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National Security Exception in an Era of Hegemonic Rivalry: Emerging Impacts on Trade and Investment

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Handbook of International Investment Law and Policy

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Abstract

2020 corroborated the trends outlined in the chapter’s first edition published in December 2019 with respect to the US-China dynamic. Since the first edition, the US-China relationship exhibited heightened tension exemplified by tit-for-tat diplomatic expulsions; China’s implementation of the Hong Kong National Security Law; a series of sweeping summer 2020 presentations by US government officials identifying China as a dire national security threat to the USA; and Chinese retaliatory sanctioning of US companies. Regarding the national security exception in investment and trade, the four emerging impacts identified in the first edition were reenforced in 2020. This update will detail the significant developments since the publication of the first edition including: (1) the reconceptualization of national security as a fusion of ideology, technology, and economic power; (2) the enhanced scrutiny of foreign investment and trade as evidenced by regulatory developments; (3) the increasing pressure on nations to align with either the USA or China as demonstrated by enormous US pressure on key US allies to economically distance from China (and the blowback against such pressure); and (4) amplified sovereign involvement in the financial markets and economic governance.

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Notes

  1. 1.

    See Rudd K (2019) US-China relations: this is a new and dangerous phase (Jan 23, 2019). https://www.afr.com/opinion/kevin-rudd-on-uschina-relations-this-is-a-new-and-dangerous-phase-20190122-h1acu6 (“Last year represented a fundamental strategic turning point in the 40-year history of US-China relations. This is not just an American view; it is also the Chinese view.”)

  2. 2.

    See Slawotsky J (2018) The national security exception in US-China FDI and Trade: lessons from Delaware corporate law. Chinese J Comp Law 6(2):241–245. https://doi.org/10.1093/cjcl/cxy012 (noting triad of hegemonic pillars of power: economic, military, and technological).

  3. 3.

    See Slawotsky J (2020) U.S. financial hegemony: the digital yuan and risks of dollar de-weaponization. Fordham Int Law J 44:39 (global sanctions power of the US Dollar is a powerful tool to enforce US policy); Slawotsky J (2021) U.S. extraterritorial jurisdiction in an age of international economic strategic competition. Georget J Int Law 52 (extraterritoriality to enforce US laws in an age of hegemonic rivalry). See also http://www.forbes.com/sites/robertwood/2014/08/19/ten-facts-about-fatca-americas-manifest-destiny-law-changing-banking-worldwide/#300593551961 (noting ability of the USA to essentially override domestic laws of foreign nations); John Grisham, The Broker, p. 366. (Noting the inviolably of Swiss banking secrecy, “the Swiss were immune to pressure from foreign governments … they were the Swiss!”). Yet, only a few years later after The Broker was published, the ability of the USA to compel the Swiss banks to disclose the names of account holders eliminated this anonymity. See https://www.justice.gov/opa/pr/justice-department-announces-four-banks-reach-resolutions-under-swiss-bank-program-0

  4. 4.

    See Slawotsky J (2020) The long-arm of U.S. justice: Scoville’s restoration of “conduct and effects” in securities enforcement and implications for Chinese corporations. Tsinghua China Law Rev 12:259 (overseas violations of US law involving the accessing of US banking sufficient to confer jurisdiction in US courts).

  5. 5.

    See infra.

  6. 6.

    See Huang Z (2017) Chinese president Xi Jinping has vowed to lead the “new world order” (Feb 22, 2017). http://finance.yahoo.com/news/chinese-president-xi-jinping-vowed-084654413.html

  7. 7.

    Schuman M (2015) Whose Money Will the World Follow? (May 15, 2015). https://www.bloomberg.com/news/articles/2015-05-14/u-s-china-rivalry-whose-money-will-the-world-follow-. See also Xi Jinping (2020) Issues on national medium and long-term social and economic strategies (Oct 31, 2020). http://www.qstheory.cn/dukan/qs/2020-10/31/c_1126680390.htm (China as the digital economy leader should be part of the rulemaking in global regulation of central bank digital currencies).

  8. 8.

    See Slawotsky J (2017) The clash of architects: impending developments and transformations in international law. Chinese J Global Governance 3(2):83–159. https://doi.org/10.1163/23525207-12340025 (discussing the effects of China’s ascendancy and how this will affect international law and global governance as well as potentially impacting domestic governance of sovereigns militating toward a Chinese governance model).

  9. 9.

    See Wu J (2018) Taking sides – USA or China (Oct 15, 2018). https://asia.nikkei.com/Opinion/Taking-sides-US-or-China (“The deterioration of the U.S.-China relationship has now gone far beyond what we can call a trade war. U.S. President Donald Trump and his administration have expanded the rivalry from an economic battle to all-out confrontation with Beijing over military and even ideological fields.”)

  10. 10.

    Willige A (2016) The world’s top economy: the US vs China in five charts (Dec 5, 2016). https://www.weforum.org/agenda/2016/12/the-world-s-top-economy-the-us-vs-china-in-five-charts/ (China is second but close to surpassing the USA).

  11. 11.

    Rand Project Air Force (n.d.) An interactive look at the US-China Military Scorecard. https://www.rand.org/paf/projects/us-china-scorecard.html (analyzing the significant rise in Chinese military power).

  12. 12.

    See Kania EB (2017) Battlefield singularity (Nov 28, 2017). https://www.cnas.org/publications/reports/battlefield-singularity-artificial-intelligence-military-revolution-and-chinas-future-military-power (China is rapidly approaching parity and has ambitions for supremacy in AI-driven warfare).

  13. 13.

    See Committee on Foreign Relations United States Senate (2020) The New Big Brother: China and Digital Authoritarianism. A Democratic Staff Report Prepared for the Use of the Committee on Foreign Relations United States Senate, p 57 (July 21, 2020). https://www.foreign.senate.gov/imo/media/doc/2020%20SFRC%20Minority%20Staff%20Report%20-%20The%20New%20Big%20Brother%20-%20China%20and%20Digital%20Authoritarianism.pdf.

  14. 14.

    Lawder D, Chiacu D (2018) Trump to use U.S. security review panel to curb China tech investments (June 27, 2018). https://www.reuters.com/article/us-usa-trade-china/trump-administration-to-use-review-panel-to-curb-china-tech-investments-idUSKBN1JN1K0 (“U.S. President Donald Trump said on Wednesday he will use a strengthened national security review process to thwart Chinese acquisitions of sensitive American technologies, a softer approach than imposing China-specific investment restrictions.”)

  15. 15.

    Irwin D (2019) Understanding Trump’s Trade War (Jan 22, 2019). https://foreignpolicy.com/gt-essay/understanding-trumps-trade-war-china-trans-pacific-nato/ (“The Trump administration’s legal justification for its 2018 steel and aluminum tariffs was a little-used U.S. statute that allows the president to raise such barriers in cases where U.S. national security is threatened. In mid-2018, the Commerce Department also started looking into whether imported automobiles might pose a similar threat – a sign that the administration was seriously considering imposing duties as high as 25% on foreign cars and auto parts, which would affect more than $200 billion worth of trade.”)

  16. 16.

    See U.S. won’t partner with countries that use Huawei systems: Pompeo (Feb 21, 2019). https://www.reuters.com/article/us-huawei-tech-usa-pompeo/us-wont-partner-with-countries-that-use-huawei-systems-pompeo-idUSKCN1QA1O6 (US NSA adviser advising nations that embracing Huawei will lead to a loss in US intelligence and military cooperation).

  17. 17.

    Such measures would include, for example, urging allies to ban an adversary’s 5G. See U.S. Urges Allies to Avoid Using Huawei Equipment, WSJ Says (Nov 23, 2018). https://www.bloomberg.com/news/articles/2018-11-23/u-s-urges-key-allies-to-avoid-using-huawei-equipment-wsj-says (“The U.S. government is contacting key allies to get them to persuade telecommunications companies in their countries to avoid using equipment from China’s Huawei Technologies Co....Officials from the U.S. have reached out to counterparts and executives in countries including Germany, Italy and Japan about perceived cybersecurity risks, the Journal said, citing unidentified people familiar with the matter.”)

