Instrumental liberalization : China's new practice in bilateral investment treaties in the 2000's

The spread of Bilateral Investment Treaties in the past decades, as a popular way to promote and protect foreign direct investment between countries, is no doubt a vivid example that displays the triumph of globalization and the diffusion of liberalization. By the end of 2013, most countries of the world have participated and signed 2,857 such treaties (UNCTAD, 2013). China, among them, is definitely a latecomer and a distinct player. Until 1982, which is 23 years later than Germany’s first treaty with Pakistan, China started its BIT program, and soon has become the world’s second largest contract party. As of its particularity, from the very beginning, China became one of the few developing economies (BRICS states in particular) that were able to sign treaties favoring their own economic interests and sovereignty; soon after, China is also the first and the only country among them that chose to abolish such privileges and started its new, liberalized practice. Stemming from China’s unique development trajectory, my research question asks: what has motivated Chinese government to make such unprecedented change? What was the rationale behind this behavior so distinct from other BRIC countries? The emerging causal narrative comes from Steve Vogel’s theory of “asymmetric regulation” in competitive markets, with the analysis of the specific domestic political and economic constraints within China. This paper argues that China’s new, liberalized practice in BITs is first a policy outcome to increase the international competitiveness of the national industry; more than that, it is also an instrumental liberalization effort made by the central government to strengthen the political control over the locals and to re-shape China’s understanding of the international order, especially the South-South cooperation.Arts, Faculty ofPolitical Science, Department ofGraduat