China Lays the Legal Ground

I think it’s safe to expect Chinese corporations to be seizing foreign-owned property in Hong Kong and Taiwan soon, and taking steps to abandon the international arbitration system given these remarks on a new law that strips foreign state immunity by the Foreign Ministry.

Q: The Standing Committee of China’s National People’s Congress reviewed and passed the Law of the People’s Republic of China on Foreign State Immunity at a recent session. The law adjusted China’s previous stance of absolute state immunity and authorized courts in China to hear lawsuits against foreign states. What’s the reason for such an adjustment?

A: Enacting the Law on Foreign State Immunity is a normal legislative activity conducted by the Standing Committee of China’s National People’s Congress. The law stipulates provisions related to foreign state immunity in line with international practices and aims to improve China’s foreign state immunity system. The law stipulates the rules for Chinese courts to handle civil cases involving a foreign State and its property, with a view to protecting the lawful rights and interests of the parties concerned, safeguarding the sovereign equality of States, and promoting friendly exchanges with other countries, which all in turn boost China’s higher-level opening-up.

The Law on Foreign State Immunity affirms the fundamental principle that a foreign State and its property enjoy immunity in China, at the same time stipulates exceptions relating to non-sovereign act of a foreign State, under which Chinese courts can exercise jurisdiction, such as cases involving disputes arising out of a commercial activity, relevant personal injury and property damage. The Law also states that Chinese courts can take compulsory judicial measures against a foreign State’s commercial property under strictly limited circumstances. It fully adheres to international law and it is also consistent with general state practices.

As a responsible major country, China firmly upholds the principle of sovereign equality and will faithfully implement this Law to protect the legitimate rights and interests of Chinese nationals and legal persons and respect the immunities enjoyed by foreign States under international law.

Translation: The USA and other Western governments, including Canada, have increasingly been utilizing their courts to the detriment of Chinese corporations and individuals. China is clearly going to follow their lead by giving its courts the power to exercise jurisdiction over foreign entities and individuals who had previously been considered off-limits on the basis of foreign state immunity.

Given how little foreign investment there is in mainland China, one would tend to expect the primary application of this expanded jurisdiction will be in Hong Kong, and eventually, Taiwan.

I expect Taiwan to peacefully unify with the mainland much sooner than most people are expecting, and I strongly suspect that it will be someone like this man who will make it happen when the time comes. Despite his public statements, I would assume that he is, for all intents and purposes, the CPC’s preferred candidate for the office, because when China eventually makes its move for reunification, it will want to have a pragmatic figure in control of Taiwan’s government in order to avoid violence and bloodshed.

The billionaire founder of tech giant Foxconn, Terry Gou, has announced he will run for president of Taiwan as an independent candidate, pledging to fix cross-strait relations and boost Taiwan’s economy.

At a press conference on Monday, Gou – a well-known and outspoken businessman – announced what he called “the era of entrepreneurs’ rule”. “I have decided to join the 2024 presidential race,” he said, touting his business and finance experience, including dealings with China.

“Give me four years and I promise that I will bring 50 years of peace to the Taiwan Strait and build the deepest foundation for the mutual trust across the strait … Taiwan must not become Ukraine and I will not let Taiwan become the next Ukraine.”

Gou should not be able to come anywhere close to winning in normal political circumstances. He couldn’t even win the Kuomintang nomination. But given the fact that the outcome of the NATO-Russian war should be known by the time the election takes place in 2024, combined with the increased US activity in southeast Asia, the fear of being similarly sacrificed on the altar of US geostrategic interests may be enough to move the Taiwanese electorate away from the separatist parties.