China and International Investment Law

Abstract

International investment law (IIL) is an attractive subfield within international economic law (IEL). China and Chinese investors are important actors in international investment law and process. With the rise of China, its influence on international investment law and governance is also growing. Since its reform and opening-up, China has been one of the most popular destinations for foreign direct investment (FDI), and since 2008, China has gradually become one of the largest overseas direct investment (ODI) countries. China is an active participant in the international investment regime and has concluded more than one hundred international investment agreements (IIAs), including more than ten free trade agreements (FTAs) with investment chapters. Chinese IIAs have experienced important shifts from the conservative IIAs providing limited investment protection, to the liberal IIAs providing high-level investment protection in the early 2000s, and then to the balanced IIAs protecting investment while safeguarding the regulatory rights of the host state. China has been respondent only in a few investor-state dispute settlement (ISDS) cases. China has also been participating in the ISDS reform process through its IIA practice and at the UN Commission on International Trade Law (UNCITRAL) forum. With the paradigm shift from the liberal IIAs to the balanced IIAs in IIL and the implementation of the Belt and Road Initiative (BRI), China has also been updating its old bilateral investment treaties (BITs) and participating in international investment governance reform. For example, China played the leadership role in the adoption of the G20 Guiding Principles for Global Investment Policymaking in 2016, and, more recently, the negotiations on the agreement on investment facilitation among World Trade Organization (WTO) members. At the domestic level, China has been constantly improving its FDI and ODI laws and system. For example, China adopted the negative list model for foreign investment admission in 2013, and formulated the new and united Foreign Investment Law. In recent years, Chinese investors have been actively participating in international investment arbitration. In international investment law and practice, China has faced many unique or special legal issues nationally and internationally, such as national security screening, transnational investment subsidy, state-owned enterprises’ overseas investment, the applicability of Chinese BITs to Hong Kong SAR and Macao SAR, restrictive arbitral jurisdiction provisions in old Chinese BITs, the role of labor provisions and sustainable development provisions in IIAs, the impact of the China-US trade war on IIL, compulsory technology transfer, the state capitalism debate, the BRI investment dispute settlement mechanism innovation, and the impact of the BRI and even the Chinese Model on the global economic legal order. China’s international investment law and practice and its role in the global economic order have attracted many legal scholars and practitioners both from China and from other countries. Since the 2010s, the study of the interaction between China and IIL has grown rapidly, and much academic literature on this subject has been produced.