A study of the influence of law on Chinese economic development: With emphasis on contract law and game theory.

Yaoyu Liu

Student thesis: Master thesis

Abstract

The vision of this Thesis is to illustrate the importance of law on Chinese economic development and to understand the dynamics China has been experienced, from a country economically undeveloped into the one with the world’s second largest economy. In order to do so, subjects of legal origin theory, Chinese formal legal system and contract enforcement, informal constraints, and reputation mechanism will be thoroughly analyzed by this Thesis. The analysis of this Thesis is divided into two mutual dependent Chapters to reach a complementary conclusion. The findings suggest that Chinese legal development is caused by economic development, which in turn is facilitated by favorable policies and cultural tradition of guanxi, both of them are informal. The role of law in the initial economic development is limited. Furthermore, Chinese legal system and formal contract enforcement are often interfered by local interest, a problem that is more serious in rural area than in urban area. The problem that formal contract enforcement is inefficient in some part leads to the analysis on the role of informal contract enforcement. Game theoretical study shows that informal reputation mechanism alone may be sufficient to enforce contract in stable and uncomplicated circumstances. Nevertheless, an efficient legal system is important for further economic development in China. In light of recent improvements and judiciary reforms, this Thesis remains optimistic on Chinese legalization progress.

EducationsMSc in Commercial Law, (Graduate Programme) Final Thesis
LanguageEnglish
Publication date2014
Number of pages91