On The Country Risks Faced By China’s Fdi Investors And Its Legal Countermeasures

Chinese companies have seen a substantial growth in FDI activities during recent years.While the Chinese companies enjoyed a remarkable success in their offshore ventures, theyalso became more likely to encounter country risk in their FDI projects. This paper intends toanalyze the specific country risks which Chinese companies are likely to encounter in theirFDI ventures, and to discuss the countermeasures against these risks from a legal stand point.This paper contains four sections:The first section of the paper concludes the current stats of Chinese companies’ FDIventures from analyzing the investor, investing fields, and host countries of current ChineseFDI activities. Upon a careful examination, and base on the fact that provided by bothChinese authority and American think-tank, this paper points out the vast difference betweenthe investment stats of state own enterprise and medium—small size private own companies,the former, being well-funded, adequately supported, and well staffed, have the capability toinvest not only the developing countries but also the developed countries that have muchhigher entrance qualification. The latter, however, from a general sense, are not well suited toinvest another country due to their inability to sustain damages that FDI can induce, but arepush by economical pressure to engage in FDI activities. The first part of this paper alsodiscusses the reason for basing the empirical ground of this paper under country riskframework.The second section of this paper focuses on the political risks that Chinese investorsencounter. After a brief discussing of the concept of political risks, this section analyzes thetypes and traits of the political risks that Chinese investors primarily suffer from. In thissection, the paper also pays special attention to the indirect expropriation using case study ofthe Starret v. Iran case to discuss the fine line between an action that is indirect expropriationand an action taken under the state’s right to regulate/The third section of this paper deals with the social risk in depth. After a close-upexamination of the concept and characteristic of social risk, this paper discusses the typicalsocial risks that a Chinese investor would encounter using a case study of Vietnam.The forth and last section of this paper is focused on introducing and using case study toanalyze and explore three possible legal ways of countering country risk. The three possible ways of countering country risk are：to improve cooperate governance, to utilize country riskor political risk insurance agency, and to enter a investment guarantee agreement with the hostcountry.