Walter Hutchens’ Blog

This is an exciting development: a US-style law school in China.

According to reports they’ll teach in English, have already hired a highly-experienced US dean and will seek ABA accreditation.

I have a coffee-table book with photos of campuses of Western-affiliated universities established in China before the founding of the “new” China in 1949. Instiutions like St. John’s in Shanghai and the Suzhou law school produced generations of multi-lingual, multi-cultural Chinese elites before the Communist revolution. After 1949, the property of these universities was nationalized, their foreign faculty and staff shown the door and some of their graduates were tortured during the ensuing tumults (such as the anti-rightist campaign and the Cultural Revolution). The re-establishment of foreign-styled educational institutions in China suggests a promising reemergence of that pre-1949 lost world: a nascent globally-integrated, progressive and modern China. The new and improved version will lack the colonial, imperial and chaotic historical context of the earlier efforts but one hopes retain the pluralism and classical values inherent in western-style higher education. The phenomenon could also show how “open” things have become in China during the reform era. The very idea of an educational institution teaching foreign material in a foreign style to PRC nationals would have been perposterous even in the early 1990s. Now someone is creating a US-style JD program in China. Wow!

One wonders, though, how the economics will work out. Using foreign professors, administrators and teaching materials will be quite expensive. Conversely, the number of high-paying jobs available for graduates—especially those in the Chinese offices of foreign law firms, which is identified as a target market—is small, though probably growing. Prospective students may be reluctant or even unable to afford the tuition in this new school if the model is to cover those costs through tuition. It may not make economic sense for them to pay high fees for only a small chance at a wage sufficiently high to offset those costs.

As I’ve opined before, this is a general conundrum of offering educational programs in China: often they use expensive foreign labor which essentially reverses the model that China has exploited to become an export juggernaut. The conventional model is to make things with cheap Chinese labor and sell them in comparatively high-priced export markets. But in these programs the selling of educational services is done within the Chinese local economy while a good bit of the labor will apparently be imported from high-wage economies. That will make things tough.

Thus, it is clear there is foundation money behind this. I know if I was on a government or foundation board looking to promote the rule of law or other changes in China, I’d be in favor of supporting US-style legal education within China. Assuming current donors remain like-minded, that could set aside the school’s cash flow concerns, at least initially.

However, there will still be other challenges. It seems likely that sooner or later China’s political system and political norms will create friction with the values and practices that inform a “US-style” legal education. The faculty in this new program may be teaching “international” or “comparative” law, and that is not especially “sensitive” in China because there’s no assumption those models are superior or appropriate for China (in fact, the common assumption is the opposite). It is no secret in China that foreigners do things differently—elections are reported on, books with descriptive accounts of foreign legal systems are readily available. But will PUSTL faculty really want to limit themselves to narrow technical issues and forego normative critiques of the PRC legal and political system? Will they leave unspoken the whole issue of how PRC models do or should compare to the foreign models being examined? Will they hold open discussions about the status of Taiwan under international law? The reasons for endemic corruption in China? Why many Tibetans are unhappy with PRC rule?

If I was on an ABA review panel I’d be extremely cautious about accrediting a law school in a jurisdiction where free speech and academic freedom are formally constrained the way they are in China.

If one is selling carbonated beverages or fried chicken (and maybe even education in some disciplines—I recall one program that offers a US degree in turf management in China!), you might set aside concerns about political freedoms in China, thinking such difficult matters are 1) irrelevant to the task at hand and 2) likely to evolve favorably over the long run. However, if you are trying to produce legal professionals—zealous, tough-minded advocates trained to challenge government authority in pursuit of clients’ interests and broad notions of justice—then the fundamentally illiberal nature of China’s political system will inevitably become, ah, challenging.

There is also a PRC regulatory “back story” I’d like to know more about. The school will, under current Chinese rules, need to be 1) legally a PRC entity, 2) a joint venture (with lots of levers of control held by the Chinese partner and Chinese regulators) or 3) something outside of the current regulatory framework, which would I assume require State Council approval. I am aware of no other basis under Chinese law for a foreign university to recruit students in China or offer degrees beyond these three options (and even option number three is a supra-legal one, an option I imagine based on my understanding of China as a rule-by-law administrative state rather than any explicit loophole in existing laws). How will this be legally structured? If it is a PRC entity (which seems most likely), then donors (and perhaps employees) will indeed be working as venture capitalists, putting resources into a high-risk endeavor that might offer beautiful returns or might wipe out the investment.

All that said, I’d be interested in teaching in a program like the one being established, if only to see how these issues play out in practice. But I doubt finding qualified faculty will be their biggest challenge. Though there are not legions of US lawyers (or legal academics) who probably want to relocate permanently to China, there are legions of unhappy lawyers in the US, so if they show up at the AALS “meet market” they can probably find some willing teachers. Moreover, there are no doubt many retired judges and law professors (and law professors on sabbatical or with a year’s leave) who would love to spend a semester or longer teaching and touring in China. So hiring professors, at least on an ad hoc basis, will probably not be their biggest challenge.

In any case, Godspeed PUSTL!

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The first class will be enrolled in the southern city of Shenzhen, though the program is affiliated with Peking Univ. which is based far to the north in China’s capital. The weather is nicer in Shenzhen, but I imagine the location is driven more by the idea of putting “experiments” far from the political center. Shenzhen was one of the first special economic zones; maybe SEZ now also means “special education zone?”

National Law Journal report.

Wall Street Journal report.

Dean Lehman.

Chinese language press report.

Inside Higher Ed report.

School of Transnational Law Homepage

Good story.

The CNBC announcer interviewing Jim Cramer today made a bone-headed comment. Cramer said it’s a good idea to buy YUM as a China play. That’s true. Cramer then said KFC’s business in China probably won’t be, as some imagine, dramatically affected by rising oil prices. The announcer then chimed in in agreement, observing that oil prices are controlled in China, which Cramer echoed.

Yeah, oil prices are government-controlled in China and haven’t risen as much as they have elsewhere, but that has basically nothing to do with customer “traffic” in China. I’ve visited I suppose a score of KFC’s all over China; I’ve never seen one with a parking lot! PRC customers walk in to the restaurants.

Rising oil prices might affect KFC’s shipping costs (and indirectly show up in their cost of ingredients and other materials), but that wasn’t the context of the exchange. Crammer was disagreeing with the idea that “people” go to KFC less when oil prices rise—not true in China, he and the host agreed, because of the price controls.

I’ve been bullish on YUM because of its China business for a while (as have many others), so Cramer’s general notion seems right to me, even though one of the rationales proffered on CNBC to support the thesis seems mistaken.

In fairness, China’s control over oil prices was not the main rationale being offered in support of the “buy KFC” thesis—Cramer correctly observed that the Chinese are eating more protein, that KFC is perceived as a safe, quality provider and that YUM has a CEO that “gets” China.

Cramer is one of those people whose frenetic, megalomaniacal style affects people differently. I’ve read a couple of his books and learned some interesting things from them (and was entertained by some of his stories—I recall one about how he made his first bundle by acting on information he got from an antitrust professors in law school—wish I’d found that method for paying off my student loans!). Cramer’s shenanigans on CNBC are often entertaining, and his financial website The Street has helpful information. But on this point—that KFC’s customers in China will be resilient because oil prices are controlled in China—CNBC is simply suggesting nonsense.

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Comment as reported: Because gasoline prices aren’t rising in China, the consumer is not going to stop eating KFC over there, Cramer said.

Video of the exchange.