Civilisation on Pause – Introduction to special issue ‘China's Global Capital and the Coronavirus: Views from Comparative Law and Regulation’

Abstract

Pandemics have a history of interrupting civilisations. From the Greeks and Romans to the British Empire, pandemics have eroded political authority and caused economic instability. The twenty-first century has been hailed as the ‘Asian century’, with China's ascent as central to a reconfiguration of global capital and power. The COVID-19 pandemic, that began in 2019 and still rages as of this writing, started in China and was exacerbated by initial repression by the local government authorities before the central government could implement appropriate disaster response. Since then, COVID-19 has been one of the most devastating pandemics in the history of globalisation. Its mortality has been coupled with regulatory responses which at times have been debilitating to national economies, no less is this true for China's own regulatory response which has been anomalous across the world. This Special Issue explores the impact the COVID-19 pandemic has had on Chinese overseas direct investment and the concomitant forms of capital (symbolic, social, and political). It features collaborative research and writing by early career experts from throughout the world, as part of the ‘China, Law and Development’ project, based at the University of Oxford. It examines how China, its trade partners, and transnational orders have responded to the pandemic through law and regulation across an array of fields: dispute resolution, legal services, immigration law and policy, digital surveillance, global health governance, and democratic fragility.

Pandemics have a history of interrupting civilisations. In 430 BC, the plague of Athens crippled the city-state such that it lost the Peloponnesian War to Sparta.¹ Rome was weakened by falciparum, a particularly deadly strain of malaria, over the thousand-year life of the republic and empire before being brought to its knees by the Black Death in 542 CE.² In the modern era, the 1918 influenza pandemic decimated populations in many underdeveloped countries like India, which lost 18 million people, fuelling waves of anti-colonial sentiment against the British Empire.³

One hundred years later, much as been made of the ‘Asian century’ and, especially, China's ‘rise’.⁴ In particular, China's ‘Belt and Road Initiative’ (BRI), a decades-long effort to link China's economy with those throughout much of the developing world through infrastructure, technology, and financialisation, can be seen as a kind of civilising process.⁵ Then came the COVID-19 pandemic, a world-wide health disaster of an unprecedented speed and scale precisely because it subsists from the very links that make the modern economy what it is – economic globalisation. The juggernaut of Chinese outbound capital, an intrinsic part of economic globalisation,⁶ collided with the immovable object of states’ regulatory responses to the virus – mandatory quarantines, immigration blockades, travel restrictions, and exit bans. Following the Greeks, Romans, and British, has China's would-be transnational civilisation been undermined by pandemic before it has even been able to flourish?

This Special Issue considers how China, its trade and investment partners, and transnational orders have responded to the pandemic through law and regulation across a wide domain of legal fields and inquiries. These include dispute resolution, legal services, immigration law and policy, digital surveillance, global health governance, and democratic fragility. This special issue is the first to examine the specific question of whether the pandemic has altered the terrain of China's efforts to shape global development. Whereas there is an already abundant literature examining how different regime types have responded to the COVID-19 pandemic,⁷ to our knowledge, this issue is the first to focus on how the pandemic, with all of its economic, political, socio-cultural, and psychological weight, has shaped what ‘global China’ means and does, and how it is interpreted by both host states and transnational regulators across the Asian region and the world.⁸ China's own policy of ‘zero-COVID’ has been an outlier across countries in the world, and has both stunted China's economic development and also incited mass protests as of November 2022. While the world population has suffered nearly three years of the COVID-19 pandemic and events are still evolving, we believe it is an opportune time to reflect on the changes and continuities that the health crisis has effected in regards to China's position as a capital and norm exporter.⁹ In particular, as the world learns to live with the COVID-19 virus, we believe that these reflections can help inform academic and policy questions pertaining to the central role China will play in shaping the post-pandemic order.

These questions arise from the ‘China, Law and Development’ (CLD) project, based at the University of Oxford. A five-year project funded by the European Research Council, the international and multidisciplinary CLD project aims to understand how China is shaping transnational law and the legal and regulatory orders of host states that receive Chinese capital. This Special Issue follows on three previous ones which each address different questions under the CLD umbrella.¹⁰ Like the others, this special issue provides a set of data points as a cross-section of key issues in the ever-changing relationship between China and transnational orders.

This Special Issue does so by honing in on how the pandemic has either abridged, rerouted, or facilitated Chinese outbound capital flows and the concomitant forms of capital (symbolic, social, and political) that follow from China's form of economic globalisation. Collectively, the contributions show that the pandemic has had a variegated impact on Chinese global capital flows and their reception in host states, an impact that has, for the most part, accelerated or exacerbated existing trends, potentials, and shortcomings.

The contributions raise three broad questions. First, how are we to understand the relationship between foreign (in this case, Chinese) investors and their respective states in terms of their political consequences in host states, or, to put it another way, what is the relationship between capital and power? Second, will expansive regulatory measures implemented to combat COVID-19 become the norm, or is the ‘right to regulate’ the new ‘state of exception’? Third, in recognition of the importance of host state agency, how has the pandemic shifted (or not) how host state regulators, professionals, and publics view Chinese capital and influence; in other words, has the pandemic impaired or improved China's image and capacities abroad?

