Criminal Law’s prohibition against torture of suspects.  But ironically, the Regulations themselves are relatively vague and their strength will only be determined through their implementation.  If defense counsel does not raise the issue of an illegally-obtained confession (with CL Article 306 defense counsel has the incentive not to protest the confession as discussed in the previous post), or if the court does not give greater life to Articles 6, 7 and 12, then the Regulations will have little impact.  But given that there are some in the legal field that are working hard to provide for greater justice and rule of law in the Chinese criminal justice system, there is hope that perhaps something can happen with these Regulations.  A small hope, but hope nonetheless.

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By Elizabeth M. Lynch, June 20, 2010

Like every other country outside of the United States, China is a soccer-crazed nation and with the 2010 World Cup, employers fear a loss of productivity of their workers.  With China six hours ahead of South Africa, the matches begin at 7 pm local time, with the last match starting at 2:30 AM., giving most Chinese the opportunity to watch the matches with their friends into the wee hours of the morning.  And it appears that many are taking advantage of this time difference even without a hometown team to root for.

Given China’s dominance in recent Olympics as well as its people’s love for soccer, it’s weird not to see a Chinese team at the World Cup.  Especially since even its neighbor – poor and ideologically-suffocating North Korea – made the cut.  China was able to build up its curling prowess to win a bronze in women’s curling in Vancouver – a sport most Chinese, actually most people outside of Canada, have never heard of.  Surely it can train a World Cup-worthy soccer team.  So what gives?

China - Economic superpower but not a soccer one

A recent article in the L.A. Times essential blames China’s “socialism with Chinese characteristics.”  While China’s state-controlled capitalism – where the state programs and controls much of the “free market” – has allowed for success in the economic sphere, it’s destroyed any hopes for soccer dominance.  China’s various professional soccer leagues are managed by the Chinese Football Association, a commercial entity that is overseen by the General Administration of Sport, a government body.  With dueling ideologies, the result is confusion and lack of coordination.  Additionally, China’s professional leagues have been plagued by high-level corruption, gambling scandals, and match-fixing, rotting the sport to its core.  While a recent clean-up of the corruption might have short-term impact, without better checks and balances, expect corruption to return to Chinese soccer and stymie any hope of creating a World Cup-worthy team.

Vuvuzela - Made in China

Although there is no China presence on the field, there is plenty of China presence in the stands.  Those annoyingly loud vuvuzelas that drown out referee whistles and any sounds from the field are mostly made in China.  And China’s wig production saw a huge uptick in demand for wigs dyed the national colors of various nations.

But what has received the most attention is ESPN’s Martin Tyler’s on-air comment that the North Korean fans are in fact paid Chinese actors, an allegation that was also made last month in the U.K.’s Daily Telegraph.  As a team playing in the World Cup, North Korea is given a large number of tickets to give or sell to its people.  But for most North Koreans, a flight to South Africa would cost too much, leaving many of the North Korean-designated seats empty.  But supposedly, these tickets have been transferred to China, who is sending 1,000 actors to cheer on its neighbor.

Both China and North Korea remain mum in regards to the nature of the North Korean fans and have neither denied nor confirmed the rumors.  But China has hired “professional” fans in the past.  Most notably the 2008 Beijing Olympics.  In order to fill empty seats, the Chinese government sent groups of enthusiastic Chinese volunteers, wearing yellow shirts and armed with thundersticks, into the stands to cheer for both teams playing.  That’s right – the Chinese sent volunteers to cheer not just for their own team, but for whichever teams were playing.  Essentially, the Chinese Olympic officials wanted to guarantee an enthusiastic crowd for the teams playing.

