Tortious Liability for Defective Products in the People's Republic of China


Tortious Liability For Defective Products

In The People's Republic of China

EDWARD J. EPSTEIN*

I. INTRODUCTION

The traditional preoccupation of China's leaders with gross
industrial output has long compromised economic efficiency and
product quality. Official consternation at socialist industry's failure to
meet expected quality standards already accompanied "socialist trans-
formation" as early as the 1950s,1 but it was not until 1978 that the
State Council, following directions from the Party, prohibited statisti-
cians from including products which do not meet state standards in
the annual figures for industrial output.2 Thenceforth, statisticians
have set apart the proportion of products which do not meet state
standards. Generally, there has been a proportional decrease in the
number of substandard products, but this is not always the case. It is
alarming that even official statistics show the quality score of many
industrial products, especially consumer products, to be low and fall-
ing.3 There is special cause for concern since, in 1987, China's rural
industrial output exceeded agricultural output for the first time.4

* Lecturer in Law, Department of Law, University of Hong Kong. This article is a
revised version of a paper presented to the "Symposium of the 'General Principles of Civil
Law' of the People's Republic of China in Comparative Perspective" held at the Chinese Uni-
versity of Hong Kong, March 25-29, 1988.

1. See, e.g., Zhong Gongyebu Guanyu Zai Shengchan Chang-kuang Jianli Zerenzhi de
Zhishi (Directions from the Ministry of Heavy Industry Concerning the Establishment of a
Responsibility System in Factories and Mines)(promulgated May 28, 1953) ZHOGOHUA
RENMIN GONGHEGUO GONGYE QiYE FAGUI XUANBIAN 25 (1981).

2. Guowuyuan Guanyu Bu Hege Pin Bu Jisuan Chanliang Chanzhi de Tongzhi (State
Council Notice Concerning Not Calculating Products Not Up to Standard as Part of the Value
of Industrial Output) (promulgated Dec. 17, 1978), GONGYE QIYE GUANLI WENJIAN XUAN-
BLAN 436 (1984).

3. In 1986, sewing machines, bicycles, and wrist-watches scored little over 90 out of a
possible 130 points, all down from the previous years's score. See ALM.IANAC OF CHINA'S
ECONOMY, iii-31 (1987).

4. Nongcun Jingfi Fasheng Lishi Jubian, Feinong Chanzhi Souci Chaoguo Nongye (There
is a Significant Change in the Village Economy, Non-agricultrual output value exceeded The
Agriculturual Output Value for the First Time), RMRB-HB, Jan. 5, 1988, at 1; see State
Economic Commissions, Ministry of Agriculture, Animal Husbandry and Fisheries, State
Bureau of Industry and Commerce, Views Concerning the Strengthening of Industrial Products
Quality Management Work in Rural-Township Enterprises, ALMtANAC OF CHINA'S ECONOMY,
x-6 (1987).



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The problem of product quality concerns the substandard nature
of both legitimate and counterfeit or unmarked goods. The Chinese
press is replete with examples of dissatisfied customers who have
purchased faulty manufactured goods, especially consumer durables.
In August 1987, the Ministry for Light Industry announced that it
would organise an exhibition of shoddy goods in Beijing. In response
to the announcement, the Ministry received over 1,900 complaints
about poor quality products,. half of which concerned refrigerators,
bicycles, and washing machines: the other half were complaints about
television sets.5 Since that time, there have also been numerous
reported cases of injury, and even death, caused by certain goods, in
particular medicine, food, and drink.6 Mostreports concern the man-
ufacturer's or seller's contractual and criminal liability. In response
to consumer claims, retailers have denied responsibility and referred
customers to manufacturers. Most often the manufacturer is located
in a distant province and fails to answer the consumer's letters and
telegrams.7

Following these developments there was a flurry of legislative
activity which created new administrative measures for standardiza-
tion, supervision, and licensing of a wide range of industrial products.
The measures covered imported goods, as well as those designed for
export., The vertical orientation of these new laws was typical of a

5. Leizhi Chanpin Zhanlan Zhengfi Gongzuo Jiesu (The Movement for Collection and
Exhibiting Poor Quality Products Concludes), RMRB, Nov. 9, 1987, at 1. The exhibition was
not held because of strong reaction from manufacturers: 'Liezhan'Liuchan de Neimu, RMR13,
Dec. 15, 1987, at 3.

6. See generally Jiaqiang Jiandu Guanli Baozhang Renmin Jiankang (Strengthen Super-
vision and Administration, Protect People's Health), Zhongguo Fazhibao, Aug. 28, 1987, at 2.
A city in Hebei Province held an exhibition of 46 types of fake and/or bad quality foodstuffs.
Handanshi Juban Weilie Shipin Zhanlan (Handan City Holds Counterfeit Product Exhibi-
tion), Zhongguo Fazhibao, Nov. 15, 1986, at 1.

7. The response to this has been the promulgation of national and regional legislation
imposing statutory warranty periods on the sale of television sets, refrigerators, washing
machines, electric fans, and radio-cassette players; Bufen Guochan Jiayong Dianqi "Sanbao"
Guilding (Provisions for "Three Warranties" of Some Chinese Manufactured Domestic Elec-
trical Appliances), e.g. Zhongguo Fazhibao, Aug. 16, 1986, at 2. The Provisions make both
retailers and manufactures liable to honor the warranty.

8. See Huaxue Weixian Pin Anquan Guanli Tiaoli (Regulations for the Safety Control of
Dangerous Chemical Items) (issued Feb. 17, 1987) ZHONGHUA RENMIN GON3HEGUO
GUOWUYUAN GONGBAO, Mar. 10, 1987, at 197; Shanghaishi Zhizhi Bu Zhengdang Jingzheng
Zanxing Guiding (Shanghai City Temporary Provisions for the Control of Unfair Competi-
tion) (adopted Oct. 15, 1987), 12 FAGUI XINxI 45 (1987); Jungong Chanpin Zhiliang Guanli
Tiaoli (Regulations for the Administration of Military Industrial Product Quality) (promul-
gated June 5, 1987), Jingji Ribao, June 13, 1987, at 4; Guojia Youzhi Chanpin Pingxuan Tiaoli
(Regulations for the Appraisal of Superior Quality Products) (promulated Apr. 10, 1987),
Zhongguo Fazhibao, April 22, 1987, at 2; Bufen Guochan Jianyong Dianqi "Sanbao" Guiding
(Provisions for "Three Warranties" of Some Chinese Manufactured Domestic Electrical
Appliances) (issued July 30, 1986), Zhongguo Fazhibao, Aug. 16, 1986 at 2; Chanpin Zhiliang

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centrally planned socialist economy. These measures sought to set
and maintain product standards by administrative means. Unlike
many other reforms, however, they did not link quality control with
economic performance. Instead, some of the laws offered rewards for
success and threatened punishment for non-compliance, but they did
not necessarily cause a manufacturer -to feel the economic effects of
producing poor quality goods.' Nor did these laws address the prob-
lem of supervising the supervisors, that is, making administrative
authorities themselves economically responsible for quality control
failures.

In the first six months of 1985, consumer led demand and excess
liquidity combined with a relaxation of certain centralized planning
measures, resulted in an "overheated" economy and an overall drop
of 11.6% in major industrial product standards.'* Proposals for fur-
ther standardization, licensing, supervision, and other administrative
controls resulted." A change in approach took place in April 1986,
when the State Council promulgated the Regulations Concerning Lia-
bility for the Quality of Industrial Products.' 2 For the first time, state

Jiandu Shixing Banfa (State Council Trial Measures for the Supervision of Product Quality)
(approved Mar. 7, 1985, promulgated Mar. 15, 1985), ZHONGGUO JINoJi GUANLI FAGUI
WENJIAN HUIBIAN (Collection of Laws and Documents on China's Economic Manage-
ment)248 (1985); Gongye Chanpin Shengchan Xukezheng Shixing Tiaoli (State Council Provi-
sional Regulations for Licensing the Production of Industrial Products) (approved Apr. 7,
1984), ZHONGGUO JINrGJI GUANLi FAGUI WFNniAN HUtBIAN (Collection of Laws and Docu-
ments on China's Economic Management) 251 (1985); Shouyao Guanli Tiaoli (Regulations for
the Administration of Veterinary Pharmaceuticals) (promulgated May 21, 1987) Zhongguo
Fazhibao, June 22, 1987, at 2; Guojia Jingji Weiyuanhui Guanyu Shixing Guojia Jianduxing
de Chanpin Zhiliang Choucha Zhidu de Tongzhi (Notice of the State Economic Commission
on Implementing the System of State Random Product Quality Testing), ZHoNGGUo JINGJI
GUANLI ZHANGCE FALING XUANBIAN, July-Dec. 1985 (Selection of China's Policies, Laws
and Edicts on Economic Management, July-Dec. 1985) 85 (1987); Chukou Jidian Chanpin
Zhiliang Xukezheng (Provisional Regulations for the Administration of Quality Licensing of
Exported Electrical Products) (State Council, promulgated Feb. 20, 1986), ZHOONGHUA
RENMIN GONGHEGUO GuowUYUAN GONGBAO Mar. 31, 1986, at 186. This list is not
intended to be exhaustive but to indicate the depth and breadth of recent legislation.

9. See eg., Gongye Qiye Quanmian Zhiliang Guanli Zhanxing Banfa (Provisional Meas-
ures for Overall Quality Management in Industrial Enterprises) (promulgated Mar. 10, 1980),
ZHONGGUO JINGHI FAGUI XUANBIAN (1977-1984) at 260 (1984).

10. See Guanyu Niuzhuan Bufen Gongye Chanpin Zhiliang Xiajiang Zhuangkuang de
Baogao (Report Concerning Partially Reversing the Fall of Industrial Product Standards),
ZHONGGUO JINGJI GUANLI ZHENGCE FALING XUANBIAN, July-Dec. 1985 (Selection of
China's Policies, Laws and Edicts on Economic Management, July-Dec. 1985) 80 (1987). In
1985, a selection of 40 products from 500 enterprises were found to be substandard. Weihu
Xiaofeizhe Hefa Quanyi You le Fagui Baozhang (There Are Now Statutes Guaranteeing Pro-
tection of Consumers Legitimate Rights and Interests), Zhongguo Fazhibao, Sept. 2, 1986, at
3.

11. Id.
12. Gongye Chanpin Zhiliang Zeren Tiaoli (Regulations Concerning Liability for the

Quality of Industrial Products) (issued Apr. 5, 1986), ZHONrHUA RENMIN GO.NGHEGUO

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economic management adjusted its traditionally vertical orientation
so as to make manufacturers, retailers, transporters, bailees, and even
quality inspection authorities directly liable to end-users for products
not meeting requisite standards. The law all but eliminated the dis-
tinctions between tort and contract. It also provided for administra-
tive and criminal liability, and a cause of action for end-users seeking
compensation for defective products.

II. THE LEGISLATIVE FRAMEWORK

A. Administration of Product Quality Control 3

There is more than enough legislation on product quality control
to make it a separate topic of discussion. It will be mentioned here
only briefly by way of background. Like much economic legislation
in China, product quality control is divided into domestic and foreign
systems which respectively regulate products for internal circulation
and for import or export.