The remainder of this introduction does the following: it first provides a brief overview of how the pandemic has affected Chinese capital outflows and projects particularly in developing states in Asia and elsewhere. It then uses the articles to address the three questions, with an emphasis on those areas where there is continuity or change over the course of the pandemic (to date) and also where contributors agree or disagree about what we can learn from the study of the relationship between the pandemic and Chinese global capital.

Containing COVID, Creating Capital

Learning to Regulate COVID-19

Whereas at first blush, a global pandemic that – as far as is known – originated in China¹¹ would most likely have negative effects on Chinese cross-border business, the actual impact of the pandemic has varied depending on industries and investment destinations, and the pandemic's effects may only make sense in light of other external and domestic factors, including the US-China trade war and China's trend toward hyper-nationalism, respectively. In assessing the impact of COVID-19, first and foremost, there can be no second-guessing that the costs of the COVID-19 pandemic in terms of lives lost have been staggering. As of the time of this writing, 6,622,760 people have died as a result of the COVID-19 virus, and there are 641,915,931 confirmed cases in total.¹² These figures place the virus as one of the deadliest pandemics in history.¹³ It is worth briefly revisiting how the disaster unfolded.

Like the severe acute respiratory syndrome (SARS) crisis of 2003, COVID-19 was first detected in China. In December 2019, patients in Wuhan, a city in Hubei Province, began showing symptoms suggestive of viral pneumonia. Despite the warnings of medical specialists, local officials initially sought to cover up the outbreak and in fact disciplined those experts and would-be whistle-blowers, a response which may have worsened its early spread.¹⁴ Nonetheless, on December 31, 2019, Chinese authorities informed the World Health Organisation (WHO) of the outbreak. Soon thereafter, the cause was determined to be severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2) which manifests as the coronavirus diseases 2019 (COVID-19).¹⁵ At that point, the Chinese government, in the words of the WHO, ‘rolled out perhaps the most ambitious, agile and aggressive disease containment effort in history.’¹⁶ This containment strategy included locking down Wuhan on January 23, 2020, and further, closing airports, mandating stay-at-home orders and temperature monitoring as well as face-masking and handwashing.¹⁷ The Chinese medical authorities focused on quick detection, isolation of cases, and early treatment. Their strategy was aided by the prevalent use of mobile technologies by Chinese citizens which were used for tracking and surveillance, a deployment of technology particularly common to authoritarian states.¹⁸

The outbreak occurred at perhaps the most inopportune time in the Chinese calendar given that the Spring Festival in early February marks ‘the largest human migration’, an annual migration of several hundred millions of people, and in particular the migrant workers who work in urban centres.¹⁹ It was during the holidays when, in early February, the Chinese government effectively shut down the railways, closed Chinese and Western stores and factories, and even suspended activities in small villages in the countryside.²⁰ By mid-February, the major economic centres like Shanghai and Guangzhou had become frozen by extended school closures and continued limitations on the movement of migrant workers.²¹ Of the 290 to 300 million migrant workers who normally would be returning to work from the holidays, only 80 million made it back.²² As a result of the lockdown, industrial production, services production, retails sales and fixed assets investment declined by 13.5 per cent, 13 per cent, 20.5 per cent, and 24.5 per cent year-on-year, respectively.²³ Consequently, during the first half of 2020, China suffered its first major setback in its path to economic growth since the early 1980s.²⁴ By the end of February, cautious measures were implemented to permit a slow and partial reopening of the economy.²⁵ However, compared to the rest of the world, China's disease mitigation measures have been exceptional. Whereas almost all other states soon began lifting their own border closures in 2020, the Chinese government has persisted in closing its borders to international travel until December 2022.

Since the national strategy was put in place, China has been effectively shuttered off from the rest of the world in terms of international travel. Chinese nationals residing within the PRC reported that authorities stopped issuing new passports and exit visas, allowing only ‘essential’ travel.²⁶ International travel to China was banned as of March 2020, with limited travel permitted roughly a year later for specific purposes. Under China's ‘zero-COVID’ policy, non-Chinese citizens seeking to travel to China face a number of hurdles including a moratorium on Chinese embassies’ issuing of visas in certain countries, prohibition of flights from certain countries to China, various health checks, a two-week quarantine upon arrival, and according to some reports, a preference for inoculation with a Chinese vaccine.²⁷

At the same time, states outside of China, including some of its closet trading partners, adopted their own COVID mitigation measures that further strained international travel and commerce. Taiwan, Hong Kong, Singapore, South Korea, and Vietnam promptly implemented strict screening of incoming travellers, rapid testing, and contact tracing.²⁸ Other Asian states, including Indonesia, Philippines, and Myanmar had less well-coordinated responses.²⁹ In addition to China, India and Thailand enforced perhaps the most aggressive forms of contact tracing by using public surveillance and various forms of lockdown.³⁰ Another category, including Japan, Malaysia, Sri Lanka, and Cambodia, elected for a middle way that emphasised public education and partial lockdowns over draconian quarantines.³¹ Variables shaping state's regulatory response include official memories of past pandemics like SARS, H1N1 (‘swine flu’) of 2009, and Middle East Respiratory Syndrome (MERS) of 2012 as well as state capacity. One variable which has attracted considerable attention, ranging from public health specialists to scholars of comparative politics, is whether the type of government (eg, multi-party democracy, authoritarian, kleptocracy, anocracy, etc) influenced the forms of containment or mitigation measures taken and the relative success of those measures. Causal inferences vary across findings, just as new strains of COVID-19 continue to test existing firewalls. Both the virus and the varied human responses are evolving, in turn.

