National Security, Free Trade Agreements and Investment – the Case of China

‘National security’ has always played a role in foreign direct investment decisions. Large-scale Chinese investment has, however, served to highlight the question of what the concept involves, as developed countries, the traditional outbound investors, extend or rethink their approach to foreign acquisitions. But is it – or should it be – a concept of unlimited flexibility? In discussing this question, this talk will consider a number of aspects of ‘national security’ in the context of Chinese outbound investment and investment into China. In particular, it will examine what ‘national security’ means to China in relation to activities within China, particularly investment and what it means to foreign governments when Chinese companies go abroad: that is, in what way does Chinese investment in particular threaten the national interest or security of a western country? It will also consider in what way and to what extent national security concerns constitute an exception from commitments made to and by China in its free trade and investment treaties and, in particular, whether states have unlimited discretion to define the term. The talk is co-hosted with the Chinese Law Discussion Group.