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compulsory implementation has been its only means of realization. In such a system, [the] individual is but a screw in a machine, which is the state, and loses all its originality and creativeness. The basic ethics required in such a system is obedience. In the market system, which is a result of continuous development of equal exchange and division of labor, the fundamental logic is free choice and equal status of individuals. The corresponding ethics in [the] market system is mutual respect, mutual benefit, and mutual credit.

Understanding those differences is the first step in China’s long-march to ‘‘market Taoism.’’

Although China has yet to accept the rule of law, a legal system is emerging and property rights are beginning to be respected. Informal codes of business behavior are being adopted to better serve consum- ers and to improve the efficiency of exchange. The opening of the legal system is important because it paves the way for the transition from ‘‘rule by law’’ to ‘‘rule of law.’’ Marcus Brauchli (1995: A1) of the Wall Street Journal writes,

The state’s steel-clad monopoly on the legal process, which makes the courts just another arm of government, is corroding. China’s economic liberalization . . . has spawned a parallel legal reform that raises the prospect of rule of, not merely by, law.

Princeton University professor Minxin Pei (1994, 1995) argues that the gradual development of China’s legal system toward affording greater protection for persons and property, the growing indepen- dence and educational levels of members of the National People’s Congress, and the recent experiments with self-government at the grassroots level will help transform China into a more open and democratic society. He points to the upward mobility of ordinary people, occasioned by the deepening of market reform, and to the positive impact of China’s ‘‘open-door’’ policy on political norms. In his view, public opinion and knowledge of Western liberal traditions, such as the rule of law, ‘‘have set implicit limits on the state’s use of power’’ (Pei 1994: 12).

People are beginning to use the court system to contest government actions that affect their newly won economic liberties. According to Pei (1994: 12), ‘‘The number of lawsuits filed by citizens against government officials and agencies for infringements of their civil and property rights has risen sharply, and an official report reveals that citizens have won about 20 percent of these cases.’’

Anyone who has visited China’s booming coastal areas and new urban centers, such as Shishi in the province of Fujian, can see firsthand the transformation of economic life that is occurring every


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