Generally, scholars have identified both strengths and weaknesses in how the Chinese government regulated the pandemic, an approach that was much more resolute than those of the US or UK governments.³² The relative merits of the Chinese approach hinge on a number of factors including its recourse to formal law versus informal norms, the administrative structure of the integrated Chinese government and Chinese Communist Party (CCP), the degree of transparency versus opacity, and the use of pre-existing digital infrastructures, among others.³³ China's unique system of governance coupled with the extensive stake the Party-State has in digital surveillance distinguish it from other Asian states, with noticeable results. So, for example, China has, as of early December 2022, before the relaxation of the ‘zero-COVID’ policy, suffered 30,567 deaths, a fraction of the death toll in India, totalling 530,633 deaths.³⁴ The severity of China's measures, while successful in preventing a high death toll, would nonetheless seem to have negative economic externalities. The popular protests that erupted across China starting in November 2022 after a fire in Urumqi killed ten people, a fire that was exacerbated by COVID-19 prevention measures, have highlighted the dilemma the Party-State finds itself in. Whereas continuing the ‘zero-COVID’ policy undoubtedly continued to erode popular support of the CCP, low vaccination rates, less effective vaccines, and overall poor communication with the population on public health measures means that the relaxation of the policy at the end of 2022 will result in a high number of mortalities.

Chinese Overseas Direct Investment in COVID Times

When the WHO announced COVID-19 as a pandemic on March 12, 2020, the sound of plummeting stock markets was audible.³⁵ By June 2020, the prognosis for the world economy under the strains of the pandemic was dire. The World Bank for instance predicted that the global economy would shrink by 5.2 per cent in 2020, making it ‘the deepest recession since the Second World War.’³⁶ Historian Adam Tooze echoes this concern in writing, ‘In the historic record of modern capitalism, there has never been a moment in which close to 95 percent of the world's economies suffered a simultaneous contraction in per capita GDP, as they did in the first half of 2020.’³⁷ To be sure, the economic shock of the pandemic has been far-reaching; it has particularly and disproportionately debilitated low-income and middle-income countries whose economies were already vulnerable before COVID-19.³⁸ Despite these cascading effects, as of the time of this writing, the global impact of the pandemic does not seem to be as deleterious as was initially predicted. Although growth remains sluggish, and there are a number of intersecting strains if not crises that may shape recovery – including ongoing trade frictions, environmental degradation, and wars – overall, the post-pandemic outlook may not be the worst-case scenario.

How has Chinese overseas direct investment (ODI) faired during the pandemic? Given the measures implemented by China as a global manufacturing hub and key link in worldwide supply chains as well as other states across the world, the pandemic has had immediate and long-term negative effects on global production, trade, and labour in regard to China. Domestic measures, whether transportation shut-downs or factory closures had negative knock-on effects outside of China. More specifically, frozen global supply chains and foreign markets, labour shortages, and, in some regions, exacerbated Sinophobia all conspired to initially curtail Chinese cross-border business.

First, the closure of factories caused a shortfall in exports which froze global supply chains. These effects were amplified on the demand side, as well, as foreign markets dependent on Chinese goods were equally chilled. In Vietnam, for instance, manufacturers, heavily reliant on Chinese imports for materials failed to secure sufficient materials for production.³⁹ At the same time, they lost orders from overseas buyers in markets such as South Korea.⁴⁰ The ensuring decrease in production created ripples through the Vietnamese economy and beyond.⁴¹ China's on-going ‘zero-COVID’ policy continues to disrupt just-in-time global supply chains, enough so that the International Monetary Fund (IMF) has called for the Chinese government to recalibrate its policies.⁴²

Second, as many of China's overseas projects involve construction and are thus labour-intensive, the export of Chinese labour has been a major dimension of Chinese outbound capital flows, particularly since the start of the BRI. By 2018, a year before the COVID-19 outbreak, the number of overseas Chinese laborers had reached nearly 100,000.⁴³ As many of the workers and managers who had returned to China for the Spring Festival in early 2000 were either prohibited from subsequently leaving China or from entering the country where they had been working, following a number of states’ bans on cross-border movement, the labour shortfall froze construction of highways, railways, dams, and energy projects.⁴⁴

One example is Pakistan, home of the China Pakistan Economic Corridor (CPEC), valued at a total of US$62 billion in investments and loans from Chinese enterprises and development banks. Whereas Chinese workers were delayed in returning to Pakistan to resume work on CPEC projects in early 2020, the two governments eventually agreed to allow most workers, with the exception of those from Hubei Province (where Wuhan is located) to return after a quarantine.⁴⁵ At a more global level, a report by the International Labour Organisation identified that in 2020, almost a tenth of world-wide working hours were lost relative to the fourth quarter of 2019, equivalent to 255 million full-time jobs.⁴⁶ Further, there was unprecedented global employment losses in 2020 of 114 million jobs relative to the prior year.⁴⁷ In short, China's push to ‘go global’ occurred during one of the worst labour markets in modern history.

