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Family concept, Family enterprises, East-Asia miracle and legislature cooperatio

Source:China ASEAN Legal Cooperation Center Editor:hy_user Release time:2012-09-19 16:55:26Font: Large middle Small | Close

 Zhipan Wu

(Vice Director of China Law Society, Executive Vice President of Peking University, Professor of Law School of PKU)

Dear Mz. Gu Xiulian, Vice Chairwoman of National People's Congress of China,
Dear Mr. Ariffin Zakaria, Chief Judge of Malaya,
All distinguished guests, ladies and gentlemen,
First of all, please allow me, on behalf of China Economic Law Studies Association of China Law Society and on behalf of Peking University, to sincerely congratulate on the launching and establishment of HUANYU Sino-ASEAN Legislature Cooperation Center, to congratulate on the Annual Alumni Association Meeting 2012 of the Sino-ASEAN Law Training Base, and to extend my warmest welcome to all friends from ASEAN member countries specialized in law.
The theme of this annual meeting focuses on further probing on legislature cooperation between China and ASEAN in order to create better legal environment for the healthy, speedy and sustainable development of the Sino-ASEAN Free Trade Area. In my opinion, in order to push forward the cooperation, one of the most fundamental principles is “to seek common ground while reserving differences”. We have to find our common interests and values, and at the same time to understand, respect and tolerate inevitable differences. China and ASEAN member countries are so close geographically, rely on each other economically, and influence each other culturally. We do share so much commonality, and to my understanding, the most important of which are our views on values. The views on values are similar and compatible to each other, which is the most crucial footstone for promoting the legislature and economy cooperation between us.
According to the statistics of 2011, the land area of China and ASEAN put together takes 32% of whole Asia, population takes 45%, and GDP takes 52%. This is the current situation in this area: less land area with huge population, while develops fast with a great GDP. Compared to other parts of the world, neither China nor ASEAN countries have edges in natural sources, especially in the per capita sense, so we have to import large amount of natural resources. We don’t have technology edges either. Though China and ASEAN countries take great shares in world manufacturing, for instance, products ranging from Apple computers to Nike shoes sold in shopping centers in US and Europe are mostly produced either in China or in ASEAN countries, neither China nor ASEAN countries take advantageous position in the chain: neither the brands nor the core technology nor the key equipments belong to us. We are “the world factory” but take only very tiny portion of profits; we are not world finance center, which means we have no finance edges and we lack proficiency of raising funds and manipulating global capitals.
Natural resources, technology and capital are crucial factors for economic development, and we have no edges in either one. Ironically, the economy in China and ASEAN countries develops so fast in the past decade which creates a miracle in world economy history. Why? According to a forecast of World Bank, in the year 2050, the population in Asia would add another 1.3 billion, economy takes 52% of world economy and China and ASEAN would be the growth pole. I believe that the growth is sustainable. As long as we work together hand in hand, seeking common ground while reserving differences, the East Asia miracle would continue, so would the peace and prosperity.
Trying to provide an explanation of the growth is strenuous, but I just want to emphasize the strong family concept as a supportive factor for the economic development. As we reinforce rule of law and regional legislature cooperation, we must pay due respect to this cultural attribute in East Asia.
A retrospect of the past three decades’ economic development history in China shows that families in China are extremely important sources for the economy growth, and positive factors all along. As we know, the transfer of China’s Central Planned Economy to marketing economy originated in rural areas. The first that touched the stones underneath rivers and turned to markets is not any person nor any state-owned enterprises, but some farmer families. They requested their families as marketing unit that sign renting contracts concerning their farmlands. Meantime, the government began allowing town families to run commercial businesses and small scale manufacturing entities, which, so vigorous, were called “Private Commercials Families”. Families in China played an incredibly important role in whole nation’s economy.
Family in Chinese is “hu”. Even 2000 years ago, it was proposed the idea of “governing people by regulating families (hu)”. This traditional idea survived all the years and even specially matches marketing economy concepts perfectly now. Why? I believe it’s fundamentally a matter of trustworthiness. In Chinese culture, the reputation of families is high above that of individuals; meanwhile, any individual’s reputation is highly correlated to that of his family, which means reputations of family and individual flourish and collapse simultaneously. There is also the tradition that sons pay their fathers’ debts, which means debts are not owed only by natural persons, but by their families. Families provide kind of guarantee, by which means the family member’s personal trustworthiness is greatly enhanced.
