Matthew S. Erie & Jingjing Zhang
in Gao, H., Raess, D., & Zeng, K. (Eds.). (2023). China and the WTO: A Twenty-Year Assessment. Cambridge: Cambridge University Press. https://doi.org/10.1017/9781009291804
Chapter 18 available here.
Chapter summary
We compare China’s foreign direct investment (FDI) and overseas direct investment (ODI) regimes, finding that, at a general level, whereas the former has transitioned from restrictive to lenient, the latter has evolved in the opposite direction, from lenient to restrictive. The different trajectories cannot be explained solely in terms of the time lag in their respective development. While the primary reasons for change are domestic, we argue that the FDI regime is more advanced because of the influence of the WTO accession of 2001. Whereas the FDI regime has become more streamlined, efficient and coordinated, partly as a result of the WTO accession package, the ODI regime, which has not yet benefited from an analogous multilateral framework, remains bureaucratic, suboptimal, and disaggregated. Our analysis is based on a data set of hundreds of normative documents that comprise the FDI and ODI regulatory regimes. We focus on the specific example of the regulation of the environmental impact of FDI and ODI. We find that the environmental and social impact of Chinese ODI is inadequately regulated, resulting in potential harms to Chinese investors and impacted communities in host states alike in the course of Chinese-financed projects overseas.