Third, the COVID-19 virus heightened Sinophobia, already prevalent in a number of regions in the world, which has further rendered business environments inhospitable to Chinese parties. Specifically, Chinese workers were deemed to be carriers of the deadly virus who contaminated non-Chinese. Racialised fears resulted in discrimination, harassment, and in some cases outright violence against Chinese citizens and ethnic Chinese.⁴⁸ Incidents did not only occur in the so-called BRI countries but also in Western states. In one well-documented example, the UK saw more than 260 cases of hate crimes against Chinese persons between January and March 2020, nearly three times that of the previous two years.⁴⁹ US President Donald Trump infamously stoked anti-Asian sentiment during the early days of the pandemic by calling COVID-19 the ‘China virus’ and ‘Wuhan virus’. Hence, both top-down and bottom-up Sinophobia operated alongside the regulatory barriers of enhanced investment screening that combined to create barriers to Chinese outbound investment.⁵⁰

As a result of the foregoing factors, the freezing of global supply chains and foreign markets, the labour shortage, and anti-Chinese sentiment in would-be host states, the pandemic contributed to a decline in Chinese ODI in 2019. According to official statistics, whereas Chinese ODI peaked in 2016, and subsequently, the Chinese government sought greater control over outbound investments to curb speculative investing, by 2019, Chinese ODI was US$136.91 billion, a decrease from the previous year of 4.3 per cent.⁵¹ However, already by 2020, Chinese ODI rose to US$153.71 billion, an increase from the previous year of 12.3 per cent, making China the largest capital exporting country in the world, by measure of investment flows, for the first time.⁵² Chinese investment into BRI states in particular followed accordingly: in 2019, Chinese enterprises invested US$15.04 billion in non-financial ODI in 56 countries along the BRI, a decrease from the previous year of 13.6 per cent and in 2020, investment in non-financial ODI was US$17.70 billion, an increase of 18.3 per cent from the previous year.⁵³ 2021 in fact saw a further increase in Chinese non-financial ODI to BRI states, a total of US$20.3 billion, a year-on-year increase of 14.1 per cent.⁵⁴ In summary, despite the early shock of the pandemic, Chinese ODI into BRI states has been sustained and actually increased. However, non-Chinese statistics paint a different story. According to these sources, compared to the period from 2015 to 2019, in the fiscal year 2020 to 2021, Chinese FDI to BRI states dropped by 62 per cent.⁵⁵ While it is difficult to explain the wide discrepancy between the official Chinese and unofficial non-Chinese statistics, and doubt could be cast on the accuracy of not only the former but also the latter, it is likely that the different measurements employ different statistical methods, an issue observed in past comparative assessments of Chinese FDI, including even comparisons between different agencies within the PRC government.⁵⁶

In recognition that there are different methods to generating the relevant figures and that outcomes can differ accordingly, it can be surmised that the official statistics provide one metric, even if it cannot be called dispositive. According to these official numbers, in recent years, the percentage of Chinese ODI to BRI states of total Chinese ODI has remained constant and even seen a small uptick. After the high-tide of Chinese ODI in 2016, the percentage of Chinese ODI to BRI states was 12.7 per cent of total investment flows.⁵⁷ In 2019 and 2020, that percentage had increased to 13.7 per cent and 14.7 per cent, respectively.⁵⁸ Likewise, overall, there has been an increasing trend for more Chinese ODI to flow into developing as opposed to developed countries. In 2017, 85.8 per cent of Chinese ODI went to developing countries and 89.1 per cent in 2020.⁵⁹ By point of contrast, during this time, despite the US-China trade war and intensified screening of Chinese investments under the Trump Administration which could foreseeably restrict Chinese ODI to the country, actually, Chinese ODI to the US has remained more or less constant.⁶⁰

One interpretation of the foregoing data is that despite the fact that Chinese FDI to developed Western economies has historically outpaced FDI to BRI states, due to the COVID-19 pandemic, there is limited evidence to suggest that there may be less a redirecting of Chinese ODI and its allies to BRI states and rather a doubling down on Chinese enterprises’ commitment to the BRI, despite its logistical challenges. It seems in many instances, Chinese embassies and consulates worked with host state governments to alleviate problems caused by regulatory barriers, including travel bans and other restrictions. It is not implausible to conclude the BRI projects received some degree of priority if not preference in host states’ efforts to re-open their domestic economies to foreign-invested projects. The Chinese government's vaccine diplomacy in many of these states seems to have further enhanced the perception of Chinese actors in such economies, and addressed Sinophobia in certain quarters.⁶¹ For example, in a major survey of African perceptions of the Chinese presence in their countries conducted during the pandemic, 63 per cent of respondents said that Chinese economic and political influence was ‘somewhat positive’ or ‘very positive’ with only 14 per cent responding that such influence was negative – the numbers were roughly similar to views of the US's influence.⁶² Still, qualitative data collected by the CLD project in recent years across a number of countries suggests that many private Chinese companies and in some instances even the state-owned enterprises (SOEs) have pulled out of BRI states due to the complications at both home and host state ends. Hence, conclusions that Chinese ODI has weathered the COVID storm have to be tempered. It seems that the pandemic has had differential impact on Chinese ODI in different sectors and different countries.