  18. 18.

    See McDonald J (2020) China to sanction Boeing, Lockheed and Raytheon over Taiwan arms sales (Oct 26, 2020). https://news.yahoo.com/china-sanction-boeing-lockheed-raytheon-130658911.html.

  19. 19.

    Kawate I (2020) China passes export control law with potential for rare-earths ban (Oct 19, 2020). https://asia.nikkei.com/Politics/International-relations/US-China-tensions/China-passes-export-control-law-with-potential-for-rare-earths-ban (noting potential rare earths export ban stating the new law “authorizes tight restrictions on the sale abroad of dual-use goods with both civilian and military applications, nuclear materials and equipment, and other products and services that touch on national security.”) (emphasis added).

  20. 20.

    Kawate I (2020) China readies new law to ban companies on national security grounds (Oct 9, 2020). https://asia.nikkei.com/Politics/International-relations/US-China-tensions/China-readies-new-law-to-ban-companies-on-national-security-grounds (“China is set to advance a new export control law that would ban Chinese suppliers from dealing with specific foreign companies on national security grounds, taking a page from the U.S. crackdown on Huawei Technologies and its peers.”)

  21. 21.

    U.S. Department of Commerce (2020) Commerce Department Prohibits WeChat and TikTok Transactions to Protect the National Security of the United States (Sep 18, 2020). https://2017-2021.commerce.gov/news/press-releases/2020/09/commerce-department-prohibits-wechat-and-tiktok-transactions-protect.html

  22. 22.

    The use of the national security rationale by the USA to impose tariffs in 2018 as well as the increasing scrutiny of Chinese foreign investment globally based upon national security all herald a more frequent resort to national security-based international economic law decisions. See Presidential Order Regarding the Proposed Takeover of Qualcomm Incorporated by Broadcom Limited. https://trumpwhitehouse.archives.gov/presidential-actions/presidential-order-regarding-proposed-takeover-qualcomm-incorporated-broadcom-limited/ (Mar 12, 2018) (“There is credible evidence that leads me to believe that Broadcom [] through exercising control of Qualcomm [] a Delaware corporation, might take action that threatens to impair the national security of the United States”) (emphasis added).

  23. 23.

    See Nakazawa K (2020) China talks of US decoupling and a divided world (July 9, 2020). https://asia.nikkei.com/Editor-s-Picks/China-up-close/China-talks-of-US-decoupling-and-a-divided-world (US-China relations are broken, and China must leave the US Dollar financial structure).

  24. 24.

    See Hammond A (2015) The TPP gives the U.S.—rather than China—the power to influence global trade (Oct 6, 2015). https://nationalpost.com/opinion/andrew-hammond-the-tpp-gives-the-u-s-rather-than-china-the-power-to-influence-global-trade (impetus for the TPP was to guarantee Washington, “rather than Beijing, would retain the position of rules-setter.”)

  25. 25.

    Somanader T (2015) President Obama: “Writing the Rules for 21st Century Trade” (Feb 18, 2015). https://trumpwhitehouse.archives.gov/presidential-actions/presidential-order-regarding-proposed-takeover-qualcomm-incorporated-broadcom-limited/ (emphasis added).

  26. 26.

    Interestingly, Joe Biden had remarked in 2019 that “China had problems with the seas and mountains” and “was not a competitor to the U.S.” See AP Archive (2019) Biden: China not economic threat to U.S. (May 8, 2019). https://www.youtube.com/watch?v=dew9qqoAM9A

  27. 27.

    See footnote 13.

  28. 28.

    House Permanent Select Committee on Intelligence (2020) The China Deep Dive: A Report on the Intelligence Community’s Capabilities and Competencies with Respect to the People’s Republic of China, p 11. https://intelligence.house.gov/uploadedfiles/hpsci_china_deep_dive_redacted_summary_9.29.20.pdf?utm_source=CHINA+MACRO+REPORTER+SUBSCRIBERS&utm_campaign=bc2c13fa16-EMAIL_CAMPAIGN_2020_10_07_10_00&utm_medium=email&utm_term=0_e23e65ea71-bc2c13fa16-396668841

  29. 29.

    Remarks by Vice President Pence on the Administration’s Policy Toward China (Oct 4, 2018). https://trumpwhitehouse.archives.gov/briefings-statements/remarks-vice-president-pence-administrations-policy-toward-china/ (“And while China’s leader stood in the Rose Garden at the White House in 2015 and said that his country had, and I quote, “no intention to militarize” the South China Sea, today, Beijing has deployed advanced anti-ship and anti-air missiles atop an archipelago of military bases constructed on artificial islands.”)

  30. 30.

    Ibid.

  31. 31.

    Slawotsky J (2018) Principled realism: thoughts on the new U.S. National Security Strategy (Jan 11, 2018). http://lcbackerblog.blogspot.com/2018/01/joel-slawotsky-principled-realism.html

  32. 32.

    Ibid. Citing 2017 United States National Security Strategy, p 25.

  33. 33.

    A counterargument states that US strategy was in reality an effort at containment. See Backer LC (2010) Encircling China or embedding it? (Nov 8, 2010). http://​lcbackerblog.​blogspot.​com/​2010/​11/​encircling-china.​html (noting Chinese concerns that US policy was aimed at containing a rising China).

  34. 34.

    Wray C (2020) The Threat Posed by the Chinese Government and the Chinese Communist Party to the Economic and National Security of the United States (July 7, 2020). https://www.fbi.gov/news/speeches/the-threat-posed-by-the-chinese-government-and-the-chinese-communist-party-to-the-economic-and-national-security-of-the-united-states (emphasis added).

  35. 35.

    See National Security Advisor O’Brien RC (2020) The Chinese Communist Party’s Ideology and Global Ambitions (June 24, 2020). https://trumpwhitehouse.archives.gov/briefings-statements/chinese-communist-partys-ideology-global-ambitions/ (emphasis added).

  36. 36.

    The United States Department of Justice (2020) Attorney General William P. Barr Delivers Remarks on China Policy at the Gerald R. Ford Presidential Museum (July 16, 2020) https://www.justice.gov/opa/speech/attorney-general-william-p-barr-delivers-remarks-china-policy-gerald-r-ford-presidential (emphasis added). Interestingly, while Barr is critical of China’s state-capitalism in his July 2020 remarks; a few months earlier he had suggested the USA engage in state-capitalism with respect to 5G. See “Really? Is the White House Proposing to Buy Ericsson or Nokia?” (Feb 7, 2020). https://www.nytimes.com/2020/02/07/business/dealbook/bill-barr-huawei-nokia-ericsson.html (“President Trump has made it very clear that he is worried about Huawei’s leading role in 5G wireless technology. Now his attorney general, Bill Barr, has offered a radical solution: having the U.S. invest in the Chinese company’s European counterparts.”)

  37. 37.

    Ibid. (emphasis added).

  38. 38.

    Compare infra the Soviet Union as a rival to the USA.

  39. 39.

    Just a few years ago, the USA perceived itself as “the exceptional nation.” See Obama B (2014) Remarks by the President at the United States Military Academy Commencement Ceremony (May 28, 2014). https://obamawhitehouse.archives.gov/the-press-office/2014/05/28/remarks-president-united-states-military-academy-commencement-ceremony (“In fact, by most measures, America has rarely been stronger relative to the rest of the world … Our military has no peer … Meanwhile, our economy remains the most dynamic on Earth; our businesses the most innovative. Each year, we grow more energy independent. From Europe to Asia, we are the hub of alliances unrivaled in the history of nations. America continues to attract striving immigrants … So[,] the United States is and remains the one indispensable nation. That has been true for the century passed and it will be true for the century to come.”) (emphasis added).

  40. 40.

