China - Economic Law Reform Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No: 32265 IMPLEMENTATION COMPLETION REPORT (IDA-26540) ON A CREDIT IN THE AMOUNT OF SDR 6.9 MILLION (US$ 10 MILLION EQUIVALENT) TO THE PEOPLE'S REPUBLIC OF CHINA FOR AN ECONOMIC LAW REFORM PROJECT May 4, 2005 East Asia and Pacific Region Legal Vice Presidency This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS (Exchange Rate Effective July 1, 1994) Currency Unit = RMB (Y) Y1.00 = US$ 0.12 US$ 1.00 = Y8.50 FISCAL YEAR January 1 December 31 ABBREVIATIONS AND ACRONYMS BLA - Bureau of Legislative Affairs BLTC - Beijing Lawyers Training Center CAS - Country Assistance Strategy CLA - Commission on Legislative Affairs CLINS - China Legal Information Network System ELRP - Economic Law Reform Project GOC - Government of China LAG - Legislative Advisory Group MOE - Ministry of Education MOF - Ministry of Finance MOJ - Ministry of Justice NPC - National People's Congress OLA - Office of Legislative Affairs (State Council) SARS - Severe Acute Respiratory Syndrome SC - State Council SIFT - Shanghai Institute of Foreign Trade SOE - State Owned Enterprises TA - Technical Assistance WTO - World Trade Organization Vice President: Jemal-ud-din Kassum Country Director David R. Dollar Sector Manager Anthony Toft Task Team Leader/Task Manager: Nicolette K. DeWitt  CHINA Economic Law Reform Project CONTENTS Page No. 1. Project Data 1 2. Principal Performance Ratings 1 3. Assessment of Development Objective and Design, and of Quality at Entry 2 4. Achievement of Objective and Outputs 3 5. Major Factors Affecting Implementation and Outcome 8 6. Sustainability 9 7. Bank and Borrower Performance 10 8. Lessons Learned 12 9. Partner Comments 13 10. Additional Information 19 Annex 1. Key Performance Indicators/Log Frame Matrix 20 Annex 2. Project Costs and Financing 24 Annex 3. Economic Costs and Benefits 26 Annex 4. Bank Inputs 27 Annex 5. Ratings for Achievement of Objectives/Outputs of Components 29 Annex 6. Ratings of Bank and Borrower Performance 30 Annex 7. List of Supporting Documents 31  Project ID: P003647 Project Name: China Economic Law Reform -LEGEA Team Leader: Nicolette K. Dewitt TL Unit: LEGOP ICR Type: Core ICR Report Date: May 4, 2005 1. Project Data Name: China Economic Law Reform -LEGEA L/C/TF Number: IDA-26540 Country/Department: CHINA Region: East Asia and Pacific Region Sector/subsector: Law and justice (76%); Tertiary education (24%) Theme: Legal institutions for a market economy (P); Law reform (P); Legal services (S) KEY DATES Original Revised/Actual PCD: 08/04/1993 Effective: 02/03/1995 02/03/1995 Appraisal: 06/26/1994 MTR: 07/01/1997 07/18/1997 Approval: 10/18/1994 Closing: 06/30/1999 06/30/2004 Borrower/Implementing Agency: People's Republic of China/Ministry of Finance Other Partners: STAFF Current At Appraisal Vice President: Jemal-ud-din Kassum Gautam S. Kaji Country Director: David R. Dollar Nicholas Hope Sector Manager: Anthony Toft Sherif Omar Hassan & Zafer Ecevit Team Leader at ICR: Nicolette K. Dewitt Natalie Lichtenstein ICR Primary Author: Sandra Beemer 2. Principal Performance Ratings (HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, UN=Unlikely, HUN=Highly Unlikely, HU=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible) Outcome: S Sustainability: L Institutional Development Impact: SU Bank Performance: S Borrower Performance: S QAG (if available) ICR Quality at Entry: S S Project at Risk at Any Time: No  3. Assessment of Development Objective and Design, and of Quality at Entry 3.1 Original Objective: Context. In 1993, when the Chinese Ministry of Finance (MOF) and the World Bank began identification and design work on what was to become the Economic Law Reform Project (ELRP), China's leaders were giving top priority to developing a legislative agenda that would facilitate China's move to a market economy. Almost as many laws were scheduled for consideration in the upcoming 1993-1998 five year session of the Chinese legislature, the National Peoples' Congress (NPC) as had been enacted between 1949 and 1992. Legal education had been revived only a decade earlier after a hiatus of a decade. These government priorities drove design issues and enabled the MOF, working with the Bank's project development team, to set the project objectives which were to: (a) strengthen the preparation of economic legislation in priority areas; (b) enhance training methods, curricula and opportunities for law teachers, legal practitioners and legal, judicial and other government personnel in the theory and practice of a new legal framework; and (c) strengthen the key legal institutions responsible for legislation and the implementation of economic laws. These objectives reflected the Government of China's (GOC) policy to accelerate the development of the legal framework for economic reform. The objectives also fit squarely within the then current Bank's Country Assistance Strategy (CAS) which gave attention to strengthening legal technical assistance to support market reforms. In addition, the project fit squarely with the government legal reform agenda which was central to China's efforts to move from a "country governed by men" to a "country governed by law". 3.2 Revised Objective: Not Applicable 3.3 Original Components: Component 1: Legislative Component (Cost: US$ 5.5 million) This component supported the preparation of laws (and their supplementary regulations and implementing rules) included in the NPC's legislative agenda, which would assist in the development of a market economy. Each legislative sub-project consisted of a package of technical assistance, designed to provide comparative legal experiences and advice on legislative drafting in a specific field of law. Each legislative package also included: acquisition and translation of materials (particularly foreign legislation); employment of international and national legal experts to advise on draft laws; seminars to discuss initial directions and subsequent drafts, and short, focused study tours by drafting group members to investigate specific issues arising in the drafting process. Component 2. Training Component (Cost: US$ 6.5 million) The training component provided support for key activities that either: (i) would have a broad impact on legal and other professionals teaching, training or implementing economic laws; or (ii) demonstrated innovative approaches to meeting the changing needs of the legal profession and legal system in the market economy. Particular focus was given to the development of new forms of teaching materials and training methods as well as the development of legal information systems. Training was conducted in-country and addressed short-term needs in the practical training of legal personnel as well as long-term strengthening of the legal