- The internationalisation of Chinese firms investing and operating abroad has been a recent phenomenon (compared to Western multinationals). The Chinese government adopted a ‘Going Out’ policy in the late 1990s to promote outbound foreign investments. Since then, Chinese firms have encountered a variety of labour problems and disputes in their overseas operations, which have attracted global media attention. More controversial aspects have included the large-scale dispatch of Chinese workers for construction and infrastructure projects as well as significant violations of local laws or management practices that have led to (sometimes violent) disputes with trade unions and workers in the host country.
- As the conduct of Chinese companies becomes subject to greater international scrutiny, Beijing has introduced a flurry of policies and guidelines in recent years that are directed at Chinese firms to act as ‘good corporate citizens’ abroad. The Chinese party-state has sought to exert influence on the operating environments of Chinese firms abroad, particularly in sectors where many of these firms are state-owned or state-connected. For example, the Ministry of Commerce and the Chamber of Commerce of Metals, Minerals and Chemicals Imports and Exports issued guidelines directing Chinese firms in outbound mining operations to strictly ‘observe the United Nations Guiding Principles on Business and Human Rights during the entire life-cycle of the mining project’. However, it is difficult to measure the actual effects of these measures and other pressures from the Chinese government or host countries on Chinese firms to take the ‘high road’ instead of a ‘race to the bottom’. Furthermore, in many BRI countries, legal and institutional frameworks may be quite weak to start with (both on paper and in practice). Host countries’ dependence on foreign investments may undermine regulatory attempts to enforce and improve labour standards.
- Labour, social, environmental, transparency and other standards under Chinese-invested BRI projects can have flow-on effects on domestic approaches to corporate social responsibility (CSR) or business and human rights (BHR). CSR and BHR issues (especially in relation to the BRI) have become more widely discussed in China. There is a growing emphasis on CSR/BHR education and training. Some universities have launched courses for students as well as professionals and managers of Chinese companies that operate overseas. However, it has been observed that there is possible tension between on the one hand Chinese firms operating abroad that are increasingly aware of the need to comply with international standards and legal obligations in host countries, and on the other hand, domestic firms in China that seldom engage with CSR or BHR discourse.
This blog post is based on Dr Mimi Zou's recent contribution to a Chatham House podcast on China and the Future of the International Order - The Belt and Road Initiative. The Asia Society Policy Insitute (ASPI) recently appointed Dr Zou as one of 12 distinguished international experts on its Belt and Road Initiative (BRI) Taskforce. Headed by former Prime Minister of Australia Kevin Rudd, ASPI is the policy arm of the Asia Society and ranked among the world's top think-tanks. The Taskforce will develop recommendations and advocate for best practices in BRI projects that will be presented to the 2nd Belt and Road Forum in Beijing in 2019.
Regulating for Competitiveness? Perspectives from Tax, Banking, and Employment Law
By Mimi Zou | Yue Dai | Jacob SchumacherChinese Law Discussion Group
The Communist Party of China as a Moral Actor?
By Kerry BrownChinese Law Discussion Group
Setting Up the Asian Infrastructure Investment Bank
By Natalie LichtensteinChinese Law Discussion Group