A “Silk Road” for Capital: Trade Policy and Foreign Investment Laws of China’s Neighbors
Northwestern Journal of International Law & Business
A ?Silk Road? for Capital: Trade Policy and Foreign Investment Laws of China's Neighbors
0 Zachary Strom, A ?Silk Road? for Capital: Trade Policy and Foreign Investment Laws of China's Neighbors, 38 Nw. J. Int'l L. & Bus. (2018). https://scholarlycommons.law.northwestern.edu/njilb/vol38/iss3/4
1 Thi s Comment is brought to you for free and open access by Northwestern Pritzker School of Law Scholarly Commons. It has been accepted for inclusion in Northwestern Journal of International Law & Business by an authorized editor of Northwestern Pritzker School of Law Scholarly Commons
A ?Silk Road? for Capital: Trade Policy
and Foreign Investment Laws of
The collaborative atmosphere of ?globalization? in the 1990s, signified
by the creation of the World Trade Organization (WTO) and the
concomitant explosion of multilateral free trade agreements (FTAs), seems to have
come to an end with the breakdown of Doha Round talks earlier in this
decade.1 Since the breakdown of these talks, collaboration has turned to
competition as major economic powers each negotiate separate, competing
agreements to create trade cartels that might influence future multilateral
trade negotiations. In the United States, this approach was evident in the
negotiation of the Trans-Pacific Partnership (TPP) with Pacific Rim nations
(notably, not China) and talks with the European Union to create a
Transatlantic Trade and Investment Pact (TTIP).2 Were these treaties to come into
effect, their potential would be to create a massive international trade
network, anchored in U.S. markets, with the ability to influence the future of
globalization. Yet the new U.S. President?s denunciation of these deals as
?horrible? and his apparent preference for protectionism may spell the end
of American hegemony on trade policy.3 This, in turn, allows other large
state actors, chiefly China, to utilize their own influence and craft a distinct
approach to building trade networks.4 The purpose of this note is to analyze
China?s approach to international trade and investment deals, using its trade
relationships with two of its neighbors as a case study, in the hopes that
such analysis will provide a useful lens with which to look at future efforts
in this arena. This will be followed by a look at the pushback that can occur
when Chinese efforts are viewed as a naked grab at power, as has been the
case in western China and in Mongolia. In this instance, it is important to
note that Mongolia has grappled with the need to create a foreign
investment policy of which the Chinese cannot take advantage.
The current course of events leaves ample room for China, and not the
U.S., to become the dominant trading power in Asia and set a new tone for
the next stage of global trade talks. Yet China?s grand vision of investment
in massive infrastructure upgrades across Eurasia through the ?Silk Road
Economic Belt,? just half of an enormous ?One Belt, One Road? foreign
investment strategy to link European, Asian and African resources and
A Silk Road For Capital
markets and formalized at a 2017
summit, will involve negotiating across a
highly varied foreign investment landscape and implicate a host of
competing international interests.5 6
It is thus sensible that China would place the highest priority on a trade
route that only requires dealing with one country, long a friendly one, that
could connect China to the Indian Ocean. That nation is Pakistan, and much
has been written on the heralded CPEC, the beautiful melody in the
?symphony? of the Silk Road plan.7 One other reason is that Pakistan?s
investment rules and treaties with China make the country much more attractive
and secure a place to invest than many of China?s neighbors that have only
recently transitioned to market economies.
One such neighbor is Mongolia, which, despite a long historical
association with China (interrupted only by 20th century Soviet domination),
has not embraced Chinese investment quite so readily.8 It has instead
pursued a diversified portfolio of foreign investors through a ?third neighbor?
policy, which itself has been undercut by the government?s lashing out
against investors perceived to be under Chinese influence.9 Having endured
a steep recession owed in large part to the subsequent dearth of foreign
investment, Mongolia is now another target of Chinese economic
expansionism through the proposed China-Mongolia-Russia Economic Corridor, yet
its legal infrastructure is far less prepared than Pakistan?s for such a plan.10
The aim of this paper is to survey Pakistan and Mongolia?s differing
positions in this network and look at the broader legal and economic forces
driving these differences. Hopefully, this will serve to illustrate the variety
of regulatory regimes China must confront if it is to realize its ?Silk Road?
II. CHINESE TRADE POLICY
China?s emergence onto the stage of international trade was a
relatively recent occurrence. Only after the death of doctrinaire Communist leader
Mao Zedong did more liberal voices in the nation?s government, led by
Deng Xiaoping, authorize limited capitalist development and other
reforms.11 The handovers of Hong Kong and Macau in 1997 and 1999,
respectively, gave China a substantial degree of control over two major
developed market economies as its ?Special Administrative Regions.? China
concluded its first FTAs with these two entities in 2003. Soon after it
pursued free trade with several other substantial developing (and, since 2008,
developed) market economies.12 One such economy is Pakistan, which
concluded a free trade agreement with China in 2003 and has since made
several bilateral amendments to strengthen the countries? trade relationship.13
This culminated in the announcement of the China-Pakistan Economic
Corridor (CPEC) plan, the discussion of which is a central feature of this note.
According to Michael Clarke, a litany of international and domestic
considerations have driven the efforts of China to build influence in central
Asia, and development is but one of these.14 The region is open for Chinese
influence, he says, due to a diminishing U.S. presence in Afghanistan and
the U.S.?s concomitant abandonment of regional development efforts.15
Meanwhile, China has also benefited from the weakness of the region?s
other major power, Russia. Russia?s leadership had pushed the notion of a
?Eurasian Economic Union? to facilitate trade between its eastern European
and Central Asian spheres of influence, and before 2014 this showed signs
of life. That year, the Ukrainian people overthrew the country?s
Russianaligned government, to which President Putin responded with a thinly
disguised invasion of the Crimea and eastern Ukraine.16 The resulting
economic sanctions to punish Russia have damaged Russia?s economy, leading to
economic collapse in the other would-be EAEU states.17
A Silk Road For Capital
This has made central and western Asia especially attractive to China,
whose SREB plan envisions trade and investment in infrastructure and
resource development along an east-west axis through western China and
across Eurasia. Adhering to the convention that Chinese foreign policy is an
extension of domestic policy priorities, the Chinese plan is in part a reaction
to Beijing?s own vulnerability in its western province of Xinjiang, which
has been plagued by ethnic strife since 2008.18 The SREB plan can be read
as an attempt to boost the economy of Xinjiang and make it a hub of trade
economically dependent on China.19 This is evidenced in the CPEC plan,
which relies on the Xinjiang city of Kashgar as such a hub.20 However, it
would be na?ve to say that China seeks to incorporate Xinjiang for solely
economic reasons. Over time, China?s efforts in that province and Tibet
have reached beyond the economic and into much-resented attempts at
cultural influence.21 An important consideration is that the SREB could
backfire on this objective due to the greater connection to countries affected by
terrorism (including Pakistan), as well as the possibility that regional
nations will balance China?s economic influence by making strategic political
networks with other powers.22
According to Guiguo Wang?s analysis of China?s FTAs, there is a
trend of growth in China?s use of bilateral FTAs to fill the void in
international trade cooperation left by the breakdown of Doha Round talks.23
Wang traces the development of Chinese FTAs, from its agreements with
its own ?Special Administrative Regions? of Hong Kong and Macau in
2003 (the same year Pakistan and China concluded their first ?Preferential
Trade Agreement.?)24 A rule through which Wang analyzes China?s FTA
development and foreign policy generally is that it is an extension of the
state?s domestic policy, and trade with Pakistan became important to
connect the restive province of Xinjiang to China?s economy and the outside
Pakistan was one of first countries to get a bilateral trade agreement
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with China, and in 2008 China and Pakistan amended their FTA, a
combination of five smaller agreements, to promote bilateral investment.26 Wang
traces four stages in the evolution of trade relations: first, the 2003
agreement for preferential tariffs towards each other?s exports, followed by an
?Early Harvest? program providing for more tariff elimination.27 This led
the way to the 2008 amendments and a 2009 agreement on trade and
services, making the China-Pakistan FTA the most thorough Chinese bilateral
FTA as of Wang?s publication.28
China?s pattern of FTA negotiation involves tailoring each agreement
individually, and there is no template used (though all of its FTAs require
the signatories to recognize each other?s ?market economy? status.)29
Although China carries substantial economic leverage into each FTA
negotiation, it has had to make concessions of its own to maintain trade relations
with its desired partners, including curtailing the use of agricultural
subsidies.30 Whether the rise of the SREB will allow more direct Chinese
influence over other countries is an open question.
