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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 11, 2010

Government Procurement - Shopping Spree for the Government

On Tuesday, China Law & Policy published an insightful interview with attorney Brett Gerson concerning China’s Government Procurement Law, China’s new policy to promote “indigenous innovation” in the Chinese technology sector, and China’s agreement to submit a proposal to the World Trade Organization’s (WTO) Government Procurement Agreement (GPA).

The very next day, what was the talk on Capitol Hill?  China’s government procurement policies!  Before a congressional hearing on China’s trade obligation under the WTO, China’s government procurement policies took center stage.  Which leads us to wonder – are members of Congress busy reading China Law & Policy?

Given the lack of depth in some of the Senators’ comments, we hope not.  In a rare show of bipartisanship, both Republican and Democratic senators united in their attacks on China, demanding that China sign on to the GPA.  Senators Debbie Stabenow (D-MI) and Sam Brownback (R-KS) were the leaders of the pack, calling for China to behave like every other WTO member and join the GPA and stating that China’s indigenous innovation policy is just a way for China to steal foreign patents.

But if the Senators had read Tuesday’s China Law & Policy interview, they would know that “signing up” is just not an option for the GPA.  China has to submit a proposal stating its new government procurement policy and the GPA member countries choose to accept or reject that proposal.  It’s like the Miss America pageant and China’s proposal is its version of the bathing suit competition; even if you wear your nicest two-piece, it’s still the judges who ultimately decide.  As Brett noted in his interview, China submitted such an application in 2007 and, because the GPA member countries did not like China’s proposal, it was rejected it.  China has promised to submit another proposal in July

Sen. Debbie Stabenow (D-MI)

2010.  Once China submits it, the decision to “sign up” for the GPA is out of its hands.  But Congress missed this important procedural distinction and the fact that China has actually promised to move forward.

And not all WTO countries are also members of the GPA.  Senator Stabenow just got that wrong.  A simple Google search would show that actually, plenty of WTO members, including countries like Australia, India and Turkey, are not parties to the GPA.

As for the accusation that China’s indigenous innovation policies are a way to steal foreign intellectual property, here’s a wake-up call – getting China to change this one policy is not going to solve the problem.  Chinese companies do illegally use foreign intellectual property and the Chinese government often turns a blind eye toward enforcing intellectual property rights and laws.  But China’s indigenous innovation policy is just one tool that China uses.  As Jim McGregor pointed out in his Washington Post op-ed, the Chinese government has created a complicated structure seeking to benefit its domestic technology industry:  “a foreign-focused anti-monopoly law, mandatory technology transfers, compulsory technology licensing, rigged Chinese standards and testing rules, local content requirements, mandates to reveal encryption codes, excessive disclosure for scientific permits and technology patents;” discriminatory government procurement policies is just one piece of the puzzle.

Congress needs to see this problem holistically – not something that can be solved merely by getting rid of a discriminatory government procurement policy.  And as McGregor notes in his piece, part of the problem is on the U.S.-side.  Although China has been building its economy for the past 10 years and the China “threat” to U.S. competitiveness has been obvious for the past five, the U.S. has done little offensively to battle this threat.  The U.S. government has not created any kind of economic planning for technology start-ups as  Tom Friedman noted in his New York Times op-ed, and the one piece of legislation that could provided something of a lifeline to the U.S.’ technology sector, the Climate Change bill, has been stalled in the Senate for a year now.  Furthermore, the U.S. still retains a behemoth bureaucracy that is ineffective to deal with the complexities of the China relationship and hires individuals with little to no China background to do this work.  Congress’ sole focus on attacking China on Wednesday ignores the other half of the equation – developing the U.S. tech sector to better compete with China and a government bureaucracy that actually protects U.S. industry.

China is an economic threat to the U.S, especially in the technology sector.  But Wednesday’s hearing showed a Congress not willing to actually solve the problem.  Instead, Wednesday showed a use of rhetoric designed to win upcoming midterm elections.  The only losers are the American public and the millions of Americans who are still out of work.

