Rule of law v rule of Party

Plaques of Chinese leaders Image copyright AFP
Image caption China's legal system is not independent and its lawmakers are part of the body that governs China

Reforming the rule of law is the aim of the secretive Fourth Plenum that has just taken place in Beijing. It's otherwise known as the annual exercise in rune-reading of what the top Chinese leaders are planning.

As disclosed through various state media announcements since this summer, China wants to overhaul its massive legal system with 200,000 judges, 3,500 courts, but zero independence.

And that's the key.

Through a long history that pre-dates the Communist Party rule but has been reinforced by it since 1949, China's judiciary is not independent and its judges are part of the administrative apparatus that governs China.

But having an effective rule of law requires independent judges who stand apart from the government that they have to be able to hold to account.

For China, it would be a sea change.

The main corporate law governing companies was promulgated only in 1993-94. In just 20 years, China has quickly adopted a slew of formal statutes and regulations covering most major areas, including competition and employment.

It was hastened by joining the World Trade Organisation in 2001, when China agreed to adopt international standards including for intellectual property rights.

But you don't need to be a lawyer to know that laws on paper are not the same thing as laws that work.

And by that more important metric, China falls short by most measures. Just check out the World Bank's Doing Business Index that ranks rule of law and regulation across countries.

And if you search for "China paradox" online, you'll find papers that try to explain how China has managed to grow so quickly despite having a poor rule of law.

But there's a limit - and sustaining growth will require better legal institutions that protect investment and people's property. Among the reasons for protests across China, corruption and property rights figure among the causes.

So there's work to be done.

But is it possible to have effective rule of law under a one-party system?

Focus on legal reforms

Legal reforms aim to protect the property rights that the new middle-class have gained, which offer an avenue of petition that is not available in the political system. In other words, China seems to focus on legal reform to draw attention away from the lack of political reform.

Image copyright AFP
Image caption The real test for China's legal reforms will be when the rule of law comes up against the rule of the party

The latest reforms set out in the communique concluding the Fourth Plenum says that local officials will no longer appoint judges and those who interfere with judicial cases will be named publicly to hold them to account.

It also says that China will try to recruit judges and prosecutors from qualified lawyers. Most Chinese judges from an older generation don't have legal training, while recent appointments come straight from law school. Low wages and a rising caseload don't attract the best legal minds.

These measures may help to some extent, but the real test for China's legal reforms is when the rule of law comes up against the rule of the Party. After all, these are not wholesale legal reforms that make the judiciary truly independent, imbued with the power to challenge the state.

But for China, these are gradual steps that are consistent with their incremental approach to reform. And legal reform entails a cultural change that will take time.

I've heard of contracts in China described as: When you sign the contract, then the negotiations begin.

This week's measures may be the first steps, but it is unlikely to be a short journey.

For more, watch Talking Business with Linda Yueh. Details of when to watch are at bbc.co.uk/talkingbusiness.