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.

Kroeber on Soros’ hard landing

In effect, the world has already experienced a China hard landing. This helps explain why markets react in such terror at every hint the renminbi might fall in value: a weaker renminbi reduces the dollar value of the goods China can buy on international markets, at a time when demand from its traditional industrial and construction sectors is already declining.

Source: Is George Soros Right that China’s Headed for a Hard Landing? | ChinaFile

Arthur Kroeber’s eloquent take on George Soros’ prediction: China is not likely to land hard this year. But the sum total of policy changes underway are going to make it a lot rougher for the rest of the world as China’s role as global growth engine diminishes. 


Year-End Miscellany: Is Guo Meimei Real?

In thinking about the case of the notorious Guo Meimei, one cannot help but wonder about her provenance. I don’t literally mean where she came from, of course. Rather, I mean how the sequential scandals that have surrounded her seemed almost perfectly timed to incite the public outrage necessary to start cleaning up official corruption, and then the mess that is Macau.

The rapid prominence she received in the media, her un-preternatural naïveté, and the suspect coincidence of having her involved in two major criminal enterprises in a row seem all too good to be true. Given the effects of her behavior, one cannot be blamed for thinking that if Guo Meimei had never existed, the Party would have had to invent her.

Which then leads to the question: did they?

Okay, setting my tinfoil hat aside for the day.