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By Elizabeth M. Lynch, June 8, 2010

Last month’s Strategic and Economic Dialogue (S&ED) featured many thorny issues that have been plaguing U.S.-China relations for the past few months: North Korea, currency manipulation, Iran….and government procurement?  Yes, government procurement. Not what one would think of as a controversial topic worthy of a major dialogue between two of the world’s leading powers.  So to help us understand the addition of government procurement to the S&ED agenda is Brett Gerson, an associate in the international trade and public procurement practices at Reed Smith and co-author of the recent article “Can China’s Government Procurement Market be Cracked?” in this month’s The China Business Review.

Click here to listen to the interview with Brett Gerson or read below for the entire transcript.
Length: 19 minutes (audio will open in another browser)

In the interview, Brett mentions three laws and regulations pertaining to government procurement in China. They can be found through these links:

• 2002 Government Procurement Law of the PRC (official PRC translation)
• January 2010 Draft Government Procurement Law Implementing Regulations (Unofficial translation courtesy of the U.S.-China Business Council) – link to be updated soon
• May 2010 Draft Administrative Measures for the Government Procurement of Domestic Products (Unofficial translation courtesy of the U.S.-China Business Council)

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Potentially a $90 billion Procurement Shopping Spree

EL:  Just to begin, what exactly is meant by government procurement and how does this involve U.S.-China relations?

BG:  Well, essentially government procurement is the process whereby governments or government ministries or agencies can purchase goods or services at a large-scale to provide for use in the carrying out of government processes.  So for example, this could, as an example of goods, a government agency could purchase in bulk a large number of, let’s say, printers or staplers or another good.  It could also be services.  The government could enter into an agreement with an IT company to provide some type of computer services or internet maintenance or something like that.

It’s becoming a very big issue between the U.S. and China because like many other areas of China’s market, there is immense potential for companies – both Chinese and foreign – to get into China’s procurement market.  Obviously the Chinese government is huge, they have a wide array of ministries and agencies both at a, sort of, federal level coming from Beijing, and at a provincial level.

EL: And how big is this market, this potential market, in U.S. dollars?

BG:  It’s hard to say exactly.  Most estimates hover around $90 billion which is really huge.  But it is tough because it is hard to say exactly which entities are state-owned enterprises, so which are entirely private and which are sort of public in nature.  But most estimates hover around $90 billion and I have seen a couple where in 2010 that’s expected to reach $100 billion.

EL: Currently, does China have any policy or laws in regards to government procurement of foreign companies’ goods or services?

BG: Yeah.  In 2002, China promulgated the Government Procurement Law.  It’s somewhat controversial in nature but it basically just states that Chinese government agencies and entities must purchase domestic goods, works or services except where those goods, works or services can’t be obtained within China under reasonable commercial terms.  Those reasonable commercial terms are defined as 20 percent more than imports.  Now, the problem with the Government Procurement Law is that it never defined what is “domestic.”  So companies, particularly foreign companies, had a hard time cracking that market because it was so easy for the Chinese government and Chinese government agencies and entities to just simply purchase products – goods or services – from Chinese companies.

Since 2002, there has been a lot of international pressure on China to better define what is domestic.  They finally did this in January 2010, just about six months ago, the Chinese government issued what’s called the Implementing Regulations.  These aren’t exactly law, but they define how the Chinese government is suppose to carry out the Government Procurement Law.  The Implementing Regulations set forth that….it better defined domestic.  It says that essentially domestic manufacturing costs that exceed a certain threshold, those products will be defined as domestic.  Now in the implementing regulations, they didn’t actually set the threshold.  We were able to look at some other guidance that the Chinese government issued recently and we were able to guess that they probably meant 50 percent.  Now, just a few weeks ago, right before the high-level meetings in China that you discussed, the Chinese government again issued another sort of policy guidance paper that did clarify that the threshold for a product to be considered domestic is 50 percent of domestic production costs.

EL:  So if they have clarified this recently and this law has been in place since 2002, why is this now becoming such

China's Government Procurement Laws - Trade Protectionism?

an issue? What has caused government procurement to become almost the centerpiece of the Strategic and Economic Dialogue last month?

