Background Memorandum


Su Lin Han
Paul Tsai China Center at Yale Law School
December 2017

In China, administrative enforcement is largely carried out by local government agencies. Under China’s centralized “unitary state system”, enforcement by local agencies is subject to national laws adopted by the National People’s Congress, rules and implementing regulations adopted by the State Council of the Central government and its ministries, and local laws and regulations. Local laws and regulations adopted by municipalities like Shanghai must not contravene national laws and State Council-issued regulations, and they generally track closely to national laws and regulations.

In a country with no independent judiciary nor judicial review of government encroachments on individual rights that are nominally guaranteed by the Chinese Constitution, this blend of national and local laws and regulations on administrative enforcement sets the legal parameters for keeping the exercise of government enforcement powers in check.

In addition, China has established administrative and judicial review mechanisms for agency enforcement actions such as fines, penalties, and other compulsory measures. Two national laws, the Administrative Litigation Law and the Administrative Reconsideration Law govern the administrative and judicial review processes respectively. Except in limited areas such as taxation, citizens have the right to seek either administrative or judicial review of their challenges to specific agency actions. In most cases, decisions reached through the administrative adjudication process (referred to as “administrative reconsideration”) are also subject to judicial review. Both the administrative review standards and procedures are governed by the Administrative Reconsideration Law and its implementing regulations. China does not have a separate administrative procedures law similar to the U.S. Administrative Procedures Act or our state and local equivalents. Outside the formal administrative and judicial review systems, citizens also are allowed to pursue extra-legal petitions called “xinfang” through which individuals can air their grievances against government actions, including judicial decisions, by appealing directly to the higher level government bodies, often the Central government authorities. It is believed that xinfang accounts for the largest portion of all complaints against government actions.
Finally, China maintains a system of internal audits and disciplinary actions against administrative enforcement officers pursuant to national and local administrative supervision and civil servant laws.

In practice, administrative agencies in China enjoy enormous and often unfettered enforcement powers outside of these legal parameters. Administrative and judicial oversight remains weak. Allegations of abuse of government enforcement powers in the daily lives of ordinary citizens and businesses abound in domestic media reports.  The issue of abuse has implications beyond the lack of public confidence in the fairness of the enforcement process and reaches to the level of social stability in the form of citizen unrests and mass protests. As a result, there has been increasing efforts to standardize administrative enforcement procedures at both Central and local government levels in an attempt to rein in “rouge players”. At the same time, modest progress has been made to strengthen administrative and judicial review of agency enforcement decisions.   

This memo will (1) provide a brief overview of Chinese laws and regulations that govern administrative enforcement and the administrative reconsideration processes, and (2) highlight several challenges in Shanghai’s administrative investigation and collection of evidence process that will be the subject of the upcoming workshop hosted by the Shanghai Office of Legislative Affairs.  

1. Laws Governing Administrative Enforcement and Review of Agency Decisions

Two national laws, Administrative Penalty Law and Administrative Compulsion Law govern the exercise of administrative enforcement powers by all government agencies in China.

Administrative Penalty Law was adopted in 1996 to create a uniform national law designed to replace a multitude of prior laws and regulations which prescribed numerous administrative fines and penalties that were seen as unjust and leaving too much room for local government abuse.1 The law sets forth permitted forms of administrative penalties and compulsory measures against violators2 and their properties, agencies authorized to issue administrative penalties, procedural requirements applicable to administrative enforcement in general, and citizens’ rights to contest administrative penalties through administrative reconsideration and administrative litigation processes.    

In 2011, China adopted the Administrative Compulsion Law to further regulate compulsory and injunctive administrative actions against citizens and their properties.  The law applies to two categories of government actions: (1) compulsory enforcement actions to stop ongoing illegal activities and those deployed in emergency situations which impact public health and safety (e.g. quarantines), and (2) enforcement of administrative decisions (e.g., fines or demolition of illegal buildings) pursuant to court orders. The law prescribed procedures for compulsory enforcement actions, including the government’s duty to inform citizens of the reason and evidence supporting the compulsory measures against them and their rights and remedies, and to document the compulsory measures in writing, etc. (Article 18). In cases of seizure of private property, agencies are required to provide written citations and receipts for seized properties (Article 24).

Citizens have the right to contest administrative penalties and compulsory enforcement actions, either by seeking administrative review through the administration reconsideration process or court review through the administrative litigation process. China adopted its Administrative Reconsideration Law in 1999 (with nominal amendments in 2009 and 2017) which provides that citizens can seek administrative review either from the local government office of legislative affairs at the same level of the enforcement agency, or from the higher level government agency supervising the work of the enforcement agency (Article 12).  During the review process, the office responsible for administrative reconsideration may conduct its own investigations and collect evidence, agency respondents must bear the burden of providing evidence to justify their enforcement actions, and citizen complainants have the right to review such evidence (Articles 23 and 24). Enforcement decisions can be revoked for lack of factual or legal support and procedural violations, and for ultra vires acts or abuse of power (Article 28).  Administrative reconsideration decisions are binding on agency respondents and are subject to judicial review brought by citizen complainants.