1. Domestic System

Quality control starts with standardization. China promulgated
national regulations for the administration of standardization.14

Although international standards are not directly accepted in the Chi-
nese legal system, they provide a point of reference for establishing
state standards.' 5

Since 1984, all industrial products must be licensed under the
authority of the State Economic Commission.' 6  The quality of
licensed products is to be monitored and the license will be revoked if
there is any decrease in quality. It is also unlawful to put unlicensed
products into circulation.' 7

GUOWUYUAN GONGBAO, May 20, 1986, at 418 [hereinafter Product Quality Liability
Regulations].

13. See supra note 8 for a list of the principal legislation discussed in this part.
14. For a discussion of China's standards system, see Note, Administrative Law of Stand-

ardization in the P.R. C., 1 J. CHINESE L. 271 (1987).
15. In 1987, the State Economic Commission announced a six-point plan to improve

product quality which includes the introduction of 1,000 new standards based on international
standards (article on file with author); Wen Hui Bao (HK), Nov. 25, 1987; see also Product
Quality Liability Regulations, supra note 12, art. 3 which provides that state standards shall
not be lower than the level of international standards.

16. Li CHUNTIAN, BIAOZHUNHUA GAILUN (General Introduction to Standardization)
passim (1982).

17. This is well illustrated by the case of a Shenzhen wholesaler fined 1,000 yuan for
selling single-phase kilowatt-hour meters manufactured without a license. The illegal proceeds
of sale were also confiscated. Cuzhi Lanzao Zhiliang Dilie: Wo Shi Chachu Yi Pi Weilie
Diandu Biao (Manufactured in a Slipshod Way with Inferior Quality: Our City Investigated

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Quality control is regulated by national legislation for industry as
a whole and for certain specialized products such as foodstuffs,
pharmaceuticals, and chemicals. Quality control is primarily an
enterprise's own responsibility, but the departments of industry and
commerce, the standards bureaux, and recently established inspection
and measurement centers all have overall supervisory powers.

Moreover, goods distributed according to an economic contract
are subject to inspection by the buyer, or by a commodity inspection
agent, before the buyer accepts delivery.

Except for the Regulations for the Administration of Advertis-
ing,18 China has not yet promulgated national legislation on unfair
and restrictive trade practices. Nevertheless, there are a number of
local laws. Wuhan and Shanghai have laws to prevent improper com-
petition. Shenyang and Fujian have laws to protect consumers.
These experimental, local laws regulate product quality insofar as
they inhibit the circulation of substandard goods.

2. Foreign System

The system for regulating the quality of goods for export tends to
mirror the domestic system. Legislation dealing with the quality of
products for export is generally stricter than domestic legislation. 9

In addition to production licensing, a manufacturer of goods for
export must obtain an export license from the Ministry of Foreign
Economic Relations and Trade [MOFERT].2 ° Importers must also
obtain import licenses from MOFERT. In addition, imported and
exported goods are subject to the compulsory scrutiny of China's
commodity inspection bureaux which certifies not only the quantity
and packaging of goods, but also their quality.2

and Deals with a Shipment of Fake and Bad Quality Electricity Meters) Shenzhen Tequ Bao
(Shenzhen Special Economic Zone Daily), Sept. 2, 1987, at 1.

18. Guanggao Guanli Shixing Tiaoli (Provisional Regulations for Advertising Adminis-
tration) (promulgated Feb. 6, 1982) COLLECTION OF LAWS AND REGULATIONS OF CHINA
CONCERNING FOREIGN ECONOMIC AND TRADE RELATIONS XV-17 (1983).

19. For example, Chukou Jidian Chanpin Zhiliang Xukezheng Guanli Shixing Tiaoli
(State Council Provisional Regulations for the Administration of Quality Licensing of
Exported Electrical Products) (promulgated Feb. 20, 1986), ZHONGHUA RENMiN
GONGHEGUO GUOWUYUAN GONGBAO, Mar. 31, 1986, at 186, applies stricter controls to
exported electrical products. There are similarly specialised regional regulations, e.g.,
Guangdong Province Measures to Administer the Registration of Export Commodity Produc-
ing Enterprises (on file with author).

20. See generally J. Horsley, The Regulation of China's Foreign Trade, in FOREIGN
TRADE, INVESTMENT, AND THE LAW IN THE P.R.C. 5 (1987).

21. Id.

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B. Legislation and 'Protective Statutes' Creating Liability

In both civil law and common law systems, tortious liability can
arise from conduct which is adjudged unlawful due to general princi-
ples proscribing the infliction of damage, or due to breach of a statute
for the protection of a prescribed class of persons. The general duty
to compensate for damage is contained in the civil code or in case law.
Any special duties are to be found in protective statutes. It is up to a
plaintiff to show that he was within the class of persons protected by a
statute. This system is familiar both to the common lawyer (breach of
statutory duty) and to the Civil lawyer, 22 although different theoreti-
cal tools are used to analyze each individual case.

In China, apart from the General Principles of Civil Law [herein-
after Civil Law], there are other laws which create civil liability and
provide compensation for a tortious act.23 These laws can hardly be
described as civil legislation, since their primary objective is to enforce
a system which will prevent damage and injury, and not compensa-
tion. Neither can these statutes be described merely as protective
because they do more than create a duty not to harm a class of per-
sons; they expressly create the constituents and form of liability. The
1982 Provisional Regulations for Advertising Administration 24 are a
good example. The relevant provisions are as follows:

Article 6
The content of an advertisement must be easily understood
and true to fact....

Article 13
.. . Advertisers shall be liable for breach of Article 6 but
advertising units who know about the false situation shall be
jointly and severally liable....

22. See e.g., ZHONGHUA MINGUO MINFA (hereinafter CIVIL CODE OF THE R.O.C.) art.

186(2) (Taiwan); cf Burgerliches Gesetzbuch [BGB] art. 82311 (W. Ger.).
23. ZHONGHUA MINGUO MINFA TONGZE (General Principles of the Civil Law of

China) [hereinafter CIVIL LAW] (adopted Apr. 12, 1986) in RMRB, Apr. 14, 1986, at 2-3,
trans. in Gray & Zheng, 34 AM. J. COMp. L. 722 (1986); Other laws concern environmental
protection; e.g. Haiyang Huanjing Baohu Fa (Marine Environmental Protection Law)
(promulgated Aug. 23, 1982, effective Mar. 1, 1983), art. 42, ZHONGHUA RENMIN
GONGHEGUO FALO HUIBIAN (1979-84) at 325 (1985), traffic accidents at sea Haishang
Jiaotong Anquan Fa (Maritime Safety Law) (promulgated Sept. 2, 1983, effective Jan. 1, 1984),
ZHONGHUA RENMIN GONGHEGUO FALO HUIBIAN (1979-84) 437, art. 46 (1985), as well as
product quality.

24. Guanggao Guanli Tiaoli (Provisional Regulations for Advertising Administration)
(promulgated Feb. 6, 1982), COLLECTION OF LAWS AND REGULATIONS OF CHINA CONCERN-

ING FOREIGN ECONOMIC AND TRADE RELATIONS XV-17 (1983). Now repealed and replaced

by Guanggao Guanli Tiaoli (Regulations for the Administration of Advertising) arts. 3 & 20,
Guowuyuan Fabu Xinde Guanggao Guanli Tiaoli (State Council issues a New Regulation for
Advertising Administration), Zhongguo Fazhibao, Nov. 12, 1987, at 2.

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Article 14
... Advertisers who violate these regulations shall be liable
to compensate for losses caused to end-users and
consumers....

The Advertising Regulations create a specific obligation to pay dam-
ages for losses caused by misrepresentation in an advertisement. If
the misrepresentation is about the quality of a product there will be
civil liability to compensate for losses caused as a result of a quality
defects. Although not "product liability" in the traditional sense, this
law appears to have been the basis of a creative decision in the Shang-
hai Intermediate People's Court in 1984. The facts are as follows:

In 1983, the Wuxi Thermal Insulation Plant in Jiangsu
Province advertised its new insulating material claiming it
was fire-resistant. The material was used to insulate the roof
of a factory building owned by the Shanghai Petrochemical
Works. In fact, the insulation was flammable and caught
fire during welding on the roof by a construction team from
the Ministry of Nuclear Industry, causing one death and the
destruction of the 1,400 square metre roof and some equip-
ment. The Shanghai Petrochemical Works sued the Wuxi
Thermal Insulation Plant.

The Court, relying on the Advertising Regulations,
ordered the Wuxi Thermal Insulation Plant to pay 35,000
yuan in damages. At the same time, 81,000 yuan in damages
was levied against the construction team for carrying on
welding operations on the roof before ascertaining whether
the insulation was fireproof. The decision was upheld on
appeal to the Shanghai Higher People's Court.25

This novel application of the Advertising Regulations resulted in
a successful action for misrepresentation. Usually this action would
be brought in contract 26 but perhaps the parties did not include a
term as to the insulation's fire resistant quality. Perhaps there was no
contract at all. In any event, the lack of, or incompleteness of, a con-

25. This summary of the case is based on two newspaper reports: Advertising Company
Sued for False Claim, Ta Kung Pao (Weekly), Oct. 16, 1986, at 1; Plant Fined Over Fatal
Works Fire, China Daily (Beijing ed.), Oct. 11, 1986, at 1.

26. Compare a 1982 case, reported in a collection for the "reference" of all courts, where
the manufacturer of prefabricated building materials was ordered to pay 57,775 yuan to
rebuild a partially constructed building after it was discovered the materials were substandard.
The decision was based on an application of article 31(1) of Provisional Regulations on Indus-
trial and Mining Contracts. Chanpin Zhiliang Bu He Guiding (Product Quality Does Not
Meet Standards), ANLI XUANBIAN 100 (1984).

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tract posed no obstacle to reliance on the Advertising Regulations as a
basis for liability. Interestingly, the Regulations draw no distinction,
as a common lawyer might expect, between fraudulent, negligent, and
innocent misrepresentation. The court apparently failed to make that
distinction as well. Consequently, strict liability applied to the misrep-
resentation, while the welder's liability for failing to check the fire
resistance of the insulation was based on negligence.

The tortious nature and effect of the provisions in the Advertis-
ing Regulations is not unique. For example, article 39 of the Provi-
sional Foodstuffs Hygiene Law states:

Violators of this law who cause food poisoning or other
food related illness or condition shall be liable to compen-
sate for damage. The person suffering damage has the right
to demand compensation. Compensation includes hospital
and medical expenses, loss of earnings, compensation for liv-
ing expenses, funeral expenses, [and] expenses necessary for
the maintenance of the deceased's dependents."

In the absence of a civil code the Chinese lawmakers have created
another basis for tortious liability. Unlike the Advertising Regulations
article 39 creates product liability as in Donoghue v. Stevenson 28 for it
would be a violation of the Foodstuffs Hygiene Law to produce or sell
a bottle of ginger beer containing the decomposed remains of a snail.
This aspect of the Chinese law is not well illustrated with cases.
Newspaper reports focus on the administrative and criminal liability
of public health offenders. But some cases, food poisoning in particu-
lar, are bound to give rise to civil claims in accordance with this
provision.29

More recently, some local legislation has created even broader
liability. Fujian Province's Regulations for the Protection of Legal
Rights and Interests of Consumers 30 is among China's first consumer

27. Civil Law, supra note 23, art. 119.
28. Donoghue v. Stevenson, 1932 App. Cas. 562 (H.L. 1932). This is the landmark case

the majority judgment of which first defined the nature and scope of the duty of care in the tort
of negligence in English common law. The action arose from the plaintiff's consumption of a
bottle of ginger beer made by the defendant soft-drink manufacturer which contained the
decomposed remains of a snail. As a product liability case, its significance is that it abandoned
the rigidity of contract in favor of tort theory as in the landmark New York decision, Mac-
Pherson v. Buick Motor Co., 217 N.Y. 382, 111 N.E. 1050 (1916).

