The RCEP Investment Rules and China

The chapter analyses China’s FTA approach to investment in terms of malleability, and its implications for the RCEP. The following questions are discussed: what is the trend of China’s FTA approach to investment concerning malleability? Is China a rule follower, shaker, or maker? How may China’s approach the RCEP regarding investment? The chapter demonstrates, firstly, that China is willing to substantially improve rules and embrace newer style investment stipulations. The ChAFTA contains innovative safeguards of regulatory autonomy and ISDS procedural features (including the roster of arbitration panellists, the public welfare notice, the code of conduct for arbitrators, and the joint interpretation of the annex by treaty parties). Secondly, China will probably be a rule shaker in the short to medium term, and possibly becomes a rule-maker in the long term. Its approach may evolve from selective adaption to targeted innovation. The reason is plain as China will be increasingly active in the development of investment norms due to the need to protect its outbound investment and enhance investor confidence in inbound investment. As a rule-shaker in the RCEP negotiations, China will often modify proposals of partners rather than offer a new set of clauses. Given various factors (including the unique nature of mega FTA, ‘stockpile’ of existing investment agreements, and China’s approach to the ASEAN), China may take a more flexible stance in the RCEP than in bilateral FTAs. The RCEP will affect the shaping of China’s FTA approach to investment.