    The US Department of Justice (2018) Attorney General Jeff Session's China Initiative Fact Sheet (Nov 1, 2018). https://​www.​justice.​gov/​opa/​speech/​file/​1107256/​download

  41. 41.

    See Silver V, Prasso S (2019) Italy’s embrace of China’s “Belt and Road” is a snub to Washington (Mar 19, 2019). https://​www.​bloomberg.​com/​news/​articles/​2019-03-19/​italy-s-embrace-of-china-s-belt-and-road-is-a-snub-to-washington (discussing China’s potential influence in Europe).

  42. 42.

    See Hillman JE, Goodman MP (2018) China’s ‘Belt and Road’ court to challenge current US-led order (July 25, 2018). https://​www.​ft.​com/​content/​b64d7f2e-8f4d-11e8-b639-7680cedcc421

  43. 43.

    See S R (2014) Why China is creating a new “World Bank” for Asia (Nov 11, 2014). http://​www.​economist.​com/​blogs/​economist-explains/​2014/​11/​economist-explains-6

  44. 44.

    New $100 bn BRICS Bank opens in China to challenge US-led lenders (July 21, 2015). http://​news.​yahoo.​com/​brics-bank-opens-business-xinhua-015809429.​html

  45. 45.

    Summers LH (2015) Time US leadership woke up to new economic era (Apr 5, 2015). http://​larrysummers.​com/​2015/​04/​05/​time-us-leadership-woke-up-to-new-economic-era/​

  46. 46.

    Ibid. (emphasis added).

  47. 47.

    White H (2018) The new East Asian jigsaw: 2019 will offer clearer picture of how US-China power struggle has reshaped region (Dec 18, 2018). https://​www.​caixinglobal.​com/​2018-12-18/​hugh-white-the-new-east-asian-jigsaw-101360537.​html

  48. 48.

    See Our bulldozers, our rules (July 2, 2016). https://www.economist.com/china/2016/07/02/our-bulldozers-our-rules (describing OBOR as a means “of extending China’s commercial tentacles and soft power”). See also President Xi Jinping Delivers Important Speech and Proposes to Build a Silk Road Economic Belt with Central Asian Countries (PRC Ministry of Foreign Affairs, Sep 7, 2013). http://​www.​fmprc.​gov.​cn/​mfa_​eng/​topics_​665678/​xjpfwzysiesgjtfh​shzzfh_​665686/​t1076334.​shtml, noting BRIs’ critical importance to China.

  49. 49.

    See Campbell C (2017) China says it is building the new silk road. Here are five things to know ahead of a key summit. Time (May 12, 2017). https://time.com/4776845/china-xi-jinping-belt-road-initiative-obor/

  50. 50.

    Capri A (2017) China’s growing influence on Middle East should not be lost on an impulsive Trump administration. Forbes (June 21, 2017). https://www.forbes.com/sites/alexcapri/2017/06/21/china-obor-qatar-middle-east-america/#469a0d4a70e8

  51. 51.

    See footnote 48 (“In 2014 the foreign minister, Wang Yi, singled out OBOR as the most important feature of the president’s foreign policy.”). See also footnote 49. (“In 2015, China transferred $82 billion to three state-owned banks for OBOR projects. It also set up the Asian Infrastructure Investment Bank (AIIB) primarily to fund OBOR, of which the $100 billion of initial capital may be doubled soon.”)

  52. 52.

    Kuhn KL (2013) Xi Jinping’s Chinese dream (June 4, 2013). http://​www.​nytimes.​com/​2013/​06/​05/​opinion/​global/​xi-jinpings-chinese-dream.​html

  53. 53.

    See Reynolds I (2015) Abe pitches Japan’s infrastructure on China’s Silk-Road patch (Oct 23, 2015). http://​www.​bloomberg.​com/​news/​articles/​2015-10-22/​abe-pitches-japan-s-infrastructure-on-china-s-silk-road-patch

  54. 54.

    See footnote 42.

  55. 55.

    See International commercial courts eye expanded role (Jan 30, 2019). http://​www.​china.​org.​cn/​china/​2019-01/​30/​content_​74423850.​htm (“China’s top court said the country’s two international commercial courts will play a bigger role this year in helping resolve disputes related to the Belt and Road Initiative and improving the global credibility of the judiciary.”)

  56. 56.

    See Lan Shen (2016) Xi Jinping’s “One Belt, One Road” strategy is showing the way to a new world order (Dec 13, 2016). http://​www.​scmp.​com/​comment/​insight-opinion/​article/​2054143/​xi-jinpings-one-belt-one-road-strategy-showing-way-new-world?​utm_​source=​&​utm_​medium=​&​utm_​campaign=​SCMPSocialNewsfe​ed

  57. 57.

    Das S (2018) How the USA has weaponized the dollar (Sept 7, 2018). https://​www.​bloomberg.​com/​opinion/​articles/​2018-09-06/​how-the-u-s-has-made-a-weapon-of-the-dollar (“But the real power of the dollar is its relationship with sanctions programs. Legislation such as the International Emergency Economic Powers Act, the Trading With the Enemy Act and the Patriot Act allow Washington to weaponize payment flows. The proposed Defending Elections From Threats by Establishing Redlines Act and the Defending American Security From Kremlin Aggression Act would extend that armory.”)

  58. 58.

    See footnote 3.

  59. 59.

    Turak N (2019) US isn’t weaponizing the dollar; sanctions are the alternative to war, Mnuchin says (Dec 14, 2019). https://www.cnbc.com/2019/12/14/mnuchin-us-isnt-weaponizing-dollar-sanctions-are-alternative-to-war.html

  60. 60.

    Donald Trump (@realDonaldTrump), Twitter (Sept 6, 2020). https://twitter.com/realDonaldTrump/status/1149472282584072192

  61. 61.

    To be sure, other prior USD rivals, such as the Japanese Yen in the 1980s and the Euro in the 2000s, failed to topple the USD. Moreover, despite China’s decade-long efforts, Yuan usage is still dwarfed by the dominance of the USD (See Galati G, Wooldridge P (2006) The euro as a reserve currency: a challenge to the pre-eminence of the US dollar?) (Bank for International Settlements, Working Paper No. 218, Oct 12, 2006) (“At its peak in the late 1980s, the yen had accounted for over 10% of reserves.”); Ibid. at 16 (“[T]he available data suggest that the euro’s share of reserves rose during the first few years after monetary union but then levelled off after 2003. In early 2006, the euro’s share was still well below the US dollar’s share and below even the share of euro legacy currencies in the 1980s and early 1990s. The euro comes closest to challenging the dollar in its role as a store of value. As a unit of account and medium of exchange, the dollar’s role is not as secure as it once was, but the dollar is still pre-eminent.”). However, as discussed below, emergent technology together with a critical mass of interests might expedite more extensive Yuan usage.

  62. 62.

    See Rapoza K (2020) China is nowhere near replacing the dollar. Forbes (Apr 23, 2020). https://www.forbes.com/sites/kenrapoza/2020/04/23/china-is-nowhere-near-replacing-the-dollar/#161d65484dfd; See also Gopinath G (2020) Digital currencies will not displace the dominant dollar. Financial Times (Jan 7, 2020). https://www.ft.com/content/e5dd66b8-2ca0-11ea-84be-a548267b914b (replacing the USD will take a very long time if even possible).

  63. 63.

    See Quinn S, Roberds W (2014) Death of a reserve currency (Fed. Rsrv. Bank of Atlanta, Working Paper No. 2014–17, September 2014). https://www.frbatlanta.org/-/media/documents/research/publications/wp/2014/wp1417.pdf (“The demise of the Bank of Amsterdam ushered in a long period of currency dominance for the British pound. The passing of the torch from the florin to the pound in the 1780’s has a number of parallels with the better-known transition from the pound to the dollar in the 1920’s and 1930’s.”),

  64. 64.