China also does not opt for rigid dispute settlement provisions, instead
relying on conflict avoidance through negotiation.31 However, more
recently, China has made a pivot to accepting investor-state dispute settlement
through arbitration, qualified by a statute of limitations, administrative
review, and the supremacy of treaty law over domestic regulations.32
Guiguo Wang notes the priorities of China in concluding FTAs are
geopolitics, resource supply, and domestic economic needs.33 He also
identifies some unique problems that China faces, influencing its approach.34
Wang provides a survey of China?s agreements as examples for each of his
claims. The China-Pakistan agreement, he says, fulfills FTAs? ?primary
purpose? of economic development, the elimination of trade barriers, and
succeeds in promoting bilateral trade, making it a relatively adequate
standard by which to judge other Chinese FTAs. 35
China?s trade policy also involves long-term strategic objectives,
particularly in regard to winnowing inefficient sectors of the economy and
securing an energy supply, which is a critical aspect of the CPEC agreement
as China consumes a considerable quantity of oil and nonrenewable fuels.36
A Silk Road For Capital
China has also aggressively pursued trade with the oil-rich Central Asian
bloc of the former U.S.S.R. through the same mechanism of offering
preferential trade treatment in exchange for direct foreign investment.37
Geopolitical considerations also influence the patterns of Chinese trade
efforts. While, according to Wang, China?s economy is not the dominant
force in East Asia due to the influence of the U.S. and Tiger economies
(Singapore, Taiwan, Hong Kong and South Korea), FTAs expand its
influence while at the same time giving nations that distrust China a reason not
China faces additional challenges in reforming the international free
trade regime. In the Sino-Pakistani trade relationship, limited bad faith
continues as Pakistan continues to illegally avoid Chinese tariffs.39 China, for
its part, quietly inserted a provision into the FTA requiring Pakistan to give
preferential treatment to goods for Hong Kong, even though that state was
not party to the agreement.40 Examples like these give some credence to the
international view of China as a somewhat cunning and manipulative trade
Wang predicts China will continue to use FTAs to influence the rules
of world trade and pursue its strategic interests, perhaps against the will of
?first world? nations.42 China has been inhibited in its pursuit of FTAs with
several countries due to their distrust of Chinese motives, although the
sudden reversals in U.S. trade policy spurred by the inauguration of President
Donald J. Trump may change this dynamic.43
The Chinese trade policy, as stated above, may get a boost from the
apparent fall of the Trans-Pacific Partnership (TPP).
The critically endangered trade agreement would have involved
Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru,
Singapore, and Vietnam in significantly enhanced trade with the U.S. Yet
the agreement would require ratification by both the U.S. and Japan to go
into effect, and the Trump administration?s official withdrawal from the
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deal has extinguished the prospect of American entry.44 Ironically, the
treaty?s framework could allow China to step in to replace the U.S.45
Opposition to expanded free trade in the U.S. came not solely from
Trump, but from all across the political spectrum. The pill that citizens of
many signatory nations found hardest to swallow was the treaty?s Article 9
Investor-State Dispute Settlement (ISDS) provisions, which would
potentially endanger public policy in each nation on a large scale due to the
multilateral nature of the treaty and the widening of ISDS?s scope over time.46
It did not help that Article 25.5 of the agreement set out substantial
regulatory procedural requirements, and exceptions to both articles were nearly
China?s western strategy embodied in the SREB plan is all the timelier
due to U.S. leaving Afghanistan, the collapse of Russia?s economy and
influence, and China?s need to hold down Xinjiang. In the best-case scenario
for China, it and Russia could share unchallenged dominion over the region,
but several hurdles, not the least of which is Russia?s demonstrated bad
faith, exist that could hinder this vision.48
Despite the relative decline of U.S. and Russian (EAEU) influence, the
Chinese will not be able to come into the region without controversies of
their own, and the strictly-business orientation of the SREB plan deprives
China of the ability to exercise strategic influence.49 Mere economic ties,
strengthened by infrastructural upgrades, would still be strategically
significant for China, as the SREB would direct international trade through the
frontier provinces of Xinjiang and Tibet and give China a secure supply of
oil and gas.50 Clarke also notes a particular risk with this approach: as China
has coupled economic development efforts with thinly veiled cultural
imperialism, CPEC infrastructure could provide a route for extremists from
elsewhere in Asia to infiltrate and supply separatists in its outlying
For the purpose of SREB ?readiness,? Asia?s nations can be divided
into four main, albeit loose, groups.52 The first is comprised of smaller, less
internationally significant powers, a category into which Mongolia would
likely fall.53 Countries that have territorial disputes against China, most
notably India, are the second group, with ?sub-regional powers,? who
command local but not large-scale influence, in the third.54 Finally, the fourth
and most critical group, are the ?pivot states? which have a history of good
relations with China and achieve a certain threshold of national power.55
Pakistan, which has received the most significant early benefits of SREB
policy, is part of this last group.56
III. PAKISTAN?S BACKGROUND AND THE CPEC
Since its independence and separation from India in 1947, Pakistan has
sought to counter the influence of its much larger neighbor through a
combination of strategic alliances and military might. Chief among the nation?s
international benefactors have been the United States, to which Pakistan
was an important ally in both the Cold War and the more recent campaigns
in the Middle East, and China, which has sought to bolster Pakistan as a
counterweight to India.57 One of the most significant cooperative efforts
with the latter nation was the design and completion of the impressive
Karakoram Highway in the 1960s over the Himalayas that separate them.58 Yet
development in Pakistan has always faced the challenge of internal and
external conflict. Pakistan has always given great importance to the
maintenance of a strong military, yet few nations that invest so heavily in military
might can escape the armed forces? influence on civil and international
politics. Since its independence, Pakistan has experienced several periods of
authoritarian military rule, most recently with the government of General
Pervez Musharraf, whose ouster in 2009 sparked remarkable political
instability.59 The current civilian government under Nawaz Sharif, however, has
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evidently held onto power well enough to encourage renewed Chinese
efforts at economic union.60
The announcement of the China-Pakistan Economic Corridor earlier in
this decade signals a new era for China?s relationship with Pakistan and
may well serve as a template for future Chinese investment pacts with other
nations in South and Central Asia. The root purpose of such a pact is the
attractiveness of Pakistan?s ports on the Arabian Sea (which, after all, was a
main motivator in the Karakoram Highway?s construction).61 Indeed, one of
the most important aspects of the plan is the expansion of the port of
Gwadar and an overland rail connection to this port from China.62 However,
the scope of the CPEC as planned goes much further, essentially amounting
to an agreement to use Chinese money and loans to bind the two nations?
