'One Belt, One Road' and Chinese Investment

Abstract

The final version of this paper has been published as “‘One Belt One Road’ and Chinese Investment”, Chapter 8 in Chao, Xi and Wolff, Lutz-Christian (eds), Legal Dimensions of China's One Belt One Road, Wolters Kluwer Hong Kong Limited, 2016.

Since the inception of the Open Door policy in 1978, foreign investment has been an integral part of China’s economic and development policy, initially to attract foreign capital and technology and subsequently to utilise China’s own capital and skills by making investments overseas. The implementation of China’s policy objectives has been supported domestically by a comprehensive system of regulation inside China covering both inbound and outbound investment and internationally by both multilateral and bilateral agreements for the facilitation and promotion of investment.

The 2015 “Vision and Actions on Jointly Building Silk Road Belt and 21st-Century Maritime Silk Road” (Vision Document) does not focus on investment, but refers to it in the context of “unimpeded trade”, with mentions of investment and trade cooperation and facilitation and the removal of trade barriers. It is clear, however, that the development of trade, construction of shared infrastructure and engagement in “energy cooperation” and other forms of economic cooperation that will be required to effect and develop the “One Belt, One Road” (OBOR) initiative must necessarily involve the investment of very substantial amounts of capital and will offer significant investment opportunities to China’s multinational enterprises and projects for China’s extensive off-shore labour contracting operations.

The economies, history, governmental structures and judicial and legal infrastructure of the 64 states and territories along the OBOR (other than China) vary widely, as do the commensurate levels of financial, operational and political risk potentially involved in investment. As much of China’s outbound investment is already made into developing and emerging economies particularly in Africa, dealing with a high degree of risk is not a new phenomenon. This paper focuses on how Chinese investment policy and strategies currently accommodate and protect investment relationships with the states along the OBOR and what changes are probable as investment increases.

Keywords: China, investment, One Belt One Road, New Silk Road, OBOR, bilateral investment treaties, international investment agreements, investor-State dispute resolution, negative list, rule of law, ISDS

JEL Classification: K30, K30, K33