    See The Semiannual Monetary Policy Report to the Congress: Hearing on Monetary Policy and the State of the Economy Before the U.S. Senate Committee on Banking, Housing, and Urban Affairs, 116th Congress (July 11, 2019) (statement of Jerome H. Powell, Chairman, Federal Reserve) (admitting the USD will not last forever as the global reserve currency).

  65. 65.

    See, e.g., Gul A (2018) China, Pakistan agree to conduct bilateral trade in yuan (Nov 5, 2018). https://​www.​voanews.​com/​a/​china-pakistan-agree-to-conduct-bilateral-trade-in-yuan/​4645164.​html (trade between China and Pakistan to be conducted in Yuan not Dollars); Ohuocha, C. (2018) Nigeria woos importers to trade Chinese yuan (July 5, 2018). https://www.reuters.com/article/investingNews/idAFKBN1JV0OX-OZABS (Nigeria starting to trade with China in Yuan not Dollars); Shen A (2019) Myanmar adds yuan and yen as trade-settlement currencies (Feb 12, 2019). https://​www.​centralbanking.​com/​central-banks/​reserves/​foreign-exchange/​4028831/​myanmar-adds-yuan-and-yen-as-trade-settlement-currencies (Myanmar allows trade settlement in Yuan and Japan’s Yen).

  66. 66.

    See Europe’s central banks confirm yuan holdings (Jan 16, 2018). https://​www.​reuters.​com/​article/​bundesbank-reserves-yuan-belgium/​update-2-europes-central-banks-confirm-yuan-holdings-idUSL8N1PB3Y5 (“More central banks in Europe revealed plans on Tuesday to hold yuan as part of their foreign currency reserves, highlighting the Chinese currency’s rise into an elite league of the world’s major reserve currencies.”)

  67. 67.

    Uehara M, Tanaka A (2020) China to overtake US economy by 2028–2029 in COVID’s wake: JCER (Dec 10, 2020). https://asia.nikkei.com/Economy/China-to-overtake-US-economy-by-2028-29-in-COVID-s-wake-JCER (China likely to become the largest economy in 2028 or 2029).

  68. 68.

    See Taplin N (2018) A Chinese oil slick for the dollar? (Sept 18, 2018). https://​www.​wsj.​com/​articles/​a-chinese-oil-slick-for-the-dollar-1537271564 (Shanghai oil futures are the only non-Dollar contract, and longer-term Yuan for oil may become a global benchmark).

  69. 69.

    Ramady M (2018) Petro-yuan may prove a bigger headache to USA than trade wars (Apr 5, 2018). https://​www.​thenational.​ae/​business/​energy/​petro-yuan-may-prove-a-bigger-headache-to-us-than-trade-wars-1.​719021 (“While the world has been engrossed with the latest spats over tariff wars, and who and when countries will retaliate against the United States, the Chinese have very quietly set the ball rolling to end the US dollar’s hegemony in international oil trade.”)

  70. 70.

    Tan S-L (2020) China’s yuan gains foothold in iron ore deals, could increase Chinese self-reliance, analysts say (Sept 4, 2020). https://www.scmp.com/economy/china-economy/article/3100091/chinas-yuan-gains-foothold-iron-ore-deals-could-increase (“Iron ore miners ‘and steel producers’ increasing use of the Chinese yuan will increase its internationalisation, reduce China’s vulnerability to any possible US financial sanctions, and help the domestic economy in line with the new “dual circulation” strategy.”)

  71. 71.

    See footnote 3.

  72. 72.

    Fan Y (2016) On digital currencies, central banks should lead. Bloomberg (Sept 1, 2016). www.bloomberg.com/opinion/articles/2016-09-01/on-digital-currencies-central-banks-should-lead. Zhou X (2016) Transcript of Governor Zhou Xiaochuan’s exclusive interview with Caixin Weekly. The People’s Bank of China (Feb 14, 2016). www.pbc.gov.cn/english/130721/3017134/index.html

  73. 73.

    Tang F (2019) Facebook’s Libra forcing China to step up plans for its own cryptocurrency, says central bank official. South China Morning Post (July 8, 2019). https://www.scmp.com/economy/china-economy/article/3017716/facebooks-libra-forcing-china-step-plans-its-own (PBOC official commenting on Facebook’s Libra).

  74. 74.

    See footnote 73.

  75. 75.

    See footnote 3.

  76. 76.

    See Chaisse J (2015) Demystifying public security exception and limitations on capital movement. Univ Pa J Int Law 37:583, 601 (relative dearth of rulings on the exception).

  77. 77.

    See Kurtz J (2010) Adjudging the exceptional at international investment law: security, public order and financial crisis. Int Comp Law Q 59:324, 338

  78. 78.

    CMS v. Argentina, 44 I.L.M. ¶ 373 (emphasis added).

  79. 79.

    See Korzun V (2016) The right to regulate in investor state arbitration: slicing and dicing regulatory carve-outs. Vand J Transnatl L 50:355, 393 (“Reliance on the specific security exception is usually accepted for a shorter period of time, limited by the goal of the exception, such as until international peace or security is restored”).

  80. 80.

    Panel Report, Russia – Measures Concerning Traffic in Transit, WT/DS512/R (adopted Apr. 5, 2019). See also Wang C (2019) Invocation of national security exceptions under GATT Article XXI: jurisdiction to review and standard of review. Chinese J Int Law 18:695, 705–706 (Ukraine Panel understood security as defense of the territory in the context of armed conflict).

  81. 81.

    Ibid. ¶ 7.136.

  82. 82.

    Ibid. ¶ 7.111.

  83. 83.

    Article 73(b)(iii) is the national security exception of the TRIPS Agreement and is the same as Article XXI(b)(iii) of GATT. The TRIPS security exception allows a state to take “any action which it considers necessary for the protection of its essential security interests’ during the ‘time of war or other emergency in international relations.’”

  84. 84.

    World Trade Organization (2020) Saudi Arabia – Measures Concerning The Protection of Intellectual Property Rights. Report of the Panel (June 16, 2020). https://docs.wto.org/dol2fe/Pages/SS/directdoc.aspx?filename=q:/WT/DS/567R.pdf&Open=True ¶7.257

  85. 85.

    Ibid. ¶7.280.

  86. 86.

    See, e.g., CC/Devas Award on Jurisdiction and Merits, CC/Devas v. India, PCA Case No. 2013–09, Award on Jurisdiction and Merits, (Perm. Ct. Arb. July 25, 2016), ¶¶ 354–356, 360; accord Deutsche Interim Award, Deutsche Telekom AG v. India, PCA Case No. 2014–10, Interim Award, (Perm. Ct. Arb. Dec. 13, 2017) ¶ 281.

  87. 87.

    See Hambling D (2018) Why the U.S. is backing killer robots (Sept 14, 2018). https://​www.​popularmechanics​.​com/​military/​research/​a23133118/​us-ai-robots-warfare/​

  88. 88.

    See Manson K (2018) Robot -soldiers, stealth jets, and drone armies: the future of war (Nov 16, 2018). https://​www.​ft.​com/​content/​442de9aa-e7a0-11e8-8a85-04b8afea6ea3 (“The advance of artificial intelligence brings with it the prospect of robot-soldiers battling alongside humans – and one day eclipsing them altogether.”)

  89. 89.

    Defensive capabilities will become increasingly crucial as well.

  90. 90.

    See Forbes Technology Council (2018) 14 ways AI will either benefit or harm society (Mar 1, 2018). https://www.forbes.com/sites/forbestechcouncil/2018/03/01/14-ways-ai-will-benefit-or-harm-society/#3bd4e14d4ef0 (“[I]t is believed that Facebook’s newsfeed algorithm influenced an election outcome that affected geopolitics.”).

  91. 91.

    Chainey R (2017) The global economy will be $16 trillion bigger by 2030 thanks to AI (June 27, 2017). https://​www.​weforum.​org/​agenda/​2017/​06/​the-global-economy-will-be-14-bigger-in-2030-because-of-ai/​

  92. 92.

