UC Law SF International Law Review


Jay S. Laifman


American investors have invested over ten billion dollars in the People's Republic of China. Further investment, however, has been slowed by fears that the Chinese Government could nationalize American assets in China. These fears are based on past occurrences when political instability or international disagreements have led to nationalization of foreign assets by the Chinese. This Note examines the likelihood that the People's Republic of China would nationalize foreign assets in the future and proposes treaty terms that would protect American investors without offending Chinese sensibilities. The author suggests that future United States-China trade treaties should contain more explicit language regarding compensation: the treaties should carefully define which events would be compensable and how compensation should be paid. Appropriate language might provide for compensation only when the Chinese Government is unjustly enriched and should require that all compensation be paid in hard currency. The author concludes that such language would be acceptable to the Chinese Government and would also provide American- investors with more protection than they have under existing treaties and laws.