29. On October 31, 1987, 762 guests at Shanghai's Dongfeng Hotel received food poison-
ing at a banquet: Shanghai Fasheng Zhongda Shiwu Zhongdu Shigu (Significant Food Poison-
ing Incident Occured in Shanghai), RMRB-HB, Nov. 6, 1987, at 4.

30. Fujiansheng Baohu Xiaofeizhe Hefa Quanyi Tiaoli (Fujian Province Regulation Pro-
tects Consumers Legitimate Rights and Interests) Zhongguo Fazhibao, Sept. 24, 1987, at 2
[hereinafter Fujian Consumer Protection Regulations].

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protection laws."1 The regulations recognize Chinese consumers'
associations32 and standardize their role in the settlement of disputes
between consumers and the producers or retailers of goods and serv-
ices. Despite the fact that the Fujian Regulations came into force well
after the Civil Law, they create their own basis of tortious liability for
damage caused to consumers by defective products and by unlawful
business practices.33 The regulations are not necessarily inconsistent
with the Civil Law. Indeed they sometimes reiterate the Civil Law.
These local laws indicate how the courts should interpret the term
"substandard" (bu hege).

The widest and most systematic regulation of product liability is
found in the Product Quality Liability Regulations.a4 Like the legisla-
tion discussed above, the Product Quality Liability Regulations are a
unique Chinese amalgam of administrative provisions which define
product quality and prescribe how it is to be maintained. They also
note the consequences for breach of quality control requirements,
which include administrative and criminal penalties, as well as civil
liability in contract or tort. Although they are consistent with, and
sometimes overlap other legislation, the Product Quality Liability
Regulations provide the most precise statement of what product lia-
bility is, and what parties are liable. For this reason we shall consider
them together with the Civil Law below.

C. The General Principles of Civil Lalv and Product Liability

1. The System of Obligations

Chinese' civil law scholarship has been under the continuing
influence of Pandectist legal thought, primarily from German civil
law adopted through Japan in the Republican Period and through the

31. Shenyang City promulgated (Certain Interim Provisions for the Protection of Rights
and Interests of Consumers) on January 19, 1987. See Xaofeizhe Quanyi You le Fagul
Baozheng (Consumer's Rights and Interests Have Legal Protection) Zhongguo Fazhibao, Mar.
5, 1987, at 2. The text of these provisions has not been published in the national press.

32. Consumer's associations have been active for some years in many major Chinese
cities conducting comparative testing of products and assisting consumers with complaints.
See, eg., Quanguo Jianli Xian Y"Ishang ge Ji Xiaofezhe Zuzti Erbai Yu ge (200 Consumer
Groups Have Been Established Throughout the Country Above the County Level), Zhongguo
Fazhibao, Jan. 6, 1987, at 1. There is also a national consumer's association which received
3,732 complaints in the first half of 1986, of which 70% concerned product quality, especially
bicycles, sewing machines, furniture, clothing, and shoes. The goods were from 127 factories
nationwide, of which 54 were in Guangong Province. Caiqu Quieshi Cuoshi Cuashi Weihu
Xiaofeizhe Hefa Quanyl Yifa Zhicai Luezhi Shangpin Shengchan (Adopting Practical Means
To Protect The Legal Rights of Consumers and Punishing According to Law Those Enter-
prises Which Produce Poor Quality Commodities), Zhongguo Fazhibao, Aug. 4, 1986, at 1.

33. See Fujian Consumer Protection Regulations. supra note 30, arts. 10, 12.
34. See, Product Quality Liability Regulations, supra note 12.

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Soviet Union after 1949. Like their European counterparts, Chinese
legal scholars are committed to a system of obligations comprising
contract, tort, quasi-contract and quasi-delict. Although strongly
influenced by economic-legal thought, the 1964 draft civil code
reflected a Pandectist mode of thinking, as did the first comprehensive
civil law textbook published in 1958. 35 The pandectist influence
resemblance grew stronger in the 1982 draft36 and can still be found in
the Civil Law although somewhat disguised in the awkward dichot-
omy between civil rights and civil liability: Note Article 84:

An obligation is a relationship of specific rights and
duties between parties, arising either from terms of a con-
tract or from a provision of law. The one that enjoys a right
is the obligee and the one that bears the duty is the obligor.

The obligee has the right to demand that the obligor
perform his duty according to the terms of the contract or
the provision of the law. 37

Obligations can thus arise from a contract or from legislative provi-
sions, including those creating obligations in tort, whether specified in
the Civil Law or some other statute, in quasi-contract, in quasi-delict
or in some other type of action. 38 Therefore, the provisions on tor-
tious liability in the Civil Law and in the administrative legislation
discussed above are not mutually exclusive. Rather, the Civil Law
must be treated more as a general law which co-ordinates the special
types of tortious obligations created by particular laws and
regulations.

39

2. Elements of Tortious Liability and Product Liability

The primary provision on tort is article 106. Like equivalent
articles in other codes, its simplicity is deceptive.4" It can only be

35. ZHONGHUA RENMIN GONGHEGUO MINFA JIBEN WENTI (Basic Problems in the
Civil Law of the People's Republic of China) (1958), trans. in Joint Publications Research
Service, Nov. 1961, No. 19500-4879 [hereinafter 1958 TEXTBOOK].

36. Translated into English by W. C. Jones in 10 REVIEW OF SOCIALIST LAW 193
(1984).

37. See CIVIL LAW, supra note 23, art. 84.
38. Examples include an executor's obligation to give effect to a valid testamentary dis-

position; the finder of a lost object or treasure trove's obligation to the owner; or an obligation
created by an administrative order to allocate resources according to a plan. See MINFA
YUANLI (Principles of Civil Law) 212 (Tong Rou ed. 1986); MINFA JIAOCHENG (Civil Law
Textbook) 198 (Tang Dehua ed. 1987).

39. This is consistent with the pragmatic civil law drafting policy by which special laws
preceded but are intended to stand together with the Civil Law in its present form. See E.
Epstein, Evolution of China's General Principles of Civil Law, 34 AM. J. COMP. L. 705 (1986).

40. See CIVIL LAW, supra note 23; see CODE CIVIL [C. CIv.] art. 138(2) (Fr.); BGB

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fully understood in its theoretical context. It states that:

Where a citizen or legal person through fault interferes
with and causes damage to state or collective property, or to
the property or person of another, he must bear civil
liability.4

1

Apparently, there are only three elements in tortious liability: dam-
age; causation; and fault. Like German law, and those civil law sys-
tems based on German Law such as the Japanese, Taiwanese, and
Soviet, Chinese civil law has kept the element of fault (guocuo) sepa-
rate from objective unlawfulness (weifaxing). Fault is the attitude of
a person who either intentionally (guyi) or negligently (guoshi) causes
damage.4' Unlawfulness is the harmful violation, by act or omission,.
of a legal norm without a legally recognized excuse.43

In addition to the general provision, there are seventeen articles
on tort, thirteen of which enumerate specific instances of tortious lia-
bility either by reference to the type of right infringed, 44 or the way in
which the damage was caused.4 This pattern follows that adopted in
the 1982 draft civil code. Yet, in the first circulated draft of the Civil
Law there was a greater number of enumerated torts than ever before.
This draft included an article on product liability. Though the draft-
ing process shows that there was some controversy as to how the arti-
cle should be worded, there was clearly no question of leaving it out.
The final text adopted by the National People's Congress states:

Where because of the substandard quality of goods
damage is caused to the property or person of another, the
manufacturer or seller of the goods must bear civil liability
according to law. Where transporters and bailees are

supra note 22, art. 823ii; MINPO art. 709 (Japan); GRAZHDANSKII KODEKs RSFSR (CIVIL
CODE) art. 444; CIVIL CODE OF THE R.O.C., supra note 22, art. 709; MINP P art. 750 (S.
Korea).

41. See CIVIL LAW, supra note 23, art. 106.
42. MINFA JIAOCHENG, supra note 38, at 243.
43. Ma Qi, Lun Sunhai Peichang Zeren Goucheng de Yiban Tiaojian (Discussion of the

Ordinary Constituent Elements of Liability to Compensate for Causing Damage), NORTH-
EAST PEOPLE'S UNIVERSITY JOURNAL OF SCIENCE AND LITERATURE 159 (1957). (This is
without question the most thorough survey of the early position in Chinese socialist law which
has come to light).

44. See CIVIL LAW, supra note 23, art. 117 (interference to personal or real property),
art. 118 (interference to personal or real property), art. 120 (interference to name, likeness,
reputation or honor).

45. Id at art. 121 (by state workers), art. 122 (by substandard products), art. 123 (by
ultra-hazardous activities), art. 124 (by environmental pollution), art. 125 (by roadworks), art.
126 (by defective premises), art. 127 (by domesticated animals), art. 128 (by excessive self-
defense), art. 129 (by rescue), art. 133 (by an incompetent person).

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responsible for this [damage], the manufacturers and sellers
have the right to demand compensation for loss. 46

Article 122 must be read in conjunction with China's general princi-
ples of civil liability in tort, as well as with the Product Quality Liabil-
ity Regulations. In the following discussion, therefore, we will
consider both the elements of tortious liability in general, and criteria
and issues of product liability in particular.

a. Damage

For civil liability to arise, damage must be caused to property or
person. Damage must be actually caused. A technical infringement
of rights, actionable per se as common lawyers would put it, is not
sufficient in Chinese law. The protected rights or interests are not set
out in article 106, but are referred to in the civil rights enumerated in
Chapter Five of the Civil Law. These civil rights include property
rights, personal rights, and economic interests such that the scope of
compensation recoverable is potentially large. In principle, compen-
sation may be had for nervous shock as well as for "pure" (direct)
economic loss.

The recoverability of economic loss which does not arise from
physical injury to property or person ("pure" economic loss) is a con-
troversial issue in many legal systems. Experience has shown that
apart from any policy considerations, the courts' ability to grant com-
pensation for pure economic loss is limited by the theoretical frame-
work of their respective systems of tortious liability. In France, for
example, there is no theoretical bar to the recovery of pure economic
loss because the core provision on tortious liability47 turns simply on
the word "damage", which has been interpreted to include physical,
economic, or moral damage.4" In Germany, however, the core provi-
sion 49 turns on damage to six enumerated rights and interests: life,
body, health, freedom, property, or "other right." Therefore, eco-
nomic loss can only be recovered if it arises from physical damage or
interference with some "other right" which has been interpreted to
mean real and possessory rights, the right to a name, and intellectual
property rights.50 In English common law, in the absence of a con-
tract, and apart from liability for negligent misrepresentation in a

46. See CIVIL LAW, supra note 23, art. 122.
47. See C. Civ., supra note 40, art. 1382.
48. See K. ZWEIGERT & H. KOETZ, 2 AN INTRODUCTION TO COMPARATIVE LAW, 283

(1977).
49. See BGB, supra note 22, art. 823i.
50. Id. at 270.