BG:  There’s two main reasons and they sort of come together.  The first is that in the World Trade Organization, there is an agreement called the Government Procurement Agreement [GPA].  It’s a plurilateral agreement meaning that some but not all of the World Trade Organization members are a part of this agreement.  It basically just states that if you’re a party to this agreement, you cannot favor products or services from your country against those from a foreign country.  China, when they first came on to the World Trade Organization in 2001, they promised that they would join the Government Procurement Agreement as soon as possible.  Now, they have submitted a proposal before, back in 2007, but it didn’t quite come to the level of international best practices.  The member countries essentially rejected it.  Since that point, the United States as well as major European countries and other members to the GPA, have pressured China to resubmit a proposal that do come up to the standard that the member countries expect.  Finally, China agreed just recently at the high-level discussions in China that they were going to submit a new proposal in July of this year.  Right before the time the World Trade Organization Government Procurement Committee meets.  So I think that is one of the issues that is really bringing it to the forefront, is that there is a lot of pressure on China to join the GPA agreement.

The other issue, and this was also discussed and mentioned by Hillary Clinton and Timothy Geithner, is China has set forth a very controversial policy called indigenous innovation policies.  And basically these are policies that direct provincial governments and agencies and ministries to buy only from certain product catalogs.  These catalogs are primarily made up of high-tech and IT goods and traditionally it’s been extremely hard for foreign companies to get their products onto these catalogs.  For example, and I mention this in the article, out of the Shanghai-based catalog, there are over 500 products that are listed on this catalog, and foreign products make up only two of these products.  Of those two, they are not entirely foreign entities, they’re joint ventures between a foreign company and a local Chinese company.

So I think those two issues, one that China has been slow to join the World Trade Organization Government Procurement Agreement and two, these indigenous innovation polices that make it very difficult for foreign companies to get their high-tech products listed on these procurement catalogs.

EL:  But in terms of China favoring its domestic products over foreign products, is China really acting any differently than from any other countries in terms of government procurement?  Doesn’t in the U.S., isn’t the U.S. government required to purchase U.S. products?  How is China any different from that?

BG:  Well there’s a couple of differences.  The U.S. and other countries that are members of the GPA do have policies that direct or allow their own domestic government entities to purchase only domestic products.

There’s a couple of differences.  One, here in the U.S. we have what is called the Buy American Act.  The Buy American Act essentially says that federal agencies can only procure unmanufactured articles that have been mined or produced in the U.S. or manufactured articles that were made substantially of articles or materials mined or produced in the U.S.  But there are several exceptions.  One is you can waive that if it would be consistent with public interest or if observing that preference would be inconsistent with the public interest.  Second, where the cost of buying the U.S. good is, sort of, unreasonably higher than would you purchase them from a foreign entity.  The third exception is where the products in question are in too short of a supply in the U.S. to make that purchase feasible.

In addition to that, government agencies may purchase foreign-made information technology equipment.  So that’s sort of a big issue and that sort of touches upon the China indigenous innovation policies – there is sort of a cut-out for U.S. government agencies to waive the Buy American requirements for sort of high-tech, IT goods.

Also, the Buy American Act doesn’t include services which the Chinese government procurement policies will.  As you know, services is a huge sector for foreign companies in China: legal services, accounting services, IT services, things of this nature.

In addition to the Buy American Act, we also have the Trade Agreements Act and this is a pretty big issue because the Buy American Act will be waived where we have a trade agreement act, an agreement with another country.  These include all the countries that are signatories of the WTO Government Procurement Agreement that we mentioned before that China is not a signatory to; these also include all countries that we have free trade agreements with ; all these developed countries and also the Caribbean basin countries.

You are right in that the U.S. does have certain policies like the Buy American Act that on their face appear somewhat discriminatory.  But I think that the differences between China’s policies and the U.S. policies is that we have so many carve-outs for our Buy American Act: exceptions and instances where the Buy American Act requirements will be waived where we have agreements in place with other countries.  China is not one of them.

