Abstract
The implementation of the Belt and Road Initiative (BRI) and the economic transformation of China are bringing a wave of Chinese investment into countries around the world. China has already transformed from being a capital-importing country to also the second-largest capital-exporting country in the world. A large proportion of its investment flows to developing countries, especially countries in the Belt and Road (B&R) region where investors are likely to face higher political risks. Protection for Chinese investors against these risks is therefore essential as China’s investments increase. China has not yet established a comprehensive legal framework covering the political risks of overseas investment. In addition, the legal protection provided by Bilateral Investment Treaties against political risk is insufficient. It is time to reconstruct China’s overseas investment insurance system and speed up the signing and revision of BITs with other countries, especially with countries in the B&R region.
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Notes
- 1.
See 2012 Statistical Bulletin of China’s Outward Foreign Direct Investment, issued by the MOFCOM, the National Bureau of Statistics (NBS) and the State Administration of Foreign Exchange (SAFE) in September 2013.
- 2.
See 2015 Statistical Bulletin of China’s Outward Foreign Direct Investment, issued by the MOFCOM, the National Bureau of Statistics (NBS) and the State Administration of Foreign Exchange (SAFE) in September 2016.
- 3.
See 2018 Statistical Bulletin of China’s Outward Foreign Direct Investment, issued by the MOFCOM, the National Bureau of Statistics (NBS) and the State Administration of Foreign Exchange (SAFE) in September 2019.
- 4.
I explain why china faces more political risks in next part.
- 5.
22 U.S.C. § 2191(4)(b).
- 6.
22 U.S.C.A. § 2194(1) (West Supp. 1988).
- 7.
On 5 October 2018, the US president signed the Better Utilization of Investments Leading to Development (‘BUILD’) Act into law, creating a new agency, the US International Development Finance Corporation (“IDFC”), to support private investment in developing countries. IDFC replaced OPIC and is supposed to provide much more funding and new kinds of support for American companies working in developing markets.
- 8.
Official website of SINOSURE, available at: http://www.sinosure.com.cn/en/Insurance/oii/index.shtml (accessed on 30 December 2019).
- 9.
SINOSURE’s expropriation policy compensates investors if the ‘host country deprives the ownership and management of an investment project or the use and control of the funds and assets of an investment project through nationalization, confiscation or compulsory acquisition’. SINOSURE’s exchange restrictions policy compensates the investor if ‘the host country hinders or restricts investors from the free exchange of currencies or raises the exchange cost and prevents outward remittance of currency from the country’. SINOSURE’s war and political riot coverage includes ‘war, revolution, riot, coup, civil war, rebellion, terrorist activity or other warlike operations occur in the host country, which results in the investors’ loss of assets or permanent inability to operate’. SINOSURE’s breach of contract policy compensates the investor if ‘the host government or any other entity approved by the insurer breaches or fails to perform that which has been agreed in the investment project contract and refuses to pay compensation’.
- 10.
See the Country Risk Analysis Report—The Countries along B&R (2015), compiled by SINOSURE.
- 11.
http://finance.sina.com.cn/money/insurance/bxdt/2019-02-12/doc-ihqfskcp4545991.shtml (accessed on 30 December 2019).
- 12.
2018 Statistical Bulletin of China’s Outward Foreign Direct Investment, issued by the MOFCOM, the National Bureau of Statistics (NBS) and the State Administration of Foreign Exchange (SAFE) in September 2019.
- 13.
2018 Statistical Bulletin of China’s Outward Foreign Direct Investment, issued by the MOFCOM, the National Bureau of Statistics (NBS) and the State Administration of Foreign Exchange (SAFE) in September 2019.
- 14.
Outlook for China’s Outward Foreign Direct Investment 2015, EY.
- 15.
Outlook for China’s Outward Foreign Direct Investment 2015, EY.
- 16.
Outlook for China’s Outward Foreign Direct Investment 2015, EY.
- 17.
A list of BITs signed by China with other countries, available at: http://tfs.mofcom.gov.cn/aarticle/Nocategory/201111/20111107819474.html (accessed on 30 December 2019).
- 18.
A list of BITs signed by China with other countries, available at: http://tfs.mofcom.gov.cn/aarticle/Nocategory/201111/20111107819474.html (accessed on 30 December 2019).
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WU, X. (2020). China’s Political Risk Insurance for Outward FDI Within the Context of Belt and Road Initiative. In: Martinico, G., WU, X. (eds) A Legal Analysis of the Belt and Road Initiative. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-46000-6_10
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