China's Civil Code

Since the first national civil codes were enacted in the 19th century – beginning in France and followed by the German Empire and Japan – there were already efforts in China under the Qing Dynasty to develop a corresponding national set of rules. Due to the political upheavals, however, this did not happen, and even after the founding of the People's Republic, other priorities initially existed. 

With the policy of opening up the country from the late 1970s onwards, extensive legal regulations in civil law became necessary, although mainly specific laws were enacted in various areas of civil law (e.g. General Principles of Civil Law, Law on Contracts, etc.). Plans to develop a uniform civil code had therefore been in existence for some time, which have now been realized.

The new Civil Code contains more than 1,200 articles, making it the most comprehensive law ever passed in China. It initially combines a number of existing single laws into one law, but also contains a number of new provisions.

The CC is divided into seven books. 

The CC is concluded with transitional and final provisions.

Not only does the CC regulate the basic legal norms for civil and commercial matters, it also strengthens the protection of the personality rights of the individual, such as the right to privacy and personal information.

In the course of the adoption of the CC, a large number of specific laws have been abolished. These include the General Principles of Civil Law, the Contract Law, the Laws on Marriage and Inheritance as well as Adoption, the Law on Rights in Rem, the Guarantee Law and the Law on Tort Liability.

In particular, the books of the CC concerning contracts and property can, under certain circumstances, have a significant impact on foreign parties operating in China. For example, in the Contracts book, further provisions on special contracts such as factoring, guarantee contracts, property management contracts, but also on partnerships, were introduced. Of further great importance are the provisions relating to e-commerce and related contracts. In the area of property, there are new regulations regarding mortgages and pledges.

Another issue of importance is now likely to be the codification of "change of circumstances" (most comparable to a disruption to the business foundation). In particular, during the COVID 19 crisis and the legal problems caused by disruptions in supply chains, etc., and the invocation of force majeure and change of circumstances in particular, numerous legal disputes arose. In this respect, the corresponding legal regulation on the change of circumstances, which was previously only addressed in a corresponding Interpretation of the Supreme People’s Court on the contract law, can now provide more legal certainty.

The CC serves in particular to clarify and regulate the legal relationships of natural persons and is intended to establish corresponding rights and obligations in this area, which in the past was often characterized by uncertainty. The codification of rights and obligations will not only create more legal certainty but also create more impetus for the private sector.

At the same time, the provisions on contracts and property in particular have an impact on foreign invested companies. For this we will go into further articles on individual aspects of the legal changes and new regulations and explain the effects.

In view of the large number of innovations in the CC, we assume that further provisions such as introductory regulations, interpretation rules, etc. will be released in the near future. As usual, we will keep you informed about these in a timely manner.