The Institutional Environment Required to Support China's New Normal Economy

The authorities in China have enunciated the development of a new normal economy which henceforth would be the main driver of economic growth and development for that country. The new normal economy would also imply a shift in the economy's structure towards services and its being driven by consumer demand. There would be greater reliance on market competition and the removal of the 'privileges' of state owned enterprises. This paper argues that it is not enough for the required legal framework to exist in statutes but that they should be observed as law in action. Using a line of reasoning based on New Institutional Economics, evidence drawn from the differing experiences of countries in Central and Eastern Europe, in particular, in their transition towards a market economy and empirical evidence analysing the effectiveness of adopting laws from one jurisdiction in another this paper argues that the success of the new market economy policy will depend not only on the reform of the law on the books but also on how it is implemented through the courts and how it fits with both Chinese legal tradition and culture.