To sign or not to sign: explaining the formation of China’s bilateral investment treaties

This article empirically examines various factors affecting the formation of China’s bilateral investment treaties (BITs) since 1978. Using a panel data analysis, this article finds that domestic and foreign relationship as well as foreign country and global factors, help explain the signing of BITs. Specifically, China’s trade openness and economic growth, foreign countries’ level of democracy, and socialization are positively related to the signing of BITs, while foreign economic growth and the distance between two countries are negatively related to the signing of BITs. Generally, this article finds that China signs BITs mainly to attract foreign capital, signaling to foreign investors that it protects their rights in China. Meanwhile, China has been less likely to sign BITs with countries with which it enjoys favorable bargaining position. As this article finds, China is more likely to sign BITs with democratic countries, suggesting that global spread of democracy spread globalization.