The Regulation of Energy Investments Along the "Belt and Road" (23-25 February Hong Kong)

The Chinese University of Hong Kong, the KAS Regional Energy Security and Climate Change Project, and the Energy Charter Secretariat will host "The Regulation of Energy Investments Along 'One Belt, One Road'" 23-25 February in Hong Kong.

I will present on "A Belt and Road Opportunity for China's Investment Treaty Program". The abstract: 

China’s One Belt, One Road initiative provides a significant opportunity to update China’s well-developed, but in many respects outdated, investment treaty program.  Many of China’s investment treaties with Belt and Road States—particularly jurisdictions that likely will play a key role as host States for future outbound Belt and Road investment in the energy sector—were concluded more than twenty years ago. Examples of such treaties include the China-Pakistan BIT (1989), the China-Georgia BIT (1993), and the China-Azerbaijan BIT (1994). China’s investment treaties from that period normally limit investor protections in several key respects, including the scope of investment dispute settlement, the scope of national treatment obligations, and the absence of market access commitments. Also absent from such treaties—and of particular importance for investment in the energy sector—is language addressing the importance of preserving sustainability and government regulatory space.

The potential for large-scale investment policy reform offered by the Belt and Road initiative—and in particular by future Belt and Road investment in the energy sector—is reinforced by recent developments in China’s investment policy. In recent years, China has pursued greater levels of investment protection, investment liberalization, investment facilitation, transparency in investment-related rulemaking, and sustainability. Those developments are reflected in a number of instruments, including the 2006 China-Russia and 2011 China-Uzbekistan investment treaties, the 2015 International Energy Charter, and the 2016 G20 Guiding Principles for Global Investment Policymaking. Such developments also are reflected in China’s incremental steps toward the application, on a nationwide basis, of a negative list approach to foreign investment.

The confluence of these two developments—the launch of the Belt and Road initiative and recent shifts in China’s investment policy—provides an exceptional opportunity for China to achieve international investment policy reform on a large scale, which could have a particularly significant impact on outbound Chinese investment in the energy sector.