China’s “Foreign-Related Rule of Law”: Shield or Spear?

Frank Hong begins by discussing the EU Commission’s recent announcement of an anti-subsidy investigation into Chinese electric vehicles (EVs). The host questions whether this moment would have arrived sooner if not for the COVID-19 pandemic. The issue of what constitutes a law-breaking subsidy versus rightful government investment is explored, referencing a speech by Jake Sullivan, the US National Security Advisor.

Frank Hong argues that the World Trade Organization is not equipped to resolve the trade dispute between China and the EU. The US has long expressed its dissatisfaction with the WTO, particularly its dispute resolution mechanism, which has been effectively paralysed due to a blockade of judge appointments by the US.

China’s public policy of developing “foreign-related rule of law” is cited as evidence of its intention to reshape the international order. The host mentions China’s Belt and Road Initiative, its dominance in solar panels, batteries, and EVs, and its new laws as signs of this ambition.

The podcast shifts focus to China’s recent enactment of the Law on Foreign State Immunity, which will take effect in January 2024. This law marks a significant change from China’s previous stance on sovereign immunity, moving from an “absolute immunity theory” to a “restricted theory”.

The host lists several new laws and regulations enacted by China in response to the international environment, including laws on countering foreign sanctions. These legislative changes are seen as a reaction to international pressures, rather than a sign of a new Cold War.

The term “foreign-related rule of law” is discussed as a concept unique to China, with no modern historical precedent. The host argues that this concept is not inherently aggressive but reflects China’s growing role in international affairs.

The podcast concludes by suggesting that China’s foreign-related rule of law could have a significant impact on the international economic order, drawing parallels with the influence of the Southern District of New York in the US legal system.