economies on terms favorable to the Chinese.63 Projects that fall under the
plan?s framework include upgrades both to the Gwadar port and
surrounding area; energy infrastructure; transportation infrastructure (including
roads, railways, and improvements in Pakistani cities); ?Investment and
Industrial Cooperation? (including through SEZ planning), and ?other areas
of interest mutually agreed upon.?64
The CPEC agreement is paralleled by another Chinese plan to
facilitate trade and infrastructural development with India, Bangladesh, and
Myanmar.65 Another regional power that may soon join this trade network is
the long-closed market of the Islamic Republic of Iran, which has indicated
an interest in joining the CPEC agreement.66 In fact, development plans for
the port of Gwadar include pipelines to transport natural gas and oil from
Iran.67 The pending lift of international sanctions on Iran will undoubtedly
affect the integrated market economy of South Asia in a manner beyond the
scope of this article.
The first phase of CPEC includes an ?Early Harvest? round of projects
financed at a 1.6% interest rate, and will feature an all-new road and
accompanying railway to Gwadar to replace the somewhat dangerous
Karakoram Highway.68 China is not the only foreign power contributing to the
corridor, either; Pakistan?s erstwhile colonizer, the United Kingdom, has
provided grants for road construction to complement the main CPEC
Under the agreement, Gwadar will be a free trade area to be modeled
on China?s Special Economic Zones (SEZs); the port itself will be leased
(on a 43-year term) to China, and tax breaks will benefit Chinese investors
in its construction.70 The energy projects will be completed by private
companies and financed by the Chinese Ex-Im Bank.71 Controversy continues to
exist over secrecy regarding financial aspects of the deal.72 The CPEC
differs from other ?economic corridors? of the SREB in that it is simply a
bilateral deal and does not involve multi-party consultation that both the
Bangladesh-China-India-Myanmar and China-Russia-Mongolia corridors
will require. With a relatively one-sided relationship between the two
countries, it perhaps makes sense that secrecy and rushed planning are concerns.
Qureshi presents a ?framework? of the legal issues, beyond trade
relations, that confront the CPEC. China has presented the ?One Belt, One
Road? initiative as a ?new model of international cooperation and global
governance,? which reflects the contemporary broadening of the goals of
free trade and national development from simply an economic matter to a
?holistic? strengthening of society.73 The CPEC agreement will have to
meet this standard to be seen as part of China?s ?new model? for trade
relationships. Beyond this, it must benefit all of Pakistan to be legal by that
country?s standards since the Pakistani constitution mandates that civil
projects equitably distribute benefits.74 Qureshi notes that this would be the
most likely basis for a legal challenge to the project from within Pakistan.
Meanwhile, the specifics of the CPEC plan beyond stated intentions have
been kept obscure from the public, as most of the China-Pakistan
negotiations are conducted through publicly unavailable Memoranda of
Under68 CPEC Projects, PAKISTAN BOI, http://boi.gov.pk/InfoCenter/CPEC.aspx (last visited
Feb. 7, 2017).
69 Shahbaz Rana, UK to Partner in CPEC, Provide $121.6 Million Grant, THE EXPRESS
TRIBUNE (Sept. 1, 2015),
70 Qureshi, supra note 77, at 790.
73 Qureshi, supra note 77, at 782.
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standing.75 What does come about may be subject to scrutiny from the
International Monetary Fund, as Pakistan?s efforts to fund the project and
commit to China-friendly fiscal policy may implicate its extended fund
arrangement with that organization.76
Qureshi asserts that the Pakistani public has a right to greater
information about the project if it would bind Pakistan?s fate to China, and that
the lack of transparency in matters including corridor alignment to be a
significant flaw.77 (Editor?s note: since Qureshi?s article, the Chinese and
Pakistani governments have revealed a CPEC ?Master Plan.?)78 The plan may
create a foreign-owned chunk of land across the length of the country, and
its economic effects have already distorted competition for homegrown
business, Qureshi acknowledges that the sheer size of China?s investment in
Pakistan discourages rational discourse about its impacts.79
Security is an issue of its own. Although the spine of the corridor was
moved away from the dangerous Western borderlands of Pakistan by
government initiative, it must still traverse Pakistan?s restive province of
Balochistan to reach Gwadar, a fact that has brought no small amount of risk to
construction.80 A security issue of a different dimension lies in the fact that
the corridor is to pass through the disputed territory of Kashmir, which is
one of many aspects of the project, besides its inherent nature of
strengthening Pakistan, that has earned objection from India.81 The aggressive posture
of India under its nationalist Prime Minister have led some to question
China and Pakistan?s ability to secure the corridor while avoiding international
conflict, especially as China has continued to cultivate enmity from India
by taking Pakistan?s side at the United Nations and blocking India?s
membership of the Nuclear Supplier Group.82 However, Pakistan has shown a
strong commitment to protecting ongoing construction, and international
tension has not stopped China from pledging the $46 billion of investments
3 (Editor?s Note: since 2016
, this number has been revised
Pakistani Trade Law
Pakistan?s main pieces of legislation concerning foreign investment
are the Foreign Private Investment Act (FPIA) of 1976 and the
investorfriendly Protection of Economic Reforms Act (PERA) of 1992.85 Through
these laws Pakistan has sought to promote an environment friendly to
foreign investment in spite of political instability since FPIA?s adaptation.86
The more fundamental FPIA applies to all ?foreign private
investment? and provides rules on calculating compensation in cases of
expropriation, while PERA prevents entirely the state expropriation of any
privatized interest.87 FPIA provides for due process, the protection of agreements
between foreign investors or creditors and anyone in Pakistan if the
government moves to acquire related investments in the public interest, and the
equal national treatment of foreign, national investors for tax purposes.88
Further, it specifies that any law or regulation more stringent to protect
foreign investments will override FPIA, which PERA did in some cases when
it came into force.89 However, despite the due process requirements and
judicial review provisions of both laws, few investors have brought claims
under either to Pakistani courts, likely due to persistent corruption.90
Unlike subsequent investment and trade agreements between Pakistan
and China, the FPIA does not separate its definitions of investor and
investment. Its substitute term for ?investor? is ?foreign capital,? which is
defined as ?an investment made by a foreigner in an ?industrial undertaking?
in Pakistan??whether it be in the form of foreign exchange, imported
machinery/equipment, or in any other form the federal government ?may
aphttps://www.stratfor.com/analysis/46-billion-tie-binds-china-and-pakistan; Nasir Jamal, The
Cost of CPEC, DAWN (March 12, 2017), https://www.dawn.com/news/1320028.
