This dissertation is a study of the changing Chinese legal system within the scope of the political economy, especially after 1978. It is designed to study both substantive changes in the legal system, and more importantly, to gain a better understanding of the economic, political, and essentially legal changes in China within the global context. In addition to historical analyses of changes at the economic, political-legal, and social levels, special attention is given to crime and punishment functions of the legal system, and the current judicial system based on a field research, i.e., court observations in both Beijing and Chengdu. Even though the legal system has been strengthened in the last 20 years, China has witnessed an increasing crime rate, mainly due to increased social-economic stratification, fading moral values, and the communist ideology. The court system has been in a process of systemization, both internally and externally, seeking more power and relative independence. However, traditional influences, such as preference of mediation (over litigation) and substantive justice (over procedural justice), and lack of respect (from the masses) and guaranteed power (from the political structure), still have major impacts on the building and operation of the judicial system. Finally, the study of Chinese legal and political reform has to be examined within the global system. The increasing integration of the Chinese economy into the world-economy system further brings dramatic changes at home. The Chinese government is playing the globalization card to facilitate economic development and to utilize both economic and legal changes to strengthen its political and social control.