by Stanley B. Lubman. Stanford, California: Stanford University Press. Hardcover: 1999, 447 pp. $75.00; softcover: 2001, 472 pp. $29.95.

In joining the World Trade Organization (WTO) in December 2001, China made commitments that promise to transform the country's marketplace and regulatory environment dramatically. China has revised hundreds of laws and regulations to bring them into line with WTO mandates and has taken complementary steps to invite more public participation in government and make government affairs more transparent down to the village level. These efforts are nothing short of breathtaking.

Nonetheless, even the best laws are of little use if they are not enforced consistently and fairly. Given its weak judiciary and other legal institutions and, as author Stanley Lubman puts it, "the prevailing environment of national and local protectionism," many businesspeople and policymakers question whether China will be able to meet its WTO obligations, especially those relating to uniform application of the law, nondiscrimination, and transparency. Written on the brink of China's WTO accession by a widely respected pioneer of the Western study of Chinese law, Lubman's Bird in a Cage: Legal Reform in China After Mao raises sobering concerns--still valid in 2002--about the prospects for China's WTO compliance and success in establishing the rule of law more broadly.

Bird in a Cage takes its title from a metaphor coined by economist Chen Yun, who described China's economy as a bird that must be allowed to fly--introduce market forces and some measure of decentralization--but only within the confines of its cage--the central plan--lest the bird escape. While China's economy has nearly outgrown its cage, Lubman demonstrates how China's fledgling legal system is like a bird constrained by the cage of Chinese Communist Party dictate. Law in a China that is shifting rapidly to a market economy still serves more as an instrument of Party control than as a framework to facilitate private transactions or to protect rights. Lubman argues persuasively that, until the courts become truly independent of Party and government interference, China cannot claim to enjoy rule of law. Such a development will, Lubman cautions, require an unprecedented political and constitutional adjustment that elevates the courts' status above that of other Chinese authorities.

Lubman builds his case with historical background and studies from a wide array of legal developments. In the early chapters, he deftly traces the distinctive elements of traditional Chinese law and their differences from the Western legal tradition. He then analyzes legal development during the Maoist era (1949-79) using studies of the Maoist approach to dispute mediation, competing approaches to criminal law, and the politicization of civil law during that period. Lubman shows us how both the imperial legacy and the Maoist overlay fail to differentiate between the functions of law and administration and place the judicial system at the same level as the state's bureaucracies in the political hierarchy--rather than giving the courts authority over administrative organs--with limited powers of judicial interpretation.

This instrumentalist approach to law as an administrative tool persisted through the reform era (1979-2001) and survives today in what might be termed the "WTO era." While Lubman documents China's truly impressive achievements in crafting a legal framework for domestic market reform and foreign direct investment, as well as the rising legal consciousness and sophistication among Chinese both within and outside government, he also pinpoints multiple obstacles to China's achieving true rule of law. These include in particular the growth of localism, in which bargaining substitutes for rules, and the debilitating impact of corruption. His primary concerns are with administrative law and dispute resolution institutions that ultimately fail either to curb bureaucratic arbitrariness or protect private rights.

Bird in a Cage is an exploration of China's modern pursuit of legal reform and institution building. The product of nearly 30 years of Lubman's rich experience as a teacher, writer, and adviser, this uniquely insightful study is invaluable for legal scholars, lawyers, and law students wanting to understand Chinese attitudes toward law. More of a series of related essays than a textbook on Chinese law per se, it is also a wonderful reference book. Lubman explains many areas of substantive Chinese law and provides an extensive bibliography and footnotes, as well as a detailed index, for those pursuing further research on topics such as Chinese court procedures or property, tort, company, criminal, and administrative law, to name but a few.

The book should also appeal to students of China more broadly, including trade practitioners, businesspeople, and policymakers, since these rule-of-law issues are entwined with questions of China's political and economic future. Lubman also proffers thoughtful suggestions on how we in the West might position ourselves to help China meet its WTO obligations. In sum, Stanley Lubman's Bird in a Cage provides a veritable feast of fact, analysis, and insight for anyone seeking to understand and engage modern China.

--Jamie P. Horsley

Jamie P. Horsley, an attorney who lived and worked in China for 13 years as a lawyer, diplomat, and corporate executive, is associate director and senior research fellow of the China Law Center, Yale Law School.

by Nicholas R. Lardy. Washington, DC: Brookings Institution, 2002. 244 pp. $19.95 softcover.

Readers of The CBR will find Nicholas Lardy's latest in his series of analyses of the Chinese economy just as valuable as his previous efforts: Integrating China into the Global Economy is a solid attempt to take stock of China's economic progress to date and its prospects over the next decade. Like his 1998 work on China's financial system, and his 1994 volume on foreign trade and investment, Integrating China uses current data and careful research to back up convincing arguments about where China's economy is today, and where it is headed, as the country embarks on a new era as a member of the World Trade Organization (WTO).

The book's five chapters cover the reforms that preceded WTO entry; the terms of China's final WTO accession package; the implications of China's entry for foreign firms and for the world economy; and the relationship of these events to US policy. Each chapter can stand alone or as part of a larger discussion about what must happen for China's economy to continue to provide for its citizens.

To business readers familiar with the story of reform-era China, Lardy's summary of these reforms from 1980 to 2001 may seem, at first, nothing new. Foreign investors that have set up operations in China have witnessed these reforms first-hand. They should stick with this section, however, because it also includes some less-publicized findings--for instance, that by the end of the 1990s, the number of tariff lines subject to import licensing restrictions had fallen below 4 percent, affecting only 8.45 percent of all imports.

