orld led the government of the PRC to suspend some of its economic readjustments, and to slow down the pace of economic reform. By and large, however, the government of the PRC wanted to continue its economic interaction with the west, and, as the events of the summer of 1989 are pushed out of the public mind in the west by even more dramatic occurrences, such as the Gulf War of 1991, western commercial interests appear to have, for the most part, overcome the fears induced by the suppression of the uprising, and are once again desirous of doing business with China.
In view of the renewed interest in doing business with China, this research examines the legal aspects of commercial transactions involving entities within the PRC. A brief background discussion is provided on the Chinese legal system, and on the development of commercial law in the country. This background discussion is followed by a more detailed consideration of law applicable to commercial transactions in the contemporary Chinese society.
BACKGROUND: CHINESE LAW AND FOREIGNERS IN CHINA
Historically, the rule of law has not been emphasized in China, and the country did not even begin a codification of its legal system until the early twentieth century.3 Since the accession to political power in China of the Communists, an effort has been under way to develop a comprehensive socialist legal system. Contemporary Chinese commercial law is a part of this comprehensive system.
Problems remain in contemporary China, with respect to an acceptance by the Chinese people of the so called rule of law. Traditionally, the Chinese have believed that the correct way to effect behavioral changes was through a process of education coupled with an inculcation in the individual of societal values.
China began engaging in foreign trade about 2OOO years ago, during the Western Han Dynasty, which spanned the time period 2O6 B.C. to 24 A.D. During succeeding dynas...