During the 2008 Olympics and now for the North Korea matches in the World Cup, the Chinese received criticism for

Fans cheer on North Korea at the 2010 World Cup

this “manufactured” support.  But I sort of think this type of magnanimity is cute and I kind of like it.  Imagine if you are the beach volleyball team from Luxemburg – you don’t even have beaches in your country let alone fans of beach volleyball that are going to watch you at the Olympics.  So how inspiring must it be to play in the Olympics and have a cheering section.  Sure it might be manufactured, but sometimes it’s just the cheers that matter for the team.  And for the other people in the stands, having a section that starts to get into the match, makes watching an otherwise boring event fun.  People don’t do the wave during the ninth inning of a tied Yankees-Red Sox game.  No.  They do the wave when they are bored, when the defeat is so obvious that you need a little entertainment to keep you involved.

So Monday morning, when North Korea takes on Portugal, I hope the fans – be Chinese or North Korean – are there wildly rooting for the North Korean team.  China should look to market this thing – a cheering section for hire and an enthusiastic one to boot?  There are a lot of politicians and disgraced corporate executives in the U.S. right now that might be interested.

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By Elizabeth M. Lynch, June 15, 2010

China's rare earth mine in Inner Mongolia

Last November, China Law & Policy reported on an obscure-sounding group of minerals found at the bottom of the periodic table: rare earth minerals.  While you may never have heard of them, you likely use them.  With their lightness in weight and resistance to heat, rare earths have been instrumental in many technological innovations, from color television, to laptops, to the iPhone.  Rare earths are also essential to any company that wants to succeed in the green technology revolution.  Rare earths are needed to create batteries for electric cars and for wind turbines.  Expect demand to increase.

But while demand increases, the global supply will decrease.  Why?  China currently produces 95% of the world’s rare earth minerals and in the beginning of June, the Chinese government announced that it was considering nationalizing its rare earth industry.  As China becomes a leader in green technology, its own domestic demand increases, leaving less to export.

Monday’s PBS Newshour did a 10 minute analysis of the rare earth dilemma, China’s demands and what it means to the U.S. as it seeks to catch up in the green technology revolution.  To watch the video or read the transcript, click here.

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By Elizabeth M. Lynch, June 2, 2010

China's new criminal justice regulations or a paper tiger? You decide

It is rare to wake up in the morning, turn on the computer and find that China just made huge changes to its criminal procedures, and in a positive way.  But that was exactly where I found myself Tuesday morning when I saw that China passed two new criminal justice regulations, one of which attempts to stem the tide of the increasing use of confessions obtained through torture.

Torture of criminal suspects in order to obtain a confession remains a common practice in China as the confession is usually the key piece of evidence in criminal trials.   But as a signatory to the United Nations’ Convention Against Torture, such action is nominally illegal in China.  Article 43 of China’s Criminal Procedure Law (“CPL”), forbids the use of torture or coercion in obtaining statements or evidence and in the Supreme People’s Court’s Interpretation of the CPL (“SPC Interpretation”) – a document meant to provide greater detail to the vaguely drafted CPL – Article 61 states that evidence obtained through torture cannot be used as the verdict’s basis.

But neither of these provisions directly discusses the actual admissibility of this illegally obtained evidence, and the SPC Interpretation is only applicable to judicial bodies, not administrative organs such as the police or the state security bureaus.  Because current law is silent on its admissibility, confessions obtain through torture, while nominally illegal, are routinely used in criminal cases.  And the danger associated with such methods, namely the risk of sentencing an innocent person to prison or even death, have been increasing.  Just this month, Henan farmer Zhao Zuohai was released from his 11-year prison sentence when the man he was found guilty of killing, returned alive to their village.

Zhao’s story is not a one-off event, and such occurrences usually receive a tremendous amount of media attention, causing the Chinese public to be critical of the criminal justice system, question its validity, and, as a result, frighten the Chinese government.  There have been rumors of reform for the past few years, and on Monday morning such reforms were adopted.  The SPC, the Supreme People’ Procuratorate (SPP), the Ministry of Public Security (MPS), the Ministry of State Security (MSS), and the Ministry of Justice (MOJ) released two new regulations: “Regulations on Examining and Evaluation Evidence in Capital Cases” and “Regulations on the Exclusion of Illegally Obtained Evidence in Criminal Cases.” The Regulations on the Exclusion of Illegally Obtained Evidence goes the furthest in providing greater protection of criminal suspects and, through various procedural safeguards, attempts to eliminate the use of torture in obtaining confessions.