Similarly, even readers who have followed the last few years of China's 15-year WTO negotiating process will find that Lardy makes some observations in the chapter summarizing China's WTO commitments that illustrate the extent of the concessions made on the Chinese side. For example, he points out that China agreed to a clause that establishes a disadvantageous, transitional product-specific safeguard mechanism that will make it "fairly easy for the United States and other countries to impose restrictions on goods imported from China. And China's ability to respond...is more circumscribed" than that of other WTO members. He notes that this mechanism, which could be invoked to counter a surge of Chinese exports, allows a WTO member to single out Chinese goods for special quotas--an exception to the WTO's principle of nondiscrimination.

Without a doubt, the strongest section of the book examines the impact of WTO entry on China, foreign firms, and other economic actors. Lardy puts two recent studies on the impact of WTO entry on China's economic growth--by the US International Trade Commission and the PRC Development Research Center--into useful perspective. He notes that they are probably low-end estimates of the boost that WTO entry will give to China's GDP, in part because they are based on computable general equilibrium models that assume that Chinese firms are already operating at optimal efficiency and in a competitive market.

The chapter also looks at sectors that are likely to be most affected by WTO membership--autos, agriculture, textiles and apparel, and finance. Lardy suggests that overcapacity is likely to be more of a problem for the domestic auto sector than will imports of foreign cars. He also predicts that it will be at least five years before foreign banks will be involved enough in the domestic banking system to threaten its stability. In textiles, he explains that China's trade in apparel and textiles will grow only to the extent that other WTO members refrain from excessive use of special safeguard mechanisms. At the end of the chapter Lardy returns to the issue of China's financial health, noting that China could still undermine its own future by failing steadily to commercialize its banks or to end policy-based lending to inefficient state-owned enterprises.

Lardy closes the book with balanced assessments of the likelihood of China's successful compliance with its WTO obligations; the consequences for US and other countries' trade patterns; and the implications for US policymakers. He warns that the high bar set for China in comparison with other WTO members makes compliance difficult and that China's legal system may not be up to the task. Yet he also details the substantial efforts China took to comply with WTO norms even before its December 11, 2001 accession.

Lardy offers insights into US policy toward China that are likely to please some Washington advocates of expanded trade and stable US-China relations. He dismisses the notion that China is solely to blame for the US trade deficit with that country, placing it instead on low US savings and investment rates. He suggests that the US government fund WTO capacity-building assistance programs, as every other major PRC trading partner already does, and warns against excessive use of safeguard mechanisms by the US Trade Representative. He also highlights the fact that the United States is the only WTO member that has not acknowledged that most of China's prices are market-determined, and thus that US antidumping procedures' designation of China as a nonmarket economy is biased. Indeed, his final statement of the book implies that China's economic integration will succeed only if other WTO members, not just the United States, do not erect barriers to keep China's products out.

--Catherine Gelb

Catherine Gelb is editor of The CBR.

compiled by Andrew C. Chang. Boston: Cheng & Tsui Company, 2002. 448 pp. $29.95 softcover.

With more than 9,000 entries, the Cheng & Tsui English-Chinese Lexicon of Business Terms with Pinyin is a welcome addition to the bookshelf of anyone doing business in or with China or another Mandarin-speaking area. The bulk of the Lexicon is devoted to common business vocabulary, business-related legal terms, and ordinary words that are often used in banking, finance, insurance, international trade, real estate, and stocks and bonds.

Entries range from the relatively straightforward, such as "debt" and "savings," to words and concepts that are more difficult to translate, such as "rain check," "tombstone ad," "make a killing," "scab," and "foreclosure proceedings," to the occasional Latin term, such as "lis pendens." Each English entry is followed by a direct translation into simplified Chinese characters, which is followed by romanization in pinyin with tone marks. Many entries have two or more translations into Chinese, separated either by commas or semicolons--words separated by commas are near synonyms, while those separated by semicolons have different meanings and are used in different contexts. Unfortunately, however, the tome lacks examples that put the words into context, which could frustrate users confronted with several different translations of one English term.

The Lexicon also includes several extremely useful appendices containing specialized vocabulary. The appendix on information technology and e-business is divided into three sections: telecommunications and video, networks and e-business, and computers and peripherals. Again, terms range from the common, such as "browser" and "cable television," to the more technical, such as "asynchronous transfer mode," "ethernet," and "dynamic random access memory." The financial statements appendix covers balance sheets, cash flow statements, and income and profit-and-loss statements.

Anyone who has struggled to convert large Chinese numbers into English equivalents will appreciate the third appendix, which lists the main units of Chinese counting, in both characters and numerals, up to one trillion. It also gives examples of various numbers in both numerals and characters, commonly used expressions, fractions, and decimals. The first part of the final appendix, which covers dining out, reads like a Chinese menu but progresses to words for smell, taste, and texture and a section on healthy requests--including useful terms such as "decaffeinated," "diabetic meal," "salt-free," and "vegetarian," among others.

Andrew Chang, professor emeritus of Chinese and Japanese at Thunderbird, the American Graduate School of International Management in Glendale, Arizona, has put together an English-Chinese business dictionary handy for students, researchers, and businesspeople alike. This reviewer hopes a Chinese-English version will appear soon.

--Virginia A. Hulme

Virginia A. Hulme is associate editor of The CBR.