In this book, Professor Julien Chaisse, a renowned scholar in the field of international economic law and China-expert, focuses on one of the countries which are proactively (re)shaping our understanding of the international order: the People’s Republic of China (PRC or China). This edited book presents, in a comprehensive, accurate, and organized manner, the gradual definition of China’s investment strategy. This book’s scope includes reflections on the international investment regime, taxation, national economic reforms, mediation, competition law and anti-monopoly law, State-Owned Enterprises (SOEs), corruption, and the highly-debated China’s Belt and Road initiative (BRI) (object of another book edited by Professor Chaisse).Footnote ¹ Most of the leading legal scholars and professionals who contributed to the book are based in Asia and working on a daily basis on issues relating to China. This diverse group succeeded in offering different, relevant and innovative contributions. The question that the book attempts to answer is whether China is aligned with the dogmas of international investment and trade law. China’s involvement in the global context is in partial contradiction with the national situation, which formed the basis for many commentators’ critical views of China’s accession to the WTO as a risk to the multilateral trading system in the long term.Footnote ² Did this accession lead to free trade or the end of market-based reform of the national economy? Environmental protection or market domination of the environmental industry? Aid for development or aid for resources?

Thanks to this book, the motivations behind China’s strategy are clearer now. According to the introduction, this book is organized around four prongs and three tracks. This division helps clarify the evolution and patterns of the Chinese trade and investment strategy. But this book’s internal arrangement is described only in the introduction and is neither endorsed nor visible in the book’s table of contents. It would have been useful for the editor to show and acknowledge, in the table of contents, this internal organization so as to achieve a better harmony among the chapters. Still, the diachronic approach to China’s process of economic reforms adopted by this book is noteworthy, because it discusses the recent changes in legislation along with the historical parcours of the country. When we refer to the historical context, we mean that Chinese legislation results from many different factors, such as politics, the role of the Communist Party of China (CCP), Chinese ‘realism’, the influence of China in the global context, the impact of global interconnections on the internal Chinese legal system, and ultimately, the specific public policy objectives within the bigger picture of the Chinese Five Year PlansFootnote ³ and beyond. Chaisse was able to structure the edited book by addressing public policy issues and concerns rather than only positive law. Economic reforms are therefore used by the author to highlight the continuum of the country’s investment strategy.

The need to balance economic interests of investors with the domestic regulatory powers of the Chinese government is an important takeaway from the book.Footnote ⁴ Balancing contradictory interests brings, however, a range of inconsistencies that are peculiar to China.Footnote ⁵ An example is the set of investment benefits that further the national strategies or are advantageous for specific economic sectors rather than favouring investment based only on economic considerations.Footnote ⁶ Another example is how the Chinese government is formally opening up its economy in long-awaited sectors, such as energy resources and transportation, but at the same time, is increasing its ‘informal’ control over foreign enterprises.Footnote ⁷

The local prong addresses in detail the country’s position regarding inwardFootnote ⁸ and outward investments,Footnote ⁹ complementing the analysis with the description of other internal and external factors involved in the shaping of the national strategy. Taxation, competition law, anti-monopoly law, and SOEs have been identified as relevant internal factors that might influence the Chinese international investment strategy. These drivers and contexts are frequently discussed in academia and have also formed the object of several international community policy recommendations and studies. While a favourable taxation regime to attract FDI is a common feature of any investment strategy, if used in a non-discriminatory way, China is using taxation to help its national private and public enterprises operating abroad.Footnote ¹⁰ The China-led Belt and Road Initiative (BRI), at the current stage of implementation, is primarily driven by SOEs and State-owned commercial and development banks. This has raised international attention, as another relevant example of the policy change and vision of the new leadership of President Xi and a setback for proponents of liberalism principles. Since the BRI’s official launch in 2013, Chinese SOEs have been involved in more than 3,000 projects.Footnote ¹¹ By considering this over-exposition of Chinese capital abroad through quasi-public (SOEs’) investments in sectors where ownership, land use in foreign countries, and other related issues are pivotal, protection of property rights is becoming a key concern for China.Footnote ¹² The internationalization of Chinese SOEs has undergone, as a response, an increase in the use of screening mechanisms on investments coming from China. The increase in conflicts amongst partners is a factor which should be taken into account for the medium term.

