Inside or Outside the Corporate Law Box? Shareholder Primacy and Corporate Social Responsibility in China

When most of China’s major cities are suffering from smog, people start to cry out for environmental improvement. The significance of Corporate Social Responsibility (CSR) has become one of the hottest topics in China. CSR and shareholder primacy are widely debated idiosyncratic areas of corporate legislation. China’s approach has thus far been unclear in both areas. This paper first considers all related provisions in Chinese commercial law in order to identify China’s approach (law on the books) from the legislative perspective. Then, based on this conclusion of the schizophrenic Chinese corporate law, it further examines the enforcement of shareholder primacy and CSR laws using empirical methods (law in action). Finally, the efficacy of the current approach is analysed and assessed from a political economy perspective. The article concludes that it would be efficient for China to follow existing statutory requirements and imperatives. Moreover, China must correct practitioners’ modus operandi in order to improve the rule of law. Social responsibility issues should, for the time being, be tackled outside the corporate law box rather than by meddling with already confusing director duties.