While the early crisis period of the pandemic may not have been as harmful to Chinese ODI as initially thought, and although a full assessment is only possible with ample time, the Chinese government's policies may have caused - and may still be causing - the most significant damage to its own global economic footprint. China's ‘zero-COVID’ policy proved unsustainable. Among its negative consequences, it constrained global supply chains⁶³ yet the chaotic opening up of China in late 2022 has similarly caused widespread confusion and uncertainty.

The Civilising Process Interrupted

Chinese ODI as Co-Adaptation

Although Chinese ODI in developing countries is diversified and directed to a number of sectors, overwhelmingly, such investment has been directed at infrastructural and energy projects, projects which may have normative effects in their respective communities and host states. While there has been much written about a ‘China model’, this concept melts into the air upon sustained inquiry. However, the Chinese government and Chinese enterprises have taken certain approaches to modernity – namely, infrastructure, urbanisation, and connectivity – that have been successful in building contemporary China to jurisdictions outside of the PRC. As the anthropology of infrastructure has demonstrated, highways, railways, coal plants, hydro-electric dams, and the like, including digital infrastructural equivalents (eg, fibre-optic cables, satellites, antennas, and even whole ‘smart cities’) orient people towards certain commercial, political, and social relationships to the state and even, given infrastructure's cross-border capability, transnational communities.⁶⁴

Such orientations may or may not foster ingrained dispositions, modalities, and ways of thinking and being in the world. Studying the changes in the built and digital environment helps then shed light on the goal Nobert Elias directed us to: the ‘structure of people's behaviour and psychical habitus’.⁶⁵ Applying these insights to the case of hand, it is plausible that Chinese-financed, -built, and -maintained projects throughout developing countries are shaping individual ‘habitus’ as much as national economies. For example, the prevalence of a certain type of e-commerce platform, originated in China and popularised in a given host state, may naturalise a certain way of not just doing online commerce but also of handling data (its storage, sharing, and transfer) and even use of (digital) currency. The use of such platforms may further feature the integration of Chinese tech companies into local contexts, social and regulatory, companies that operate in a certain relationship with the Chinese authorities.⁶⁶

Yet it would be a mistake to assume such dispositions amount to Sinicisation or even to assume intentionality on part of the Chinese government and Chinese enterprises in creating such effects. Chinese projects feature an assortment of actors, including policy banks, state-owned enterprises, private tech companies, contractors, lawyers and consultants, Chinese and local labour, and, of course, regulators on both the Chinese and host state side. These actors do not operate in a clear ‘principal-agent’ relationship with the Chinese government and the CCP and in fact may work at cross purposes. There are thus myriad goals held by diverse parties in such projects, with Chinese enterprises often reacting (not always successfully) to the realities of conducting business in challenging host state environments.⁶⁷ Instead of a unilinear normative imposition, the increasing Chinese presence in host states demonstrates multi-directional effects, some of which are unintentional.⁶⁸

Hard or digital infrastructures are undergirded by various forms of more explicitly behaviour-shaping norms, namely, legal infrastructures.⁶⁹ Chinese ODI operates through contracts; beyond their function to create rights and obligations for the named parties, contracts contain clauses for governing law and dispute resolution preferences. There may also be international investment agreements, free trade agreements, or memoranda of understanding which create frameworks for commercial relationships between Chinese investors and host states. Given the bargaining power of Chinese parties that supply capital through credit or debt instruments, they may push for Chinese law and Chinese arbitration in their contracts; or the Chinese government may seek to update international investment agreements with terms that are more preferable to Chinese investors. Such efforts would seem to give more credence to a Chinese ‘push’ for its norms into host states.

While this normative push may be happening through China's efforts to integrate its law into foreign and international law,⁷⁰ it does not operate in a normative vacuum in host states. Instead, Chinese enterprises, like any foreign-investors, must comply with local laws and regulations. In other words, they must, to some degree, localise. This requirement applies across the gamut of legal fields: corporate law, tax, public procurement, employment, environment, anti-corruption, and so on. As a result, China's transnational civilising process also entails the possibility of versions of reverse civilising as Chinese enterprises, lawyers, and laborers adapt to local circumstances, protocols, and cultures.

All of these processes of mutual adaptation and learning, however, have been interrupted by the COVID-19 pandemic, with complicated effects. In essence, the regulatory authority of both China as home state and the host states became prohibitive at the start of the pandemic and has since functioned to constrain the operations of Chinese investors abroad, even if aggregate flows have (officially) increased. This interruption and its aftermath raise a number of questions which this special issue addresses. Before previewing those issues, it is helpful to summarise the process that created this special issue, that is, how the articles were written and assembled as a coherent whole.

Collaboration as Response to an Academic Interregnum

The pandemic has not only affected cross-border investment and trade, but also academic knowledge production. Scholars, especially in the traditions of law and social sciences, have mostly been unable to gather data through fieldwork, interviews, or other qualitative methodologies that require in-person travel. Anthropologists and sociologists of law and comparativists who employ ethnographic traditions have perhaps been most impaired by lockdowns and travel bans. As John Borneman and Abdellah Hammoudi once wrote, the essence of ethnography is ‘being there’,⁷¹ and yet under COVID-19 conditions, one cannot go there. What, then, is a research project, focused on collecting qualitative data about China's engagement with legal and regulatory orders throughout Asia and the rest of the world, to do?