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"special relationship," 5' it seems that as a matter of policy the House
of Lords is unlikely to again allow recovery for pure economic loss
caused by merely negligent acts.52

Tortious liability under the Civil Law is limited to the infringe-
ment of certain rights and interests specified in Chapter Five and
would therefore seem to face the same restriction on recoverability of
pure economic loss as in Germany. However, since the 1950s Chinese
legal scholars,53 like their Soviet counterparts, have stated that as a
matter of principle "actual damage" (shi sunshi) includes both losses
which have in fact been suffered (&iji sunshi) and losses of interest or
profit which could have been obtained (kede liyi). The latter type of
loss quite clearly includes pure economic loss and the examples used
to illustrate it consistently relate to losses arising from downtime. 5

There is support for this view in the text of the Civil Law, which sets
out three basic rules on remedies for a tort. The first two are based on
restitution of property or damages equal to its value; but the third
paragraph provides:56

Where the injured party sustains other substantial loss
as a result, the party who caused the damage must pay com-
pensation for that loss.

"Other substantial loss" (qita zhongda sunshi) is broad enough to
include pure economic loss but is qualified by "as a result" (yinci
zaoshou) which is arguably limited to economic loss consequential to
the physical losses referred to in the two preceding paragraphs.57 A

51. Junior Books Co. Ltd. v. Veitchi Co. Ltd., 1983 App. Cas. 520 will be limited to its
facts. See HEUSTON, SALMOND AND HEUSTON ON THE LAWv OF TORTS 229 (1987).

52. Hedley Byrne & Co. v. Heller & Partners Ltd., 1964 App. Cas. 465 (H.L.).
53. 1958 TEXTBOOK, supra note 35, at 185.
54. 2 SULIAN MINFA (Soviet Civil Law) 395 (1986).
55. The 1958 Textbook gives an example of a loss of profit suffered by a factory treating

wooden sleepers with creosote when it had to cease operations because poor quality creosote
was supplied. See 1958 TEXTBOOK, supra note 35, at 185. Although an action against the
suppliers would surely be in contract the writers also treated the principle as applicable to
liability in tort. See id at 332. A more recent example is of a restaurant which closes down
after a violent brawl during which the restaurant fittings and food were damaged and
destroyed and present customers frightened away. Here, it was said, the restaurant could
claim not only for the physical damage and profit lost from the existing customers but also for
the profit lost during the time it was closed for repairs. See JIANO PING, MINFA JIAOCHANG,
(CIVIL LAWv TEXTBOOK) 322 (1986); Tong Qiang, ZHAIQUAN, Obligations 20 (1987); see also
ZHONGHA RENMIN GONGHEGUO MINFA TONGZE JIANGHUA, (Lectures on the General Prin-
ciples of Civil Law of the PRC) 211 (Civil Law Teaching and Research Section Chinese Uni-
versity of Politics and Law eds. 1986).

56. See CIVIL LAWv supra note 23, art. 117.
57. This argument has arisen in the course of discussions I have had with Chinese schol-

ars but appears to be as yet undocumented.

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JOURNAL OF CHINESE LAW

recent case; Shanghai Power Supply Bureau v. Proteus Shipping Co.
S.A., Panama, seems to support the former interpretation:

In November 1984, the defendant's Panamanian regis-
tered vessel M.V. Agamemnon wrongfully dragged anchor
while moored in the Huangpu River Shanghai Harbour and
thereby fouled an underwater electricity cable. The power
network was, therefore, cut off from a substation, a high
voltage industrial zone, and the seventh city south power
generator station which caused a power-cut to part of the
area. Fourteen factories stopped production. The anchor
damaged the cable, the power-cut damaged equipment of
the substation, the high voltage industrial zone, and the fac-
tories and resulted in a loss of profit to both the power gen-
erator station and the factories.

The Shanghai Maritime Court held that on the facts
proven the defendant's conduct was in breach of the Mari-
time Safety Law and awarded a total of 230,264 yuan dam-
ages for the cost of repairing the cable damaged by the
anchor, for the damage to the equipment, and for the loss of
profits caused by the power-cut. 58

It is unclear whether the lost profits were really pure economic loss
because in awarding damages the court made no distinction between
pure and consequential economic loss.5 9 It is also unclear whether the
factories were really parties to the action at all since their names do
not appear in the report. Nevertheless, the court specifically allowed
recovery for their loss of profits.

If pure economic loss is recoverable in China it is fair to infer
that loss of profits due to downtime caused by a defective product will
be recoverable whether or not the defect has also caused some physi-
cal harm. This would not be a surprising result in Canada' or in
some American states, 61 but is unlikely in the United Kingdom 62 and

58. Shanghai Gongdian Ju Yu Boluo de Si Hangwu Gongsi Haishi Sunhaf Peichang
Jiufen An, ZHONGHUA RENMIN GONGHEGUO ZUIGAO FAYUAN GONGBAO, Mar. 20, 1986, at
28.

59. Spartan Steel Alloys Ltd. v. Martin & Co., 3 All E.R. 557 (1972), where the English
Court of Appeal allowed the loss of profit which would have been made on molten metal
spoiled by the power cut but not profits lost on potential subsequent meltings which could not
take place at all.

60. Rivtow Marine Ltd. v. Washington Iron Works, 1973 D.L.R. 3d 350 (Can.) (losses
arising from downtime for repair of defective crane).

61. See, e.g., Seely v. White Motor Co., 63 Cal.2d 9 (1968), allowing recovery for com-
mercial losses arising from a defective truck which overturned.

62. The Aliakmon, 1986 A.C. 785 (H.L.).

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PRODUCT LIABILITY

absolutely impossible in West Germany.63 Like their Western coun-
terparts, Chinese courts may be reluctant to talk openly about the
implications of insurance for tortious liability. In fact, the relative
merits of loss and liability insurance are not yet discussed in Chinese
civil law textbooks. It should be pointed out, however, that since the
early 1980s the People's Insurance Company has been offering prod-
uct liability insurance and many manufacturers of even famous brand
consumer products have taken out coverage. 64

If, compensation is recoverable for pure economic loss resulting
from downtime caused by a defective product, the next step is to ask
whether the diminution of value in the same product or the cost of
repairing its defect is also recoverable. This raises the familiar
dilemma of claiming losses in tort which are usually only recoverable
for breach of warranty. The uneasy distinction between contract and
tort in product liability cases has become a favorite topic of discussion
for legal writers and a universal dilemma for the courts. A manufac-
turer is liable in tort if it makes a defective product which breaks and
injures someone. Assuming that the defect is discovered in time to
prevent injury, the manufacturer is not immune from liability for the
cost of repair merely because there is no contract with the end-user.65

Such a simple proposition of justice does not, of itself, permit a simple
answer in law. The United States Supreme Court has held that dam-
age to a defective product alone is the essence of a warranty action
and, therefore, a manufacturer has no duty to compensate for wear
and tear.66 In the United Kingdom, the courts have had to resort to
the fiction of physical damage where the defective product is in need
of repair,67 and despite one attempt,68 have been unable to penetrate
the barriers between contract and tort.

Committed to a system of obligations which similarly distin-
guishes contract and tort, Chinese legal scholars also feel constrained
to observe that tortious liability for' defective products does not
include compensation for the product itself; this is a contractual mat-

63. See B. S. MARKESINIS, A COMPARATIVE INTRODUCTION TO THE GERMAN LAV OF

TORT 112 (1986).
64. Products insured include television sets, washing machines, refrigerators, and elec-

tricity leakage detectors. See Chuxuxing Jiating Caichan Baoxian Shoudao Qingdao Jumin
Huanying (Qingdao Residents Welcome the Insurance Policy Protecting Property of House-
holds Which Save Money), Zhonguo Fazhibao, May 29, 1987, at 2.

65. The example is Lord Denning's and he favored liability in tort for the cost of repair.
Dutton v. Bogner Regis U.D.C., [1972] 1 Q.B. 373, 396 (C.A.).

66. East River S.S. Corp. v. Transamerica Delaval, Inc., 106 S. Ct. 2295 (1986).
67. See Anns v. Merton London Borough Council, [1978] A.C. 728.
68. Junior Books Co. Ltd. v. Veitchi Co., supra note 51, but note that damage to the

product itself is excluded in the Consumer Protection Act, 1987, ch. 43, § 5(2).

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ter.69 The Product Quality Liability Regulations make a distinction
between liability to compensate for "economic losses" and liability to
repair, refund, or replace a product during the warranty period. Arti-
cle Twenty, however, suggests that even in the absence of a contract
the courts may determine either type of liability:

Disputes that arise concerning product quality problems
shall, when there is an economic contract, be handled
according to the Economic Contracts Law. If there is no
contract, any party to the dispute may request the relevant
quality supervision institution to resolve the matter through
mediation, or file suit in the People's courts.7°

In practice, there will rarely be an economic contract between the
consumer and the retailer or manufacturer. However, it remains to be
seen whether the courts will observe the traditional distinction
between contract and tort to settle such disputes.

b. Causation

The damage must be caused by the violation of an enumerated
right.7' In a product liability case the plaintiff has the burden to
prove that the defect has caused his loss or injury. The standard used
to judge the cause-and-effect relationship between the violation of
right and damage is objective and said to be not mere "possibility"
but "precision. "72 The Chinese legal writers therefore stress the scien-
tific aspect of causation. In their examples, breaks in the chain of
causation are almost invariably proven with the aid of some expert
verification.73 As the following case shows, proof of causation has
been a knotty problem in product liability disputes since the early
days of the P.R.C.:

An X-ray tube newly purchased by the Jilin Central Rail-
way Hospital exploded during an examination when unregu-
lated current passed through it. The question which
required scientific verification was whether the tube
exploded because too much current passed through it or

69. Qiantan Chanpin Zeren de Jige Fali Weni (Brief Comments on Several Product
Liability Legal Issues), Zhongguo Fazhibao, Mar. 6, 1987, at 3.

70. See Product Quality Liability Regulations, supra note 12, art 20.
71. Unlike the C. Civ., supra note 40, art. 1382 (France), the word "cause" is not used in

CIVIL LAW, supra note 23, art. 106 but the element of causation is encapsulated in the term
"infringe and harm" [qinhai] which appears to have originated in the MINP6, supra note 40,
art. 709 (Japan) and was also used in the Zhonghua Minguo Minfa, supra, note 22, art. 184.

72. Ma Qi, supra note 43, at 179.
73. E.g., QINQUAN DE MINSHI ZEREN (Civil Liability of Tort) 39 (Zhang Peilin ed.

1987).

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PRODUCT LIABILITY

because its quality was too low to withstand the current.7'

Writing in 1957 the author did not, as we might today, discuss
the above case in terms of "misuse," but the point is clear that if the
X-ray tube exploded because it was misused the chain of causation
would have been broken. Alternatively, both the defect and the mis-
use of the product may have contributed to the damage. As we will
see below this is not the same as contributory negligence, which is
also an assessment of subjective blameworthiness, since tortious liabil-
ity to end-users is strict liability; that is, fault is not an element in this
tort and contributory negligence is therefore irrelevant.

c. Unlawfulness: Creating Legal Duties

In German law, the traditional approach has been to treat unlaw-
fulness (Rechtswidrigkeit) and fault (Verschulden) separately so that
fault will only be considered if unlawfulness is found." This legal
technique is used to classify as wrongful the defendant's acts and
omissions by objective means. This performs a delineative function
not dissimilar to the legal duty in tort (of care, honesty etc.) which is
recognized by common law lawyers. The element of unlawfulness is
satisfied if there is either a violation of the rights and interests specifi-
cally enumerated in the general provision on tort76 or a violation of a
protective statute (Schutzgesetz) which creates a duty owed to the
plaintiff.7 In practice, liability created by the two provisions may
overlap. This is well illustrated by a leading German case on product
liability in which the German Court of Appeal upheld a chicken
farmer's claim against a vaccine manufacturer both on the grounds of
negligent manufacture and breach of the Medicines Act.78

Under the influence of the BGB, the Civil Code of the R.O.C.7 9

copied this bifurcated approach to unlawfulness. More in keeping
with the Soviet approach contemporary Chinese civil law scholars do
not distinguish between a violation of the general legal duty created in
article 106 of the Civil Law and special duties created by law. There-
fore, neither the Soviet Civil Code, nor the Civil Law, contain a pro-
tective statute, the violation of which creates a duty owed to the
plaintiff."° The Soviet approach is to treat a breach of a protective

74. Ma Qi, supra note 43, at 163.
75. Markesinis, supra note 63, at 40-43.
76. BGB, supra note 22, art. 823ii.
77. Id art. 823ii.
78. Id. at 245.
79. CIVIL CODE OF THE R.O.C., supra note 22, art. 184.
80. Supra note 40.

