Chinese traders take on the state

IN THE covered alleys of Qingdao's Jimo Lane market, a legal revolution is afoot. Furious at the local authority's attempts to squeeze more money out of them, more than 500 private stallholders and shop-owners in this booming port on China's east coast have sued a local government office.

In a country where the state judicial system is at best undeveloped and at worst far from impartial, mounting a class action against a government office is uncharted territory. Lawyers in Qingdao said this was only the second time anyone had sued a government department. With so many plaintiffs involved, the suit has become a test case for the rights of the city's growing private businesses.

Sitting in her small clothes-shop in Jimo market, surrounded by tailors' dummies, Fan Hongguang explained: 'The northern district branch of the Industrial and Commercial bureau has offended the legal rights of the getihu (private business-person).' Ms Fan is typical of China's assertive new entrepreneurs. She was sent to work in the countryside during the Cultural Revolution, returned to Qingdao in 1981, resigned her government job, and set up as a getihu selling clothes. She was not nervous about going to court 'because we are optimistic . . . This is a famous market, and many people are interested in the outcome because it may affect their own situation'.

Across China, the absence of a legal framework gives local cadres sweeping powers to implement new regulations with little fear of court action over breach of contract. The Jimo market traders' complaints started in May, when their local office of the Qingdao Industrial and Commercial Bureau suspended the stall-holders' licences and said they would have to sign new rent contracts, apply for new business licences, and pay a 720 yuan ( pounds 55) facility fee each, equivalent to several weeks' profits. Anyone failing to do so in time would have his or her stall taken away.

The stall-holders, who mostly sell cheap clothes and household goods, were enraged. Just months before, in October 1993, they had secured new licences from the bureau that were supposed to run until 1997. Su Yicheng, another stall- holder, said: 'China is becoming a lawful and legal country. So after studying the laws, we tried to find a way to act for ourselves.' Some 516 private traders approached the Pengcheng Law Office and sued the bureau, demanding 800,000 yuan ( pounds 60,000) in compensation.

The Pengcheng Law Office (the name means 'bright future') is another illustration of how China's judicial system is evolving, albeit slowly. It was set up as a co- operative in March by more than 10 lawyers, many only in their twenties, who had previously worked for the government law office. The firm specialises in economic and business law.

About a dozen law co-operatives have recently been established in Qingdao. Sun Piwu, 27, vice-director of Pengcheng, said: 'It is getting easier to sue a government department, especially now that people are more used to the idea of the rule of law. We expect more and more cases like this will come to court.'

The case was finally heard on 25 August before three judges in the Qingdao Intermediate Court. Five representatives, including Ms Fan and Mr Su gave evidence for the getihu. Now everyone is waiting for the judgment.

The question is, do the stall- holders have any chance of winning? According to Ms Fan: 'It is possible to win, but we are prepared for any result. If we win, it is the law's victory. If we lose, we do not lose face because we are practising the law.'

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