85 Gouri, supra note 7, at 40.
86 See ?Mohammad Zia-ul-Haq,? Encyclopedia Brittanica, https://www.britannica.com/
87 Foreign Private Investment Act of 1976 and Protection of Economic Reforms Act of
89 ?Provided that nothing in this Act shall be in derogation of any facilities or protection
specifically sanctioned by the Federal Government to foreign private investment in the case
of particular industrial undertaking or a class of industrial undertakings or such facilities or
protection as may be available to foreign private investment under a bilateral investment
treaty.? Article 1, FOREIGN PRIVATE INVESTMENT (PROMOTION AND PROTECTION) ACT 1976.
90 Gouri, supra note 7, at 54.
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prove for the purpose.?91
The law defines ?foreign private investment? as ?investment in foreign
capital by a person who is not a citizen of Pakistan or who, being a citizen
of Pakistan, is also the citizen of any other country or by a company
incorporated outside Pakistan. Notably, does not include investment by a foreign
government or agency of a foreign government,? and it clearly protects
investments, not investors, making it not entirely harmonious with the
bilateral investment treaty (BIT)?s and FTA?s treatments of the subjects.92
The China-Pakistan BIT and FTA do not mention ?[f]ull protection
and security? for each country?s investments in the other, which could be
significant as several aspects of CPEC cross dangerous parts of Pakistan.93
While this may be a minor difference, such protection is provided for in the
Pakistan-Japan BIT, the language of which mentions an obligation to
provide ?constant protection and security.?94
Companies from China, not corrupt foreign governments, control
money under the CPEC agreement, but these companies also then have the
ability to pay off foreign rulers, as China has no equivalent of the U.S.?s
Gouri argues China and Pakistan need collective strategy to mend
fences with India, contrary to other assertions that China should seek to heal
relations with India on its own.96 He also criticizes the CPEC for not
guaranteeing a ?fair distribution of benefits,? which could leave Pakistan in the
position of Latin American countries where strong economic growth has
not benefited society in total, but he does not offer a way to achieve this,
nor does he offer strategy on implementing fair labor standards in the
Furthermore, Chinese corruption remains an elephant in the room
despite social responsibility provisions in the CPEC agreement.98
IV. MONGOLIA?S ROLE AND HISTORY
Mongolia?s history, well before the current age of global capitalism,
has been colored by rivalry with its larger southern neighbor, China. It only
91 Pakistan?s Foreign Private Investments Act, http://boi.gov.pk/UploadedDocs/
92 Gouri, supra note 7, at 62.
93 Qureshi at 782.
94 Japan-Pakistan BIT, at Japan BITs, INVESTMENT POLICY HUB, http://investmentpolicy
95 Gouri, supra note 7, at 65.
98 China Corruption Report, GAN BUSINESS ANTI-CORRUPTION PORTAL, http://www.
business-anti-corruption.com/country-profiles/china (last visited Feb.18, 2018).
achieved its current political independence from China in the early part of
the last century through becoming a satellite of Soviet Russia, and since the
overthrow of its communist regime in 1990, the nation?s government has
sought to diversify its economy and guarantee its people an adequate
standard of living despite greatly increased poverty.99 Mongolia?s economy
entered a new era at the turn of this century with the opening of copper and
gold mines in the bountiful Oyu Tolgoi, but the discovery of vast natural
resources has forced the government to toe a fine line between encouraging
the influx of foreign capital and attempting to distribute some of that capital
to the nation?s people.100 Jennifer Lander has traced the back-and-forth of
investment policy between achieving these two objectives since the 1990s,
identifying several concrete shifts in the law whose substance will be
discussed further later in this paper but which will be summarized here for the
In the neoliberal spirit of the 1990s, Mongolia?s 1997 Minerals Law
offered openness and reliability to foreign investors, including through the
guarantee of investor-state ?stability agreements? to insulate investments
made at a given point in time from later changes in investment and tax
law.102 While this encouraged substantial investment in the Oyu Tolgoi, the
lingering inability of Mongolia to use foreign capital to alleviate poverty
among its people, and concerns that the nation?s economy would fall into
the ?trap? of resource dependence, triggered changes in the law from 2006
on that altered the status of international business there.103 A 2006 law
sought to give the Mongolian government a stake in the operation of the
mines, but serious issues arose from the government?s need to provide
equity for this stake without going into debt.104 The collapse in the mineral
market in 2012 and fears of China stepping into the mineral business there led
to the passage that year of the controversial, highly restrictive Strategic
Entities Foreign Investment Law (SEFIL).105 This law attracted heavy
criticism before its passage and led to a collapse in international investment
before being replaced in late 2013. The state has continued since 2013 to
encourage foreign investment again while asserting political autonomy in
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the face of China?s growing economic ?soft power,? including through
symbolic gestures to thwart China?s political principles.106 Mongolia?s
situation may well be instructive for other Central and South Asian nations
courting Chinese investment, and Mongolia did not even reach the crisis
point that it did through selling too much to China; it had consciously
attempted to balance the sources of foreign investment to avoid Chinese or
Russian domination yet still found itself at the whim of greater global
Corruption in the Mongolian government has also served to tarnish the
country?s international image and attractiveness to investors, and Mongolia
has been unable to address significantly worsening economic inequality
Although China and Mongolia conduct a significant amount of trade,
they do not have a free trade agreement in place; a proposed FTA in 2010
went nowhere.108 The decline of the Mongolian economy in recent years
has perhaps contributed to its failure to conclude more FTAs (despite
succeeding in doing so with Japan), and though South Korea has notably
opened negotiations, Mongolia has remained under Chinese economic
domination.109 Mongolia?s debt load is also much greater than the size of its
GDP, and an IMF bailout has not lessened its economic vulnerability.1
Mongolia?s economic dependence was as strong as ever:
upwards of 80% of Mongolia?s export value goes to China, and a third of its
imports come from there; by a well-regarded estimation three-quarters of
Mongolia?s economy is dependent on China.111
SEFIL restricted foreign entities, state-owned or private, from owning
more than half of the stock in any company dealing in a ?strategic entity,?
and such ?strategic entities? could include any economic sector that
Mongolia?s government decreed.112 An exception to this rule for mineral
prospecting and exploration did nothing to redeem the law to investors, as it simply
meant that companies would have to divest shares as soon as they passed
the exploration stage of the mining process.113 The backlash among, and
consequent withdrawal of, many foreign investors from Mongolia led a
desperate government to impose exit bans on some, further undermining
investor confidence and the country?s international standing at large, and the
manner in which Mongolia?s government failed to issue regulations that
might have helped investors navigate its requirements certainly did not help
matters.114 The law was widely criticized an example of ?resource
nationalism,? a larger trend of statist intervention against investor control in many
natural resource-dependent economies.115
Mongolia, like Pakistan, is part of the SREB vision, being enmeshed in
a ?China-Mongolia-Russia economic corridor? declared by President
Chinese Xi Jinping in 2014.116 An agreement between the three countries in
June 2016 formalized the plan, which already stands to gain significant
clout due to China?s impending admission to the United Nations? TIR
(International Road Transport) customs program for international trucking
(TIR-licensed trucks will be able to pass through the countries with just one
customs inspection.)117 However, the much greater territory that trade must
traverse to reach outside markets, coupled with Mongolian ambivalence
about Chinese influence and Russia?s economic weakness, means that
strategic corridors like CPEC remain a higher priority.
