U.S.-China Bilateral Investment Treaty

What is a Bilateral Investment Treaty (BIT)?

A Bilateral Investment Treaty (BIT) is an agreement between two countries that establishes rules for foreign investors and investments in both countries. BITs are intended to give investors more protection, freedom, and market access when investing in foreign markets. The United States currently has BITs with 42 nations and is working on one with China.

The U.S.-China Bilateral Investment Treaty

Formal discussions for the U.S.-China Bilateral Investment Treaty (BIT) began in July 2013. The BIT aims to “provide more opportunities for U.S. and Chinese companies to compete on a level playing field in each respective market.” While the United States has traditionally offered broad freedoms and protections to Chinese investors in the U.S, the Chinese government has placed many restrictions on American investors working in China. China currently restricts investments in over 100 industry sectors and places harsh and burdensome restrictions on American enterprises investing in China.

The Benefits of the U.S.-China BIT

The U.S.-China BIT creates an opportunity to expand investment options for American and Chinese companies. A completed agreement would particularly benefit American investors who have lacked many freedoms and protections while investing in China. In 2012 cumulative Chinese investments in the United States totaled $5.2 billion, which is less than 1% of total foreign investment in the United States. In 2013 American investments in China reached $3.4 billion, which was only 3% of total foreign investments in China.

A successful U.S.-China BIT creates potential benefits for both parties. For China, the investment treaty would:

  • Allow high-quality American products be more accessible to Chinese consumers
  • Help China re-balance its economy to focus more on consumption by household rather than relying on fixed assets
  • Allow Chinese industries to gain more exposure to American companies, helping them transition into more innovation industries that pay higher wages.

For the United States, the BIT would ideally allow American investors to receive national treatment in the Chinese market and gain more access to Chinese consumers. More specifically, the BIT would:

  • Prohibit China from using regulations that favor Chinese firms or using state-owned enterprises (SOEs) to advance their own interests in the private market
  • Ensure better protections to intellectual property by eliminating investment restrictions that require American firms to partner with Chinese firms
  • Provide new avenues for investor-state dispute settlement provided by the agreement
  • Give American companies the opportunity to expand into an economy with a middle class larger than the total population of the United States

A Bilateral Investment Treaty between China and the United States would link two of the largest economies in the world and create conditions that enable investors and companies in both countries to be successful.

More information on BIT and U.S.-China relations:

Office of the U.S. Trade Representative

U.S.-China Business Council




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