Foreign Direct Investment and Investment Arbitration in China

Investment has become increasingly important in shaping the economic landscape in Asia. In recent years, there has been a burgeoning number of bilateral investment treaties (BITs) and investment chapters incorporated into bilateral and regional free trade agreements (FTAs) in China. The rapid growth in the economy of China means that China’s approach to investment and the resolution of investment disputes are of significant importance for other Asian countries and for the world at large. This chapter gives an overview of Foreign Direct Investment (FDI) trends in China, examines the existing investment legal regime in China, and gives a detailed analysis of China's track record in investment treaty claims. Given the specific autonomous status of Hong Kong Special Administration Region (Hong Kong SAR), it is authorised to conduct the relevant external affairs in accordance with the Basic Law, including to conclude bilateral investment treaties. Therefore, the FDI trends in Hong Kong and Hong Kong's existing investment legal regime will also be discussed separately. Whether the BITs entered into by China will apply in Hong Kong will also be addressed.