Mongolia?s 1997 Minerals Law was a major incentive to foreign
investment through the use of stability agreements detailed above, but in 2006
the national government acted to protect the ?strategically important? Oyu
Tolgoi mines by authorizing itself to have up to a 34% stake in the mines
through individualized agreements with investors.118 The country also
authorized a ?windfall profits? tax that it later attempted to use against a
forNorthwestern Journal of
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eign corporation in a possible violation of a double-taxation treaty.119 While
some raised red flags (Williams), the country still had a stable investment
framework and saw a significant investment boom until 2011?s drop in
copper prices hit.120121
Fiscal stability and integrated budget laws limited the government?s
ability to finance its own equity stake in the Oyu Tolgoi mines following a
2006 investment agreement, and a sudden collapse in revenue led to a large
public debt that has dogged Mongolia ever since.122 It was in this
environment that Mongolia introduced SEFIL as a stronger attempt to more
equitably distribute the benefits of its mining industry, but the strict provisions of
the law combined with erratic government actions to enforce it led to a
massive withdrawal of investments and a continuing fear of state
Decline and Return of Investment?
According to the U.S. Department of State, foreign investment in
Mongolia peaked at the height of the country?s resource boom in 2011, and
has fallen 85% since.124 Although the contemporary drop in mining profits
was partly to blame, the country?s populist policy course was a much bigger
Since the country?s regime change in 2014, there has been a somewhat
more optimistic outlook, as the new government has moved to restore
foreign investment and open new mines.126
The country?s new Prime Minister has stated that the country?s deals
with trading and investment partners are back on track, but it is unclear
whether or not this rhetoric applies to non-mining investments. The rule of
law remains weak, as Mongolia has retained authority to imprison foreign
investors or bar them from leaving the country.127
Although the current government supports new FDI and has promised
to honor international arbitration judgments, it has yet to demonstrate this
friendliness in a significant capacity, and the previous government?s use of
exit bans and lawsuits against withdrawing investors have led to skepticism
120 Id. at 404.
122 Lander, supra note 114, at 10.
124 U.S. DEP?T OF STATE, ?2015 Investment Climate Statement-Mongolia,? http://www.
126 Mongolian Investment Law of 2013, https://www.mofa.gov.mn/new/images/banners/
127 Supra note 140, U.S. State Dept. on Mongolia.
of the state?s commitment to international trading norms.128
The Investment Law (IL) of 2013 sets forth legal rights and obligations
of investors, stabilizes the tax environment, and establishes concrete powers
and responsibilities of the central government.129 Foreign and domestic
investors are, once again, distinguished only by residence and not the stricter
standard of nationality, and both can invest in anything that the law itself
(as opposed to government decree) does not specifically restrict.130
Lander is careful to state that there is not an inherently negative
relation between the rule of law and investment regulation, and a recalibration
since the neoliberal 1990s was a sensible policy, not in itself an example of
irrational resource nationalism.131 In her view, the new Investment Law of
2013 represents an attempt to strike a balance between the competing
considerations of investor confidence and broad public benefit.132 The law
restricts government involvement, provides national treatment to foreign
investors, stabilizes tax rates, and provides new incentives for investments
while significantly reducing government approval procedures.133 Eligible
projects under the law, for example, can receive tax stabilization certificates
that guarantee favorable treatment for 27 years, although their limited
transferability may present problems down the road.134 Further cause for
optimism is seen in the stated purpose of the agency in charge of foreign
investment, which is mandated to promote the value-added production so
often missing from natural resource economies.135
John P. Williams saw Mongolia?s post-2006 investment restrictions,
culminating in SEFIL, as part of a resource-nationalist trend but did not see
particular cause for alarm in its provisions.136 Together with contemporary
Kazakh and Indonesian mining legislation, he saw a justified motivation in
concerns over Chinese control, but his analysis of the law largely ignored
the chaos of its implementation on the ground.137 According to Williams,
128 ?Mongolia?s New Investment Law a Good Start, but More Reforms Needed,? OXFORD
BUS. GROUP (2015),
129 ?Mongolia Revises Its Regulatory Framework for Foreign and Domestic Investment,?
HOGAN LOVELLS, http://www.hoganlovells.com/files/Uploads/Documents/13.11.01_F
ber_2013.pdf (last visited March 23, 3017).
135 ?Invest Mongolia Agency,? THE DIPLOMAT,
http://thediplomat.com/tag/investmongolia-agency/; Williams, supra note 135, at 401-03.
136 Williams, ?Global Trends and Tribulations in Mining Regulation,? at 401.
137 Williams, supra note 135, at 402.
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statist mining policy is a natural shift from the privatization frenzy of the
1980s and 1990s, before which most mines in the developing world were
state-owned.138 In Mongolia, Williams wrote, the 1997 investment statute,
with its first-come, first-serve policy towards mining claims and the
stabilization certificate concept, was part of the 1980s-90s neoliberal legal trend
that the 2006 adjustment abruptly curtailed.139 From 2006 on, government
regulations as described above gave the state the power to avail itself of
equity in the mines by decree.140 Like Lander, he did not see this as a
reactionary policy, instead noting that it was made partly as an attempt to
recover, through investors, substantial funds that Mongolia had paid to the
Soviet Union for mineral exploration before 1991.141 However, the
government?s hostility to investment, manifested through erratic suspensions of
title, culminated in the 2012 law that promulgated a wide array of
government approval requirements, including mandatory approval of acquisition
by any foreign investors of 33% or more of any resource deemed
?strategic,? mandatory government approval of any acquisition or operations by
foreign SOEs; and a parliamentary vote requirement if the value of
transaction for over 49% of shares of a company exceeds U.S. $76 Million.142
The law also placed taxes on all transactions and allowed the national
government to place local content procurement regulations applying to all
mining companies in Mongolia.143
Yet, contrary to almost all analytical scholarship on the issue,
Williams predicted that none of the government?s investment policy would be
harmful.144 He cited as evidence the continued successful floating of shares
and bonds on the Hong Kong Stock Exchange by companies with mining
properties in Mongolia, perhaps ignoring a diverse investment portfolio of
those companies.145 Additionally, he viewed the continued planned status of
two of the world?s largest mining projects in Mongolia and the country?s
17% economic growth in 2010 (before the bust) as evidence of a
fundamental economic soundness that was later shown to be illusory.146 Mongolia, in
fact, at a glance appears to have done much worse in regard to foreign
investment than the other Asian countries included in Williams?s analysis, for
138 Id. at 394-95.
139 Id. at 402
140 Id. at 401.
142 Id. at 402.
144 Id. at 402?403.
145 Id. at 402.
146 Id. at 403; Enda Curran, Michael Kohn and James Mayger, ?The Land of Genghis
Khan is Having an Epic Economic Meltdown,? BLOOMBERG NEWS (Aug. 18, 2016),
which he presented gloomier outlooks.147
The loathed SEFIL was replaced after little over a year by the 2013
Investment Law, which, crucially, declared set ?strategic sectors? instead of
relying on executive decree to determine them.
