Foreign Investment, Investment Treaties and Corruption in China and Hong Kong

Abstract

AbstractThis chapter focuses on the interaction of domestic regulation of corruption in China and Hong Kong and the increasing number of international arbitration cases brought by and against China. In conjunction with the enormous growth in foreign investment in China since it opened up at the end of the 1970s, China has developed a comprehensive network of international investment agreements (IIAs). Hong Kong is also a party to about 30 IIAs in its own name. Government and business corruption and bribery have been a problem in both jurisdictions. China and Hong Kong have taken active steps to criminalize, and to investigate and prosecute, corruption and to participate in major international initiatives relating to corruption. While corruption has, so far, made a limited appearance in the small number of investor–state dispute settlement (ISDS) cases brought by investors against China and cases brought against other states by Chinese and Hong Kong investors, based on existing material, a number of tentative conclusions and recommendations can be made. China should move towards a higher level of transparency, both in relation to ISDS cases and to its domestic criminal law system; both China and Hong Kong should play a more active role in prosecuting bribery by enterprises outside China, including by joining the OECD Convention on Combating Bribery of Foreign Officials; and, finally, China should consider including provisions relating to corruption in its future IIAs in order to demonstrate its commitment to the international war on corruption in business.