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China BITs:
How to Use Investment
Agreements
By Arendse Huld, China Briefing, Dezan Shira & Associates
China’s Ministry of Commerce released a new guide to help companies and investors
understand and use bilateral investment treaties (BITs). China BITs guarantee equitable
treatment for investors and their investments in the host country, improving trust between
the two parties and fostering an investor-friendly environment.
On June 28, 2021, China’s Ministry of Commerce In short, a BIT seeks to promote and facilitate bilateral
(MOFCOM) released a Reference Guide for foreign investment by protecting foreign investors from
Enterprises to Use Investment Agreements (‘the unfair treatment in the host country. This helps ensure
Guide’) to help investors navigate the terms and they can enjoy the same rights as domestic investors for
conditions of China’s BITs, how to use them for the scope of investments detailed in the contract.
arbitration in the event of dispute settlement.
Free trade agreements (FTAs) and other international
In this article, we outline the contents of the Guide investment agreements (IIAs), such as treaties of
and provide additional context on what protections friendship, commerce, and navigation, as well as
investors can and cannot receive under a BIT between framework and partnership agreements, often also
their own country and China. contain relevant chapters on the terms and conditions
of private foreign investment. China may therefore
What are BITs and why do they matter? provide protections for investors from a particular
country even if there isn’t an active BIT covering them.
The Guide defines a BIT as an agreement signed
between two countries or regions that sets out terms and According to the United Nations Conference on Trade
regulations for private investors in the partner country. and Development (UNCTAD), China has 107 BITs in
force as of 2021. It also has active IIAs and FTAs with a
An important function of BITs is providing protection further 17 countries and regions.
and guarantees for both individuals and companies
in the host country. These are provisioned in addition What protections are provided by China BITs and who is
to protections already guaranteed under a host covered?
country’s domestic laws. The BITs often also include
mechanisms for foreign investors to raise and settle BITs guarantee investors and companies from one
disputes in a neutral court should the host country fail contracting country the same treatment by the host
on its obligations to protect their rights. Some BITs country as that awarded to domestic investors or
also stipulate regulations for market access. investors from a third country. These protections include,
3 AMCHAM SOUTH CHINA
China BITs:
How to Use Investment
Agreements
By Arendse Huld, China Briefing, Dezan Shira & Associates
China’s Ministry of Commerce released a new guide to help companies and investors
understand and use bilateral investment treaties (BITs). China BITs guarantee equitable
treatment for investors and their investments in the host country, improving trust between
the two parties and fostering an investor-friendly environment.
On June 28, 2021, China’s Ministry of Commerce In short, a BIT seeks to promote and facilitate bilateral
(MOFCOM) released a Reference Guide for foreign investment by protecting foreign investors from
Enterprises to Use Investment Agreements (‘the unfair treatment in the host country. This helps ensure
Guide’) to help investors navigate the terms and they can enjoy the same rights as domestic investors for
conditions of China’s BITs, how to use them for the scope of investments detailed in the contract.
arbitration in the event of dispute settlement.
Free trade agreements (FTAs) and other international
In this article, we outline the contents of the Guide investment agreements (IIAs), such as treaties of
and provide additional context on what protections friendship, commerce, and navigation, as well as
investors can and cannot receive under a BIT between framework and partnership agreements, often also
their own country and China. contain relevant chapters on the terms and conditions
of private foreign investment. China may therefore
What are BITs and why do they matter? provide protections for investors from a particular
country even if there isn’t an active BIT covering them.
The Guide defines a BIT as an agreement signed
between two countries or regions that sets out terms and According to the United Nations Conference on Trade
regulations for private investors in the partner country. and Development (UNCTAD), China has 107 BITs in
force as of 2021. It also has active IIAs and FTAs with a
An important function of BITs is providing protection further 17 countries and regions.
and guarantees for both individuals and companies
in the host country. These are provisioned in addition What protections are provided by China BITs and who is
to protections already guaranteed under a host covered?
country’s domestic laws. The BITs often also include
mechanisms for foreign investors to raise and settle BITs guarantee investors and companies from one
disputes in a neutral court should the host country fail contracting country the same treatment by the host
on its obligations to protect their rights. Some BITs country as that awarded to domestic investors or
also stipulate regulations for market access. investors from a third country. These protections include,
3 AMCHAM SOUTH CHINA