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statute the same way as any other unlawful conduct.' Although Chi-
nese treatises are silent on the relationship of protective statutes to the
Civil Law's provisions on tortious liability, it seems likely that China
will adopt the Soviet approach.

One Chinese legal scholar has characterized conduct as unlawful
if it is prohibited by law, public order, or good morals and is not
justified by a lawful excuse.8 2 In principle, any breach of the myriad
of administrative regulations on product quality will satisfy the ele-
ment of unlawfulness. In Germany, the practical result has been that
the element of unlawfulness is automatically satisfied if a right or
interest enumerated in the general provision on tort is violated in the
absence of a legally recognized defence (Rechtsfertigungsgrund).3 So
too, in most Chinese civil law treatises, unlawfulness is treated almost
as a technical requirement which will be satisfied where damage is
caused in the absence of a defence.8 4 In many common law countries,
the courts have extended the defendant's duty not to cause injury or
damage to the plaintiff so far that "it ought to apply unless there is
some justification for its exclusion. '8 5  Although the civil law
approach is more subtle, there is no question that in both systems the
courts are formulating public policy. At least one Chinese legal
scholar has suggested that unlawfulness is a policy question because,
apart from conduct prohibited by positive law, conduct may be
unlawful merely because it breaches social public order (shehui gong-
gong shenghuo guize) or good morals.8 6

Liability under article 122 of the Civil Law is for damage caused
to property or person "because of the substandard (buhege) quality of
goods." The duty not to cause damage is thus defined in terms of
"substandard quality" rather than the more familiar Western concept
of "defect." This formula was only adopted in the third major draft
of the Civil Law after consideration of an even broader concept of
"problem of quality" which would be still harder to define. The
meaning of "substandard quality" is readily defined by reference to
administrative and technical specifications rather than by the general

81. SULIAN MINFA, supra note 54, at 396.
82. Ma Qi, supra note 43, at 163-73.
83. "Unlawfulness, in other words, depends on the harmful result Erfolgsunrecht,"

Markesinis, supra note 63. More recently, a new school of thought has shifted the focus from
the harmful result to the wrongfulness of the conduct itself. As a result, negligence is treated
more as a part of unlawfulness which is understood more in terms of a duty theory based on
policy considerations.

84. PRINCIPLES OF CIVIL LAW, supra note 38, at 241; 1958 TEXTBOOK, supra note 35, at
325.

85. Home Office v. Dorset Yacht Co., 1970 A.C. 1004 (P.C.).
86. Ma Qi, supra note 43, at 166, 168.

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PRODUCT LIABILITY

criterion of safety. Without systematic caselaw it would be very diffi-
cult for Chinese courts to cope with general notions of defect and risk
of harm. Therefore, defining product liability in terms of quality set
by administrative standards gives the courts a solid peg on which to
hang their decisions. Although western lawyers may feel more at ease
with the concepts of defect and safety, in practice, little if anything
turns on the different approaches because it is a defect which makes
the product substandard and unsafe. What, then, is "substandard
quality"?

Article two of the Product Quality Liability Regulations is a use-
ful starting point for the definition of quality of "industrial prod-
ucts".87 It sets out three factors for determining product quality
which may be specified in legislation, state standards or in contract
terms. First, there is the "application" to which the product is put.
(Originally, the Chinese may have meant to say "use" which is a hom-
onym with one different character. Probably nothing turns on this.)
The second factor is the safety of the product and last, any other spe-
cial requirements specific to a particular product or its type. There-
fore, liability for a defective product is not based on some inherent,
objective defect in the product, such as a flaw in its design or produc-
tion, but on its failure to meet any of the quality requirements. At
first sight, such liability is not "product liability" in the accepted
sense, but "product quality liability" which appears potentially wider
in scope especially in the case of administrative and criminal liability
which may accrue for breach of quality requirements. However, civil
liability only arises when the end-user's losses are caused by the fail-
ure of the product to meet the stated requirements so that the end-
user will still have to prove some deficiency or defect in the product's

87. "Industrial products" are not defined but probably include all manufactured goods
except military products which are the subject of separate legislation. Cf. Guanyu Guanche
'Zhonghua Renmin Gongheguo Youzhi Chanpin Jiangli Jiaoli' de Buchong Guiding (Supple-
mentary Provisions for the Implementation of the High Quality Product Awards Regulations)
(promulgated Feb. 28, 1981), art. 3, ZHONGGUO JINGJI FAGUI XUANB ,N 1977-1984 at 276
(1984) provides that agricultural products and agricultural byproducts, industrial products
which have not been processed (eg., coal, minerals, crude oil, natural gas, timber), electricity
and superceded industrial products are not eligible for awards.

Article Two of the Product Quality Liability Regulation reads:
"'relevant laws and regulations of the state, in quality standards and in contracts

regarding the application (sic) and safety of products and other requirements of a
special nature.

Liability for product quality refers to the liability to be borne for losses caused to
end-users because of the failure of product quality to meet the above mentioned
requirements."

Supra note 12.

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quality. As we will see below, such a technical definition tends to take
the verdict on a product's quality out of the court's hands.

Unfortunately, no regulations set forth a comprehensive list of
quality requirements, and the requirements which do exist vary from
one type of product to another. However, some general guidance may
be obtained from the Product Quality Liability Regulations and arti-
cle ten of the Fujian Consumer Protection Regulations.88

These quality requirements are very broad indeed, covering not
only inherent defects in a product itself,89 but also its packaging,9"
labelling,9' and instructions.92 Such requirements also extend to mat-
ters which have no relevance to the safety of the product, such as
product licensing, but this will not necessarily expand the scope of
liability. It must not be forgotten that the damage must be caused by
the fact that the quality of a good is substandard. For example, if a
consumer is accidentally burned using a rice-cooker he cannot claim
compensation merely because the rice cooker had been sold without a
license. The victim must show that the substandard quality was a
cause of injury, e.g., because the rice-cooker was in fact a reject prod-
uct not licensed for sale to the public.

The duty created in Civil Law article 122 is owed to anyone who
sustains personal or property damage from a substandard product.
As liability is tortious, no contract is necessary between the parties.
Potential plaintiffs include the purchaser, the consumer, and certain
third parties. For example, several legal scholars refer to a case where
a child was scalded by a thermos flask which burst whilst being car-
ried by a passer-by. The flask burst because of a defect, and scholars
conclude that the manufacturer is liable to compensate the child. 93

(i) The Unborn Child

One controversial topic in tort liability this century has been the
right of a child to make a claim after birth for a prenatal injury.
Courts in different jurisdictions have, not surprisingly, reached oppo-
site conclusions on rights of the unborn child. The thalidomide settle-
ments in the 1970s brought the same question into the product
liability arena. What is the position likely to be in China? First, it

88. Supra note 12; Fujian Consumer Protection Regulations, supra note 33.
89. Product Quality Liability Regulations, supra note 12, art. 9, including factors such as

design and manufacturing.
90. Id.
91. Id.; see also Food Labelling Regulations Welcomed, China Daily (Beijing ed.), Nov. 5,

1987, at 2.
92. Product Quality Liability Regulations, supra note 12, art. 9(4).
93. Zhang Peilin supra note 73, at 23.

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PRODUCT LIABILITY

should be noted that the capacity to enjoy civil law rights (minshi
quanli nengli) is defined in article nine of the Civil Law and is pos-
sessed only by persons from the time of birth until death. Prima facie,
then, an unborn child has no legal rights.94 The Inheritance Law,
however, provides that the appropriate share of a testamentary dispo-
sition must be reserved for an unborn child, but if the child is stillborn
its share will be redistributed according to the rules of intestacy.9

This means that the unborn child enjoys the right to inherit, a prop-
erty right protected by article 76 of the Civil Law, even if it is never
born alive.9 6 This is difficult to reconcile with the definition of civil
capacity provided in the Civil Law. The right of inheritance may be
viewed as a legislative exception to the general principle. It is unlikely
that Chinese courts could, or even would, create a second exception to
allow the unborn child to make a claim for a prenatal injury in tort.9

In China this kind of unfortunate occurrence will be left to the suc-
cour or indifference of social institutions.

(ii) Who Owes the Duty?

A tortious duty with respect to defective products is not merely
owed by the manufacturer, but also the seller, persons who have
stored or transported the goods, and even administrative departments.
There is some disagreement amongst authorities regarding the scope
of the duty owed. One view is that the manufacturer, distributor or
retailer, and the administrative departments responsible for quality
control and supervision each owe a duty not to allow goods of sub-
standard quality to enter the market. For manufacturers and sellers
this is clear from article 122 of the Civil Law itself.98 The duty of
administrative departments, however, was never contemplated in the
drafting of the Civil Law. This duty arises instead by virtue of article

94. This is supported by the Chinese judicial view that civil legal capacity must bt
proven by documents showing the date of birth, e.g., household registration or birth certificate:
Zuigao Renmin Fayuan Guanyu Guanche Zhixing "Zhonghua Renmin Gonghcquo Minfa
Tongze" Ruogan Wenti de Yijian (Shixing) (Views of the Supreme People's Court On Certain
Questions Concerning the Implementation of the "General Principles of Civil Law" (for Trial
Use)), ZHONGHUA RNMIN GONGHEGUO ZUIGAO RENMIN FAYUAN GONGBAO, June 20,

1988, at 17.
95. Id. at art. 28.
96. This is the law described by one writer, even though he concludes that it is appar-

ently inconsistent with principle: JIANG Liu, JICHENGFA JIESHI (Annotated Inheritance Law
of the PRC) 126 (1987); see also Law of Succession of the People's Republic of China (adopted
Apr. 10, 1985, effective Oct. 1, 1985) THE LAWS OF THE PEOPLE'S REPUBLIC OF CHINA
(1983-1986) (1987).

97. This seems to be confirmed by the Chinese Supreme Court's view on the determina-
tion of civil legal capacity. See supra note 94.

98. See also Product Quality Liability Regulations, supra note 12, arts. 11(4), 15.

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four of the Product Quality Liability Regulations which provides that
administrative departments "whose control and supervision [of qual-
ity] are slack shall bear joint and several liability." 99 Departments in
charge of quality control and supervision are many and varied. They
include administrative departments for standards and measurements,
commodity inspection, quality supervision, industry and commerce,
and the enterprise's own quality control departments, as well as stan-
dards bureaux, testing centers, labor bureaux, and the Certification
Office under the State Economic Commission. Vicarious liability of
state agencies for the torts of their workers is expressly provided for in
article 121 of the Civil Law, and there are precedents for liability even
though it is a relatively recent development in Chinese legal prac-
tice."° Liability arises only where control and supervision are slack,
thus suggesting that the primary basis is fault.

