Originally from Business Disputes In China - 3rd Edition

Since the beginning of the 1980s, when the People’s Republic of China (China) concluded its first bilateral investment treaty (BIT), China has demonstrated a significant shift from a relatively protectionist policy on foreign investment to a gradually more liberal view. Such development is reflected, inter alia, in the great number of investment treaties concluded by China in recent years. By June 2010, China had concluded 128 BITs.1 China has also modernized many of its older BITs. This development of the Chinese policy on investment protection is frequently described as the shift from the first to the second generation of Chinese BITs.2

Discussions regarding Chinese BITs have often had the perspective of foreign investments in China.3 This is understandable. Looking at the statistics, during the past decades, foreign investment in China has by far exceeded Chinese outbound investments.4 Due to the rapid economic growth in China during recent years,5 however, China has also become an increasingly important source of outbound foreign investment (ODI) with the Chinese government taking important steps to encourage this.6 In 2009, China's outbound investment totalled over USD 56.6 billion, with Asian and South American countries being the main target of these investments.7 This is an almost 100 percent increase since 2003 when Chinese outbound foreign investments amounted to USD 28.5 billion.8