Chinese SOEs and Diplomatic Immunity

There has been a lot of discussion in the news and online today about whether a Chinese state-owned enterprise can claim sovereign immunity from prosecution in the United States because they should be considered “an organ of the state.”

This is a legal question, and it is not cut and dried. Andrew Dickinson, Rae Lindsay, and Audley Sheppard of Clifford Chance in London did a superb write-up on the issue for the UN Special Representative on business and human rights, “State Immunity and State-Owned Enterprises.

The conclusion they reach will not salve the anger of anyone outraged by what appears to be a Chinese attempt to claim extraterritoriality for their largest companies. The issue is less a matter of statute than it is one of precedent, and the fact is, the matter could go either way.

For that reason, any Chinese state-owned enterprise operating in the US and facing civil or criminal prosecution in US courts would be foolish not to try to get an immunity ruling. At the same time, common sense would suggest to any businessman that caution is warranted in dealing with a Chinese SOE: the courts may not offer you the protections that you might expect.

In the long run, this will undoubtedly hurt Chinese SOEs: if they operate above the law while their US partners are subject to it, the legal imbalance in any contractual arrangement makes it foolhardy to contract with an SOE, to buy their products, or to engage their services. Careful businesspeople may wish to steer clear of Chinese state-owned enterprises for this reason alone.

Red Alert: The Growing Threat to U.S. Aircraft Carriers 

As China deploys surface-to-air missile (SAM) launchers to the Woody Islands in the South China Sea, CNAS Defense Strategies and Assessments Program Associate Fellow Kelley Sayler has written a new report, “Red Alert: The Growing Threat to U.S. Aircraft Carriers.” The report examines the short-, medium-, and long-range threats to the carrier – including SAMs and other anti-access/area denial capabilities, in which China is investing heavily – and concludes that U.S. carriers will not be able to act with impunity in the event of future conflict.

Source: Red Alert: The Growing Threat to U.S. Aircraft Carriers | Center for a New American Security

PLA Expeditionary Capabilities and Implications for United States Asia Policy 

Alongside China’s development of many capabilities necessary to conduct missions far from its borders, China’s actions to shape the international security environment are accelerating. This poses both opportunities and challenges for U.S. policymakers.

PLA Expeditionary Capabilities and Implications for United States Asia Policy | RAND

This is the text of the testimony Kristen Gunness made to the US-China Economic and Security Review Commission in January of this year. Reading between the lines, it is clear that China is determined to wield a big stick far from its home shores.

The Resilience of Cold War Strategic Alliances

William Tow at the Australian National University summarizes the results of an ANU conference covering the question of why Cold War strategic alliances remain in force in Asia. The obvious answer is “China.” But Tow notes that there is more to it than that, and that the bigger question facing these alliances is how much US involvement in those tie-ups is a substantive factor, and how much of it is so much rhetoric.
Tow’s paper is another sign that observers around the Pacific are unsettled about the degree to which the Obama Administration’s “Asia Pivot” is real vs. so much aspirational hot air.