The Return of Zheng He? An Assessment of Chinese Sovereign Wealth Fund from a Law & Development Perspective

Abstract

This paper addresses People’s Republic of China (PRC) participation to the international economic order by focusing on its sovereign wealth fund (SWF), China Investment Corporation (CIC), in order to assess whether PRC attitude towards law is heavily skewed towards the unique goal of economic development – whether this law is domestic or international. After providing an overview of the phenomenon of SWFs as a whole and a description of the most significant features of CIC, the paper puts the latter in the broader context of the sweeping economic and legal reforms carried out by PRC in the past thirty years in order to show the mission CIC has been entrusted and the legal tools it has been endowed to that end. I endeavor to show that, just like PRC has successfully built ex novo its domestic legal system with the purpose of promoting economic growth, the same behavior is traceable also for international law, once the ‘domestic use’ of international legal order by PRC is recalled. With some caveats, the specific issues posed by CIC as SWF seem to be another proof of this general finding, once the possible short-circuits within international legal order affecting SWFs are considered. As a matter of policy, it is advisable that any response by recipient countries of CIC investments to any perceived ‘threat’ from them insist on international cooperation with the sponsor State, better bilateral rather multilateral, especially for the US. This concerted response is necessary not only to make it effective dealing with SWFs issues generally but also to avoid dangerous backlashes that could jeopardize Chinese economic growth and, as a repercussion, U.S. and global economic outlooks alike.