EL:  Just to go back to the indigenous innovation policy of China, because that was something that Secretary of State Clinton did mention specifically as a problem.  I guess just examining the equities of it.  Given that the U.S. and other countries were largely able to develop their technology sector before our current global trade system, and before there was competition from other countries, shouldn’t China also be permitted this luxury?  Don’t they have an opportunity to catch up?  Isn’t China’s indigenous innovation policy just a way to allow its small but growing technology sector to really flourish?

BG:  There is no question that China should be allowed to sort of foster the growth of their high-tech services but I

Investing in R&D in China might bring more benefit than an indigenous innovation policy

think, and Secretary Clinton and Secretary Geithner both mentioned this, that there’s ways to do this that are less discriminatory for foreign firms.  Rather than link the indigenous innovation policies to government procurement – which they are trying to do – we think that there are other ways such as using tax incentives or research and development support programs that can sort of achieve the same goals without the discriminatory effect.  We think that generally China grow this area by including foreign firms rather than excluding them.  Like I said, there are certainly sort of high-tech tax status programs that they can enter into and R&D programs.

One of the big ways that their policies discriminate against foreign firms is, initially when they released the indigenous innovation policies, they required that to get on these catalogues that I mentioned before, the company has to…the trademark of the product has to be owned by a Chinese company and they also had to have full ownership of the products IP [intellectual property] in China.  This was really stringent, this was tough.  Thankfully, just a couple of months ago in April actually, the Chinese government again released sort of guiding, implementing regulations memo.  Now, this doesn’t have the force of law but they’re proposing to relax these requirements by saying that instead of having full ownership of the trademark in China, the company need only have exclusive rights to the product’s trademark in China.  Instead of having complete ownership of the intellectual property in China, you only have to have a license to use the intellectual property in China.

So this is definitely a step in the right direction.  But ultimately, I think ideally foreign companies, U.S. companies, would want to de-link the indigenous innovation policies from government procurement.

EL:  Just getting back to the Strategic and Economic Dialogue, do you know what it was that the U.S. side was seeking to achieve in terms of government procurement and indigenous innovation policy.  I know that you had mentioned a little bit before but can you just summarize that the U.S. wanted out of it?

BG:  Sure.  I think the first thing they wanted is to urge China to submit an additional proposal, a new proposal, to the World Trade Organization Government Procurement Agreement, which they have agreed to do by mid-July so that’s definitely is a step in the right direction.  We don’t know exactly what that is going to say but we are think that it is going to be a step closer to international best practices and the other proposals that the member countries have agreed to.

Second, I think that, the U.S. delegates really wanted the Chinese government to relax the indigenous innovation policies and de-link them from the government procurement policies.  As it stands right now in the Implementing Regulations, Article 9 says that Chinese government entities and agencies should favor indigenous innovation products which are only listed on these catalogues like I mentioned.  So I think what the U.S. government would like to see is getting rid of the indigenous innovation article from the Government Procurement Law.  It is unclear that the Chinese government is going to do that.

EL:  Even though it seems like there was some progress at the Strategic and Economic Dialogue and that China has agreed to submit a new proposal, do you really see though China, I guess, even if it submits a new proposal, do you see that proposal to the WTO to join the Government Procurement portion of the WTO, do you see that as actually being something that other member countries would agree to?  Do you see China acquiescing to a lot of the foreign pressure and is it really in China’s self-interest to do that at this stage in its development?

BG:  It’s hard to say at this point.  I think we’ve seen that, in other areas, in strategic and economic areas, China has certainly refused to acquiesce to international pressure to do certain things or not to do certain things.  So it is hard to say without seeing their proposal.  I think that the GPA member countries would reject a proposal that is not up to standard.  They’ve done it before and I think they might do it again.  And I’m not sure that would be in China’s interest.  I think China at this point would have to understand what the member countries expect, what the parameters would be.  And it’s unclear to me that they would submit something that would be any less than that.  So it’s hard to say.  I don’t know.

Generally it seems that China doesn’t acquiesce.  However if the international community is successful in persuading them that it is in their best interest, to relax their indigenous innovation policies and to de-link them from government procurement, then I think they will go ahead and submit a proposal that’s up to par, that’s in line with international best practices.

