On the Moral Principles of Contract Ethics

In China contract ethics has gained paramount importance with the development of the socialist market economy. Before, in the planned economy, the enterprises didn’t have to be concerned with contract ethics because they only had to execute the instructions of the central government. Contracting policy has now been gradually introduced and is becoming popular. However, simultaneously, the phenomena of not honoring one’s promises and of breaking one’s contracts have spread widely. According to the (incomplete) statistics of the Chinese Ministry of Industry and Commerce, in 1998 the courts tackled 2,890,000 cases nationwide involving creditors’ rights and repayments of debts, estimated at 51 percent of all cases in China. The overdue funds between enterprises in China have reached more than 5 percent of the whole trade volume, compared to only 0.25–0.59 percent in fully developed market economies. While domestic enterprises have annually drawn 4 billion contracts, the ratio of fulfillment has been far below the average level in developed countries. Unsurprisingly, this has aroused substantial concern of high-ranking officials in China’s provincial and municipal governments. And the report of the country’s Tenth Five-Year Plan explicitly stated that “we will make tremendous efforts to tidy up and regulate the market order, reinforce the market system, consolidate trustworthiness and establish a system of confidence.”