148 The 2013
sectors are minerals, communication and finance; government approval
requirements for foreign state-owned enterprises (SOE) are limited to those
investing in over 33% of an entity, and an executive agency, not Parliament,
The law still provides regulatory oversight for foreign investment, as it
requires that all foreign entities must be registered as ?entity with foreign
investment? (EFI) or as a ?representative office? to conduct activity in
Mongolia. These categories are distinguished by the definition of an EFI as
a business, incorporated in Mongolia, at least 25% owned by foreign
investor with a minimum contribution of $100,000, while a representative office
can only essentially be an outpost of a foreign company that is not
authorized to take in revenue from business activity.150 Yet a private individual
under the new law could buy full ownership of a Mongolian company
without needing to receive government approval.151
The agency created to monitor foreign investment is delegated broad
power under the law to oversee its implementation, issue tax stabilization
certificates to investors, make determinations about investments by foreign
SOEs, and help investors in planning investments while protecting their
interests.152 (Author?s note: It is unclear whether this last purpose is at conflict
with government or public interest.) However, in a nod to the continued
wariness of Chinese influence and tax dodging, the agency must, if
approving a foreign SOE?s investment, consider whether investment conflicts with
national security interests, adversely impacts government revenue, or
constrains competition.153 The agency?s viability would appear to hinge on
whether the agency sinks to the level of corruption other Mongolian
government bodies have.154
The signals from Mongolia?s government have been mixed, as populist
former wrestler Khaltmaa Battulga won the 2017 presidential election by
running on anti-China rhetoric and resource nationalism.155 At almost the
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International Law & Business
same time of his election, China imposed sudden new border crossing
restrictions to the effect of choking off Mongolian coal and copper exports
and causing a 120-kilometer truck backup.156 Whether or not China
intended this as a measure of intimidation, it certainly underscored the persistent
anxiety in Mongolia?s politics of overdependence on China. Battulga?s
declared intention to foster new trade connections with Russia may too
depend on Chinese investment in the CRM corridor, investment for which
China is not shy to impose conditions.157
Mongolia?s case, for all its qualifying factors, is an instructive example
of the hardships that can result for both sides when a nation open to foreign
investment restricts it out of fear of outside control.
Contrasts with Pakistan
Foreign-owned property under CPEC (commercial or industrial) is
safe from government acquisition, a stark contrast with Mongolia?s
pre2014 system.158 Pakistan?s PERA already forbids the taking of privatized
property.159 For the purposes of dispute resolution, arbitration has priority
over judiciary methods in the China-Pakistan BIT.160 This is not the case
with the China-Mongolia agreement, which is relevant, as the judiciary is
inherently less reliable in an international context.161
Objective statements can determine what gets protected under a BIT.
The China-Mongolia BIT?s objectives are to foster the development of
economic cooperation between the countries, 162 a much less inclusive
provision than that in the China-Pakistan BIT, whose purpose is ?to encourage,
protect and create favourable conditions for investments by investors?
going between states, a much more inclusive statement.163
The China-Mongolia BIT gives separate definitions for Mongolian and
Chinese investors. For Mongolian investors are defined as ?[n]atural
persons who have nationality of [Mongolia]? or ?[e]conomic entities
incorporated or constituted in accordance with the laws of [Mongolia] provided that
they are competent under those laws to make investment in the territory of
the other contracting state.? Chinese investors are ?[n]atural persons who
have nationality of the people?s republic of China? or ?[e]conomic entities
established in accordance with the laws of the People?s republic of china
and domiciled in the territory [thereof].? The China-Pakistan BIT does this
as well, and Gouri criticizes the structure as a possible source of confusion,
especially since the FTA makes no such distinction.164
Differing definitions of investors between countries are a common trait
of BITs between China-Pakistan and China-Mongolia, and could reflect a
lesser degree of mutual understanding regarding each other?s corporate
In the future, we may expect to see bilateral agreements between
regional nations and China to follow one of either two paths?becoming more
uniform on Chinese terms or becoming even more specifically tailored to
each country?s needs. Given the comprehensive nature of Chinese plans,
one may see initial endeavors with greater carve-outs for national
idiosyncrasies give way to structured agreements between multiple parties, but to
discuss this possibility is to indulge in speculation.
V. CONCLUSION Although the legal regimes it must confront are varied and sometimes unpredictable, the evacuation of other competing powers in Asia has left
China in a very favorable position to use its ?soft power? to grow its
economic influence out over the continent. Other countries welcome Chinese
investment, although the degree to which they are willing to accommodate
the unavoidable accompanying expansion of influence varies. Pakistan, by
keeping an open door to foreign investment and staying friendly with
China, is the first in line to reap the rewards of this vision, but will also be an
example to other Asian states of what the consequences of massive Chinese
investment are. Mongolia has not followed this route due to wariness over
China?s current domination of its economy, yet China has shown its
willingness to handle different states on a case-by-case basis in FTA and
economic corridor negotiations. The example of Mongolia remains instructive
in showing that inviting foreign investment is a one-way street to economic
163 China-Pakistan BIT.
164 Gouri, supra note 7, at 25.
165 Id. at 24-25; China-Pakistan BIT.
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growth which a country can start down easily and have a hard time turning
around. An attempt to seriously restrict its use can carry drastic
consequences for a country?s economy. The differences between the legal
postures of these states towards Chinese investments are readily visible, both in
their own domestic law governing foreign investments and in their
international agreements with the Chinese government. Yet, as mentioned before,
China has demonstrated a determination to overcome the differing political
and legal postures of each country in its plan, and if it succeeds, it may well
reap the rewards of unparalleled influence when world trade leaders
1 David Kleimann & Joe Guinan, THE DOHA ROUND: AN OBITUARY (Global Governance Programme , 2011 ).
2 Randi Brown , TPP? TTIP? Key Trade Deal Terms Explained , BROOKINGS INSTITUTION (May 20 , 2015 ), https://www.brookings.edu/blog/brookings-now/ 2015 /05/20/tpp-ttip -keytrade-deal-terms-explained/.
3 Vicki Needham , Trump Vows to Overhaul 'Horrible' Trade Deals, THE HILL (July 21 , 2016 ), http://thehill.com/policy/finance/288812-trump -vow-to-overhaul-us-trade-policy.
4 Brooke Wylie , Donald Trump: China Exploiting US Isolationist Agenda to Gain Power in Asia, Experts Say , ABC NEWS ( June 10 , 2017 ); see also Jethro Mullen & Charles Riley, China and Europe are Moving Forward Without Trump, CNN MONEY (June 1, 2017 ), money.cnn.com/ 2017 /05/31/news/economy/china-europe -eu-trump-us-trade/index .html.
5 The other half of OBOR is a ?Maritime Silk Road,? a series of port upgrades that will facilitate increased shipping to southeast Asia, the Middle East, and Africa. Tian Jinchen , One Belt and One Road: Connecting China and the World, MCKINSEY (July 2016 ), http://www.mckinsey. com/industries/capital-projects-and-infrastructure/our-insights/onebelt-and-one-road-connecting-china-and-the-world.
6 AP , Chinese President Xi Hosts Belt and Road Forum, SOUTH CHINA MORNING POST (May 15 , 2017 ), https://www.scmp.com/video/china/2094362/chinese-president -xi-hostsbelt-and-road-forum.
7 Ahmad Gouri , Towards Greater Integration? Legal and Policy Directions of Chinese Investments in Pakistan on the Advent of the Silk Road Economic Belt, 4 CHIN J COMP LAW 36 , 45 ( 2016 ).
