Introducing the ‘China, Law and Development’ Project: Analyzing China’s Impact on Cross-Border Legal and Regulatory Order

Based on current projections, China will be one of the world’s largest exporters of capital in the near future, a first in modern history for a nondemocratic state. The ‘China, Law and Development’ (CLD) project, funded by a European Research Council Starting Grant (Grant No. 803763), and based at the University of Oxford, is a five-year interdisciplinary research project that assesses the implications of China’s cross-border commercial activity at two levels: the legal and regulatory systems of host states that receive Chinese capital, and international commercial law. Comprised of a team of scholars from law, anthropology, sociology, political science, and development studies, the CLD project generates empirical data and analysis on the two-way interaction between, on the one hand, Chinese investors adapting to difficult regulatory environments and, on the other hand, local and national regulatory authorities’ adjustment to the new norm of Chinese outbound capital, including investment, loans, and aid. 

By way of brief background, in the decades after the Second World War, as US multi-national companies expanded their operations to developing countries in Latin America, Africa, the Middle East, and Asia, a number of American actors, including governmental agencies as well as civil society actors and legal academics promoted the transplanting of American law to host states. A mix of self-interest and altruism, the ‘law and development’ movement featured, broadly, two main goals: first, to create environments for transactional security in overseas markets and, two, to promote democracy. Fast forward half-a-century, and the US, in the grip of nationalist protectionism, is retreating from commitments to global governance, while China is ascendant in the Asian region and beyond. China is, for the most part, not replicating the US’s approach to law and development as Chinese SOEs and private companies ‘go out’, and yet Chinese firms, like any investor, require security to obtain returns on investments and protect assets and nationals in fragile states. This requirement begets the question of how Beijing and Chinese firms are promoting cross-border order, and the role of law in that process. 

To address this question, the CLD project examines a gamut of legal questions including choice of law concerns in relevant contracts, the modernization of the PRC legal system, China’s engagement with and reform of existing trade and investment regimes, China’s presence in legal reform of host states, dispute resolution and legal services, regional legal harmonization, and the generation of new methods and theory of socio-legal studies through the lens of globalizing China.

In addition to building empirical case studies, the CLD research team includes early career scholars and practitioners who write ‘Research Briefs’ summarizing their on-going research projects. These projects include the promotion of new regulatory regimes and legal institutions like the establishment of a multilateral tax administration cooperation mechanism, the Asian Infrastructure Investment Bank, and the China International Commercial Court; the different trajectories of Chinese investment on Africa and Europe; and how Chinese overseas direct investment has galvanized domestic legal reform in, for example, immigration regulation and legal services. Future Research Briefs will appear here.

While it is too early to derive conclusions from these few observations, as the CLD project has just started, it is clear that, given Beijing’s commitment to advance and reform its ‘Belt and Road Initiative’, that China will continue to expand its presence in both existing multilateral organizations like the G20 and international treaties like the Hague Convention and Singapore Convention in order to further its investment policy as well as promote its new parallel institutions in international development finance, some of which appear to increasingly conform to international standards. At the same time, incentives and constraints in outbound-related work will continue to require domestic law reform, particularly in areas such as conflict of law and dispute resolution. 

Lastly, to note, the CLD has established a forum called the Silk Road Legal Exchange and Research Network (SRN). SRN is designed by and for practitioners, including lawyers, compliance officers, arbitrators, judges, and businesspeople, as well as members of academia and think tanks, who are focused on the legal and regulatory dimensions of Chinese outbound capital. SRN provides a platform for discussion and collaboration for business, research, and policy-making. 

Please contact Dr. Vicky Hayman at vicky.hayman@orinst.ox.ac.uk for more information.

Matthew S. Erie is an Associate Professor of Modern Chinese Studies and Associate Research Fellow of the Socio-Legal Studies Centre at the University of Oxford.