Why did China seldom claim? : Overseas investment and bilateral investment treaties

• Main Author: Chen, Jiaxin
• Other Authors: -
• Format: Thesis-Master by Coursework
• Language: English
• Published: Nanyang Technological University 2021
• Subjects: Social sciences::Political science
• Online Access: https://hdl.handle.net/10356/148636
• Institution: Nanyang Technological University

Since the reform and opening up, China has utilized favorable investment policies and rules to attract foreign investment to promote its economic growth. Nowadays, rising China has also become an emerging FDI outward country. However, Chinese investors often encountered difficulties in the process of ‘going out’. Facing the host country’s breach of contract, the bilateral investment treaty (BIT) allows investors to use the legal tool to claim the host countries for compensation. Meanwhile, although China has signed a large number of BITs, Chinese investors seldom claimed the loss in the International Centre for Settlement of Investment Disputes (ICSID). The previous research mostly focuses on BIT’s enhancing effect on attracting foreign investment, while there is less analysis of BIT’s other functions and its actual use. The study aims to why did China ratify the BITs at the first place, and further discusses the question of why there is a low utility rate of BITs of Chinese overseas investment in dispute resolution. The article argues that China ratified the BITs for strategic consideration, including both economic and political aspects. When it comes to the actual use of BITs, the investment institutions and the business-state linkages play essential roles. To critically examine the topic, BITs between China and the European Union (EU) countries as well as 53 BITs between China and the countries along ‘Belt and Road’ are analyzed. The research finds that, instead of solving the dispute settlement issues, the China-EU BIT tends to play its role in market liberalization. As for China-BRI BITs, they cannot provide adequate provisions in dispute resolution. Also, in addition to institutional factors, the investors who are the actual users of BITs, affect the utility rate and applying process of BITs. In the institutional analysis, this research quantifies the level of investment protection when studying the BITs and reflects the heterogeneity of BITs, and by doing so, the article sheds a light on the objectives and practical use of Chinese BITs.