8 Gregor Grossman , One Belt, One Road and the Sino-Mongolian Relationship , ASIENHAUS (April 9 , 2017 ), https://www.asienhaus.de/uploads/tx_news/2017_April9_ Mongolei UA _sec_01.pdf.
9 Country Profiles: Mongolia, OEC, http://atlas.media.mit.edu/en/profile/country/mng/.
10 Reuters, China, Russia, Mongolia Sign Economic Corridor Plan, XINHUA (June 24 , 2016 ), http://www.scmp.com/news/china/diplomacy-defence/article/1980597/china-russiamongolia -sign-economic-corridor-plan.
11 Deng Xiaoping , ENCYCLOPEDIA BRITTANICA, https://www.britannica.com/biography/ Deng-Xiaoping (last visited February 4 , 2017 ).
12 China FTA Network, MINISTRY OF COMMERCE OF CHINA , http://fta.mofcom.gov.cn/ english/.
13 Guiguo Wang , Current Developments: China's FTAs: Legal Characteristics and Implications, 105 A.J.I.L. 493 , 498 ( 2011 ).
14 Michael Clarke , Beijing's March West: Opportunities and Challenges for China's Eurasian Pivot , Orbis 60 FOREIGN POL'Y RES. INST ., no. 2 Orbis , 2016 , 296 .
15 Id. at 300.
16 Casey Michel , Even Vladimir Putin's Authoritarian Allies Are Fed Up with Russia's Crumbling Economy , THE NEW REPUBLIC (January 18 , 2015 ), https://newrepublic.com/ article/120778/eurasian-economic -union-putins-geopolitical-project-already-failing.
17 Clarke, supra note 18, at 302.
18 Usaid Siddiqui , The Ethnic Roots of China's Uighur Crisis , AL JAZEERA AMERICA (July 21 , 2015 ) http://america.aljazeera.com/opinions/2015/ 7/the-ethnic-roots-of-chinas-uighurcrisis .html.
19 Clarke, supra note 18, at 307.
20 Christine R. Guluzian , Making Inroads: China's New Silk Road Initiative, 37 CATO J . 135 , 143 ( 2017 ) ; see also Su-Mei Ooi and Kate Trinkle, China's New Silk Road and its Impact on Xinjiang , THE DIPLOMAT (March 5 , 2015 ), thediplomat.com/ 2015 /03/chinas-newsilk -road-and-its-impact-on-xinjiang.
22 Id. at 305.
23 Wang, supra note 17, at 500.
25 Clarke, supra note 18, at 298. Glut , Reuters (Jan. 12 , 2017 ), http://www.reuters.com/article/us-china -oil-cnpc-demandidUSKBN14W0WK (last visited Feb . 19 , 2018 ).
37 Wang, supra note 17, at 520.
39 Wang, supra note 17, at 514.
41 See also the new U.S. administration's position on Chinese currency manipulation . Joseph Adinolgi , Trump may soon label China a currency manipulator, Deutsche Bank says , Market Watch (Feb. 8 , 2017 ), http://www.marketwatch.com/story/trump-may -soon-labelchina-a-currency-manipulator-deutsche-bank- says- 2017-02-07.
42 Wang, supra note 17, at 514.
43 Ali Wyne , Does China Need More Friends in Asia?, The National Interest (Mar. 20 , 2016 ), http://nationalinterest.org/feature/chinas-next -move-build-alliances-15550.
44 Sarah Kimmorley , The Massive TPP Trade Deal is Dead After Obama Takes it Off the Table , Business Insider Australia (Nov. 14 , 2016 ) http://www.cnn.com/ 2017 /01/23/politics/ trans -pacific-partnership-trade-deal-withdrawal-trumps-first-executive-action-mondaysources-say/.
45 See, e.g., Allen Cone , Australia's Prime Minister Suggests China Could Replace U.S. in TPP , UPI (Jan. 24 , 2017 ), https://www.upi.com/top_news/world-news/ 2017 /01/24/ australias-prime -minister-suggests-china-could-replace- us- in-tpp/1561485267612/.
46 Steven Seidenberg , ? Trans-Pacific Partnership Raises Question: How Should Governments and Corporations Resolve Disputes??, ABA Journal (Nov . 2016 ), http://www.abajournal.com/magazine/article/trans_pacific _partnership_dispute_resolution (last visited February 28, 2018 ).
48 Clarke, supra note 18, at 309.
50 Id. at 302.
52 Xue Li and Xu Yanzhou, How China Can Perfect its 'Silk Road' Strategy: The Challenges Facing China's Silk Road Strategy and How to Overcome Them , THE DIPLOMAT (Apr. 9 , 2015 ), http://thediplomat.com/ 2015 /04/how-china -can-perfect-its-silk-roadstrategy/.
53 Despite its large territory, Mongolia is landlocked and sparsely populated .
54 Li & Yanzhou, supra note 68.
56 Gouri supra note 7 , at 40.
57 Donald Johnson , India-Pakistan Relations : A 50 -Year History , ASIA SOCIETY , http://asiasociety.org/education/india-pakistan-relations-50 - year-history.
58 Adam Hodge , Karakoram Highway: China's Treacherous Pakistani Corridor , THE DIPLOMAT (July 30 , 2013 ), http://thediplomat.com/ 2013 /07/karakoram-highway -chinastreacherous-pakistani-corridor/.
59 Jane Perlez & Salman Masood, Pakistan Ministers Are Called Before the Courts , N.Y. Times (Dec. 18, 2009 ), http://www.nytimes.com/ 2009 /12/19/world/asia/19pstan.html ?rref =collection%2Ftimestopic%2FMusharraf%2C%20Pervez&action=click&contentCollection =timestopics®ion=stream&module=stream_unit&version=latest&contentPlacement=51 &pgtype=collection.
60 Islamic Republic of Pakistan, Prime Minister's Office, pmo .gov. pk (last visited Feb. 7 , 2017 ).
61 See Asif Qureshi , China/Pakistan Economic Corridor: A Critical National and International Law Policy Based Perspective , 14 ( 4 ) CHIN. J. INTL . L. 777 ( 2015 ) [hereinafter ?Qureshi?].
62 CPEC , PAKISTAN BOARD OF INVESTMENT (BOI ), http://boi.gov.pk/InfoCenter/CPEC .aspx (last visited Feb. 7 , 2017 ).http://boi.gov.pk/InfoCenter/CPEC.aspx.
63 Nasir Jamal , The Cost of CPEC, DAWN (Mar. 12 , 2017 ), https://www.dawn.com/ news/1320028.
65 Rupak Bhattacharjee , Bangladesh, China, India and Myanmar Corridor: Ushering in a New Era of Interconnectedness, INDIAN DEFENCE REVIEW (Sept . 18, 2016 ), http://www.indiandefencereview.com/spotlights/bangladesh -china-india-and-myanmareconomic-corridor-ushering-a-new-era-of-interconnectedness/.
66 Syed Sammer Abbas , Iran Wants to be Part of CPEC, Says Rouhani , DAWN (Sept. 22 , 2016 ), http://www.dawn.com/news/1285404.
67 Engr Hussain Ahmad Siddiqui , CPEC Projects: Status, Cost and Benefits, DAWN (July 23 , 2015 ,), http://www.dawn.com/news/1194014.
