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Asia-Pacific FDI Forum II - November 29-30, 2016

China's Three-Prong Investment Strategy: Bilateral, Regional, and Global Tracks

The Asia FDI Forum 2016 is structured around the emerging three tracks of China's investment policy and strategy. As China is experiencing 'painful and treacherous' (Premier Li Keqiang in a speech at the WEF 2015) economic transition from state-led manufacturing to a service-based economy, new strategies are needed to fuel its stalled economic reforms and development goals as articulated in China's 13th Five-Year-Plan (2016-2020).

For China's domestic investors, there is a shrinking pool of good investment opportunities in the country compared to its very high savings rate. According to World Bank`s Doing Business Index, which measures business-friendly regulations, China was ranked 84 in 2015, after Ukraine ranked at 83. It is thus important for China to adjust its investment rules and policies with its major economic partners and within the Asia-Pacific region.

The Bilateral Prong: In recent years, China, a country which has historically preferred to deal bilaterally with foreign nations, has launched bilateral talks with its top high-income trading partners to advance its interests and gain more influence. China has concluded bilateral deals with certain strategic partners e.g. ASEAN (2009), Canada (2012), and Australia (2015). In addition, there are two notable deals under negotiation: US-China BIT (launched in 2008) to govern a more complex economic relationship between the world`s two largest economies, and EU-China investment treaty (launched in 2013 at the 16th EU-China Summit) to encourage further liberalization of China`s economy.

The Regional Prong: China has also actively participated in shaping the economic architecture of the Asia-Pacific region. Spurred by regional economic integration in the West (EU, NAFTA, MERCOSUR, Pacific Alliance) and frustrated by the deadlock of WTO multilateral negotiations, countries in the Asia-Pacific region are leaning towards harmonization and modernization of their foreign investment rules. To fulfill the "Asia-Pacific dream" touted by President Xi, China has, since 2006, been promoting an Asia-Pacific trade pact, Free Trade Area of Asia Pacific (FTAAP), arguably with Regional Comprehensive Economic Partnership (RCEP) and (Trans Pacific Partnership) TPP as pathways created by China and the U.S. towards harmonization. In 2014, a level of harmonization has been achieved in the East Asia as China-Japan-Korea Trilateral Investment Agreement entered into force. And of course the potential coming into force of the TPP, even without having China, must be part of the analysis, as it could also have complex and significant impacts on the region's investment governance.

The Global Prong: China has garnered increasing attention through its introduction of the One Belt One Road (OBOR) in 2013, aimed at strengthening its "Go global" policy by opening up new markets and increasing the value of cross-border business. Over China`s G20 Presidency in 2016, a multilateral consensus has been reached on Global Investment Policymaking, which specifically reference inclusive growth and sustainable development as objectives of investment policymaking, and implementation of which will be pivotal in reducing the fragmentation of international investment law and policy going forward.

The 2016 Forum's overarching topic is whether these three tracks compete with each other, or whether they complement one another—a question of profound importance. Also the discussion will allow participants to understand the process that China is going through from a net capital importer to an active capital exporter. How that transition is reflected in Chinese treaty practice (post and pre-establishment, negative list approach), the difficulties of incorporating historical investment treaties concepts such as customary international law and China's approach with ISDS will be other important issues addressed by the panelists. We look forward to welcoming you to discuss legal and policy frameworks governing foreign investment in, among and by Asian states, and hope that together we can advance efforts to identify research and policy gaps that must be filled in order to promote more sustainable and responsible investment in the region, and globally.

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