One response to the unprecedented obstacles thrown up by COVID-19 and specifically states’ regulation of the pandemic is to collaborate. Collaboration means sharing resources, knowledge, methods and data, across space which may otherwise be fragmented and disconnected pursuant to COVID-19 measures.⁷² Specifically, the articles for this special issue are collaborations by Research Associates (RAs) for the ‘China, Law and Development’ (CLD) project. The RAs are mostly early-career scholars, practitioners, and activists whose work focuses on some dimension of the legal and regulatory bases of Chinese economic globalisation. They are in eclectic and diverse group of professionals whose work cuts across fields (academia, public service, private practice, advocacy) and jurisdictions (South Africa, Cambodia, China, Serbia, Poland, Sri Lanka, Georgia, Kyrgyzstan, Malaysia, Brazil, and elsewhere). Crucial to the CLD project, they offer perspectives from many of the host states themselves, perspectives that diversify the tendency to view globalising China either from the viewpoints of China or the US. At present, the RAs are categorised into six research clusters: compliance, labour and migration, dispute resolution, legal services, law and technology, and international economic law.

In the spring of 2021, research cluster leaders met online through video-conferencing to discuss their ongoing research in light of the special issue. Specifically, they identified core themes for the articles, reflecting their research cluster, and discussed writing strategies. The writers for each research cluster met, then, virtually over the rest of 2021. They shared drafts with me, the Principal Investigator of the CLD project, and with each other. I provided feedback to the authors and also both looked for points of overlap between the articles and ensured that each article responded to the common question that prompted the Special Issue – that is, the nature of the relationship between the COVID-19 pandemic and global China. With an understanding of who the authors are and how the articles were written, it is possible to turn to the main questions and findings of the articles.

On Capital and Power

One of the most debated issues in the growing field of Global China is the extent to which Chinese ODI supports the Chinese government's political and geostrategic aims abroad. On the one hand, some scholars have pointed to the various links between Chinese enterprises, and SOEs, in particular, and the Party-State to suggest that overseas projects are guided, at least, in part by geo-economic considerations.⁷³ In a much more extreme form, certain scholars have identified the BRI as a pathway to the Chinese ‘grand strategy’ of becoming a global hegemon.⁷⁴ On the other hand, other scholars have suggested that the perceptions of Chinese activities overseas are filtered through various forms of Sinophobia which distort activities on the ground, and which may be more commercial than political in nature.⁷⁵ This latter view dovetails with an emerging consensus that analysis of the relationship between China and host states may elide the agency of the latter.⁷⁶ While it is important to note that often different interpretations of the nature of Chinese projects overseas is shaped by one's ideological lens, disciplinary perspective, and geographic focus, this special issue gives credence to the idea that there are in fact a range of potential relationships between such projects and Chinese authorities. That is to say, the relationship between the commercial and political varies, with some cases showing the possibility of correlation if not causality and others giving evidence for the opposite claim – that the presence of political (specifically, geopolitical) drives is quite muted in the overseas projects.

One area that highlights different views and possibly how different jurisdictions show varying interpretations on the relationship between Chinese commercial entities and their overseas projects and political authority is digital infrastructures.⁷⁷ In their study, ‘Digital Surveillance Trends and Chinese Influence in Light of the COVID-19 Pandemic’, Germanò et al, find that the Chinese government did not use the COVID-19 pandemic as cover to increase its digital repression in host states. Based on publicly available documents in multiple languages from three case studies, namely, Brazil, South Africa, and Vietnam, the authors conclude that the pandemic did not allow the Chinese Party-State to export is values or governance overseas. The digital infrastructure projects financed, constructed, and managed by Chinese enterprises were much more responsive to local conditions, including regulatory frameworks of host states, rather than imposing Chinese versions.

This finding is contrasted, to some extent, by Chen and Chen in their ‘Chinese Investment in Malaysia: COVID-19, Democracy, and Beyond’. Chen and Chen argue that Chinese investments into Malaysia, including in digital technology, have caused the curtailment of civil liberties and democratic backslide. Drawing on journalistic sources, human rights reports, and scholarly literature, they argue that vulnerable democracies such as Malaysia have institutions and cultures of compliance that can lock them into suboptimal commercial agreements, such as that of 1Malaysia Development Berhad, a Malaysian SOE that Prime Minister Najib Razak used to embezzle money, including from China, in return for infrastructure deals.

It is possible to reconcile the different views put forward by the authors of the two articles. Both sides agree that local circumstances may facilitate the political effects of Chinese investment, including exacerbating existing trends such as creeping authoritarianism. It may not be that Chinese capital inherently leads to such outcomes, but it may be one factor amongst many that, when coupled with pre-existing de-democratisation, may worsen the political climate. In this sense, the pandemic itself may be inconsequential to this concern. Rather than a pretext for an increasing its influence (pursuant to Germanò et al's hypothetical), the fundamental question may be what Chinese digital infrastructures mean for data privacy, freedom of speech, and other civil liberties in the long term, since such infrastructures, by their nature, are the foundation for other subsequent layers of technologies that comprise the built environment.