76 Id. at 783.
77 Id.; Gouri, supra note 7, at 47.
78 Khurram Husain , Exclusive: CPEC Master Plan Revealed , DAWN (June 21 , 2017 ), https://www.dawn.com/news/1333101.
79 Gouri, supra note 7, at 47.
80 PTI , China May Talk to Pakistan About Terror Affecting CPEC , INDIA EXPRESS (Sept. 19 , 2016 ), http://indianexpress.com/article/world/world-news/china-may -talk-to-pakistanabout-terror- affecting- cpec- 3039519 /.
81 PTI , PM Modi Raises India's Concern Over CPEC Which Runs Through PoK , INDIAN EXPRESS (Sept. 4 , 2016 ), http://indianexpress.com/article/india/india -news-india/primeminister-narendra-modi-raises-indias-concern-over-cpec-which-runs- through- pok- 3013260 /.
82 Panos Mourdoukoutas , China Should Either Make Peace with India or Forget About CPEC , FORBES (Nov. 16 , 2016 ), http://www.forbes.com/sites/panosmourdoukoutas/2016/11/ 16/china-should -either-make-peace-with-india-or-forget-about-cpec/#b58689b22ee5.
83 The $46 Billion Tie That Binds China and Pakistan , STRATFOR (May 6 , 2016 ),
99 About Mongolia , UNITED NATIONS DEVELOPMENT PROGRAM , http://www.mn.undp. org/content/mongolia/en/home/countryinfo. html (last visited Feb . 18 , 2018 ).
100 Byambajav Dalaibuyan , The story of the discovery of Oyu Tolgoi , MONGOLIA FOCUS (Feb. 5 , 2018 ), http://blogs.ubc.ca/mongolia/2016/oyu-tolgoi-discovery/.
101 Jennifer Lander , A Critical Reflection on Oyu Tolgoi and the Risk of a Resource Trap in Mongolia: Troubling the 'Resource Nationalism' Frame, LAW, SOC . JUST. AND GLOB . DEV. J., 2013 , Vol. 18 ( 2 ), http://www2.warwick.ac.uk/fac/soc/law/elj/lgd/2013_2/ 2013 _ 2_lander/.
106 See e.g. Reuters, China Says It Hopes Mongolia Learned Lesson After Dalai Lama Visit , SOUTH CHINA MORNING POST (Jan. 25 , 2017 ), http://www.scmp.com/news/china/ diplomacy-defence/article/2065082/china-says -hopes-mongolia-learned-lesson-after-dalai.
107 Nyamosor Tuya and Jeffrey Reeves, PacNet # 82 - For Mongolia , Two Symbolic Steps in the Wrong Direction, CENTER FOR INTERNATIONAL AND STRATEGIC STUDIES ( Dec . 6, 2012 ), https://www.csis.org/analysis/pacnet-82r -response-pacnet-82-mongolia-twosymbolic-steps-wrong-direction
108 Zhou Yan , Free trade pact with Mongolia on the cards , CHINA DAILY (May 12 , 2010 ) http://www.chinadaily.com.cn/business/2010-05/12/content_9838829.htm.
109 Jung Suk-Yee , S. Korea , Mongolia Agree to Pursue EPA? BUS . KOREA (Jul. 18 , 2016 ), http://www.businesskorea.co.kr/english/news/politics/15254-korea -mongolia-freetrade-s-korea-mongolia-agree-pursue-epa.
110 Sharad K. Soni , Mongolia's New President is Mongolia First and China Last , EAST ASIA FORUM (Aug. 11 , 2017 ), http://www.eastasiaforum.org/ 2017 /08/11/mongolias-newpresident -is-mongolia-first-and-china-last/.
111 Bochen Han, ? The Trouble With China-Mongolia Relations,? THE DIPLOMAT , http://thediplomat.com/ 2015 /11/the-trouble -with-china-mongolia-relations/.
112 Leslie Hook , ? Mongolia's New Investment Law: Deterrent or Clarification?,? FIN . TIMES (May 18 , 2012 ), http://blogs.ft.com/beyond-brics/ 2012 /05/18/mongolias-newinvestment -law-deterrent-or-clarification/.
113 The Law on the Regulation of Foreign Investment in Entities Operating in Strategic Sectors, at MONGOLIA MINING JOURNAL , http://en.mongolianminingjournal.com/content/ 33226.shtml.
114 Ashley Lee , ? Investors Hope for Clarity on Mongolia Foreign Investment Law,? INT'L FIN. L. REV . (May 2013 ) at 14.
115 John P. Williams , Global Trends and Tribulations in Mining Regulation, 30 JERL 391 , 406 ( 2012 ).
116 Peter Bittner , ?China, Russia, Mongolia Sign Long-Awaited Economic Partnership Agreement,? THE DIPLOMAT (June 28 , 2016 ), http://thediplomat.com/ 2016 /06/china-russiamongolia -sign-long-awaited-economic-partnership-agreement/.
118 Williams, supra note 135, at 398.
147 See Lander , supra note 114.
148 Id. at 13-14; Revised Securities Market Law of 2013 (Mong .) (http://mse.mn/uploads/ laws/27aba6dbc709e17d808f9abe4b9a40511f70dfdb.pdf).
149 Id. at 13.
151 Hogan Lovells , supra n. 145 .
152 2013 Law.
153 Hogan Lovells , supra n. 145 .
154 See U.S. State Department on Mongolia, supra n. 140 .
155 Sharad K. Soni , Mongolia's New President is Mongolia First and China Last, EAST ASIA FORUM ( August 11 , 2017 ), http://www.eastasiaforum.org/ 2017 /08/11/mongoliasnew-president -is-mongolia-first-and-china-last/.
156 Chintushig Boldsukh , ?President Kh.Battulga and Mongolia-China Relations ,? UB POST (Sept. 12 , 2017 ), http://theubpost.mn/ 2017 /09/12/president-kh -battulga-and-mongoliachina-relations.
157 Chintushig Boldsukh , ? Chinese State Media Says China Can Help Mongolia Under One Condition,? UB POST (Feb. 9 , 2017 ), http://theubpost.mn/ 2017 /02/09/chinese-statemedia -says-china-can-help-mongolia-under-one-condition/.
158 Gouri, supra note 7, at 17; see ?Asia-Pacific: Mongolia: Investment Darling No More,? 32 Int'l Fin . L. Rev. 6 (March 2013 ).
159 Protection of Economic Reforms Act (PERA), http://www.na.gov.pk/uploads/ documents/1334289655_675.pdf.
160 China-Pakistan BIT , Feb . 12 , 1989 , at Investment Policy Hub, http://investmentpolicy hub.unctad.org/IIA/country/160/treaty/952.
161 Agreement Between the Government of the Mongolian People's Republic and the Government of the People's Republic of China Concerning the Encouragement and Reciprocal Protection of Investments, China-Mongolia (Aug . 25, 1991 ), UNCTAD I.I.A . No. 623 , http://investmentpolicyhub.unctad.org/IIA/mappedContent/treaty/940 (hereinafter ?ChinaMongolia BIT?). See also Mongolia Corruption Report , GAN BUSINESS ANTI-CORRUPTION PORTAL , https://www.business -anti-corruption.com/country-profiles/mongolia (last visited Feb . 18 , 2018 ).
162 China-Mongolia BIT .