    Lee J (2018) Commercializing national security? National security exceptions’ outer parameter under GATT Article XXI. Asian J WTO Int Health Law Policy 13(2):277, 296.

  93. 93.

    Ibid. (Since they are not enacted in response to “fissionable materials or the materials from which they are derived,” “relating to the traffic in arms, ammunition and implements of war and to such traffic in other goods and materials … for the purpose of supplying a military establishment,” and “taken in time of war or other emergency in international relations.”)

  94. 94.

    Ibid. (“But they set forth specific requirements such that a simple showing of economic concern, mere reference to an economic harm, or remote relevance to military activity does not satisfy them.”)

  95. 95.

    Ibid. at 302 (2018) (“The wording of the [GATT national security exception] article apparently conveys the meaning that it should guard against improper imposition of trade-barriers for commercial, business or political purposes under the guise of national security. Otherwise, the measure may turn out to be an illegitimate carte blanche or a ‘self-proclaimed’ waiver.”) (emphasis added)

  96. 96.

    Dufour F (2020) Trump administration says Huawei, Hikvision backed by Chinese military (June 25, 2020). https://www.cnbc.com/2020/06/25/trump-administration-says-huawei-hikvision-backed-by-chinese-military.html (“A Department of Defense (DOD) document listing 20 companies operating in the United States that Washington alleges are backed by the Chinese military…The DOD document also includes[Hikvison,] China Mobile Communications Group and China Telecommunications Corpas well as aircraft manufacturer Aviation Industry Corp of China.”)

  97. 97.

    See footnote 13, p 5.

  98. 98.

    See, e.g., Lin L-W, Milhaupt CJ (2013) We are the (national) champions: understanding the mechanisms of state capitalism in China. Stanford Law Rev 65:697 (“In the future, more boards of directors may be established for the parent companies of the national champion groups, SOE boards may take on somewhat more power, and independent directors may become more prevalent. (These are reforms that have preoccupied many corporate law commentators.) But they will hardly alter the fundamental governance norms of Chinese SOEs, which are determined by the party-state in its role as controlling shareholder.”) (emphasis added).

  99. 99.

    See footnote 35 (“The CCP accomplishes this goal, in part, by subsidizing hardware, software, telecommunications, and even genetics companies. As a result, corporations such as Huawei and ZTE undercut competitors on price and install their equipment around the globe at a loss. This has the side effect of putting out of business American manufacturers of telecom hardware and has made it very difficult for Nokia and Ericsson. Why do they do it? Because it is not telecom hardware or software profits the CCP are after, it is your data. They use “backdoors” built into the products to obtain that data.”) (emphasis added).

  100. 100.

    See footnote 35. In the digital age, opinion and thoughts are influenced by data and potential data manipulation and is so recognized by both China and the USA. See Buckley C (2011) China PLA officers call Internet key battleground (June 3, 2011). https://www.reuters.com/article/us-china-internet-google/china-pla-officers-call-internet-key-battleground-idUSTRE7520OV20110603 (Chinese military understands that the internet is a significant battleground over public opinion).

  101. 101.

    See footnote 21.

  102. 102.

    See footnote 13, p 27.

  103. 103.

    See footnote 34.

  104. 104.

    Ibid. (emphasis added).

  105. 105.

    See footnote 36.

  106. 106.

    Ibid.

  107. 107.

    Secretary of State Pompeo MR (2020) Communist China and the Free World’s Future (July 23, 2020). https://2017-2021.state.gov/communist-china-and-the-free-worlds-future-2/index.html (“We stopped pretending Huawei is an innocent telecommunications company that’s just showing up to make sure you can talk to your friends. We’ve called it what it is – a true national security threat – and we’ve taken action accordingly.”)

  108. 108.

    Ibid.

  109. 109.

    See footnote 20 (“For example, China produces almost all of the world’s dysprosium, a rare-earth element used in magnets for electric cars. According to official Chinese data, 72% of its exports in 2018 went to Japan. Japanese companies use the material to produce magnets, which they sell to clients around the world. Under the new law, China might restrict their supply if one of their U.S. clients were blacklisted.”)

  110. 110.

    OECD Services Trade Restrictiveness Index: Policy trends up to 2020 (November 2020, p 20). https://www.oecd.org/trade/topics/services-trade/documents/oecd-stri-policy-trends-up-to-2020.pdf (“[T]he new Law on the Control of the Foreign Investments Offending the National Security of Hungary entered into force. The Law establishes a verification procedure of investors’ conformity with national security interests (pre-screening procedure) for specific activities.”)

  111. 111.

    Ibid., p 24 (“As of 1 January 2019, a new investment screening mechanism has been in effect [in Norway]. It covers investments in certain companies whose activities are essential to national security interests, including national financial stability and autonomy. The screening mechanism applies to direct or indirect acquisitions of one-third or more of the share capital, assets, or voting rights or transactions that would enable the acquirer to exercise significant control over the company. Investments that impose a “not insignificant” risk to national security interests may be blocked or subjected to further conditions.”) (emphasis added).

  112. 112.

    Nelson SS (2017) Germany bans “My Friend Cayla” doll over spying concerns (Feb 20, 2017). https://www.npr.org/2017/02/20/516292295/germany-bans-my-friend-cayla-doll-over-spying-concerns (In 2017, for example, Germany banned My Friend Carly – a doll from the USA that you could talk to you – because the conversation was processed by servers in the USA); Lunden I (2016) LinkedIn, is now officially blocked in Russia (Nov 17, 2016) https://techcrunch.com/2016/11/17/linkedin-is-now-officially-blocked-in-russia/ (Russia blocked access to LinkedIn because LinkedIn refused to store personal data of Russian users in Russia).

  113. 113.

    Abi-Habib M (2020) India bans nearly 60 Chinese apps, including TikTok and WeChat (June 30, 2020). https://www.nytimes.com/2020/06/29/world/asia/tik-tok-banned-india-china.html (citing national security, India bans TikTok and other Chinese apps).

  114. 114.

    Ministry of Commerce of the PRC (Aug 28, 2020). http://www.mofcom.gov.cn/article/ae/sjjd/202008/20200802996696.shtml (main purpose of the revision was to “regulate the export of technologies, promote technological improvement and expand economic and technological exchanges with foreign countries while safeguarding national economic security.”)

  115. 115.

    See footnote 19.

  116. 116.

    See footnote 20.

  117. 117.

    See footnote 18.

  118. 118.

    See Benton Heath J (2020) Trade and security among the ruins. Duke J Comp Int Law 30:223, 232 (“By invoking these exceptions, the United States has edged toward a version of national security that goes beyond military readiness, to embrace a conception that equates security with economic self-sufficiency and competitiveness.”)

  119. 119.

    See Shepardson D, Freifeld K, Alper A (2020) U.S. moves to cut Huawei off from global chip suppliers as China eyes retaliation (May 15, 2020). https://in.reuters.com/article/us-usa-huawei-tech-exclusive/u-s-moves-to-cut-huawei-off-from-global-chip-suppliers-as-china-eyes-retaliation-idINKBN22R1KC (ban on chip sales to Huawei); Swanson A, Zhong R (2020) U.S. places restrictions on China’s leading chip maker (Oct 5, 2020). https://www.nytimes.com/2020/09/26/technology/trump-china-smic-blacklist.html (USA blocks chip sales to SIMC)

  120. 120.

    In 2018, the USA enacted The Foreign Investment Risk Review Modernization Act (“FIRRMA”) extensively strengthening the existing vetting architecture of CFIUS. While ostensibly FIRRMA is applicable to all foreign buyers, it was precipitated by perceptions that China poses a serious national security challenge to the USA. See McLaughlin D, Mohsin S, House B (2017) China-US-buying spree prompts move to toughen deal reviews. Bloomberg (Oct 26, 2017). https://​www.​bloomberg.​com/​news/​articles/​2017-10-26/​china-s-u-s-buying-spree-prompts-move-to-toughen-deal-reviews

  121. 121.

