The Situation And Legislative Perfection Of Our Foreign Direct Investment Insurance System

Foreign Direct Investment Insurance System, aiming at protecting and encouraging direct external investments of its own county, is a system of domestic legislation established to offer the direct protection for its investors,via the special or appointed insurance institutions,from the political risks in the host country so that they can apply to insurance institutions for compensations when their investment interests are damaged by the political risks caused by the government actions of the host country, then the insurance institutions can make a claim against the host country on behalf of the investors.The Foreign Direct Investment Insurance System established to transfer the political risks investors faced. Once investors’ investments and managements are subjected to the political risks in host country, the insured investors can apply to the insurance institutions for compensations. To foreign direct investment, the Foreign Direct Investment Insurance System is such an important means of support that most countries all around the world have already established its own. While, recently, China’s constant acceleration of progess of foreign direct investment and extension of investment areas haven’t promoted its corresponding development of the insurance system. Taking stategies of investment and development into account, 80% China’s hosts for investments are resource-intensive developing countries, most of which are swarmed with political unrest, public disorders, armed civilians and frequent riots. Investors have to bear more political risks when they invest there. Therefore, it’s of much necessity to establishe and better China’s Foreign Direct Investment Insurance System.December 8, 2001, China Export and Credit Insurance Corporation(hereinafter referred to as CECIC) were officially set up to insure foreign direct investments, which means the development of Foreign Direct Investment Insurance System has come into a new stage. While owing to the imperfection of the corresponding system and laws, it works imperfectly. This paper will give a specialized discuss on China’s Foreign Direct Investment Insurance System based on stuyding the system of US, Japan and Germany and analyzing their historic evolution, legislation model and system installation, ect. Text of this paper is divided into four parts, and the basic contents are as follows:Firstly, it will discuss the state of development of China’s Foreign Direct Investment Insurance System, based on the concepts of foreign direct investment and explanation of its system. In my view, political risk is the key to cause a siginficant loss to chinese foreign direct investors and an obstacle to the external trade development of chinese enterprise. To establish and better Foreign Direct Investment Insurance System as soon as possible, is of no time to delay.Secondly, it will discuss the state of development of this system. It will list separately the detailed requirements of the National Legislation and International Treaties about the Foreign Direct Investment Insurance System and point out the unfavourable problems appeared in the performance of the current system of China’s foreign direct investment, which will offer reference and directions for the establishment and perfection of China’s Foreign Direct Investment Insurance System.Thirdly, historical evolution of Foreign Direct Investment Insurance System, the single or biliteral insurance mode, management operating system, qualified insured, the insurance coverage and insurance period of US, Japan and Germany will be analyzed to summerize the differences and similarities and the future development trends of their insurance systems. Then taking China’s condintions into account,it will expound the enlightments getting from foreign systems above-mentioned.Fourthly, according to the contents above-mentioned, it will offer suggestions to China’s Foreign Direct Investment Insurance System, including the establishment and perfection of the principle that China’s Foreign Direct Investment Insurance System should follow, the National Regulatory and Approval Mechanism, the Country Risk Rating, Early Warning and Management.