Over the last several months, in January, since they issued their Implementing Regulations, there has been significant international backlash and they have sort of watered down some of the more strict discriminatory provisions in the Implementing Regulations.  So there’s been progress.  I suppose they only have another six, seven weeks before they’re going to submit their proposal to the Government Procurement Committee so it is unclear how much further they are going to go in watering those items down.

EL:  Well I guess only time will tell what happens in July.   Thank you.

BG:  It will be interesting; hopefully we can follow up and discuss what happened.

EL:  That would be great.  Thank you so much for your time.

BG:  Thank you.

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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.

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By Elizabeth M. Lynch, May 18, 2010

Regular China Law & Policy blogger, Marcy Nicks Moody, just posted an interesting piece over at Foreign Policy Digest.  In the past three months, China has seen a spate of killings of children, mostly kindergarteners while attending school.  Why this sudden rise in gruesome murders in a society that places so much emphasis on “social stability” and seeks to establish a “harmonious society”?  In ‘Some Got Rich First–and Richer Later: The Uneven Nature of China’s Economic Development,’ Marcy looks at these horrific incidents, contemplates possible causes and finds the growing income inequality in China as a possible reason.

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By Elizabeth M. Lynch, May 17, 2010

After a two year hiatus, the U.S. and China resumed their human rights dialogue last Thursday and Friday in Washington, D.C.  Don’t be alarmed if this is the first you heard of the Dialogue; the U.S. mainstream press barely covered it.

The U.S-China Human Rights Dialogue is subject to criticism and much of it viable.  China doesn’t send anyone with much power to negotiate (for last week’s Dialogue the highest official was Chen Xu, Director General of the Department of International Organization of the Ministry of Foreign Affairs); the Dialogue itself is conducted largely behind closed doors and it is unclear what is accomplished; and there are never benchmarks set to determine if these dialogues actually produce any results.

But last week’s U.S.-China Human Rights Dialogue, even with the little that is

Assistant Secretary, DRL, Michael Posner

known about it, is newsworthy; it reflects a changing interpretation of human rights in the U.S.-China relationship.  From what can be gleaned from Department of State press conference, the new emphasis in human rights appears to be almost exclusively rule of law.  While Mike Posner, Assistant Secretary of State for the Bureau of Democracy, Human Rights and Labor, highlighted five different topics which were discussed at the dialogue (religious freedom, labor rights, freedom of expression, rule of law, and racial discrimination), the focus of the Chinese delegation’s field trip on Friday was largely legal.  On Friday, the Chinese delegation made the following visits: a meeting with Justice Sandra Day O’Connor to discuss rule of law and an independent judiciary; a talk with Cardinal McCarrisk at Catholic Charities’ Anchor Mental Health Center to discuss the relationship between the religious community and government as it pertains to human and social services; discussions with the Federal Mediation and Conciliation Services concerning labor rights and collective bargaining; and a talk with Thomas Crothers at the Carnegie Endowment for International Peace regarding the interplay among law, human rights and food safety.

In addition to the focus of an effective legal system as a part of human rights, here are some other interesting takeaways:

Why discuss with delegates from an atheist country the role of religious organizations?

This is perhaps the most interesting and most puzzling aspect of the talks.  China, run by the Communist Party, is a self-declared atheist country.  In fact, all of the Chinese delegates from last week are admitted atheists.  To be a Chinese official, Communist Party membership is a prerequisite; to be a member of the Chinese Communist Party renunciation of religion (Buddhist, Islam, Christianity, etc) is necessary.   So given this fact, the State Department trip to Catholic Charities offers an interesting insight into the U.S.’ policy toward religion, human rights, and China, particularly in regards to Christianity.

While ostensibly atheist, China is one of the fastest growing Christian nations.  Even based on the Chinese government’s official numbers –which are likely low-balled—from 1997 to 2006, China saw a 50% rise in the number of Christians.  The number, including those that attend the government-run churches as well as the underground, unofficial churches, is around 70 million.  Although this seems like a large number, population wise, it is only around 5%.  So for many Western Christian missionaries, the name of the game is China.  Western Catholics and Protestants both know this and are in China, albeit undercover, in large numbers.