    See, e.g., European Commission (2020) Guidance to the Member States concerning foreign direct investment and free movement of capital from third countries, and the protection of Europe’s strategic assets, ahead of the application of Regulation (EU) 2019/452 (FDI Screening Regulation) (Mar 25, 2020). https://trade.ec.europa.eu/doclib/docs/2020/march/tradoc_158676.pdf?utm_source=CCSI+Mailing+List&utm_campaign=f114c4c804-Perspective+284&utm_medium=email&utm_term=0_a61bf1d34a-f114c4c804-62915057, pp 1–2 (“To this end, the European Commission calls upon Member States to… to set up a full fledged screening mechanism and in the meantime to use all other available options to address cases where the acquisition or control of a particular business, infrastructure or technology would create a risk to security or public order in the EU, including a risk to critical health infrastructures and supply of critical inputs.”)

  122. 122.

    Ibid. at 1 (emphasis added).

  123. 123.

    Ibid. at p 1.

  124. 124.

    See European Commission (2020) Screening of foreign direct investment (Nov 24, 2020). http://trade.ec.europa.eu/doclib/press/index.cfm?id=2006 intro Art 13 noting that screening mechanisms should (“consider all relevant factors, including the effects on critical infrastructure, technologies [] which are essential for security or the maintenance of public order…. [and] whether a foreign investor is controlled directly or indirectly, for example through significant funding, including subsidies, by the government of a third country or is pursuing State-led outward projects or programmes.”); Ibid. at Art 4 (Defining risks to security and public order as involving “critical infrastructure, whether physical or virtual, including energy, transport, water, health, communications, media, data processing or storage, aerospace, defence, electoral or financial infrastructure, and sensitive facilities, as well as land and real estate crucial for the use of such infrastructure.”)

  125. 125.

    See Soble J (2017) Why the U.S. fears a Chinese bid for Westinghouse electric (Apr 7, 2017). https://​www.​nytimes.​com/​2017/​04/​07/​business/​us-china-toshiba-westinghouse.​html?​_​r=​0 (“Westinghouse is believed to have been targeted by Chinese spies. If a Chinese entity were to buy the company, China could obtain secrets without the cloak and dagger”).

  126. 126.

    See Slawotsky J (2009) Sovereign wealth funds as emerging superpowers: how US regulators should respond. Georget J Int Law 40:1239, 1251

  127. 127.

    See Chaisse (2015), pp. 583, 594–595 in footnote 76.

  128. 128.

    China has announced a negative list based upon national security considerations. See China reveals punishment for firms on unreliable entity list (Sep 19, 2020). https://www.bloomberg.com/news/articles/2020-09-19/china-reveals-punishment-for-firms-on-unreliable-entity-list

  129. 129.

    See footnote 18 (“China will impose unspecified sanctions on the defense unit of Boeing Co., Lockheed Martin Corp., and Raytheon Technologies Corp. after the U.S. approved $1.8 billion in arms sales to Taiwan last week.”)

  130. 130.

    See footnote 114.

  131. 131.

    Higgins-Dunn N (2020) China tightens tech export controls potentially jeopardizing TikTok deal, reports say (Aug 29, 2020). https://www.cnbc.com/2020/08/29/china-tightens-tech-export-controls-jeopardizing-tiktok-deal-reports-say.html (“Cui Fan, a professor of international trade in Beijing, told Xinhua that ByteDance would probably have to get approval from the Chinese government and suggested the company may have to suspend negotiations on TikTok’s sale.”)

  132. 132.

    See footnote 109.

  133. 133.

    For example, blocking transactions may potentially implicate international investment agreements and give rise to claims either at the ICJ State – State venue or International Centre for Settlement of Investment Disputes (ICSID) Investor–State arbitration. See Hsu L (2017) The role and future of sovereign wealth funds: a trade and investment perspective. Wake Forest Law Rev 52:837, 847.

  134. 134.

    China may also perceive that these measures are brought in the context of the USA–China rivalry. See Backer (2010) in footnote 33 (“For a considerable period of time, Chinese officials have been focusing on the possibility that the United States intends to surround it to prevent it from more forcefully asserting its own interests in the region…[T]he Chinese suggest that American policy has been to engage China economically while creating an effective military encirclement that would enhance the American position in the event of conflict.”)

  135. 135.

    Pronina L, Follain J, Okov S (2018) EU is ready to fight back against China’s growing trade dominance. Bloomberg (May 3, 2018). https://​www.​bloomberg.​com/​news/​articles/​2018-05-03/​europe-embarks-on-a-china-strategy-with-a-majority-for-screening. Notwithstanding this objection, the EU has in fact established such a mechanism. See European Commission (2019) Foreign Investment Screening: new European framework to enter into force in April 2019 (press release, Mar 5, 2019). http://​europa.​eu/​rapid/​press-release_​IP-19-1532_​en.​htm (new EU mechanism approved).

  136. 136.

    Global Time editorial (2020) International community needs to break its silence on US highway robbery of TikTok (Sept 25, 2020). https://www.globaltimes.cn/content/1202041.shtml

  137. 137.

    Wong E, Rappeport A (2018) In race for global power, USA and China push nations to pick a side (Nov 21, 2018). https://​www.​nytimes.​com/​2018/​11/​21/​us/​politics/​usa-china-trade-war.​html

  138. 138.

    Chen C (2020) India to slowly phase out Huawei and other Chinese vendors from its telecoms network (Aug 25, 2020). https://www.scmp.com/tech/big-tech/article/3098693/india-slowly-phase-out-huawei-and-other-chinese-vendors-its-telecoms (“India is gradually phasing out Chinese vendors from its telecoms networks amid rising tensions between the world’s most populous countries following deadly border clashes, according to a Financial Times report.”)

  139. 139.

    McFall C (2020) Israel rejects $1.5B Chinese water plant after Pompeo said it could affect working relationship with US (May 26, 2020). https://www.foxnews.com/world/israel-rejects-chinese-water-plant-pompeo (Israeli government under immense pressure from Secretary of State Pompeo who told Israelis, “We do not want the Chinese Communist Party to have access to Israeli infrastructure, Israeli communication systems, all of the things that put Israeli citizens at risk and in turn put the capacity for America to work alongside Israel on important projects at risk, as well.”)

  140. 140.

    Kelion L (2020) Huawei 5G kit must be removed from UK by 2027 (July 14, 2020). https://www.bbc.com/news/technology-53403793 (“This has not been an easy decision, but it is the right one for the UK telecoms networks, for our national security and our economy, both now and indeed in the long run.”)

  141. 141.

    Buchan L (2020) US warns Britain’s sovereignty in jeopardy over Huawei deal amid pressure on Boris Johnson to change course (Jan 27, 2020). https://www.independent.co.uk/news/uk/politics/huawei-5g-boris-johnson-us-trump-mike-pompeo-china-a9303191.html (“In an escalation of pressure on Boris Johnson, Mike Pompeo said the UK had a “momentous” decision to make this week over whether to allow Huawei to form part of the UK’s 5G infrastructure.”)

  142. 142.

    See Cohen T, Scheer S (2019) Israel’s chip sales to China jump as Intel expands (Mar 19, 2019). https://​www.​reuters.​com/​article/​us-israel-china-tech-exclusive/​exclusive-israels-chip-sales-to-china-jump-as-intel-expands-idUSKCN1R00DF (“Israel’s exports of computer chips to China soared last year as Chinese companies bought more semiconductors made at Intel’s Kiryat Gat plant.”)

  143. 143.

    Ackerman G, Levingston I (2019) Israel is stuck in the middle of Trump’s conflict with China (Jan 28, 2019). https://​www.​bloomberg.​com/​news/​articles/​2019-01-28/​trump-s-freeze-on-china-exposes-israeli-tech-firms-to-chill-wind (“During a visit to Israel this month, U.S. National Security Adviser John Bolton was due to raise concerns about China technology penetration, in particular through Huawei Technologies Co. and ZTE Corp.”)

  144. 144.

