Looking back at the last three decades of reform and opening up in China, many components of this process can now be examined in an attempt to ascertain what part they have played in the country's political, social and economic growth. Rule of law and a harmonious society are some of the issues at stake. Professor Jiang Ping, former President of China University of Political Science and Law, discusses these and other areas of reform in an interview with China Economic Weekly.

From a legal perspective, what do you think of China's current market order?

Jiang Ping: In my opinion, a market-related legal system is mainly composed of two parts: one is about rights and the other is about order. From the perspective of the role of state power, the two have different natures.

As for issues concerning market rights, the state should minimize its interference, so that the major market players can enjoy more freedom. On the contrary, the state should interfere more in the establishment of the market order, as without its support, problems would arise.

Freedom and order are the fundamental factors for the construction of a market economy, but China lacked laws in these two areas, and as a result there was a lack of necessary market freedom and market order.

As for the legal system for market freedom, the situation has become very promising. Market freedom mainly refers to rights that free up four areas, namely, property rights, creditor's rights, equity rights and intellectual property rights. China has formulated relevant laws in place for these four categories--Real Right Law, Contract Law, Company Law and Intellectual Property Law, which have contributed to a vastly improved Chinese legal system.

Apart from market freedom, we should have a look at market order. It is widely recognized that China is among the countries of worst market order. According to statistics from the China Association of Small and Medium-sized Enterprises, although China is among the fastest-developing economies, its market order ranks behind the 120th place on the world list. Problems with China's market order are obvious.

The market order is disturbed by three problems: fraud, bribery and monopoly. Business fraud includes such problems as bad credit records and substandard products. This problem is now very serious in the Chinese market. The Chinese Government has already started to deal with problems like false and fake commercial information, poor quality of medicine and food, with tough measures.

Second is commercial bribery, almost a hidden rule in China, which exists in almost every industry. Therefore, it is a huge tumor that plagues China's market order and one the government is tackling with vigor.

Third is industrial monopoly. A market economy is based on free competition that excludes monopolies. Currently in China, such industries as petrol and electric power are most typical to this problem.

Do you agree that inequality is one of the most serious challenges to the development of market economy in China?

Improved laws help a lot to solve problems in terms of market freedom, but in-depth conflicts between legislation and reality as well as between legislation and reform remain. The uneven development level between China's rural and urban areas is particularly striking. The market economy values equality and it is expected to solve three major problems concerning equality.

The first equality refers to that between China and other countries, in terms of the legal status between Chinese investors and business operators and their foreign counterparts. This problem has been basically settled since China's WTO accession.

Second is the equality between the state and individuals as well as between state-owned and private enterprises. This problem has been resolved thanks to the Real Right Law.

Third is about the equality between rural and urban areas.

Speed and order are two crucial factors in the development of a market economy. There was an imbalance in development between these two factors in the past. How can a balance be struck between the two?

When I mentioned the order of a market economy above, I also mentioned business fraud, commercial bribery and industrial monopoly. More extensively, there are also problems in relations between economic development and resource distribution, environmental protection and realization of market equality. If we focus too much on economic growth, an imbalance between them will take place.

In some areas, the construction of a market economy sometimes needs the invisible hand of the market and in some other areas state power is necessary. In China, the situation is that state power is inseparable from the market, but this power alone won't work. How to separate the functions between the market and the government? When it comes to market freedom, the invisible hand should dominate, while in maintaining market order, the government should do the work.

What are the biggest achievements in building China's legal framework in the past two decades?

I believe the success of China's reform and opening up is attributed to the combination of market economy and rule of law, neither of them separable.

According to Professor Wu Jinglian, an eminent economist at the Development Research Center of the State Council, a leading think tank for the Chinese Government, in the past, most Chinese economists held the belief that once China set up a market economy, all problems would be resolved. However, the market economy is not a panacea, as there are good market economies and also bad market economies. What is the criterion for good or bad? It is the strict rule of law.

Thus, economists believe that without the rule of law, a market economy cannot operate effectively. Because of the lack of a complete legal system in quite a long time in the past, at the beginning of reform and opening up, legal experts had a naïve belief that once laws were established, all problems would disappear. But later it was revealed that laws could have positive or negative effects. The rule of law is good, but the establishment of laws will not ensure the rule of law. I believe what we are searching for is a market economy based on the rule of law.

Therefore, the fundamental problem in China's rule of law is to draw a clear line between state power and people's rights. It's also important to ensure the legal use of the state's power, to bring it under control and to make sure that it protects people's rights.

What do you think is at the core of rule of law?

The core of rule of law covers human rights, democratic systems, and how to ensure the harmony between state power and people's rights. State power is not allowed to violate people's rights and vice versa.