Transporters and bailees, however, merely owe a duty not to mis-
handle goods in their care so as to render them substandard in qual-
ity. This idea hails from the Product Quality Liability Regulations
which provide: "when damage [to goods] is caused by reasons clearly
attributable to storage, transport, or loading and unloading, the stor-
age or loading and unloading enterprise shall bear liability."'' It was
added to the Civil Law only in its third major draft, and its object is
clearly to allow the manufacturer or seller to claim contribution from
the transporter or bailee whose fault is the real cause of the goods'
substandard quality.'

(iii) Defenses and Contractual Exclusion of Liability

Prima facie unlawful conduct may be lawful if it is justified by a
valid excuse. Chinese legal scholars recognize five such defenses:
first, the performance of a duty, such as a doctor performing emer-
gency surgery, or a fireman who destroys some property in order to
save other property from destruction by fire; second, the exercise of a
right, such as the right to evict an unlawful tenant; third, a legitimate
self-defense; fourth, the avoidance of difficulty in an emergency; and
fifth, the consent of the victim, that is, volenti non fit injuria. In the
absence of specific product liability legislation, there exist no specific

99. Id. art. 4.
100. Cf. Dicks, Legal Opinion, CHINA TRADE REPORT, Nov. 1981, at 11, cites a case of

environmental pollution where the public health department and environmental protection
department paid compensation to a fish farm. In a mediated agreement the Departments
admitted fault for allowing a hospital to discharge water with dangerous chemicals which
killed the fish.

101. Product Quality Liability Regulations, supra note 12, art. 13.
102. See Appendix.

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PRODUCT LIABILITY

product liability defenses such as the "development risk defense" or
the "component defense." Liability for a substandard product in
China is thus potentially wider than for a defective product in some
other legal systems.10 3

The volenti defense raises the question of the ability to contract
out of tortious liability. How would a court in China deal with a
contractual disclaimer, limitation, or exclusion clause purporting to
restrict or exclude altogether tortious liability for damage or injury
caused by a substandard product? The court would likely treat such a
clause as invalid.

Textbooks on the common law of contract would not be com-
plete without a discussion of exemption from civil liability. The Eng-
lish courts valued freedom of contract to such a degree that they
would enforce contracts which included unfair or even unconsciona-
ble terms."° Less attention is devoted to contractual exclusions of
liability under civil law. In France, terms excluding liability in tort
are simply invalid on the grounds that they are contrary to the ordre
public.'0 5 In Germany, the courts have held that liability in tort may
be excluded by agreement, but exclusion clauses are subject to strict
interpretation contra proferentum and expansive policy considerations
including the German principle of honesty and good faith (Treu und
Glauben ).

10 6

In China, contract textbooks rarely discuss exemption clauses.
The reasons for this may be rather varied. Excluding liability for
breach of contract in China may mean contracts are not performed.
This is anathema to the function of the "economic contract" which
emphasizes specific performance because economic contract is itself a
means of implementing the state economic plan. There is evidence,
however, that exemption clauses are acceptable in principle if they
"do not violate state laws, decrees, and the spirit of state policy,"107

but no legislation exists on point.
Both the German Codes'0 8 and Civil Code of the R.O.C.10 9 have

103. See, eg., Consumer Protection Act, 1987, ch. 43, § 40(e) (specifically provides for
the development risk defense) § 4(l)(f) specifically provides for liability for a component part
where it was supplied according to the buyer's specifications or the final product is itself
defective.

104. Hence modem statutory changes to the law, e.g., Unfair Contract Terms Act, 1977,
ch. 50.

105. B. NICHOLAS, FRENCH LAW OF CoNrRAcr 227 (1982).
106. Markesinis, supra note 63, at 266-67.
107. QIYE JINGJI HETONG YU HETONG GESHI (Enterprise Economic Contracts and

Contract Standards) 63 (Yan Ciqing ed. 1987).
108. BGB, supra note 22, art. 476.
109. CIvIL CODE OF THE R.O.C., supra note 22, art. 366.

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specific provisions to control terms which limit or exclude the seller's
warranty obligation but there is no equivalent provision in the Civil
Law. There are, however, three general provisions for the control of
unconscionable contract terms which represent principles common to
Chinese civil law in both the PRC and the R.O.C. First, agreement is
based on consent so that "a court may find that a disclaimer clause
printed in relatively small print on a standard contract form is not
part of the bargain, on the theory that unless the buyer reads and
understands that clause, his consent is lacking." '" 0 Second, rights and
obligations must be performed according to honesty and good faith. "I'
This "does not require good faith in contract formation [but] the
spirit of the doctrine is such that hidden and unexplained disclaimer
clauses may well be aborted."' 12 The third and most analogous prin-
ciple of German civil law is that a civil legal act (of which a contract
is a primary example) which violates the law or public interest is
void.' '3 In China this principle has been used to strike down con-
tracts or parts of contracts' 1 4 which are illegal or not in the public
interest. 115

Under French law contractual exclusion of tortious liability is
contrary to ordre public. In a similar vein, in Taiwan "liability for
intentional acts or gross negligence cannot be released in advance." 116

A similar attitude would be' adopted in China if the courts were to
hold that a disclaimer would defeat the protection conferred by the
Civil Law or other legislation creating liability. Although there is no
equivalent provision in the Civil Law, the principle is analogous to
acts contrary to public policy. Therefore, if product liability is strict,
a disclaimer would defeat the purpose of protection conferred by
statute.

The adoption in China of the unequivocal French position on

110. Chung-sen Yang, Liability of Sellers in Chinese Law, in TRADE AND INVESTMENT
IN TAIWAN 437 (H.H.P. Ma 2d ed. 1985). Cf. CIVIL LAW, supra note 23, arts. 4, 55(2),
59(1).

111. Treu und Glauben, BGB, supra note 22, art. 242; Chengshi he Xinyong, Civil Code
of the R.O.C., supra note 22, art. 148(2); CIVIL LAW, supra note 23, art. 4.

112. Yang, supra note I10, at 438.
113. Civil Law, supra note 23, arts. 55(3), 58(5); CIVIL CODE OF THE R.O.C., supra note

22, supra art. 72; BGB art. 138(1).
114. Void acts may be severable from valid acts. CIVIL LAW, supra note 23, art. 60.
115. See, Guojia Gongshang Xingzheng Guanli Ju Guanyu Queren he Chuli Wuxiao

Jingji Hetong de Shixing Guiding (Provisional Regulations of the State Administration for
Industry and Commerce on the Confirmation and Handling of Invalid Economic Contracts)
(promulgated July 25, 1985) in CHINA LAWS FOR FOREIGN BUSINESS 5-560 (1987); arts. 2(a)
(contracts contrary to law), 2(b) (prohibited goods specified in contract), 2(d) (damaging state,
public or other interests).

116. CIVIL CODE OF THE R.O.C., supra note 22, art. 222.

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exemption clauses assumes that no distinction is drawn between con-
sumer transactions on the one hand, and commercial transactions,
such as between importers and retailers on the other.1 7 The object of
article 122 of the Civil Law, however, limits protection to consumers,
end-users, and innocent third parties. Since the scope of liability
under the Product Quality Liability Regulations goes further than the
Civil Law, it is predictable that the Chinese courts may allow enter-
prises to allocate liability according to contract but strike down any
clause which purports to limit or exclude liability to the consumer.

d. Fault

Article 106(2) of the Civil Law makes clear that "fault" (guocuo)
is the general standard of liability for tortious conduct. "Fault" is the
attitude of the tortfeasor, and as used in article 106 must be under-
stood in the sense of the French term "la faute," that is, including
both intention (guyi) and negligence (guoshzi).1 1 8 The Soviet and Chi-
nese codes, however, have adopted a compendious expression of
"fault" which probably reflects the French usage "la faute."119

Like its equivalent in all legal systems, the concept of fault is an
attempt to make an assessment of the subjective blameworthiness of
the tortfeasor's conduct according to objective standards such as the
paterfamilias or ubiquitous "reasonable person." An examination of
Chinese textbooks and cases discloses no obvious departure from
these widely accepted principles. What deserves our attention is
whether fault is an element of the tort of product liability at all.

It is clear from article 106(3) that the drafters of the Civil Law
anticipated situations of tortious liability without fault. "Where there
is no fault but the law provides that there must be civil liability, there
must be civil liability." The troubling question is how to tell when the
law provides liability without fault. Unfortunately, this is not easily
discovered through a simple reading of the tort provisions in the Civil
Law. The concept of tortious liability without fault was accepted by
Chinese legal scholars in the 1950s."2° Under the influence of the
1922 Soviet civil code, however, the scope of strict liability was lim-
ited to ultra-hazardous activities arising from technological develop-
ment, as is now set out in article 123 of the Civil Law. In later years,

117. Such a distinction is drawn in consumer protection legislation in many common
law countries. Eg., U.K. Unfair Contract Terms Act, ch.50 (1977).

118. E-g., BGB, supra note 22, art. 823; MINP6, supra note 40, art. 709; and CIVIL CODE
OF THE R.O.C., supra note 22, art. 184. These codes all separate willfulness and negligence as
elements of fault.

119. C. Civ., supra note 40, art. 1382.
120. Ma Qi, supra note 43, at 191.

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in response to Western trends towards strict liability for a wider range
of new, but analogous potentially harmful activities, Chinese legal
scholars developed a category of "special torts" (teshu qinquan
xingwei) which reversed the onus of proof or did not require proof of
fault at all. This category first included torts committed by incompe-
tents and animals, vicarious liability of the state and legal persons,
ultra-hazardous activities, and environmental pollution. 121 This pro-
vided the basis for the tort provisions in the 1982 draft civil code
which expanded "special torts" to include defamation and traffic acci-
dents. The "special torts" provisions were "special" only insofar as
they reversed the onus of proof of fault or created a type of "deemed"
fault by virtue of the unlawfulness of the activity. Nevertheless, the
general principle in the 1982 draft code continued to be one of no
liability without fault.

Product liability was only included in the category of special
torts after drafting of the Civil Law had commenced. In his speech
introducing the final draft to the National People's Congress,122 the
chairman of the Committee for Law Building Work, Wang Hanbin,
said that "in general we have adopted the principle of fault liabil-
ity ... but there are some occasions when the law provides that even
though there is no fault there must be civil liability ... ." He did not
say which provisions these are, but afterward specifically mentioned
product liability. This was most unclear and generated varying views
on how the tort provisions should be interpreted.

Seven of the twelve works surveyed for this article clearly sup-
port the view that product liability means strict liability, at least
between the consumer and the manufacturer or retailer. 23 But of the
other five, only two assert that product liability is based on fault. 24

The acid test is reasoning and the view of the majority is let down by

121. MINFA YUANLI, PRINCIPLES OF CIVIL LAW, supra note 38 at 245-49.
122. Speech by Wang Hanbin, Chairman of the Committee for Law Building Work, at

the Fourth Session of the Sixth National People's Congress, in Beijing (Apr. 2, 1986) (tran-
script on file with author).

123. See, e.g., Su CHI, MINSHI ZEREN (Civil Liability) 25-26 (1987); Lectures on the
General Principles of Civil Law (Hu Shixiang ed. 1986); JIANG, supra note 55, at 336; MINFA
JIAOCHENG supra note 38, at 449; ZHANG, supra note 73, at 20; ZHONGHUA RENMIN
GONGHEGUO MINFA TONGZE JIANGHUA (Lectures on the General Principles of Civil Law of
the PRC), supra note 55, at 218.