Administrative Hearings. Administrative reconsideration generally does not require a hearing, except in cases involving large fines, revocation of licenses or permits, and orders to close down business operations. There are no national laws or regulations govern the hearing procedures or rules of evidence during such hearings. However, many Central government ministries (e.g. Ministry of Environmental Protection, State Administration of Industry and Commerce, and State Foreign Currency Management Bureau) and local governments have adopted their own procedural rules with respect to administrative hearings.

In 2015, Shanghai adopted its hearing procedures for administrative penalties requiring such hearings to be organized by the enforcement agency issuing the penalties but hearing officers must not have direct involvement in investigations that lead to the penalties. These hearings are presided by staff from the office of legislative affairs within the enforcement agency who are responsible for reviewing administrative reconsideration applications. Under the Shanghai hearing rules, large fines and property seizures are defined as those with a value in excess of RMB5,000 (approximately US$750). All parties to such hearings have the right to present their arguments, the right to representation by 1-2 people (although legal representation is not specified), and the right to cross-examine witnesses. During such hearings, agency respondents bear the burden of proof to establish the factual and legal basis of the administrative penalty decisions, and the following types are evidence are allowed: writings, physical objects, witness testimonies, evaluation reports, test results, written notes prepared by enforcement officers during the investigation, video and audio materials, electronic data, and statements from the complainant. All evidence relevant to the factual determination is required to be presented during a hearing upon authentication. The rules do not address issues relating to exclusion of evidence if government investigations and methods of evidence collection are found to be illegal.

Judicial review of government enforcement actions and administrative reconsideration decisions is governed by the Administrative Litigation Law, which was first adopted in 1989 and amended substantially in 2014. While judicial review is not the subject of this memo, it is worth noting that pursuant to the 2014 Amendment, the administrative reconsideration bodies, most often the offices of legislative affairs at various levels of the government can be sued in court challenges either as co-defendants with the enforcement agency if they rule in favor of the agency respondent or as defendant if they ruled against agency respondents. In general, China’s lack of judicial independence means that courts tend to side with administrative actions in high policy priority areas of the local government, but in limited cases, courts will rule against agency actions for failure to comply with required procedures.3 

2. Shanghai’s Challenges in Administrative Enforcement

In August 2017, more than 400 Chinese government officials and scholars convened to discuss pressing challenges of administrative enforcement in urban management, during which several areas of enforcement irregularities have been identified, including forcible demolition of illegal structures and use of excessive force against illegal vendors. A few years ago, public outcries against “entrapment” or “fishing” operations against illegal taxis in many Chinese cities, including several well-publicized incidents in Shanghai, forced the Shanghai government to ban the practice. However, internal debates continue about the extent to which agencies should be allowed to use undercover operations to conduct investigations and collect evidence in administrative enforcement actions, and the need for legal and procedural enforcement guidelines which strike a proper balance between the government’s interest in enforcement efficiency against private citizens’ rights to a fair process.4 In particular, two areas of challenges, which are by no means unique to Shanghai, have been the focal points of such debates.

Abuse by Chengguan, the Urban Management Department. China’s municipal urban management departments (Chengguan), known as a “para-police agency” with a “reputation of excessive force and impunity,”5 are responsible for enforcement of an extremely broad range of local ordinances and regulations relating to the management of urban environments. Chengguan came into existence in 1997 following China’s adoption of the Administrative Penalty Law in part to consolidate the urban management and enforcement functions previously carried out by multiple city agencies. In practice, Chengguan’s administrative enforcement authority to issue fines and confiscate private property overlaps with many other municipal government agencies, including those overseeing buildings and urban infrastructures, environmental protection, business regulation, transportation, water and sewer management, and food and drug safety. There have been numerous reported cases of “violence enforcement” by Chengguan officers against illegal street vendors and in tearing down illegal buildings during China’s massive urbanization process. There have also been reports of mass unrests in response to use of excess force by Chengguan officers that lead to death and serious injuries to citizens. In Shanghai, a well-publicized incident in 2009 involving the severe beating of a street vendor by contractors of Chengguan spurred subsequent efforts by the Shanghai government to strengthen regulation of administrative enforcement by Chengguan and other city agencies. (See discussions below)

 

“Fishing Operations” Against Unlicensed Taxis. Since the mid-2000, many Chinese cities stepped up enforcement actions against unlicensed taxis. In Shanghai, nearly 16,000 vehicles were caught up in the enforcement sweep leading to the World Expo in 2009, many of which the result of the so-called “fishing operations.” During such operations, paid informants of Chengguan and the City transportation department pretended to be customers and offered fares to unwitting drivers. As soon as the drivers began the rides, enforcement officers would sweep in to confiscate the vehicles and issue up to RMB10,000 in fines. Some blame local agencies’ own financial incentives for carrying out such “fishing” operations. One prominent Chinese scholar alleged in a 2010 state media report that fines and fees imposed by administrative agencies are considered “off-budget” revenues which often account for as much of 40% of their budgets. Despite official requirement that fines be paid directly into the state’s treasury, much of the fines have been diverted to agencies’ own use and are tied to staff bonuses.