Given the nature of the inquiry – the relationship between Chinese investors and political authorities – more empirical work, namely, case studies, would help flesh out specifically under what conditions does the relationship lead to such effects, why and how. The comparative question is also applicable: can non-Chinese foreign investment lead to similar outcomes? Whereas the relationship between tech companies and governments in multi-party democratic states differs from that in China and, further, such tech companies may operate in compliance with legal frameworks of their home state, nonetheless, the Snowden affair showed how private tech companies from the US have participated in state-directed intelligence gathering in violation of civil liberties and local host state law.⁷⁸ At the same time, it may be a mistake to conclude that ‘big tech’ is everywhere the same in terms of its corrosive effects on democracy as states, companies, and transnational data networks are not commensurate and exist in different types of interrelationships.⁷⁹

The ‘Right to Regulate’ as the New ‘State of Exception’

An area where the COVID-19 pandemic gains more immediacy is in the question of whether regulatory measures enacted in the course of the pandemic, some of which have been legitimised by the principle of the ‘right to regulate’, ultimately become a new kind of ‘state of exception’. By way of background, Zhou et al trace in their ‘China's New Global Health Governance’, the ‘right to regulate’ to the United Nations Draft Convention on the Right to Development that requires states to adopt regulatory measures to achieve the convention's aim. China has championed this convention and the right to regulate therein, especially in the domain of global health. The right to regulate dovetails with a long-standing Chinese position that states have a right to development, based on their own historical, social, political and economic circumstances and in conformity with the exercise of their own sovereignty.⁸⁰ Zhou et al analyse the presence (explicit or otherwise) of the right to regulate in multilateral, plurilateral and bilateral agreements that China has supported or ratified to ask whether China is shaping an emerging consensus through this principle as the world confronts the health crisis of COVID-19. In addition to health, the principle of the right to regulate permeates a number of legal areas, from counterterrorism and national security to population control and ethnic autonomy.

The right to regulate may, however, create conflicts with commitments under international law. Some of these conflicts may be addressed through exemptions. So, for example, Zhou et al explain that the China-Singapore Free Trade Agreement (FTA) authorises both governments to suspend the operation of the FTA for the protection of health. Other conflicts between COVID-19 regulations and existing international law may result in starker conflicts. Looking beyond health, Ying et al, in their ‘All Roads Lead to Beijing? Shifts in Chinese Labour and Capital During the COVID-19 Pandemic', study how China's migration governance has changed over the course of the pandemic. Ying et al include a broad range of sources to examine on the side of the inbound flow of non-PRC nationals, highly-skilled labour migrants into China, immigrant traders from Africa, and labour migration from border regions, as well as on the side of the outbound flow of Chinese nationals, labour and investment emigration to Serbia.

Importantly, Ying et al analyse how the entry bans imposed by the PRC government in 2020 comply with existing obligations under the International Covenant on Civil and Political Rights (ICCPR) to which the PRC is a signatory and hence must refrain from actions that violate its purpose. The ICCPR provides for the right to enter one's own country, a right which applies to not only nationals but also long-term residents. This right then conflicts with the exit bans which were imposed on people categorised as ‘permanent residents’. There was ambiguity in practice by the PRC government on this issue which demonstrates some of the difficulty in reconciling exceptional measures such as entry bans with existing duties under international treaties.

The right to regulate, broadly construed, may lead to additional regulatory issues which have been explored by the literature on the ‘state of exception’. Philosopher Giorgio Agamben famously analysed the measures enacted by the Bush administration during the ‘Global War on Terror’; specifically, President Bush's military order that authorised ‘indefinite detention’ and trial by means of ‘military commissions’ as well as the USA Patriot Act, which meant that Taliban captured by US forces did not enjoy the status of prisoners of war under the Geneva Conventions and also did not enjoy due process rights under US law.⁸¹ In short, the executive measures and subsequent legislation enacted in the wake of the 9/11 terrorist attacks excepted those affected by military procedures that deprived them of liberty from rights under international and US law.

By way of analogy, the exceptional measures implemented by governments in the wake of the COVID-19 pandemic may also limit people's enjoyment of rights protected under domestic and international law, including the rights to movement, assembly, work, and others. The question, then, is whether some of these measures may survive past the end of the pandemic and become normalised, effectively permanently abridging citizens’ rights. To return to Chen and Chen's article, one example of this problem is the Emergency (Essential Powers) (No 2) Ordinance 2021 in Malaysia which criminalised the spreading of ‘fake news’ about the pandemic. Along with other legislation that muffled dissent, the concern is that the declaration of emergency is simply a device by the existing administration to retain power in the face of opposition.

In summary, the pandemic may be used as a pretext for anti-democratic power consolidation. Such power consolidation may possibly be enabled or facilitated by Chinese investment even under conditions where there is no direct political influence. Concerns about the state of exception remain inside China, despite the abrogation of the ‘zero-COVID’ policy, given the broad use by the government of digital surveillance which is strengthened within the context of an overall trend toward repression in the course of Xi Jinping's consolidation of authority in the country. Likewise, these concerns are felt outside of China, in jurisdictions that may feature increasing authoritarian leanings in the wake of the pandemic and its economic and social precarity.