124. Liu SUZHEN, MINFA TONGZE JIESHUO (EXPLANATIONS OF THE GENERAL PRIN-
CIPLES OF CIVIL LAW) 419 (1987); ZHONGHUA RENMIN GONGHEGUO MINFA TONGZE
QIANLUN (Brief Commentary on the General Principles of Civil Law of the PRC) 264 (Tong
Rou ed. 1987). See also, ZHONGHUA RENMIN GONGHEGUO MINFA TONGZE ZHUSHI (Anno-
tated General Principles of Civil Law of the PRC) (Zhou Yuanbo ed. 1986); ZHONOHUA
RENMIN GONGHEGUO MINFA TONGZE PINGSHU (Commentary on Civil Law of the PRC)
(Wang Jianxin ed. 1986).

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PRODUCT LIABILITY

lack of textual support in the Civil Law itself. Wei- Zhenying, civil
law professor at Peking University, has expressed the only view in
favor of strict liability based on statutory interpretation. 1

2 Professor
Wei suggests that the Civil Law exhibits a drafting technique
whereby, in effect, fault becomes an element of the tort only if it is
mentioned in the provision, whether it is the fault of the tortfeasor,
the contributory fault of the victim or the fault of a third party. All
other provisions are based on strict liability. This is akin to expressio
unius est exclusio alterius which Professor Wei called the "exclusory
method" (paichu fangfa). Ingenious as this interpretation may
appear, it is hard to imagine a more awkward drafting technique, if
this is indeed what the drafters consciously adopted.

Other supporters of no-fault product liability refer to the policy
considerations behind the "special torts." 12 6 First, strict liability is
accepted in economically advanced countries which emphasize com-
pensation of the victim rather than liability. Second, whoever engages
in a potentially dangerous activity for profit should bear the risk of
harm caused. Third, and closely related to the second reason, is that
harm arising from this kind of activity can most easily be limited or
avoided by the tortfeasor. Finally, in these kinds of potentially harm-
ful activities fault is almost impossible to prove.

The proponents of fault liability argue that producing or selling a
substandard product is in itself negligent. 27 There is powerful logic
in this argument. In Germany, for example, jurists have recently rec-
ognized that the dividing line between unlawfulness and fault is finer
than was previously believed. 28 Of course, if the German view is
accepted, it is the defendant's burden to exculpate himself by proving
that he took all due care and/or that the plaintiff was contributorily
negligent. We shall consider the latter aspect in more detail below.

Professor Jiang Ping of the Chinese University of Politics and
Law (Zhongguo Zhengfa Daxue) takes a novel approach in arguing
that all the "special torts" provisions concern legal presumptions and
the burden of proof. Thus, he contends, product liability provided in
article 122 of the Civil Law is based on the irrebuttable presumption
of fault. He calls this "deemed fault" (shiwei guocuo) and asserts that
its effect is the same as other deemed provisions in the Civil Law. 29

125. Comment by Professor Wei Zhenying, at a private discussion with the author and
Professor Whitmore Gray, School of Law, University of Michigan (May 1986).

126. See eg., Su, supra note 123, at 26.

127. See supra LiU NOTE 124.

128. Markesinis, supra note 63, at 40-43.

129. Eg., CIVIL LAW, supra note 23, art. 66(1); Jiang Ping, Minfa Zhong de Shiwei.

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The plain language of the text does not support such an
interpretation.

So what is the answer? Fault liability? Strict liability? It should
be pointed out that it is a long way to go from no liability for substan-
dard products to strict liability. The commentary on the following
case reflects the guidance offered to the courts.

Villager Ho was building a house and to this end
purchased six concrete beams from a concrete factory. Ho
engaged a construction team to build the house and was also
assisted by his neighbor Zhou who acted as a laborer. Dur-
ing construction the six concrete beams fractured causing
serious injuries to Zhou. The accident cost Ho 300 yuan in
lost building materials. Zhou also sued Ho for 800 yuan as
compensation for medical expenses and lost earnings. The
court's investigation revealed that (1) the concrete beams
were substandard because they had not been allowed
enough time to set and (2) the construction team had not
taken proper safety precautions.

A majority of the court held Zhou and Ho were prop-
erly first and second plaintiffs respectively, and that both
defendants, the concrete factory, and the construction team,
were liable to compensate Zhou for his losses. Apportion-
ment of liability was not mentioned. 30

Commentary on the case reveals that blameworthiness is still at the
back of some minds. The fact that the concrete factory sold substan-
dard concrete beams "explains that it ignored the safety and interests
of the consumer."' 13' So, too, the construction team was at fault
because it failed to take proper safety measures. Ho was not to blame
because he was not a professional builder and could not have foreseen
that the concrete beams would fracture.

(i) Contributory Fault

In the discussion of causation above, it was noted that damage
may be attributed to several causes - such as a defect in the product
itself or misuse by the end-user. This is different from apportionment
of contributory negligence, since causation is based on objective crite-
ria and not the subjective blameworthiness of the parties. Article 131

Tuiding Yu Juzheng Zeren (Deeming Presumptions and Burden of Proof in Civil Law), 4
ZHENGFA LUNTAN 1 (1987).

130. Guo Yujun & Yang Biao, You Shui Chengdan Peichang Zeren (Who Should Bear
Liability to Compensate), Zhongguo Fazhibao, Aug. 24, 1987, at 3.

131. Id.

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PRODUCT LIABILITY

of the Civil Law provides that the tortfeasor's civil liability may be
reduced if the victim is also at fault with respect to the damage which
occurs. This odd statement of contributory fault suggests that the
drafters carefully avoided using the word "cause" and that the vic-
tim's fault and the damage are linked merely by an objective chain of
causation. They are not.

Chinese'32 and Soviet'3 3 texts show that, like fault itself, contrib-
utory fault is a subjective element of liability which measures blame-
worthiness and not causal connections. The Soviet Civil Code makes
this quite clear by providing that only the victim's gross negligence
will reduce the tortfeasor's liability. Thus, even if an act of the victim
contributes to his injury, the tortfeasor's liability is not reduced unless
the victim was also at fault, that is, in some way blameworthy for his
acts.1 4 In practice, causation and fault are often inextricable factors
in contributory fault. Nevertheless, it is not sophistry to distinguish
between them as is illustrated by the following example.

Suppose the plaintiff, an ordinary consumer, accepts delivery of a
new refrigerator. The refrigerator is installed by the deliveryman who
removes the grounding prong from the plug so that it will fit into the
wall socket, telling the plaintiff "not to worry about it." Suppose fur-
ther that the plaintiff subsequently receives an electric shock from the
refrigerator and that it can be shown that the shock was caused by a
manufacturing defect which would not have occured had the appli-
ance been properly grounded. 135  Since the appliance was not
grounded, the plaintiff has unquestionably contributed to his injury.
As to fault, however, the victim may be exonerated from blamewor-
thiness because he was misled by the deliveryman and should not be
expected to know the dangers of using appliances which are not
grounded. If, on the other hand, the consumer is a qualified electri-
cian, he is partly to blame for his injury because he should have been
aware of the danger of removing the grounding prong from the
refrigerator.

As previously mentioned, most Chinese legal scholars argue that
product liability is strict. If fault is not an element of the tort, then
what relevance is contributory negligence in apportioning the victim's
liability? If, as shown by the example above, the tortfeasor's resulting
liability may be different when one considers the subjective fault of

132. MINFA YUANLI, supra note 38, at 244-45; JIANG, supra note 55, at 332-33.
133. SULIAN MINFA, supra note 54, at 398.
134. This is the same result as under U.K. Law Reform (Contributory Negligence) Act

(1945), which requires the court "to consider not only the causative potency of a particular act
but also its blameworthiness." HEusTON, supra note 51.

135. The facts are based on Smith v. Ingalis Ltd., 83 D.L.R.3d 215 (Can. 1978).

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JOURNAL OF CHINESE LAW

the victim. Allowing contributory negligence to reduce the
tortfeasor's liability will defeat the object of setting a strict standard of
liability. 136 A number of Chinese textbooks have addressed the issue
of willful self-infliction of harm as a defense to product liability and
conclude that only where the product is willfully misused may the
tortfeasor be relieved of liability. 137

D. Procedural Issues

1. Parties

There are four possible defendants provided in article 122 of the
Civil Law: the manufacturer, the retailer, the transporter, and the
bailee. The plaintiff can elect to sue either the manufacturer or the
retailer to bear full liability for his losses. He cannot, however, sue
the transporter or bailee since article 122 provides that only the man-
ufacturer or retailer has a right to claim against the transporter and/
or bailee whose conduct has caused the substandard quality of the
goods. Action against the transporter or bailee is by way of contribu-
tion only.' 38 The right of contribution also arises between the manu-
facturer and retailer because they bear joint and several liability. If,
as in most cases, the plaintiff elects to sue the retailer, it seems that the
retailer can seek contribution from the manufacturer either by joining
him in the action or by bringing a separate action as is illustrated by
the following case:

Au-yang bought a black and white television set from
the Fengfu City Household Electrical Goods Store in Anhui
Province. Two days later Au-yang's twelve year old son
plugged it in and used his left hand to pull the TV aerial,
whereupon he received a bad electrical shock and was hospi-
talized at a total cost of more than 2,000 yuan. The electri-
cal goods store paid 800 yuan and the TV factory 400 yuan,
but both refused to bear any futher expenses. Au-yang sued

136. This is a problem which also faces the Hong Kong courts. The solution in one case
was to restrict severely the extent to which the victim's own negligence was taken into account
in reducing the tortfeasor's liability. Chung Kei v. So Yiu, 1983 H.C.A. 9864. Note also that
the defense of contributory negligence has been expressly preserved in product liability claims
under U.K. Consumer Protection Act, ch. 43, § 6(4) (1987).

137. MINFA JIAOCHENG, supra note 38, at 449.
138. This is reflected in the Supreme People's Court view on art. 122 of the CIVIL LAW:

"Where consumers or end-users themselves or third parties have sustained personal injuries or
property damage by using a substandard product, the person suffering damage can claim com-
pensation from the manufacturer or seller .... [W]here transporters or bailees are responsible
for the quality of the product, if the manufacturer or seller requests compensation for the loss
this can be handled as a separate case [or) alternatively the transporter or bailee can be added
as third parties and handled together [with the main case] art.153(2)," see supra note 94.

