Can corporate social responsibility be considered part of the Chinese regulation?

This chapter deals firstly with the Chinese responsibility for wrongful acts linked to business activities and secondly with corporate social responsibility. The aim of the paper is assessing whether and how corporate social responsibility contributes to ensuring that multinational corporations, which have somehow replaced states as the main actors in the new international dynamics, comply with human and social rights and the environmental protection in China. As a matter of fact, China plays a dual role at the international level: it receives foreign investments and, at the same time, invests abroad. Multinational corporations are characterized by the delocalization of the production process and the subordination of their activities to the home corporation, which is located in the state of origin. Multinational corporations’ activities have been defined as “economic entit[ies] operating in more than one country or a cluster of economic entities operating in two or more countries,” characterized by “public, mixed or private ownership, which own or control production, distribution, services, or other facilities outside the country in which they are based.” According to the Institut de Droit International, they are composed of “a decision-making center located in one country, and of operating centers, with or without legal personality, situated in one or more other countries so linked that they may co-ordinate their operations in various ways.” As a consequence, there is a dichotomy between the plurality of legal persons composing the multinational corporation and the entirety of the multinational corporation from the economic point of view, as a single entity on the market. This dichotomy gives the chance to delocalize the production to countries with a favorable regime (the so-called forum-shopping phenomenon). While analyzing the particular case of China, it is worth noting that the state still plays a primary – or, at the least, fundamental – role in the economy with consequences at the international level. As far as China is concerned, private multinational corporations’also include those of the Chinese state-owned enterprises (SOEs). SOEs are business entities established by central and local government, owned – totally or mostly – by the state, and whose supervisors are governmental officials. In evaluating whether China has correctly adapted its domestic law to accommodate the international obligations undertaken, it has to be noticed that legislative reforms have recently been adopted in the areas of Chinese corporate, environmental, labor, human rights, and consumer rights law. Among them, the introduction into corporate law of the provision, according to which a corporation must “comply with laws and administrative regulations, social morality and business ethics, act in good faith, subject itself to government and public supervision; and undertake social responsibility.” Therefore, Chinese law now explicitly establishes corporate social responsibility as law. In light of this analysis, it is possible to conclude that the legislative measures passed in the field of environmental, human, and social rights protection contribute to adapting the domestic legal system to the international obligations binding China and to the international soft law principles on corporate social responsibility. In so doing, they operate, at least theoretically, within Chinese law as a means for making corporations accountable, and sustainable development viable.