The Alignment of the EU-China Comprehensive Agreement on Investment with the Chinese SOE Governance Framework

Abstract

The following article analyzes the EU-China Comprehensive Agreement on Investment (CAI) and its ability to discipline state-owned enterprises (SOEs) within China. The CAI aims towards more balanced and reciprocal trade and investment relations between the European Union (EU) and China. The analysis scopes the contemporary legal and regulatory framework governing SOEs and explores their alignment with the CAI. The analysis adopts doctrinal and comparative research analysis, comparing the provisions featured within the CAI with China’s foreign investment and SOE regulations. The findings suggest that the CAI features strong mechanisms for the purposes of investment protection, the fast-evolving investment protection framework within China is bound to soon outpace it. The presence of the Communist Party of China (CPC) however complicates the efforts towards market liberalization with CAI lacking the tools to address both CPC and state interference. The article concludes that, while CAI is a crucial step towards better investment protection, its impact on the overall liberalization of the Chinese market might be limited in scope.