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The Chinese system of interpreting laws

On Behalf of | Mar 25, 2024 | Business Law

In the United States, the judicial system provides checks and balances to the legislative branch of government. Part of this process includes having federal and state courts interpret laws.

In China, the National People’s Congress Standing Committee decides how to apply pieces of legislation. The process is notably different than what most Americans have experienced.


The NPCSC is a permanent body of approximately 170 members, elected by the National People’s Congress. This group enacts the majority of China’s national laws and oversees other governmental bodies. The NPCSC has the authority to interpret national laws, appoint or remove top officials, ratify treaties and more. It meets around 350 days per year, acting as China’s de facto national legislature when the NPC is not in session.

Law interpretation

The NPCSC interprets laws through a process outlined in the Legislation Law of the People’s Republic of China. It exercises its power when the specific meaning of a provision needs clarification. This situation often occurs when new circumstances arise in which the law is applicable.


The Council of Chairpersons, a key NPCSC body, sets the NPCSC’s agenda, determines session length and decides when to put bills to a vote. The NPCSC’s decisions on politically sensitive issues are often unanimous, reflecting the party leadership’s influence.

Other roles in the legislative process

The NPCSC also has the power to do the following other things:

  • Amend the constitution
  • Enact important legislation
  • Approve the central government’s budget
  • Ratify plans for national development

While the full NPC rarely votes against items on its agenda, the NPCSC may amend bills before the final vote. The Communist Party leadership’s instructions guide the NPCSC’s decisions, especially under Xi Jinping’s leadership.

The Chinese system of interpreting laws can have a significant impact on U.S. businesses operating in China. It can influence many issues, including their compliance, legal certainty, dispute resolution, regulatory environment and cross-border transactions.