In fact, the international trade (and investment) environment seems to be heading in a more conflictual direction. Existing tools and instruments such as the national security clause, which were less frequently used in the past, have met with new attention and interest. While this exception was conceived to protect essential security interests, in recent years it has been used for limiting politically driven decisions that could harm the national economy for very diverse reasons.Footnote ¹³ In the view of the reviewer, in addressing SOEs, the shortcomings of the multilateral trading and investment regime should be taken into consideration. Under the WTO, a traditional neutral stance over the owner of an entity limited the possibility to intervene and counteract eventual illicit behaviour.Footnote ¹⁴ Ownership structures and the different rationales that drive the operation of an SOEs should be considered when designing investment and trade policy in line with current negotiated bilateral and regional free trade agreements.Footnote ¹⁵ A clear regulatory framework on SOEs could limit the recourse to countermeasures and increase the use of national security considerations.Footnote ¹⁶

In recent years, the Chinese government better formalized and structured its outward direct investment strategy,Footnote ¹⁷ by taking a favourable approach to environmentally sound investments.Footnote ¹⁸ In Chinese international investment agreements, sustainable development provisions are, although on the rise, still not a core element and are mostly included when the counterpart is a developed nation.Footnote ¹⁹ An additional problem arises in regard to the misalignment between state and local government priorities.Footnote ²⁰ Conflicts between central and local government are also lowering the coherence of the national investment strategy.

This book also highlights an important characteristic of China’s investment strategy: the exclusion from the negotiating table of the most sensitive topics for the country.Footnote ²¹ To date, there are no international investment agreements to which China is a party that specifically and meaningfully address SOEs.Footnote ²² While some topics are excluded, others that the Chinese government considers essential for the future development of the country, such as emerging technologies and innovation, are a core element of the national investment policy and an object of specific support from the government to strengthen relationships with partners.Footnote ²³

The periodization of China’s investment treaties is of great interest and sheds a light on the evolving national landscape of industrial policies and the consequent need to better protect its enterprises operating abroad rather than protecting national enterprises from foreigner competitors. Further, the country is pushing for the implementation of the latest multilateral trade agreement concluded under the auspice of the WTO; the Trade Facilitation Agreement (TFA). The TFA is aligned with the country’s trade, but also investmentFootnote ²⁴ priorities and is the only WTO agreement that is specifically and directly relevant for the BRI.Footnote ²⁵

The liberal approach of China to mega-regional investment agreements could benefit the international community.Footnote ²⁶ Economic integration is not primarily driven by particular ideological connotations, such as neoliberalism and free trade in the case of Europe and North America, but by an urgent need of a better market connection and socio-economic development by retaining some regulatory spaces if possible.Footnote ²⁷ The investment regime could also be used to strengthen and better align the country’s national laws and regulation with international standards.Footnote ²⁸ China’s peculiarities should, however, be considered when investors seek remedies. Mediation is an excellent example of how, rather than solving disputes via arbitration, China attaches great importance to alternative ways to settle disputes and the international investment system could benefit from it.Footnote ²⁹

Although the book manages to cover and clarify China’s investment strategy and at the same time forecasts the future direction and development of the international investment regime, it would have been interesting to be offered some insight on the role of the CCP in the investment realm. Similarly, the analysis of the political thoughtFootnote ³⁰ and economic vision for the development of China could have been included to further strengthen the high quality of the book. Most studies of contemporary China, especially in investment business and legal reforms, tend to place more importance on the post-Deng period that is regarded as the caesura from the previous period. However, Chinese legal and economic institutions are rooted in the Maoist and also the republican period.Footnote ³¹

Professor Chaisse’s book is an important contribution not only in the areas of international law, international relations and geopolitics, public policy, investment law and trade law, comparative law, but also in the constantly growing field of comparative international law and the interactions among international commitments, rules, and practices along with internal and domestic issues, focusing on China as a case study.