Top-tier Chinese law firms are accelerating their overseas expansion efforts along with China’s Belt and Road Initiative (BRI) amid a slowing economy.
Beijing-based Jingsh Law Firm announced its plan in November 2023 to establish three offices in North Korea, South Korea, and Tokyo, Japan, in an effort to build a formidable platform facilitating the expansion of Chinese enterprises in response to the deceleration of the Chinese economy, according to a Nikkei report.
In January this year, the Chinese Ministry of Justice revealed that the number of foreign-related lawyers has exceeded 12,000. The number of overseas branches of Chinese law firms increased from 122 in 2018 to 180 in 2022. As of November 2023, the number of foreign-related lawyers in China has increased by over 4,800 compared to 2018, representing a growth rate of 67.8 percent.
Yu Ping, a Chinese legal scholar, said that Chinese law firms and lawyers are “highly market-oriented, making it unlikely for their profit structure and business logic to align closely with the Chinese Communist Party (CCP).”
Aligning With BRI
Mr. Gao (pseudonym), a lawyer based in Japan, said that Chinese law firms’ overseas expansion appears to align with serving the regime’s strategy for global expansion.Mr. Gao told The Epoch Times that Chinese investors venturing abroad often face language barriers when seeking legal assistance. “They naturally seek out Chinese lawyers who possess expertise in foreign laws,” he said.
“When the Chinese companies invest in Japan, they may feel more assured going through me to find a Japanese law firm. This creates motivation for the Chinese law firms to expand overseas.”
Mr. Yu agreed, “The Chinese state-owned enterprises will prefer to use Chinese law firms. They prefer not to reveal their investment information to foreign law firms, although international law firms will maintain confidentiality. But, they always have concerns.”
Based on official statistics released by the Chinese Ministry of Commerce and other departments, China’s outbound investment has been surging in recent years. In particular, China’s 70+ BRI participating states represented tremendous opportunities for Chinese investors, according to the China Briefing.
In the first eight months of 2023, China’s non-financial outbound direct investments (ODI) in BRI countries totaled 140.37 billion yuan ($19.20 billion), marking a significant 22.5 percent increase year-on-year.
According to figures from China’s National Bureau of Statistics, outbound direct investment decreased 8.8 percent in 2022 compared to the previous year. Despite this overall decrease, investments in Asia (excluding Hong Kong) remained steady at $26.7 billion, matching the previous year’s level.
CCP’s Legal Warfare
Since joining the WTO in 2001, Beijing has experienced a period of integration with the world, demonstrating a willingness to adopt Western legal concepts. Chinese law firms had more opportunities to engage in international business. However, foreign law firms with centuries of experience were still the preferred choice for enterprises.Thereafter, the CCP began to exert increased control over various aspects of the legal system.
In September 2023, the CCP mouthpiece Liberation Daily reported that Shanghai is actively developing the Asia-Pacific Arbitration Center and the Shanghai International Legal Service Center with a global orientation.
According to the report, the Shanghai Bar Association initiated a long-term training program for foreign-related lawyers known as the “Navigation Plan,” which has successfully trained 302 lawyers proficient in international business, regulations, and cross-lingual, cross-cultural skills. The number of practicing lawyers engaged in foreign legal services in Shanghai has now reached nearly 3,500, representing 10 percent of the city’s total lawyers.
The regime’s mouthpiece, Xinhua News, had also reported earlier in 2019 that the Shanghai Jin Mao Partners established partnerships with law firms from G20 member countries, Shanghai Cooperation Organization member countries, and BRICS countries. Its BRI Legal Research and Service Center has developed 68 offices across five continents in three years.
“Upon the inception of the BRI, the legal sector promptly engaged,” said Mr. Yu.
According to Mr. Yu, the China Law Society and the China Bar Association took the lead, primarily aiming to support governmental policies.
Legal expert Tan Yao-Nan told The Epoch Times that the core distinction between the legal industry in China and their Western counterparts lies in their relationship with the government.
Party Adversaries
Mr. Yu said Chinese law firms and lawyers are deeply entrenched in a market-driven environment characterized by profit motives and business strategies that inherently keep them away from the CCP.He explained, “If you examine the inner workings of Chinese law firms, you'll realize that they lack the capability and financial resources to undertake government-sponsored ideological endeavors abroad. Survival is their primary concern, as their revenue stream depends on clients, primarily centered around compliance work.”
He indicated that state-owned law firms only existed in the 1980s. Today, China’s leading law firms are all private partnerships that do not receive government funding.
“Law firms operate differently from state-owned institutions as they lack centralized leadership. They are essentially packs of individual entities, resembling a sack of potatoes that appear as one unit when together but separate into individual entities when dispersed. Business decisions in law firms are determined through partner meetings, and what guides these decisions? They are driven by interests,” he said.
He doesn’t believe there is hard evidence suggesting that lawyers are forced to participate in the BRI due to pressure from authorities. He said, “Many partners in prominent law firms opt not to participate in the initiative. They prioritize compliance-related business, which often yields higher profits.”
He emphasized, “Indeed if we look closely, lawyers should be considered CCP’s adversaries.”
“They do not work to serve the Party’s interests. In China, lawyers are among the most resistant to Party leadership. Consequently, CCP views law firms as a weak link and has consistently sought to suppress and control them over the years,” he said.
Mr. Yu took the 709 Crackdown in 2015 as an example. In July 2015, the regime conducted a nationwide crackdown on rights lawyers and activists in China. “Hundreds of them were arrested, along with their families,” he said.
Furthermore, lawyers face immense pressure when representing private enterprises. “Despite this, they have no alternative; their livelihood depends on these cases, and they must handle them because they are being paid for it,” said Mr. Yu.