The reforms, which seem to be taken directly from a Law & Order episode, are rather sweeping and sophisticated, and

Forget about LA. Next Stop, Law & Order: China!

if implemented, can successfully eliminate torture and provide for greater justice.  But that’s the catch: in a system where more than 70% of defendants go without counsel and in the few cases with counsel, obstacles to effective representation abound, will such reforms really mean anything?  Because the regulations have yet to be publically published, the analysis below is based upon a summary provided to the Chinese media by Prof. Fan Chongyi, noted criminal law professor at the China University of Politics and Law and participant in drafting the reforms.

(1) Oral testimony that is the result of torture may be excluded from evidence.    Oral testimony that was the result of improper procedures, such as when only one investigator partakes in an interrogation [the law requires at least two interrogators], does not necessarily have to be excluded if it can be corrected.

Although this regulation certainly clarifies that courts may exclude confessions obtained through torture, the new regulation in no way creates an absolute “exclusionary rule.”  Instead, by using the term “may,” the regulation largely leaves it in the hands of the courts to decide whether to admit evidence obtained through torture.  Given the lack of judicial independence and the power of local security bureaus in China, it is questionable if local courts, when pressed by more powerful forces, will in fact exclude confessions based on torture.  Additionally, in cases where improper procedure was used, it is unclear what would need to be done to “correct” the issue and allow for the testimony to be admissible.  Perhaps the regulations, when officially issued, will clarify this.

(2) The defendant and his attorney have the right to request a pre-trial hearing concerning an illegally obtained confession.  The court may request that the defendant or his lawyer provide the names of the alleged officer involved in the illegality, the place, the time, the method used, the content of the illegality, and anything else related to the claim.

In a society with few rights for defendants, this regulation explicitly providing for the right to raise the issue of admissibility is rather extraordinary.  Additionally, the regulation calls for a pre-trial hearing to determine whether illegally obtained evidence should be admitted.  By separating the decision concerning the admissibility of the evidence from the actual trial, the regulation attempts to guarantee that the illegally obtained evidence in no way influences the final verdict.

By giving the defendant the right to question the admissibility of evidence, the regulation raises a bigger issue: when most defendants are not represented by counsel, who will inform the defendant of his or her rights?  Presumably in a situation of a confession obtained through torture, neither the police nor the prosecutor has much interest in informing the defendant of his right to attempt to invalidate the confession they just worked hard to obtain.  The alternative, that the court informs the defendant of his or her right, does not appear to be mandated by the regulations, making it questionable if the court will, on its own initiative, inform the defendant.  Given the pressures on the court as discussed in point 1 above, such action appears unlikely.

But even with a lawyer, a defendant will still have difficulty in raising the issue of a coerced confession.  A defendant’s changing his testimony, even if the prior confession was in fact the result of torture, is not in the self-interest of his attorney.  Article 306 of China’s Criminal Law (CL) provides criminal liability, and a prison term of up to seven years, to lawyers who entice their clients to change their testimony in opposition to the facts or to give false testimony.  While the overarching purpose of the sanction – to ensure that lawyers do not encourage their clients to lie – is laudable, Article 306 has been used by police and prosecutor as a way to intimidate defense counsel from questioning the validity of any confession, even when torture is obvious.  And this is not an idle threat.  This past year, after a high-profile case representing an organized crime syndicate in Chongqing, criminal defense attorney Li Zhuang was charged with violating Article 306 by advising his client to recant his confession on the basis that it was obtained through torture.  Li was eventually found guilty and sentenced to one year and six months in prison.  Thus, as long as there is Article 306, there remains an incentive for lawyers to advise their clients NOT to recant their confession.