While China has a growing Christian population, the Chinese government remains ambivalent about its development – sometimes seeing it as buttressing its authority and sometimes seeing it as a threat.  Although religious groups and charities have been important in the U.S.’ civil society development, China is a long way from having any sort of religious charities that could support human rights or rule of law.

So why the trip to Catholic Charities?   Perhaps the Chinese officials requested this because they are sincerely interested in learning more about the role religious groups can play in society.  Or perhaps U.S. policymakers’ idea of human rights, at least in China, is becoming less secular and more religious-based, particularly Christian.  Unfortunately, Assistant Secretary Posner did not explain why the Human Rights Dialogue with atheist China focused on the role of religious organizations in supporting human rights and we are left merely to speculate.

U.S. Raises Issue of Liu Xiaobo’s Imprisonment, the Disappearance of Gao Zhisheng, and likely the Disbarment of Tang Jitian and Liu Wei

Assistant Secretary Posner informed the press that U.S. officials discussed many specific Chinese dissents’ cases during the Dialogue.  However, the only two cases he named were those of Liu Xiaobo and the very odd case of Gao Zhisheng.

Liu Xiaobo has a long history of human rights activism in China.  In 1989, he

Activist Liu Xiaobo

participated in the Tiananmen protests and has repeatedly criticized the Chinese government.  His activism has received many accolades from the West, including Reporters Without Borders’ Foundation de France Prize.  In December 2008, Liu Xiaobo was one of the organizers of the Charter ’08 movement, a movement calling for more democracy, less corruption and greater accountability of the Chinese government.  For these activities, Liu was arrested and sentenced to a very harsh 11-year prison term for inciting subversion of state power.  Even for China, the sentence is particularly long.

Although Liu’s sentence was harsh, the outcome was not surprising from

An emaciated Gao Zhisheng in March 2010 after a year in police custody

China.  Gao Zhisheng’s case however is just downright bizarre and Kafkaesque.  Gao is a self-taught lawyer and received much praise by the Chinese government for his work in public interest law.  But that was back in 2001.  By 2006, Gao had fallen out of favor and his work, particularly the representation of the repressed religious organization Falun Gong, was seen as a threat to the Chinese government.  In 2006, Gao was detained, arrested and eventually found guilty of subversion.  His three year prison sentence was converted to five year probation and he was allowed to remain at home.  After harassment, physical abuse and threats to his life, in February 2009, one month after his wife and child fled China for the United States, Gao was mysteriously abducted by Chinese police.  His whereabouts remained unknown.  The Chinese government remained largely silent in regards to Gao’s whereabouts until January of this year when in response to questions regarding Gao’s disappearance, Foreign Ministry spokesman Ma Zhaoxu retorted that Gao was “where he should be.” Although ominous, Gao eventually reemerged in March 2010 at Wutai Mountain, hundreds of miles from his home.  Announcing that he was giving up rights activism for the opportunity to be reunited with his family, Gao went to Xinjiang Autonomous Region at the beginning of April to visit his in-laws.  After one night there, Gao was abducted a second time and to this day, his whereabouts are unknown.

In addition to Liu and Gao, Posner also mentioned that the cases if recently disbarred public interest lawyers were also raised.  This likely means Tang Jitian and Liu Wei, two public interest lawyers who were recently stripped of the right to practice law.  Both Tang and Liu merely represented

China’s increasingly hard-line stance against rights activists and public interest lawyers reflects a country that may not be interested in establishing the rule of law, at least at it pertains to non-economic spheres.  Raising these issues is important not just for the people being detained or harassed, but also to see how China moves forward in response to the issues.  For example, President Obama, in his trip to China last November, reportedly raised the issue of Liu Xiaobo’s detention.  However, the Chinese government did not lighten Liu’s sentence in response.  Instead, the Chinese government sentenced Liu to the overly harsh term of 11 years in December, a month after President Obama’s visit.  It will be interesting to see what happens to Liu Xiaobo, Gao, Tang and Liu Wei after the Human Rights Dialogue.  Does China care anymore about the U.S.’ criticism?