    USMCA Article 32.10.

  145. 145.

    See Wu (2018) in footnote 9 (“While China is not named, the clause is squarely aimed at isolating Beijing. Likewise, Washington will certainly ask for a similar clause in its trade negotiations with Japan, the European Union or any other nations. They too will be likely forced to choose between the U.S. and China.”)

  146. 146.

    Heydarian RJ (2020) US presses and pushes allies into New Cold War (May 30, 2020). https://asiatimes.com/2020/05/us-presses-and-pushes-allies-into-new-cold-war/

  147. 147.

    See footnote 16 (“U.S. Secretary of State Mike Pompeo on Thursday warned that the United States would not be able to partner with or share information with countries that adopt Huawei Technologies Co Ltd. systems, citing security concerns.”)

  148. 148.

    Sanger DE, Barnes JE, Zhong R, Santora M (2019) In 5G race with China, U.S. pushes allies to fight Huawei (Jan 26, 2019). https://​www.​nytimes.​com/​2019/​01/​26/​us/​politics/​huawei-china-us-5g-technology.​html?​action=​click&​module=​Top%20​Stories&​pgtype=​Homepage

  149. 149.

    Kharpal A (2020) U.S. tries to get Huawei blocked from Brazil’s 5G networks with $1 billion financing pledge (Oct 21, 2020). https://www.cnbc.com/2020/10/21/us-tries-to-get-huawei-blocked-from-brazils-5g-networks.html (“Washington has stepped up its offensive against Huawei, offering financing to Brazil to get the Chinese telco effectively blocked from the nation’s next-generation 5G networks.”)

  150. 150.

    See Cave D, Uren T (2018) Why Australia banned Huawei from its 5G telecoms network (Aug 30, 2018). https://​www.​ft.​com/​content/​e90c3800-aad3-11e8-94bd-cba20d67390c (Australia).

  151. 151.

    Schulze E, Taylor C (2019) Huawei could be banned from 5G in Germany (Jan 18, 2019). https://​www.​cnbc.​com/​2019/​01/​18/​huawei-5g-ban-in-germany.​html (“The German government is considering banning Huawei from providing 5G equipment in the country saying security concerns are of ‘high relevance’.”); Fadden R (2019) For the security of Canadians, Huawei should be banned from our 5G networks (Jan 23, 2019). https://​www.​theglobeandmail.​com/​opinion/​article-for-the-security-of-canadians-huawei-should-be-banned-from-our-5g/​ (“There are plenty of reasons why intelligence professionals are alarmed by Huawei’s involvement in our 5G networks, particularly, the close relationship between Huawei and a Chinese government with a history of cyberespionage. Add the fact that China’s 2017 National Intelligence Law gives Beijing the power to compel Huawei’s support for its intelligence work, and it should be a clear-cut case.”); France considers bill amendment to target Huawei (Jan 21, 2019). https://​www.​reuters.​com/​article/​us-france-huawei/​france-considers-bill-amendment-to-target-huawei-les-echos-idUSKCN1PF25E (“France is considering introducing a bill amendment to empower its security and defence watchdogs to make retroactive checks to telecoms operators’ equipment once installed, targeting China’s Huawei.”)

  152. 152.

    Elmer K (2020) Portugal rejects US warning of sanctions over Chinese investment as rivalry heats up (Sept 29, 2020). https://www.scmp.com/news/china/diplomacy/article/3103511/portugal-rejects-us-warning-sanctions-over-chinese-investment (“Lisbon has rebuffed a warning from the US ambassador that sanctions could be imposed on Portuguese companies with Chinese investment, the latest sign that rivalry between Washington and Beijing over Europe is intensifying.”)

  153. 153.

    Shinozaki K, Kastner J (2019) Germany follows UK in casting doubt on US-Huawei ban (Feb 19, 2019). https://​asia.​nikkei.​com/​Economy/​Trade-war/​Germany-follows-UK-in-casting-doubt-on-US-Huawei-ban (noting Germany, the U.K. and New Zealand are questioning US pressure to ban Huawei) (emphasis added)

  154. 154.

    Li T (2019) Huawei founder, says West would be “foolish” not to buy its 5G products as they are leading edge (Jan 22, 2019). https://​www.​scmp.​com/​tech/​big-tech/​article/​2182995/​huawei-founder-says-west-would-be-foolish-not-buy-its-5g-products-they (“They are foolish and will lose money if they don’t buy [our products],” …“We have many things that the European and American countries need, and they will have to purchase from us.”)

  155. 155.

    Lee YN (2020) Four years on, Philippine President Duterte is still struggling to show the benefits of being pro-China (Sept 7, 2020). https://www.cnbc.com/2020/09/08/philippine-president-duterte-fails-to-produce-results-from-pro-china-stance.html (“In a dramatic shift in the Philippines’ foreign policy, Duterte declared in 2016 the country’s “separation” from the U.S. – a military ally – and announced closer ties with China. Among other things, the president also set aside his country’s territorial dispute with Beijing in the South China Sea, in exchange for billions of dollars that China pledged in infrastructure investments. But much of that promised investment has not materialized.”)

  156. 156.

    Wibawa T (2019) New Zealand gets “punished” by Chinese tourists following Huawei ban, according to state media. https://​www.​abc.​net.​au/​news/​2019-02-19/​china-tourists-punishing-new-zealand-over-huawei-decision/​10825340 (“Chinese state-owned media Global Times, claims Chinese tourists are considering abandoning their travel plans into the country as a way to ‘punish’ New Zealand over its decision to ban mobile company Spark from using Huawei equipment in its 5G upgrade. It also says the political relationship between the two nations is now ‘strained’.”); Murtaugh D, Scott J (2019) Major Chinese port bans Australian coal imports, report says (Feb 21, 2019). https://www.bloomberg.com/news/articles/2019-02-21/glencore-sees-political-issue-in-china-s-australia-coal-delays (“A major port in northern China has reportedly banned coal imports from Australia – in a sign that Beijing may be flexing its economic muscles and warning nations not to bar its next-generation wireless technology.”)

  157. 157.

    China to halt key Australian imports in sweeping retaliation (Nov 3, 2020). https://www.bloomberg.com/news/articles/2020-11-03/china-to-halt-key-australian-commodity-imports-as-tensions-mount (“China has ordered traders to stop purchasing at least seven categories of Australian commodities, ratcheting up tensions with its key trading partner in its most sweeping retaliation yet. Commodities traders in China won’t be able to import products including coal, barley, copper ore and concentrate, sugar, timber, wine and lobster, according to people familiar with the situation. The government has ordered the halt to begin on Friday, one of the people said, asking not to be identified as the information is sensitive.”)

  158. 158.

    See Vela JH (2018) EU and China break ultimate trade taboo to hit back at Trump (Nov 21, 2018). https://​www.​politico.​eu/​article/​eu-and-china-break-ultimate-trade-taboo-to-hit-back-at-trump/​ (“Anger over U.S. President Donald Trump’s steel tariffs is pushing Europe and China to rip up one of the most sacrosanct unwritten rules in international trade policy: Don’t question national security.”)

  159. 159.

    Chatzky A (2019) China’s Belt and Road get a win in Italy (Mar 27, 2019). https://​www.​cfr.​org/​article/​chinas-belt-and-road-gets-win-italy (“Chinese President Xi Jinping just returned from a visit to Europe to promote the Belt and Road Initiative (BRI), China’s unprecedented plan to expand its geopolitical reach. As Rome and Beijing signed a major deal on the BRI, several European leaders expressed alarm about the agreement’s ability to divide Europe.”)

  160. 160.

    There are exceptions such as nonpublicly traded Huawei.

  161. 161.

