This article seeks to demonstrate that China’s bilateral investment treaty

(“BIT”) practice is best understood in light of China’s pursuit of its interests, as it

grows from a developing country hungry for foreign investment to an emerging

power to be reckoned with as both a capital importer and a capital exporter. Its

evolution is not a one-directional liberalization over time, as claimed by some

Western scholars. Neither does the perceived liberalization pose a serious threat to

China’s sovereignty, a fear shared by certain Chinese scholars. Such clarification

is of particular relevance amid the current debate on a potential backlash against

international investment arbitration. The Western scholars’ approval of China’s

liberalization in investor protection is in contrast with Chinese scholars’ advocacy

for tightening sovereign control, resonating with the divergence between the

supporters and detractors of international arbitration in the current debate.

However, this article will try to illustrate that China’s BIT-making, while not

impervious to the legal debate, is driven first and foremost by interest.

 

 

Section II gives a brief overview of China’s BIT program and points out

certain liberal features that have been consistent throughout the program. Such

features seem to have escaped the focus of Western and Chinese scholars alike.

They both seem to have emphasized the liberalization of China’s new-generation

BITs, the former giving it a nod of approval while the latter demanding its retreat.

Based on the analysis of several provisions in China’s BITs, Section III questions

the validity of such claim of liberalization and argues that safety valves are

embedded in both old-generation and new-generation BITs to protect China’s

sovereign interest. Section IV posits an alternative view of China’s BIT-making:

any decision China makes today has to be a balancing of its interests as both a

capital importer and a capital exporter. Using the recently signed China-Canada

BIT as an example, Section V suggests prudential carve-outs determined by

contracting states in concert as a helpful tool for China to utilize in its BITmaking.

Section VI concludes that although China’s BIT-making is a product of
its time, China’s pursuit of its own interest will always be its guiding light.