Finally, while the regulation’s designation of a pre-trial hearing to determine the admissibility of illegally obtained evidence is a step in the right direction, such a pre-trial hearing is meaningless if the judge deciding the admissibility of the evidence is the same judge that will determine the guilt or innocence of the defendant (in China, judges determine guilt; there are no juries).  Having the same judge decide both would defeat the purpose of attempting to prevent illegally obtained evidence from influencing the trial portion.  It will be interesting to see if the officially published regulations will clarify this issue.

(3) After the defendant or his lawyer raises the issue of illegally obtained evidence and provides the details required by the court [see point 2 above], the burden of proof then switches to the prosecutor to show that the evidence was obtained legally.

This regulation is perhaps the most impressive in that it is also the most sophisticated.  Burdens of proof are

Prosecutors await trial in China

difficult concepts to understand, and knowing when to switch the burden from one party to another, can give an otherwise ineffective rule teeth. The law seeks to switch the burden of proof to the party that has the greatest opportunity to determine the truth.  Here, as China correctly notes, that party is the prosecutor.  The prosecutor, in working with the police and at times as part of the interrogation, has the best opportunity to demonstrate the admissibility of the confession.

Additionally, switching the burden of proof can also create an entirely new incentive structure to prevent the illegal behavior from ever occurring.  Here, China utilizes this concept.  Once the prosecutor has the burden of proof to show that evidence was obtained legally, he or she will seek to have procedures in place to guarantee that the police do not violate the law in obtaining evidence so that if the defendant raises the issue, the prosecutor can win.  For example, while there has been a few cities in China that have experimented with videotaping police interrogations, this practice has largely remained isolated.  But, with the switched burden of proof, prosecutors all across China will seek to implement methods to guarantee that confessions are obtained legally, and may seek to pressure their police counterparts to begin recording all interrogations. This regulation could potentially change the way interrogations are performed and recorded, reducing the risk that torture is used.

However, it is still subject to the criticism noted in points 1 and 2 above: will the court decide to exclude evidence even if illegally-obtained since it is not required to do so and will the defendant even know to act upon his or her rights?  If the answer is no, then the incentives created by the switched burden of proof remain irrelevant.

(4) The interrogator (usually the police or the prosecutor) must appear in court and testify.

While this might seem mundane to most Americans, as Prof. Fan notes, for China, this is pioneering.  In China, there is very little live testimony during criminal trials.  Just forcing someone to actually appear and testify in court is radical.  Having that person be a police officer is even more shocking.  In China, the state security apparatus is a powerful body and far outranks the courts or the nascent criminal defense bar.  The fact that the MSS and the MPS agreed to this regulation is certainly surprising and raises a red flag: has the MSS and MPS really agreed to give the courts power over their employees?

Again, the criticism of the new regulations noted in point 1 and 2 are applicable here as well.  Will we even reach the point that there is a hearing questioning the legality of evidence?  Likely not.  But regardless of those issues, the regulation itself seems to be without any bite.  Unless the officially published version expounds upon this regulation, there are no procedures in place to determine which party can call the police office to testify or whether defense counsel will be permitted to cross-examine the police officer, both necessary to guarantee that the regulation is effective.

(5) In regards to illegally obtained physical evidence, if the illegally obtained evidence has the potential to influence the fairness of the trial, then it should be excluded unless there is a reasonable reason for the illegality or it can be corrected.

This regulation is perhaps the vaguest, and thus weakest of them all; it appears to be inspired by the U.S.’ “fruit of the poisonous tree” (FPT) doctrine.  Under the FPT doctrine, other evidence discovered as a result of an illegal search or interrogation is also excluded.   For instance, after an illegal search of a house (the poisonous tree) a key to a locker is found and in that locker is the murder weapon (fruit), that murder weapon will also be excluded.  An exception exists if it can be shows that the discovery would have been inevitable or the discovery would have been made through an untainted source.

