International Regime Of Sovereign Wealth Funds And Its Legalization

Sovereign Wealth Fund (SWF) is a government management of national reserve in the form of an investment entity. China Investment Co., Ltd was established in 2007 as the main SWF in China, which commits to protect and increase the value of the national reserve. However, at the beginning of this century, regulatory environment for SWFs in foreign countries as well as in international plane has changed greatly, and the regime on SWFs has evolved in the way of institutionalization and legalization.Some countries have strengthened their foreign investment restrictions. It shows that financial protectionism after U.S. subprime mortgage crisis in the world economy is on the rise. However, in addition to the regulations of SWFs in recipient countries, international community has been trying to build norms and restrictions for both SWFs and recipient countries. However whether or not these rules can become effective regulatory rules is to be tested. Will the international rules actively promoted by international organizations be accepted by sovereign states happily? It is obviously that the international institution of SWFs has been established just for a short period of time and its compliance has yet to be tested. Meanwhile, China's sovereign wealth funds, recently set up with great energy, but invested in frustration should make great efforts to promote their corporate governance in order to control the risk which would be increased by the changes of the regulatory systems. It is significant for the sound development of China's SWFs to carefully observe the track of legalization of the international institution of SWFs, concerning on the international regulations for SWFs.Regulation of sovereign wealth funds is tangled of political and economic factors. This is a matter of international political, economic, and legal relationship problems. The era of globalization, no one government can be competent enough to solve such a "global problem" alone. Legalization is believed as one of the approaches available for the global governance in the current politics across the world. Based on this belief, this dissertation attempts to reveal the pattern of legalization in the field of international economic cooperation from the perspectives in economics, international relations and jurisprudence.Through text reading and quantitative analysis the author is to discover the depth of legalization of the regime on SWFs, consequently, to find out why the states prefer such cooperation laws in low-legalization and how the states comply with international legal norms with a proposition to adopt compliance mechanism into the regime, such as peers review, which will improve the compliance of current international rules of SWFs.Finally, by examining the development of China's SWFs and the domestic regulations of the Fund as well, some suggestions are given on how to improve both the domestic and international regulatory systems for SWFs. Special focus is placed on the China's participation in the formation of the international regime institution in question.The main contributions and innovations:(1) Depth of legalization of the international institution of SWFs has been determined. Many scholars label GAPP and GUIDELINE as soft norms, but without justification. In this paper, the depth of the legalization was metered by quantitative analysis in accordance with three-dimensional characteristics of the regime with an approach of text reading.(2) Causes of the states'preference to soft-law for SWFs regulations and their compliance in future have been explained. Previous studies hadn't provided a reasonable explanation on this phenomenon. This interpretative analysis to some extent make up for this gap.(3) The value of theory is to guide practice. This paper studies the international system of sovereign wealth fund supervision and the developing trend of legalization, suggestions are proposed to improve the compliance of the regime on SWFs and participation and involvement in the formation of international policy and system as well.