Laws in motion: a view on China’s progress

As chinadialogue begins its new editorial series on environmental law in China, I asked Robert Lewis, international managing partner in the Beijing-based Zhong Lun Law Firm, to reflect on the last decade’s effort to build environmental law in China.

As an American lawyer who has worked in China for 20 years, Robert Lewis is well placed to compare the state of environmental law in the two nations. The good news, he told me, is that he has seen “very significant progress” over the last 10 years in China: there are more Environmental Impact Assessments, for instance, though they are not always sufficiently stringent and their quality varies greatly from province to province. He does, however, see several ways in which the law could be made to work more effectively. 

One problem Lewis identifies is the lack of political will to apply China’s new environmental laws retroactively, either in the buildings sector or to address the widespread problem of contaminated sites.   

“With new buildings, people have to comply with pretty good requirements,” he said, “but it is very difficult to look back at all the bad environmental legacy in manufacturing, chemical plants and power generation and require retrofit.” It is, he says, a structural problem: there is no concept in China of a Superfund retrospective clean up. Superfund is the common name for the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, a United States federal law designed to clean up sites contaminated with hazardous substances. Under the law, the Environmental Protection Agency is empowered to identify parties responsible for contamination of sites and compel them to clean up the sites. Where responsible parties cannot be found, the EPA itself is authorised to clean up sites, using a special trust fund.   

In China, the factory owner is responsible for the clean up but, unlike in the US, the current owner has no recourse in law against any previous owner. Sites already contaminated by the last three decades of industrialisation in China tend to stay that way.     

In the west, including the United States, Lewis explained, environmental protection progressed through big cases. In 2005, Lewis thought that the major pollution episode on the Songhua Jiang would be an important milestone for China: “I went to Heilongjiang and was very interested in the case. I thought it might be as significant as the Three Mile Island case,” (a serious nuclear accident in the United States in 1979). But he was disappointed that the lessons were not learned and the consequences for the company were negligible.    “I looked at the company’s website,” he said. “It’s a listed company and a subsidiary of PetroChina and the website had many statements of green policy, clearly written by leading law firms. It said it was going to quadruple its efforts. I was not impressed: any multiple of nil is nil.” 

In the United States, the company’s stock price would have suffered – as BP’s did after the pollution accident in the Gulf of Mexico last year. “But nothing happened on the stock price, said Lewis, “so I concluded that everyone outside China who looked at these environmentally sensitive industries has already factored in the liability, or there was no liability.”   

China’s environmental law could be greatly strengthened, he argued, if it was easier to bring class action lawsuits on behalf of pollution victims. “In China, you can join actions and have multiple plaintiffs in a single action, but they have to be identified. In the US, they can be anonymous. The legal system in the US is open to abuse, but it also has its salutary aspects.”

Lewis praises what he calls a “sea-change” in societal expectations of the law in China. People in China, he said, tend to think the law is something separate from them, but it’s really the framework that allows the law to be practiced. The purpose of environmental law is to reflect and implement the overall social compact. If there is no recourse and no responsibility, it is fundamentally unfair.  If we impose a responsibility that exceeds the harm, it is also unfair.   

The role of government regulation is to ensure that the interests of a powerful few do not override the dispersed interests of the people. “You might think that principle would resonate well in a socialist system,” he said, “but because it is a system in transition, it is compromised. Environmental law must make the connection between those who are harmed individually and those who create the harm. In China, it is improving, but still on the path to that goal.”   

In the US, he explained, there are two concepts of what rules: rule by man, in which the law does not count, and rule of law, under which all men are equally subject to the law. But in China, there is a third concept: rule by law in which the communist party is the foundation and the law is an instrument for managing society.  

“So much of what they have done has worked,” he said, and China is moving in laudable directions in so many ways. The question is: at what point does it go beyond current system? China has done an impressive job in the transition from a centralised to a heavily regulated market economy with a remarkable level of divestment of state ownership. At what point along this path does economic and social reality require adjustment?”

He also expects that international standards and expectations will have an effect in China, now that Chinese companies are going out into the world and have to be aware of their stock price, especially if they want to move production outside China. “Once you become a global company,” he said, you need to have global concerns. One reason Zhu Rongji wanted China to join the WTO was because it was a way of importing international standards to China.”