At the beginning stage of China’s marketing economy development when rule of law was barely established, the most scarce resource in the market is trustworthiness. Of course, state-owned enterprises were exceptions. But how could private enterprises get others’ trust? The only way is to rely on their families. Thus, to my opinion, the dramatic economic growth in China is rooted in family concepts, in the thousands-years-old culture and tradition of valuing family.
A bigger concept is family clan. Clans have more population and economic power, thus could get more trust from market. As a result, clans could obtain more funds and run commercials in larger scale and geographic areas.
Clan-owned enterprises exist in every corner around the world, but more conspicuous in China and South-East Asia. Though they have already introduced modern corporate governance and manager agents concepts that prevail western countries, most of those clan-owned enterprises still stick to traditions, and the concepts about families and family clans still play a crucial role in the operations and developments of their enterprises.
We have to admit that many flaws are bothering the clan-owned enterprises, among which is the complicated issue of successors. No matter it’s in mainland China or in Hong Kong or Taiwan, or in other South-East countries, it seems that laws could do little in so many family legacy succession litigations. There are indeed many troublesome matters within a big family clan, but as old clans decay, new clans arise quickly. The efficiency and high trustworthiness of clan-owned enterprises are hard to be replaced.
Family is the most basic unit in Chinese society, which social pattern is said to be very beneficial to economic development. Especially in case that economy grows dramatically while social security system lags behind, families in China shoulder great portion of responsibilities for social securities. For instance, tens of millions of farmers now work in cities, whose pensions, medical care and educations are partly dependent on government or enterprises they work for, partly dependent on their own families. It’s unfair indeed and things are changing slowly now, but take into consideration of the long slow process of establishment and improvement of social security system, families’ roles greatly reduce the costs of economy development that enable the government to invest more funds into public infrastructure constructions or other enormous projects such as education and advanced technologies, South-to-North water diversion, High-Speed Railway Network, High Way Network, desert management and reforestation, pollution control, so on and so forth. Such investments ensure China a quick growth in terms of technology, intelligent human resource and infrastructures that backbone the dramatic and sustainable economic development in China. Chinese government has invested so much with a very low national debt rate, which is quite a different picture in Europe and US, and such achievements are indeed greatly owing to ordinary families.
I believe that ASEAN member countries share similarities in such aspects. It’s our common tradition and advantage. Acknowledgement and respect of our tradition require us to keep certain vigilance in transplanting the whole western model of experience into our systems. For example, we need to take the clan-owned enterprise characteristics into consideration in corporate law aspect, and pay attention to the differences between the pure marketing relation and the more complicated relations between families and within the clans as we handle the issues of private sector lending and funding. In regarding to the legislature in terms of social welfare system, we shall never degrade or overlook the roles families play. Though it’s necessary to put more responsibilities onto government, we shall continue to respect and encourage families’ roles.
Chinese people believe that laws shall not deny common senses. A good legal system shall encode “natural laws” and “man’s spirits”. In Chinese values hierarchy structure, the order and sequence shall be senses, rationalities and laws, in which laws are subordinated to senses and rationalities. As law professionals, we of course would promote the solemnity of rule of law and the concept that law conquer heaven, at the same time, we shall also admit that laws are not mechanicals, but a blend consequence of coordination between traditions and economic social realities. Only laws in this sense shall be regarded sensible laws that bring about sensible governance.
Ladies and gentlemen,
To my knowledge, family concept takes a crucial position in East Asia values hierarchy system, which ensures a society with high trustworthiness and efficiency that benefits marketing economy.
Based on this knowledge, I suggest that we shall reinforce the exchange in terms of legislature culture and professionals promote the mutual understanding, mutual respect and mutual trust in order to promote the Sino-ASEAN legislature cooperation.
At present, we human beings are facing many severe crises and challenges, and East-Asia is confronted to many developing problems. No country could solve its problems all alone, thus cooperation between governments and peoples is a necessity. It shall be emphasized that China and ASEAN share great common cultures, which consists great advantages for better dialogues and communications. We can achieve even greater consensus and make a better interactive and complementary developing regime.
So much for my speech and it’s open to any critics. I sincerely wish our friendship be evergreen!
Thank you!

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