training system. Component 3. Institutional Support (Cost: US$ 1.3 million) The institutional support component provided targeted assistance to key legal institutions whose functions were critical to the country's evolution toward a market economy. These institutions included: (i) the NPC's Commission on Legislative Affairs (CLA) with principal responsibility for reviewing and revising - 2 -  drafts of all key legislation for consideration by the NPC, which received support for modernizing its document processing and circulation with new office equipment and technology as well as upgrading its databases of foreign laws for comparative law reference purposes; (ii) the Bureau of Legislative Affairs (subsequently renamed the Office of Legislative Affairs (OLA)) within the highest level of GOC's executive branch, the State Council, which received support to connect the State Council at the national and local levels to a common legal information network system (CLINS) that would include a comprehensive database of Chinese laws and regulations (both national and local) and would facilitate reviews by the State Council of draft regulations; and (iii) the Ministry of Justice (MOJ), which received support for redesigning the lawyers examination system and continuing legal education. The design of the three components was clearly linked to the objectives described above. The credit: (i) facilitated the preparation of laws and regulations included in the legislative agenda of the NPC by putting comparative experience in the hands of local drafters; (ii) promoted implementation of laws through innovative training of government officials, judges and legal professionals; and (iii) supported key legal agencies by modernizing the lawyers' examination system and upgrading legal databases. This gave officials the opportunity to learn lessons from international experience as they reformed their legal system. 3.4 Revised Components: At mid-term the project's legislative component was broadened at the request of GOC to include an expanded legislative agenda brought about by China's accession to the World Trade Organization (WTO). WTO accession made it necessary for the NPC and the State Council to revise a large number of existing laws and regulations and to speed up preparation of other new laws. GOC's request, to which IDA agreed, in turn necessitated an expansion of the Project's original scope (originally envisioned to be limited to laws to be considered by the NPC during its 1993-1998 legislative agenda) to cover the NPC's subsequent five year legislative agenda, and to support the drafting process of regulations which were to be considered and passed by the State Council during this same period. The institutional component was also broadened following the mid-term review in several respects. First, with the developments in information technology, access to the OLA's CLINS was broadened to include the general public through the internet. Second, several Project-supported study tours were among the factors that convinced the MOJ to expand the lawyers' examination system to include the judges and procurators' examination system, and to combine all three in a single unified examination system. Third, the Project began to provide support to the Chinese judiciary. This support reflected the natural evolution and fruition of China's legal reform efforts, which by the latter half of the Project could boast the enactment of a basic legislative framework, and a shift in GOC's focus to the implementation of this framework. 3.5 Quality at Entry: Quality at entry, as assessed by the peer reviewers, was satisfactory based on: (i) consistency of objectives with the priorities of the NPC; (ii) demonstrated capacity of GOC to implement other technical assistance (TA) projects in China; and (iii) the fact that the scope of the Project was not overly ambitious and careful attention had been given to what was relevant and attainable in context of law reform in China. 4. Achievement of Objective and Outputs 4.1 Outcome/achievement of objective: The achievement of objectives and outputs under the Project is satisfactory. The project design was broad and flexible enough and fit well enough within GOC's own comprehensive program of legal reform to allow the government entities participating in this program to implement the Project's stated objectives of strengthening preparation of priority economic laws, enhancing legal training and strengthening key legal institutions. In the end, the project supported: (i) 15 agencies involved in drafting more than 50 pieces of - 3 -  legislation critical for the functioning of a market economy; (ii) 5 training institutions that provided more than 34,000 person/times (person/times means number of participants in all training sessions; individuals attending more than one session are treated each time as a new person) of training to public officials, private lawyers and business and judges; and (iii) 4 institutions responsible for implementing the legislative agenda, improving access to Chinese laws and reforming the lawyers' examination system. All of the laws and regulations supported by the legislative subprojects were drafted and in many instances enacted with others still being revised. Surveys conducted at Project completion indicate that across the board, the participating government entities found the assistance provided by the Project improved both the quality of the legislation prepared (through a better understanding of the practical issues involved and solutions devised in other countries) and the process for its preparation (through increased public participation and transparency). Particularly noteworthy is GOC's efforts to ensure the involvement by each drafting agency of experts -- either staff or academic advisers -- with deep understanding of China's legal framework as well as its economic goals, who could effectively translate the international experience gained into legislation adapted to China's actual needs, and the selection of top caliber training institutions to provide training under the Project. The training subprojects met the physical output targets for all training facilities and the number of individuals to be trained. Site visits during supervision show that trainers and trainees are of high caliber and that the centers are producing a high caliber of professional graduates. The institutional strengthening subproject launched the CLINS which is linked to all provinces and municipalities, and helped develop a unified examination for lawyers, judges and procurators. During project implementation there was, however, a strong emphasis by the project entities on monitoring investment inputs and physical outputs rather than consequent outcomes. The absence of outcome indicators in the project design