Duke Law in China: The Global Marketplace
By Frances Presma
The Global Marketplace ...
For the past 14 years, Ping Wang has traveled to China almost monthly from his home in Virginia. Still, he says he is constantly surprised by the changes he sees in Beijing, where he grew up, trained, and practiced law before coming to Duke.
There are many places I don't recognize–new construction, entirely new neighborhoods. It's all very, very different. Culturally that is true, too. The younger generation thinks very differently from the way we did a long time ago." The environment for doing business and the legal environment have also markedly changed, he adds.
"Lawyers are playing an important role, which you could not have predicted years ago. They are importing new concepts–western legal concepts–to China, and establishing communication between the PRC local business community and the foreigners doing business there. All of that is changing very quickly."
That it has changed is clear. China is not only open for business, it is looking to extend its reach and resources, as evidenced by the China National Offshore Oil Company's (CNOOC) June bid (later withdrawn) for American oil giant Unocal, and other recent attempts by Chinese firms to acquire such brands as Maytag, as well as their distribution networks.
The realities of doing business in China–and comparisons to its main Asian competitor, India–were the subject of a morning panel at the Law School's conference at Tsinghua University on June 11. (See story, page 26.)
Professor Stephen Wallenstein, director of Duke's Global Capital Markets Center (GCMC) which co-sponsored the conference, takes a clear-eyed look. While he calls China "the engine of world growth at the moment," that growth is a bit out of control, in terms of the extent to which the Chinese are building over-capacity in sectors such as commercial real estate.
"On one hand, there is a nine percent growth rate in the country, and a 15—20 percent increase in investment every year. China has recently dismantled its fixed exchange rate and has huge reserves. However, the economy is still cushioned by a significant level of non-tradable government stakes in large enterprises. China's plan to unwind the high level of government ownership is crowding out new listings of more productive private enterprises. Managers don't own stock, so they don't have the incentive to maximize profits and shareholder value."
Wallenstein points out that China's securities markets are trading at an eight-year low. "Investors are very leery. Corporate governance, transparency, accounting rules–all have a very long way to go." At the same time, he adds, China represents a substantial opportunity for the GCMC, because of its expertise and focus on corporate governance.
The GCMC presented a training program in China in 2000 at the Shanghai Futures Exchange, which was co-sponsored by the China Securities Regulatory Commission and Morgan Stanley, and it is currently evaluating the possibility of presenting a Directors' Education Institute in China in the fall of 2006.
Significantly, there are opportunities for lawyers in every sector.
"For Chinese students, the current opportunities in China are extraordinary," says Ocko. "It makes sense for
them to stay and get some practical experience in the United States, but their futures–and their fortunes–are going to be made in China. If you are doing high-end securities litigation,
or large-scale project finance for a Chinese firm or for a U.S. firm operating in China, you're doing as well as you could in the United States, and there you can make a contribution."
Notorious for its lack of intellectual property protections–another subject of Duke's Tsinghua conference–that area is a hotbed of legal activity. China's entry into the World Trade Organization (WTO) also presents significant opportunities; the banking sector is one that has to open by the end of 2006.
Issues emerging in China also present opportunities for Duke Law School, its faculty, students, and graduates. Poverty is on the rise, as is poverty law. Clinical Professor of Law Carolyn McAllaster traveled to China as a guest of the clinical programs at Peking University Law School in June, finding great interest in Duke's clinical programs and opportunities for students. It is fascinating, she says, to see that at least two of that university's four clinics focus on research; students research the legal needs in specific low-income communities and report directly to government officials, as well as to their instructors.
"That's very different from what we do. Our laws are set, in a way, and in most cases we are trying to get the law interpreted in our clients' favor."
McAllaster anticipates greater contact between Duke Law's clinical programs and those at Peking University, possibly leading to a student exchange.
There's great pedagogical value in learning to work across cultures, bringing any expertise that students might have gained in a clinic here to their work in China, and in bringing back an understanding of the tremendous need internationally for legal services for poor people.
Charles S. Murphy Professor of Law and Public Policy Studies Christopher Schroeder immersed himself in environmental issues in China during his June trip.
"Economic growth is putting heavy demands on all aspects of the energy sector," Schroeder points out. "China's energy mainstay has always been coal, which it possesses in abundant amounts second only to the United States. At one time, China thought that bringing on line the hydroelectric power from the Three Gorges Dam would mean that it could retire some of its oldest coal fired plants, but the explosion of economic activity thwarted those plans. Instead, China now anticipates another 200 gigawatts of new coal-fired electrical generation will be built in just the next 15 years."
While car ownership has boomed as a sign of prosperity–increasing about 100 percent over the past three years–it is another source of pressure on worldwide petroleum production, adds Schroeder, and has had a discernible effect on world oil prices.
"These two fossil fuels–coal and gas–are clearly the engines driving China's economic boom. Unfortunately, they are also the engines of increasing environmental problems. China is on schedule to eclipse the United States as the world's leading generator of global warming gases in about 20 years. Fossil fuels used in electrical generation and in autos are the two principal sources of local air pollution throughout China, but especially in the cities. The skies of Beijing, Shanghai, and Xian were dull and gray with pollution during most of our visit.
In short, the environmental and energy issues facing China, like many of its social and economic issues, are large in their scope and large in their potential impact on both the Chinese and the rest of the globe.
Looking ahead, Dean Bartlett says there are many ways to contribute to law and policy in China.
"We can find the best students from China and give them a first-rate education. We can keep in touch with these students when they graduate and learn about the issues of importance to them. We can multiply and deepen our contacts with law faculty in China and share expertise on a wide variety of topics in law and legal education, including intellectual property, business law, environmental law, constitutional law, and legal clinics. What we learn through these interactions, of course, is as significant as what we teach. Duke's approach will continue to be one of partnerships and mutual exchange."
