Chinese civil law qualifies a party as a natural person if they are a biological human, and categorizes them further into Chinese citizens, foreign persons, and stateless persons This separation is important as it is distinguished from citizenship since naturalization is not required.

Parties that are Natural Persons

Family Proprietorship

China’s family proprietorship system was initially developed in the early 1980s to transition away from the collectivized commune economy. Individual households of natural persons may legally register to do business as a family proprietorship, and any individual over the age of 16 able to work may register a family proprietorship. When an entire family files for a family proprietorship, only the head of the household needs to have the ability to do work; other family members are exempt. Registering a family proprietorship also gives natural persons rights to property and its proceeds, in addition to the right to enter into contracts and undertake obligations.

Farm Operators

A similar registration type is that of Farm Operator, which was another legal registration used to de-collectivize agricultural land. Early on, a Farm Operator would have been a commune family who signed a Farm Operating Agreement in a manner similar to a family proprietorship, granting all rights to the use and profits from collectivized rural land.

Comparative Law

Empowering natural persons to carry on business in China was a step taken very suddenly in the early 1980s during a consolidated reform action. Historically, the emphasis on natural person business operators was on rapidly enabling households to independently engage in economic activity, thus households were registered as family proprietorships and farm operators. Laws governing entities and sole proprietorships were passed later, which is to say that family proprietorships preceded sole proprietorships in the PRC. In the United States and elsewhere, natural persons operating as sole proprietors will typically use a “doing business as” registration, whereas, in China, the d/b/a registration is handled through the business registration itself. Thus, in a lawsuit against a Chinese natural person proprietorship, the natural person, rather than an entity, is the named party.

Further Reading

See our comprehensive resources on China’s Foreign Investment Law. and an overview of FDI regulation in our Foreign Investment Law FAQ.

Translation methods

See: 自然人