Commentary

Editor's note

In our continuing efforts to publish diverse and authoritative per-
spectives on Chinese Law, the Journal of Chinese Lawv is proud to
present the following Commentary as part of a continuing series of
periodic contributions from influential Chinese policymakers.

Liu Hongru serves as Deputy Governor of the People's Bank of
China and currently is the Vice-Director of the State Commission for
Economic Restructuring of the PRC. He has also served on the
PRC's State Council Leading Group on Foreign Investment, which
has supervised relevant authorities in the drafting of foreign invest-
ment laws.*

Mr. Liu's commentary on banking and financial reform in the
PRC provides useful insights into the course of legal development in
China. Law does not evolve in a vacuum. Rather, it develops within
the context of the political, economic, and social imperatives of a soci-
ety. This interdependent relationship is especially marked in the PRC
where, since the Third Plenum of the Eleventh Central Committee of
the Chinese Communist Party in 1978, efforts at legal reform have
been explicitly driven by the goals of economic -restructuring and
modernization. Thus, Mr. Liu's analysis of banking and financial
reform and its role in China's overall economic restructuring helps to
elucidate not only the underlying rationale for the PRC's legal
reforms thus far, but also the path which these reforms may take in
the future.

This Commentary was translated into English by Mr. Liu's staff
in conjunction with the Journal's editors. In addition, the Journal's
editors have supplemented the author's footnotes to the extent possi-
ble and have provided additional footnotes for cross-reference.

* Sullivan, The Investment Climate, CHINA Bus. REV., Jan.-Feb. 1987, at 8, 10.