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PRODUCT LIABILITY

the electrical goods store for 30,000 yuan in his capacity as
guardian, but it accepted liability for only a further 500
yuan. The Fengfu Basic People's Court collected evidence.
Inspection of the TV revealed that it was substandard in
many respects and that the poor quality caused the aerial to
carry an injurious current. Therefore, the court held that
the electrical goods store was liable to compensate the plain-
tiff for'expenses totalling 6,614 yuan, and that the store
should bring a separate action against the factory for
contribution.1

39

The decision of the court not to join the manufacturer in the same
action seems inconsistent with article 47 of the Code of Civil Proce-
dure which provides that persons with coterminous rights or obliga-
tions must be joined in the same action. 40 If the manufacturer and
retailer both bear full liability for damage caused by substandard
goods, as the court suggests, then they must be joint tortfeasors who
bear joint and several liability and must therefore be joined in the
same action.14" '

There will also be some cases with multiple plaintiffs. Food-
poisoning poses a likely possibility, but as yet there have been no
reported tort cases involving food cases. China has no specific rules
on class actions, but article 47 of the Code of Civil Procedure provides
that parties with coterminous rights or obligations can entrust the
conduct of the litigation to one of their number. The acts of the
"class" representative and the final outcome of the case then bind the
whole "class". This is not quite the same as a "class action", but the
courts have developed their own means to achieve the same result as
is illustrated by the following case:

From July 1984 to April 1985 nineteen consumers each
bought a sofa-bed or spring bed from the retail outlet of the
Tianjin East Sea Cotton Furniture Factory. They were all
dissatisfied with the quality of the beds. After the factory
refused to refund the price, they brought suit in the Hexi

139. Shou Falu Zhicai (Accept Legal Punishment), RMRB. July 21, 1987, at 1.
140. Zhonghua Renmin Gongbeguo Minshi Susong Fa (Shixing) (The Provisional Code

of Civil Procedure of the People's Republic of China) [hereinafter Code of Civil Procedure]
(promulgated Mar. 8, 1982, effective Oct. 1, 1982) in ZHONGHUA RE.NMIN GONGHEGUO
FALU HUIBIAN (1979-84) (Collection of Laws of the People's Republic of China (1979-1984).
283 (1985) [hereinafter THE COLLECTION].

141. This was the result in another case where a basic level court in Jinan City ruled that
both the manufacturer and retailer of a tractor with a substandard steering rod were liable to
the driver for the injuries he suffered after the steering failed. CHINA LAw AND PRACTIcE
(May 2, 1988) at 30.

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JOURNAL OF CHINESE LAW

Basic People's Court against the furniture factory and the
business enterprise.

Investigation by the court revealed that the sofas had
not been made according to state standards. The court
mediated an agreement whereby the defendants would
refund the price to the plaintiffs and bear the costs of the
litigation.

In order to settle further disputes and avoid litigation,
the court further ordered the furniture factory to settle all
claims concerning the quality of its furniture with consum-
ers who had not yet brought suit. 4 2

Legal commentators observed that the court's order was binding on
all consumers with claims concerning the quality of furniture from
the defendant factory.'43

The emergence of Chinese consumers' associations and their role
in mediating consumer claims has already been mentioned.," The
Fujian Consumer Protection Regulations provide for consumers'
associations to bring or support suits on behalf of consumers of an
unspecified class.145 As yet, no procedural rules exist to allow this
provision to work in practice, but changes to the Code of Civil Proce-
dure are now being formulated to allow this type of class action.

It should also not be forgotten that China's Code of Criminal
Procedure allows the victim of a crime who suffers personal injury or
damage to property to bring a civil action supplementary to the crimi-
nal prosecution. 4 6 Therefore, where putting a substandard product
into circulation constitutes a crime and causes damage to third par-
ties, for example poisonings caused by fake maotai liquor, the victim's
families can bring supplementary civil actions which will usually be
heard at the same time as the criminal trial. 14 7

2. Burden of Proof and Expert Evidence

Although Chinese civil proceedings are inquisitorial with the
judges taking charge of collecting evidence, the Code of Civil Proce-
dure places on the plaintiff the burden of proving that the goods were

142. Jiang Wei & Jia Changcun, A Discussion of Class Actions (Jan. 1987) (unpublished
manuscript) (on file with author).

143. Id.
144. See supra note 30-33 and accompanying text.
145. See supra note 30.
146. Zhonghua Renmin Gongheguo Xingshi Susong Fa (Shixing) (The Provisional

Criminal Procedure Law of the People's Republic of China) art. 53 (promulgated July 7, 1979,
effective Jan. 1, 1980) in THE COLLECTION supra note 140, at 133.

147. Id. art. 54.

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PRODUCT LIABILITY

substandard and that this caused the damage. 4 Specialists in prod-
uct liability are painfully aware that proof of a defect can be a difficult
technical matter. In China, this is further complicated because, as we
have seen, liability turns on an administrative determination of
whether the product was of substandard quality. Judges are no better
qualified than the parties to make judgements about the quality of
goods and the causal link between the substandard quality and the
subsequent injury. For this reason two special procedures are avail-
able to assist the court.

The first is a form of expert evidence on the quality of the goods
in dispute. In litigation such expert appraisal of the goods may be
sought by the court according to the Provisional National Measures
for the Arbitration and Inspection of Product Quality. 149 Although
the measures originally conceived for the resolution of disputes over
the sale of industrial and agricultural products in arbitration or litiga-
tion, there appears to be no obstacle to their use in other cases where
the quality of a product is in dispute. The court sends a form to the
product quality arbitration inspection organ of the standards bureau
which then inpects and tests the product according to the appropriate
standards and issues a certificate as to its quality. Certificates of nota-
rization (gongzheng) or verification (iianzheng) are treated as prima
facie evidence in Chinese procedural law and thus shift the onus of
proof to the opponent. No law says that a certificate issued by a prod-
uct quality arbitration inspection organ is irrebuttable proof, but it
should, in practice, be even more persuasive than a notarized or
administratively authenticated statement as to quality, such as that
issued by commodity inspection authorities before the goods are put
into circulation.

Secondly, judges may call upon specialists in technical matters to
assist in deciding the question of causation. In ordinary civil proceed-
ings, at first instance, the court consists of a collegiate bench of three
persons, usually judges or assistant judges, but sometimes also a judge
and two assessors. Assessors are something akin to lay magistrates,
that is, not legally qualified but able to decide questions of fact as well
as law. Before legal education recommenced in earnest in the early
1980s there was a grave shortage of legally trained judges and the
assessor system was relied on heavily by the courts. It is still common
for minor criminal offences to be tried by a judge and lay assessors but
since amendments to the Organic Law of the People's Courts in

148. Code of Civil Procedure, supra note 140 art. 56.
149. Quanguo Chanpin Zhiliang Zhongca Jianyan Zanxing Banfa (Provisional National

Measures for the Arbitration and Inspection of Product Quality) (National Standards Bureau,
issued Jan. 31, 1985) 5 FAGUI XUANBIAN (Selected Laws and Regulations) 470 (1986).

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JOURNAL OF CHINESE LAW

1983,150 the assessor system is rarely used in civil cases. One impor-
tant exception exists in cases requiring technical expertise in which
the Supreme People's Court has endorsed the practice of forming a
collegiate bench comprising a judge and two expert assessors. 15'

3. Rights of Subrogation and Indemnity.

The People's Insurance Company's standard form products lia-
bility policy provides that an insured shall subrogate his rights to the
insurer if the latter elects to defend or settle the claim in the name of
the insured.'52 However, there is no special provision in the Code of
Civil Procedure for joining the insurer as a party to the action. The
same effect may be achieved by the insured's simultaneously bringing
of an action against the insurer for an indemnity and the court's join-
ing the two actions together under article 47 of the Code of Civil
Procedure.

III. CONCLUSION

Amidst rapid industrial development, China has recognized the
importance of product quality. Like many other aspects of economic
reform the task of raising and controlling product quality has been
left mainly to a plethora of vertically orientated administrative legisla-
tion. Some of these laws have also created civil liability in both con-
tract and tort to allow consumers themselves to redress the harm
caused by defective products. As a result, manufacturers now feel
the economic impact of producing goods of substandard quality. This
horizontal form of redress represents a significant change in China's
traditional vertically integrated economic system. The provision of
tortious liability for damage caused by substandard goods in article
122 of the Civil Law is a key to this important reorientation.

The Civil Law does more than provide a source of civil liability.
It also defines and co-ordinates liability created in many other laws
and regulations. The Civil Law must, therefore, be read together with
other legislation concerning product liability, such as, the Product
Quality Liability Regulations.

Product liability is a new topic of study and legislation in China.
In this respect the Civil Law is innovative rather than merely the con-

150. Quanguo Renmin Daibiao Dahui Changwu Weiyuanhui Guanyu Xiugai
"Zhonghua Renmin Gongheguo Renmin Fayuan Zuzhi Fa" de Guiding (Amendment to the
Organic Law of the PRC People's Courts by The Standing Committee of the NPC) in THE
COLLECTION, supra note 140 at 477.

151. See MINSHI ANJIAN (Civil Cases) 160 (Peking University Law Department Mated-
als Section ed. 1981).

152. See H. ZHENG, CHINA'S CIVIL AND COMMERCIAL LAW 153 (1988).

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PRODUCT LIABILITY

solidation of previous practice. Thus, there are many questions which
have not yet been definitively examined in the law and commentaries,
such as, liability without fault, recoverability of pure economic loss,
contractual exclusion of product liability, and the rights of unborn
children. Many of these issues overlap with tortious liability in gen-
eral, and some guidance may be found in comparing China's princi-
ples of tort with other civil law systems such as those of Germany,
Taiwan, and the Soviet Union. The Civil Law and the scholars who
interpret it will not have the final say on product liability in China. It
took a giant step to create strict liability where there previoiusly was
little or no liability at all and, ultimately, the final say will lie in future
Chinese practice and the continual development of product liability
legislation.

APPENDIX
DRAFT ARTICLES ON PRODUCT LIABILITY

1 5 3

1. GENERAL PRINCIPLES OF CIVIL LAW OF THE PEO-
PLE'S REPUBLIC OF CHINA (DRAFT FOR COMMENTS)
October 15, 1985.

Article 91J

Where because the quality of goods do not conform with
provisions damage is caused to the person [or] property of
another, the manufacturer [and] seller who knows [of the
substandard quality] must bear civil liability.

Article 102

The period of limitation for civil suits arising from the
following acts or events is one year:
1.
2.
3. a suit for damage to person or property brought about
by food poisoning, drug poisoning, product liability accident,
industrial injury or other reasons;
4. ...

2. DRAFT PRESENTED TO THE 13TH SESSION OF THE
STANDING COMMITTEE OF THE SIXTH NATIONAL
PEOPLE'S CONGRESS by Wang Hanbin,
November 13, 1985.

153. The English is, as far as possible, consistent with the translation by Gray and
Zheng, supra note 23 (emphasis added).

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JOURNAL OF CHINESE LAW

Article 97E

Where because of the question of quality of goods dam-
age is caused to property or person of another, the manufac-
turer [and] seller must bear civil liability.

Article 108

(see Article 102 above)

Article 125

[In cases of] product liability, the law of the producer's
domicile applies.

3. DRAFT DATED February 20, 1986.

Article 126J

Where because of the substandard quality of goods
damage is caused to the property or person of another, the
manufacturer and seller of the goods must bear civil liabil-
ity. Where transporters [and] bailors are responsible for this
[damage], [they] must also bear civil liability.

Article 135

The period of limitation for the following lawsuits is
one year:
1. • .•

2. A suit [based on] sale without notice of products of sub-
standard quality;
3 .

4.
5..

Article 145

Where because of the substandard quality of goods
damage is caused to the property or person of another, the
law of the domicile of the producer of the goods applies;
except where the contract specifies otherwise.

4. DRAFT PASSED BY THE 15TH SESSION OF THE
STANDING COMMITTEE OF THE SIXTH NATIONAL
PEOPLE'S CONGRESS dated March 8, 1986.

Article 121

Where because of the substandard quality of goods
damage is caused to the person of property of another, the

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1988] PRODUCT LIABILITY 321

manufacturer and seller of the goods must bear civil liability
according to law. Where transporters and bailors are
responsible for this [damage], the manufacturer and seller
have the right to demand compensation for loss.

A-rticle 135

(see article 135 above)

Article 146

(see article 145 above)