    Alper A (2019) White House considered kicking Huawei out of U.S. banking system (Dec 3, 2019). https://www.reuters.com/article/us-huawei-tech-usa-treasury-exclusive/exclusive-white-house-considered-kicking-huawei-out-of-u-s-banking-system-sources-idUSKBN1Y717U (“The plan, which was ultimately shelved, called for placing Huawei Technologies Co Ltd. [HWT.UL], the world’s second largest smartphone producer, on the Treasury Department’s Specially Designated Nationals (SDN) list. One of the people familiar with the matter, who favors the move, said it could be revived in the coming months depending on how things go with Huawei.”)

  162. 162.

    Economists say U.S. threat to undermine Hong Kong dollar peg is “self-defeating” (July 8, 2020). https://fortune.com/2020/07/08/hong-kong-us-dollar-peg-threat-economists/ (discussing the possibility of undermining the US Dollar-Hong Kong Dollar peg. “The most straightforward way to implement such a strategy would be for the U.S. to impose limits on the ability of American and potentially other foreign banks to sell U.S. dollars to Chinese lenders, possibly via sanctions on Chinese banks.”)

  163. 163.

    For a discussion of the US financial hegemony and Chinese attempts to counter this power, see footnote 3.

  164. 164.

    See supra Part II.

  165. 165.

    See footnote 3.

  166. 166.

    Executive Order on Addressing the Threat from Securities Investments that Finance Communist Chinese Military Companies (Nov 12, 2020). https://trumpwhitehouse.archives.gov/presidential-actions/executive-order-addressing-threat-securities-investments-finance-communist-chinese-military-companies/ (“[T]he PRC’s military-industrial complex, by directly supporting the efforts of the PRC’s military, intelligence, and other security apparatuses, constitutes an unusual and extraordinary threat.”)

  167. 167.

    Ibid.

  168. 168.

    Franck T (2020) Senate passes bill on oversight of Chinese companies, Alibaba shares move lower (May 20, 2020). https://www.cnbc.com/2020/05/20/senate-passes-bill-on-oversight-of-chinese-companies-alibaba-shares-move-lower.html (“The Senate passed legislation on Wednesday that could ban many Chinese companies from listing shares on U.S. exchanges or raising money from American investors without adhering to Washington’s regulatory and audit standards.”)

  169. 169.

    See Alper A, Lawder D (2019) Trump considers delisting Chinese firms from U.S. markets (Sept 27, 2019). https://www.reuters.com/article/us-usa-trade-china-limits/trump-considers-delisting-chinese-firms-from-u-s-markets-sources-idUSKBN1WC1VP (USA considering measures including de-listing Chinese shares).

  170. 170.

    Cirilli K, Banjo S (2020) U.S. warns colleges to divest China stocks on delisting risk (Aug 19, 2020). https://www.straitstimes.com/world/united-states/us-warns-colleges-to-divest-china-stocks-on-delisting-risk (“The US State Department is asking colleges and universities to divest from Chinese holdings in their endowments, warning schools in a letter on Tuesday (Aug 18) to get ahead of potentially more onerous measures on holding the shares.”)

  171. 171.

    Franck T (2020) White House directs federal pension fund to halt investments in Chinese stocks (May 12, 2020). https://www.cnbc.com/2020/05/12/white-house-directs-federal-pension-fund-to-halt-investments-in-chinese-stocks.html (prohibition on US government pension fund to invest in Chinese equities).

  172. 172.

    See also Ho S (2020) Trump administration seeks to delist U.S.-listed Chinese companies for blocking audit inspections (Aug 27, 2020). https://tax.thomsonreuters.com/news/trump-administration-seeks-to-delist-u-s-listed-chinese-companies-for-blocking-audit-inspections/ (US stock exchanges may delist Chinese companies that do not allow US audit inspections).

  173. 173.

    China makes proposal to U.S. in concession to solve accounting dispute (Aug 27, 2020). https://www.reuters.com/article/us-china-audit-dispute-idUSKBN25N0BR

  174. 174.

    Europe’s next big rescue idea – public stakes in small firms (July 9, 2020). https://www.straitstimes.com/business/economy/europes-next-big-rescue-idea-public-stakes-in-small-firms (“The next big idea gaining traction among officials and economists is potentially taking stakes in small and medium-sized businesses, in contrast to early efforts that relied heavily on loans to keep corporations afloat.”)

  175. 175.

    Fildes N (2018) Finnish government buys stake in Nokia (Mar 13, 2018). https://​www.​ft.​com/​content/​8a6741b8-26a9-11e8-b27e-cc62a39d57a0

  176. 176.

    Germany ready to buy stakes in automakers, other companies to protect them (Feb 5, 2019). https://​www.​autoblog.​com/​2019/​02/​05/​germany-buy-stakes-automakers-protection/​ (“The pivot to a more defensive industrial policy is driven by German concerns about foreign – particularly Chinese – companies acquiring German know-how and eroding the manufacturing base on which much of Germany’s prosperity is built.”)

  177. 177.

    See Spence E (2020) U.S. takes stake in battery-metals firm to wean itself off China (Oct 4, 2020). https://www.bnnbloomberg.ca/u-s-takes-stake-in-battery-metals-firm-to-wean-itself-off-china-1.1503540 (“The U.S. government has taken an equity stake in a battery-metals company in a move that undercuts dependence on China for a key material used in electric vehicles.”)

  178. 178.

    See Really? Is the White House proposing to buy Ericsson or Nokia? (Feb 7, 2020). https://www.nytimes.com/2020/02/07/business/dealbook/bill-barr-huawei-nokia-ericsson.html (“President Trump has made it very clear that he is worried about Huawei’s leading role in 5G wireless technology. Now his attorney general, Bill Barr, has offered a radical solution: having the U.S. invest in the Chinese company’s European counterparts.”)

  179. 179.

    Hirsch L (2020) Trump says he would consider government equity stakes in companies seeking bailouts (Mar 19, 2020). https://www.cnbc.com/2020/03/19/coronavirus-bailouts-trump-would-consider-federal-equity-stakes-in-companies.html

  180. 180.

    See China Molybdenum buys 95 pct stake in DRC copper-cobalt mine (Dec 14, 2020). http://www.xinhuanet.com/english/2020-12/14/c_139588737.htm (“China Molybdenum Co., Ltd. has acquired a 95-percent stake in the Kisanfu copper-cobalt mine in the Democratic Republic of Congo (DRC) from U.S.-based Freeport-McMoRan Inc. for 550 million U.S. dollars. The Kisanfu mine holds an estimated 6.28 million tonnes of copper and 3.1 million tonnes of cobalt metal.”)

  181. 181.

    Backer L (2013) Sovereign investing and markets-based transnational rule of law building: the Norwegian Sovereign Wealth Fund in global markets. Am Univ Int Law Rev 29:1, 92–94; See Slawotsky (2009), pp. 1239, 1255 in footnote 126.

  182. 182.

    See footnote 176 (state acquiring shares to prevent a foreign government from controlling corporation)

  183. 183.

    See Slawotsky J (2020) Financial stability and national security in an era of hegemonic rivalry: the need to tighten United States securities disclosure requirements. J Bus L 22:457

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  1. IDC Law and Business Schools, Herzliya, Israel

    Joel Slawotsky

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    Julien Chaisse

  2. School of Business and Law, University of Portsmouth, Portsmouth, UK

    Leïla Choukroune

  3. Institute of Malaysia and International Studies, National University of Malaysia, Bangi, Selangor, Malaysia

    Sufian Jusoh

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Slawotsky, J. (2021). National Security Exception in an Era of Hegemonic Rivalry: Emerging Impacts on Trade and Investment. In: Chaisse, J., Choukroune, L., Jusoh, S. (eds) Handbook of International Investment Law and Policy. Springer, Singapore. https://doi.org/10.1007/978-981-13-5744-2_2-2

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    National Security Exception in an Era of Hegemonic Rivalry: Emerging Impacts on Trade and Investment
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    DOI: https://doi.org/10.1007/978-981-13-5744-2_2-2

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    National Security Exception in an Era of Hegemonic Rivalry: Emerging Impacts on Trade and Investment
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    DOI: https://doi.org/10.1007/978-981-13-5744-2_2-1

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