China’s regulation here seems to adopt the spirit but not the substance of the FPT doctrine, by only looking to the FPT exceptions.  In the U.S., the exceptions to the FPT doctrine are only applied to the fruit; no exception is made for the poisonous tree.   Here, China applies similar exceptions to the actual tree, to the evidence that was obtained directly as a result of the illegal violation.

This regulation is further weakened by the fact that these terms “reasonable reason” and “corrected” are left completely undefined.  Courts are left to their own devices to determine what these terms mean, a situation that was suppose to be avoided by these new regulations.

China’s “Regulations on the Exclusion of Illegally Obtained Evidence in Criminal Cases” is impressive and provides the architecture necessary to guarantee greater fairness in China’s criminal trials by excluding evidence obtained illegally.  The sophistication of some aspects of the new regulations reflects China’s increasing understanding of the need for effective procedures in order to give meaning to its legal principles.  However, these regulations should be viewed as a step toward greater progress; China has only stuck its foot in the water; it has yet to jump fully in.  China needs to find solutions to the systemic problems plaguing its criminal justice system. Unless China makes efforts to foster a vibrant criminal defense bar, provide access to attorneys early in criminal investigations, and takes steps to create a judiciary independent from the state security and Party apparatus, the new regulations will likely have little impact in the short-term.

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By Elizabeth M. Lynch, May 24, 2010

Only a handful of the 200 U..S. officials at today's Strategic & Economic Dialogue in Beijing

The second U.S-China Strategic & Economic Dialogue (S&ED) is off to an interesting start in Beijing.  The U.S.’ agenda for the talks – agreement on Iran sanctions, change in China’s currency policy, and greater openness of China’s procurement market for foreign companies – was largely overshadowed this morning by South Korea’s announcement that it will hold North Korea responsible for the torpedo attack on a South Korean war ship, the Cheonan, in March 2010 which resulted in the death of 46 sailors.

As the S&ED was set to open in Beijing, South Korea’s president, Lee

Chinese President Hu Jintao greets U.S. Secretary of State Hillary Clinton at Monday's opening of the S&ED

Myung-Bok, issued the strongest statement against North Korea in decades and announced that all trade between the Koreas would be suspended, investment would be stopped, and North Koreans would not be permitted to visit South Korea.  Additionally, South Korea will also reinstall megaphones at the border between the two countries and resume anti-North Korean broadcasting, a practiced it stopped in 2004 when tensions were easing between the two Koreas.  Previously, North Korea stated that any retaliation by South Korea in response to the Cheonam incident would be seen as an act of war; today it announced planned attacks on any South Korean megaphones at the border.

In her remarks during the S&ED’s opening ceremony, Secretary of State Hillary Clinton, who is accompanied by 200 U.S. officials on this trip, brought up the issue of North Korea’s increasing “belligerent” actions and the need for the U.S. and China to work together in regards to North Korea.  Chinese President Hu Jintao did not mention North Korea in his speech.

But President Hu did bring up the currency issue in his remarks, to the surprise of most.  In his speech, President Hu promised that China would continue to reform its currency policy, but noted it would be on China’s terms and such reform would be gradual.

With the delay of the Treasury Department’s report on China’s currency policy and recent op-eds in the state-controlled Chinese press regarding the need to give more flexibility to China’s currency — the yuan — it appeared that China would make some sort of concession on the currency issue.  However, the recent crisis in Greece and the European Union, which has resulted in a 20% drop in the value of the Euro against the dollar, changed that opinion.  By effectively tying the yuan to the dollar, as the dollar gets stronger against the Euro, Chinese goods become more expensive in the European Union, China’s largest export market.  So President Hu’s promise to do something about China’s currency policy was a bit of a surprise.  And the public nature of the comment was even more surprising since the revaluation of the yuan is a hot-button issue for the Chinese domestically: Beijing does not want to appear to be placating to U.S. demands.

But what remains to be seen is when: when will China adjust its currency policy.  Don’t expect that question to be answered at the S&ED which concludes Tuesday afternoon.