In the United States, we tend to take our problems straight to the top. It's easy to imagine a situation where the frustrated American issues the direction, "I want to speak to your supervisor." But when one sits across the table from the Chinese government, such a strategy may yield less certain results.
The Chinese government is really nothing more than a structure imposed upon Chinese society to legitimize rule by the Community Party. Theoretically, it operates with the National People's Congress [NPC] wielding the bulk of the power. From this body the Standing Committee is selected, which runs the show when the NPC is not in session (i.e. most the time.) Together, these two bodies produce the Codes that compose Chinese law. Since China followed the Continental tradition, rather than the Common Law tradition, case law is less important for future litigants than are the Codes generated by the NPC and the Standing Committee.
Under the previously mentioned faces of the legislative branch is the judiciary and the State Council, or executive branch. That annoying gap between theory and practice rears its ugly head regarding the executive branch. Theoretically, the executive branch is headed by the Premier (currently Wen Jiaboa,) while the President (currently Hu Jintao) holds a more ceremonial role. But here is an illustration of why squeeking to the apparent big cheese for grease may prove fruitless.
It is not uncommon in Chinese government, centrally, provincially, and locally, for those that are "officially" the bosses to be subordinate to their "official" employees. This occurs where the boss' rank in the Party is lower than that of his/her employee. Case in point: Wen and Hu. As discussed above, Hu holds a lower official position in government than does Wen. But Hu is not only President of the NPC and China. He also holds the influential positions of Party Chair and Chair of the Military Council. Thus, the widely held understanding of Hu as the leader of China, rather than his "official" boss, Wen. This points to the fact that the government is merely a structural legitimation for Party rule.
The pheonomenon is mirrored at provincial and local levels. There, too, higher "offical" status is not necessarily indicative of access to the levers of power. These are the more applicable levels of confusion for foreign bussiness people in China, provincial and local government being more accessible than Wen and Hu (unless you're Bill Gates or, maybe, Bates Gill.)
This dilemma, like that arguably facing intellectual property rights in China, illustrates the cultural transition that globalization and pragmatism are forcing upon China. Up to at least 1979, China had spent millenia in a system of rule by law, where laws were merely binding decrees made by the emporer/dictatorship. This method of governance was furthered through the Confucian tradition of hierarchical living, wherein the Emporer, husband, and father were the supreme authorities over their respective realms. Now, continued economic growth via foreign investment requires at least the impression that China is moving to a system of rule of law. Rule of law, as in many developed countries, operates to protect the people from not only each other, but from unjustified governmental meddling.
Such limitations on the rights of government in the interest of citizens, are utterly alien to the Chinese legal tradition, as demonstrated by recent arrests of prominent human rights lawyers, continued last weekend. It is this legal tradition that is central obstacle to doing business in China. As stated time and again by China Law Blog, it is not that China is deprived of laws; China is over-regulated, on the books at least. This dearth of laws, all supplied by the NPC, the Standing Committee, and their local counterparts, often presents investors and consultants with a Catch-22: do I follow this regulation, acting contrary to that one? Or vise versa? In the case of local or provincial regulations contravening central regulations, this puzzle is especially troubling. It may be impossible to get one's investment off of the ground without kow-towing to local or provincial officials. But, theoretically, central authority trumps regional regulations. So where the two conflict, a perfect world would have the central regulations be binding, and the regional ones fall by the way side. Enter the judiciary...
Unlike many countries, China does not permit judicial review of the actions of other branches of government. Thus, the Supreme People's Court has not the authority to declare executive or legislative acts unconstitutional. Also, the judiciary may not invalidate regional rules contradicting those of the central government. So in the case mentioned above, the investor is forced to either walk away from insurmountable regional laws, or violate central laws and pray to the gods that they don't care to notice in Beijing.
Without authority clearly in the hands of any given player, investment continues. And absent any remedy for those deprived of private property due to the regional/central rock-and-a-hard-spot, growth persists on the fuel of foreign currencies. Only when one begins to realize the depth of challenges facing foreign investors in China, can one truly appreciate the degree of opportunity presented by Chinese markets. We can only hope that the inescapable temptation of investing in Chinese markets does not prove like the Sirens' song. At least we can rest assured than no matter what happens, we'll all need lawyers.