Tearing Down the Great Wall – the New Generation Investment Treaties of the People’s Republic of China


The People’s Republic of China (PRC or China) has emerged as the world’s prime destination of foreign investment in the developing world and is continuously strengthening its position as a source of outward foreign investment, notably in Asia and Africa. In this context, the PRC has concluded over 110 bilateral investment treaties (BITs) that grant protection against expropriation and establish other standards of treatment for foreign investors in China and Chinese investors abroad.

While the PRC was originally hesitant regarding international investment protection, the country started, beginning in the late 1990’s, entering into new generation BITs that break with her long-standing reservations towards national treatment for foreign investments and comprehensive investor-State dispute settlement. Surprisingly, this change in treaty practice has so far only received little attention in international legal scholarship, although the conclusion of the new generation BITs constitutes a fundamental change in China’s foreign economic policy.

The paper gives an account of the PRC’s investment treaty practice and shows how her new generation BITs provide novel mechanisms of protection for foreign investors. It is argued that these treaties help to transform China’s domestic legal system significantly, support her transition to a market economy and strengthen the country’s integration into the global economy. Ultimately, China’s new investment treaty practice is also an important indicator for the evaluation of international investment law by a developing country in the struggle about the appropriate level of investment protection in an increasingly global economy.


International Law

Date of this Version

January 2007