The COVID-19 Pandemic and China's Status Abroad

One question which is particularly salient in the study of Chinese global capital and the COVID-19 pandemic is the extent to which the pandemic has affected – for better or worse – China's image abroad as well as its capacity to exert its economic governance abroad. Given its extensive investments overseas, China has assets, property, and personnel based in countries throughout the world. The ability to conduct projects depends on not just the consent of the host government but also ongoing good will in the relevant community or population at large. The COVID-19 pandemic, on the one hand, seems to have damaged China's pretension to creating an image of a responsible stakeholder given that early repressive measures by the local government may have increased the spread. On the other hand, China has worked tirelessly to present itself as a responsible member of the global community through its involvement in health measures, including providing COVID-19 vaccines for many developing countries. A number of articles in this special issue examine the question of how the pandemic has affected China's image and work abroad either directly or implicitly, including through China's involvement in the international health field and also in adjunct fields, such as legal services and dispute resolution.

There is little doubt that China has emerged as a strong promoter of health governance during the pandemic, yet China's role in the health field has met with mixed results. As mentioned, Zhou et al show how China has engaged in a multi-prong effort to improve health governance internationally. This effort includes working with established multilateral institutions such as the WHO and Gavi, the vaccine alliance, as well as via its bilateral ties with host states in Africa and elsewhere. The authors conclude that while China's total donations to COVID-19 initiatives like Gavi, for instance, are much lower than the US or other states, nonetheless, China has considerably stepped up its involvement, and many host states in Africa have acknowledged China's growing beneficial role.

Whether the COVID-19 pandemic has affected China's image and capacity abroad is a question relevant beyond the field of health, as two articles show. Both Huang et al in their ‘COVID-19 and Dispute Resolution in China: Trends in Arbitration, Litigation, and Contractual Defences’ and Yip et al in their ‘The “Two Faces” of Cross-Border, Transactional Legal Practice During COVID-19: How and From Where Have Lawyers Mobilised China's Capital Flows Under Lockdown’ examine issues relating to legal services – transactional and dispute resolution – for Chinese parties or China-invested deals. The authors find that, generally, the pandemic has increased pre-existing trends, rather than curtail them or mark a radical shift in the legal industry. Such consistency in spite of the pandemic may explain, in part, how it is that Chinese ODI was able to not only maintain but actually increase its outflow over the course of the pandemic at least according to official numbers.

The pandemic has in certain respects fomented the growth of China's legal industry and, modestly perhaps, enhanced its footprint overseas. Huang et al show how the pandemic has accelerated the Chinese dispute resolution industry's digital turn. For example, courts had prior to the pandemic begun holding virtual hearings and receiving online evidence. These practices continued into the pandemic and were mostly expanded. As international commercial arbitration has become increasingly popular as a means for dispute resolution for cross-border deals and arbitration commissions have become prominent gap-fillers in the regulatory landscape,⁸² the pandemic has shown the commissions issuing rules to deal with issues pertaining to data security for online hearings. Such activity would seem to only enhance the reputation of such forums inside and outside of China.

Similarly, Yip et al argue that the pandemic largely did not disrupt the services law firms provide to Chinese and foreign clients engaged in cross-border business, and, instead, some law firms innovated and sought extension into new ‘second-tier’ markets. These gains can be explained in part by the shift to online infrastructures and human resource policies that enabled Chinese and other Asian law firms to post strong performance in the second half of 2020. While the presence of Chinese law firms in BRI states remains small, overall, the years of the pandemic saw the gradual internationalization of Chinese law firms overseas. Substantively, a number of practice areas grew in response to the pandemic and contemporaneous trends, including intellectual property, dispute resolution, and others. Likewise, for the most part, foreign law firms in China have been able to weather the pandemic without significant losses. Despite the hardships of working in a closed China, foreign lawyers remain committed to the Chinese market. Juxtaposed with Huang et al, Yip et al's study suggests that legal services were one factor that helps explain how it is that Chinese enterprises were able to continue their overseas projects during the pandemic years.

Concluding Remarks

It is certain that the COVID-19 pandemic has changed whole industries and tested governance models. As such, the pandemic has wrought regulatory adaptation from health and development to data and employment. Along these lines, the pandemic has similarly affected Chinese ODI and overseas projects yet with differential impact. The real reason for a decrease in Chinese ODI, modest if at all according to some sources and more dramatic according to others, is, of course, China's own regulatory response in the form of the ‘zero-COVID’ policy. Despite the negative spill-over of this policy, for the most part, the transnational civilising process that China is part of, coupled with a possible regionalisation as opposed to globalisation of the world economy, continues.

There are outstanding issues, however, including whether China's own regulatory response in the form of its ‘zero-COVID’ policy reversal will stabilise global supply chains. Despite the reversal, China's policy appears linked to ongoing governance patterns that focus heavily on domestic stability at all costs, patterns that may inhibit re-globalisation after the worst effects of the pandemic have subsided. Likewise, exogenous pressures and shocks remain in the form of war in Europe, ongoing trade tensions between China and the US and the European Union, and the uninterrupted environmental crisis. At the same time, given China's vested interests in the global economy and transnational orders, despite or because of these significant challenges, the Chinese Party-State and Chinese enterprises continue to learn and adapt to both the international state of affairs and domestic environments, suggesting that it would be premature to discount China from shaping global development in the post-pandemic period.