Because of its principal role as a handmaiden of the state, China has failed to internalise the other side of the rule of law — principles such as judicial independence and due process — familiar to liberal democracies, if not always perfectly implemented by them. Thus, law in China is peculiarly dependent on the prevailing political and economic situation and, ultimately, on the whim of the state.
The second part of the lesson has been the selective nature of China’s rule by law. The problem of corruption, which in turn arises from the lack of a rule of law and of political rights, is now endemic to Chinese business. It is impossible for China to tackle corruption all at once, so corruption is only picked off selectively in areas where it appears most harmful to state interests and as the political and economic situation demands.
The choice of Stern Hu as the initial target in the current anti-corruption campaign represented a new and riskier strategy for China, in that, rather than initially targeting a local corrupt official or businessman, it first targeted a foreigner. In detaining Hu, China was not just taking on an overseas Chinese individual or foreign company, it was ‘killing a chicken to scare the monkey’. Where the detention was understood overseas primarily as a desire to punish Rio Tinto and warn other foreign resources companies, over time it became clear that ‘the monkey’ China was targeting was also a domestic one. The arrest of Hu proved to be just the opening bell in a fight against corruption in China’s entire steel industry, aimed not just at punishing those Chinese nationals supplying information to foreign iron ore companies, but at bringing to heel the many Chinese companies seen as responsible for raising iron ore prices.
Given its close alignment with politics, the third characteristic of Chinese law is its combination of arbitrariness and flexibility. Since the initial detention of Hu and his colleagues, the case has changed radically in nature.
Initially, the four were detained under state secrecy laws. By holding them under the highly flexible category of a ‘suspicion of receiving state secrets’, the Chinese state released itself from many of the normal constraints imposed by its Criminal Procedure Law, which help regulate how long it can detain a suspect without charge and without access to a lawyer. Instead it exposed Hu and his colleagues to the deliberate ambiguity and vagaries of the State Security Law.
By then formally arresting Hu and his colleagues on 11 August, China redefined its initial allegations against the four men from a ‘state secrets’ category to that of obtaining ‘commercial secrets’ through violation of China’s Criminal Law. This changed the responsible prosecuting organ from being the State Security Ministry to China’s Supreme People’s Procuratorate . It also meant that the suspects would face sentence terms ranging from 15 days to seven years, in comparison to execution, the severest punishment for the crime of state secret theft. These altered charges have allowed China greater diplomatic flexibility in handling the case.
The fourth, and for the international community, the most searing part of the recent Chinese lesson has been that the lack of a genuine rule of law in China not only affects the human rights of China’s citizens, but also, in times of stress, may impact on the human rights of members of the international community.
Since it assumed its rightful position in the United Nations in 1971, China has been learning the rules of international citizenship. To some extent this learning has been instrumental, but in many instances there appears to have been a genuine internalisation of international norms. But the lack of a genuine rule of law within China remains an enduring obstacle. Critically, the law’s failure to guarantee its citizens human rights also restricts the avenues in which national stresses may be regulated, accommodated and modified within the state structure itself. Equally, the lack of political rights disempowers the Chinese citizen who, in times of political, economic or social stress, has either to internalise intense frustration or give vent to it in illegal ways.
These shortcomings in China’s legal and political order help explain the PRC’s decision in this case to first detain a foreign national, Stern Hu, rather than a local company executive. Since the Chinese state is ill-equipped to regulate domestic pressures within its own institutions, in times of stress, the immediate instinct of its more conservative leaders is to project them outside its borders, whether in acts of nationalism, chauvinism, or sheer, tough-minded bullying. While such tactics are abhorred by many Chinese officials, conditions of stress tend to give conservative leaders the upper hand.
Currently, China is a state under particular stress — it is impelled to maintain astonishing rates of economic growth in order to forestall the social chaos which might otherwise eventuate in the absence of political and social reforms. With the onset of the GFC, and China’s increasingly frantic, often frustrated, search for cheap mineral resources to fuel continuing growth, those stresses have skyrocketed, particularly from frustrations over the collapsed deal between Chinalco and Rio Tinto, and the vagaries of iron ore prices over the last few years. In addition, in 2009 a series of highly symbolic anniversaries for China and its autonomous regions has attracted both international and domestic attention to the way China is governed. The result internally has been heightened tensions in many different areas and increased crackdowns on dissent.
Internationally, by contrast, leadership frustrations have focused primarily on the area of economic security and the search for international scapegoats. Whether or not he actually received, or sought, under-the-table intelligence about China’s bottom line in iron ore negotiations, Stern Hu was not the first former Chinese national or overseas Chinese businessman to have been detained in China on suspicion of receiving state secrets. Former Chinese nationals are vulnerable to the unspoken charge of betraying the motherland. They are also more effective businessmen than their Anglo-Celtic counterparts, being attuned to the realities of business in China and its attendant corruption.
As for Rio Tinto’s response, the signals have so far been ambiguous. On the one hand, Chief Executive Tom Albanese has been promising the Chinese government that Rio will respect China’s legal process and has observed that the Stern Hu case provides an important reason to ‘get closer to China’. On the other hand, the head of Rio’s Iron Ore Division, Sam Walsh, has insisted that Hu has done nothing wrong; on 5 September he announced that Rio had for the time being suspended its negotiations with China since, he said, ‘remember that we have our negotiators detained’. Perhaps these are not conflicting positions within Rio but merely part of the same ‘strategic ambiguity’ which saw the Australian government withdraw its Ambassador from Beijing while denying that the withdrawal had anything to do with the Stern Hu case or with deteriorating Australia-China relations. Ambiguity also marked Prime Minister Rudd’s statement at the ASEAN summit in late October that the Stern Hu matter is ‘a continual matter of concern to Australia’, while overall relations with Beijing were ‘strong and in good shape’.
If all three cases are reflections of calculated strategic ambiguity, rather than simply an effort to compartmentalise the Stern Hu issue, then the Australian government and Rio are indeed learning well from that past master of strategic ambiguity — the Chinese government. While continuing to evince due respect for China’s legal process, as is proper, international policy makers do well, given the selective, arbitrary and political nature of China’s rule by law, to also respond to the Hu case with a few politely-worded but strategically targeted signals.
The alternatives, blustering threats or weak-kneed pandering, are not to be recommended. They could ensure that decision-makers in China will drag this case out into the abyss of endless international bickering and domestic court cases, only to end up with a conviction and, following some years of imprisonment, a sudden release of Stern Hu without any further explanation. The Stern Hu case must be moved to the forefront of the Australian government’s attention, because it is not the first example of the deleterious impact of China’s legal system on Australia, and it will not be the last. The critical irritant remains the essential incompatibility between China’s rule by law and Australia’s own rule of law. Australia needs to ensure that, at least for our own country, the best rule wins.
This is a shortened version of a column published in the Alternative Law Journal Volume 34(4) ‘When Laws Fail to Protect’.
Ann Kent is Visiting Fellow in the College of Law, Australian National University, and author of Beyond Compliance: China, International Organisations and Global Security (2007).