Even the Chinese know what the real purpose of Arizona’s new law

To create a feeling of mutual respect, the U.S. usually voluntarily discusses its own human rights issues during these dialogues.  In last week’s Dialogue, Assistant Secretary Posner volunteered Arizona’s new law against illegal immigrants as an example of a potential human rights violation in the United States.  However, according to Posner, the Chinese were not concerned about the law as it may apply to their citizens visiting the U.S.  Even the Chinese know that the law’s likely racial profiling will be for Mexicans, not Chinese.

How to Move Forward

Last week’s Human Rights Dialogue was only the second since 2002, after China suspended the talks.  Actually having the Dialogue itself is a major accomplishment.  Additionally, at the end both sides agreed to have another session in 2011, making the Dialogue an annual event.  For purposes of a continuing conversation, this is a good sign.  But the criticism that China merely plays lip service to the Dialogue is apt.  That is why it is important that during this month’s Strategic & Economic Dialogue (S&ED), to be held in China May 24 and 25, that high level officials, including the Secretary of State, raise human rights.  China places more emphasis on the S&ED compared to the Human Rights Dialogue.  But if the U.S. really wants China to move forward in human rights and rule of law, the topic must also be raised at the S&ED.

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By Elizabeth M. Lynch, May 12, 2010

Link here for webcast (or go through the House website here).

Click here for CL&P’s Written Testimony Submitted to the Committee

Yesterday, the Committee  on House Administration held a hearing to discuss  and analyze the DISCLOSE Act (H.R. 5175), the legislation drafted to deal with some of the issues raised by the Supreme Court’s decision in Citizens United v. Federal Election Committee.  Most of the new legislation deals with what disclosure should be made when a corporation runs a commercial or ad as part of its political activity.  But Section 102 of the proposed legislation seeks to close the loophole that enables foreign corporations, operating through U.S. subsidiaries, to fund “electionteering communications.”

China Law & Policy’s article, “Citizens United: U.S. Politics with Chinese Characteristics” was picked up by the Committee’s staff and I was invited to testify about potential foreign government influence in our elections post-Citizens United.  On the panel also included former Federal Election Committee (FEC) chair and lead staffer on the McCain-Feingold, Trevor Potter of Campaign Legal Center; Prof. John C. Coates of the Harvard Law School and expert in corporate governance; Michael Toner, partner at Bryan Cave and former FEC Chair; and William McGinley an attorney at Patton Boggs.  The House Committee is to vote on the legislation on Thursday, May 13.

The full webcast can be watched here (or here).  It was a very interesting discussion and I recommend watching all of it (total time is 1 hour 31 minutes), but for those just interested in the discussion on foreign influence (or the parts where I speak), below is a breakdown by time of the discussion.  Thank you for watching!

Discussion on Foreign Influence in U.S. Elections:

14:45 – 16:45 Trevor Potter, Opening Statement

21:49 – 22:27 John C. Coates, Opening Statement

22:38 – 27:45 Elizabeth M. Lynch, Opening Statement

29:28 – 31:05 Michael Toner, Opening Statement

34:03 – 34:32 William McGinley, Opening Statement

42:56 – 46:14 Rep. Lungren, Question for the Panel

• 46:15 – 47:12 Coates, Response to Rep. Lungren
• 47:13 – 48:47 Lynch, Response to Rep. Lungren
• 48:48 – 49:46 Lungren Conclusion

1:02:59 – 1:03:21 – Toner, Response to Rep. Harper

1:05:45 – 1:10:22 – Rep. Capuano, Questions for the Panel, Back-forth with Toner, and China issue Lynch

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By Elizabeth M. Lynch, May 10, 2010

China Law & Policy will be appearing before Congress tomorrow.  The Committee on House Administration, which has jurisdiction over federal elections, is seeking testimony on the potential for foreign influence in U.S. elections post-Citizens United.  I have been invited to testify.  Congress is seeking to pass legislation, called the DISCLOSE Act, to rectify some of the issues caused by the Supreme Court’s Citizens United decision.

The hearing  will be at 5 PM at 1310 Longworth House Office Building in Washington DC.

The hearing will also be shown LIVE on the web: http://cha.house.gov/ (on the left-hand hand side will be a link for live webcast)