In 2009, a pair of high-profile fishing operations against two drivers in Shanghai who proclaimed their innocence and contested the enforcement actions drew national attention to the unfairness of entrapping law-biding citizens and abuse of administrative enforcement power. Public outcry, the threat of litigation, and subsequent government investigations resulted in official apologies and reported settlement of the disputes.

Shanghai’s Response. In response to these incidents, the government of Shanghai has issued a series of directives and rules since 2010 to strengthen oversight of the city’s administrative enforcement, including, e.g., “Opinions of the Shanghai Municipal People’s Government on Further Normalizing and Strengthening the Administrative Law Enforcement, June 2010,” “Opinions of the Shanghai Municipal People’s Government on Further Strengthening the Building of Administrative Law Enforcement Forces, June 2011”; and “Procedures for Management of Administrative Enforcement Certificates, September 2012.”

In particular, the 2010 Shanghai Code of Conduct for Administrative Enforcement Officers and 2012 Shanghai Urban Management and Administrative Enforcement Regulations (revised in 2015)6 put Shanghai at the forefront of China’s efforts to regulate the exercise of administrative enforcement power.7

Overall, Shanghai appears to tackle the city’s administrative enforcement challenges on several fronts, including (a) improve training and qualification of personnel by requiring examination and certification of all administrative enforcement officers; (b) prohibit the use of improper investigation tactics such as enticement, false pretenses, threats, and violence to collect evidence; and (c) strengthen supervision of administrative enforcement through the administrative reconsideration process during which illegal enforcement actions can be vacated or amended, and agencies are provided with recommendations from administrative review offices to correct problematic enforcement practices.  

Despite such efforts, according to our former visiting scholar from the Shanghai Office of Legislative Affairs, the consensus among enforcement agencies is that they need more detailed guidelines on the proper methods, procedures, and standards for conducting administrative investigations and collecting evidence so that their enforcement actions can stand up to court challenges. In addition, since the ban of “fishing operations” in 2010, agencies are facing increasing difficulties in collecting evidence against illegal taxis and other illegal operations involving more fluid situations and witnesses are unwilling to come forward. Questions remain on whether certain undercover operations should be allowed and whether there should be exceptions to the general ban on “fishing operations”. Finally, the use of government contractors who are generally less qualified and poorly trained to participate enforcement actions remains unsettled even though the majority view is leaning against such practices.

Challenges of Administrative Reconsideration. According to a 2013 legislative implementation assessment report issued by China’s National People’s Congress, of the more than 1 million administrative reconsideration cases reviewed since 2000 (averaging about 100,000 cases per year), over 10% of the agencies decisions were reversed or ordered to be corrected. However, the report points to a lack of public confidence in the fairness and neutrality of the administrative reconsideration process as a key factor contributing to the low utilization of the administrative adjudication process. According to the report, the volume of xinfang (direct citizen petitions to higher levels of government) is several times to dozens of times the volume of administrative reconsiderations cases in most localities.

Since 2010, more than 20 official pilot projects, including several in Zhejiang Province (the location of one of our roundtable discussions in December) have been carried out to centralize administrative reconsideration functions and allow outside experts to join the so-called “administrative reconsideration committees” whose function is to review cases and make recommendations to the government offices of legislative affairs for final adjudication.8 There have also been efforts to expand role of hearings in the administrative reconsideration process. In addition to improving public confidence, these reform efforts appear to be aimed at reducing the volume of xinfang cases which are seen as having a negative impact on social stability.

 

1. See Cai Dingjian and Wang Chenguang (ed.), China’s Journey Toward the Rule of Law: Legal Reform, 1978-2008 (2010, published by Koninklijke Brill NV and by Social Sciences Academy Press), p. 125.

2. Chinese police are authorized to make warrantless administrative detentions of violators for non-criminal offenses under the Public Security Administration Law of 2005.

3. See He Haibo, “How Much Progress Can a Legislation Bring: The 2014 Amendment of the Administrative Litigation law of PRC”.

4. These are some the research questions raised by Mr. Zhu Zhensheng, visiting scholar to Paul Tsai China Center from Shanghai’s Office of Legislative Affairs in fall 2016.

5. See Excerpt from Human Rights Watch, “Beat Him, Take Everything Away: Abuses by China’s Chengguan Para-Police (2012); and Stanley Lubman, “The Ticking Bomb of China’s Urban Para-Police”, Wall Street Journal, August 8, 2013.

6. No English translations are available for these regulations.

7. Currently, there is no national law that defines the scope of Chengguan’s enforcement authority or regulates Changguan’s enforcement process. Nor is there a Central government body in charge of uniform supervision of Chengguan officers’ conduct. In January 2017, China’s Central Ministry of Housing and Urban-Rural Development issued the first national “Urban Management Enforcement Rules” seen by many in China as a step in the right direction. But these rules lack the effect of law. The ministry also positions itself as a coordinator of the regulation of Chengguan’s conduct, not an enforcer of its rules.

8. The concept of an “administrative reconsideration committees” was raised in a 2010 State Council directive calling for centralizing the administrative review process.