A Brave New World? China, Inc. and International Law, Supranational Structures, and the Future of the Economic State

On Friday, March 1, 2018, Professor Mark Wu, of Harvard Law school, joined the Sawyer Seminar for its third guest speaker event. Prior to the event, Professor Wu shared a “thought experiment” exercise with the Sawyer Seminar students to facilitate a conversation around his larger article, The “China Inc.” Challenge to Global Trade Governance. His materials led to a far-ranging conversation that spanned issues such as China’s unique governmental structure, economic gamesmanship within international law, and the future of the state system. Several guests, including Professor Sara Beale, attended the event.

Wu began the conversation by explaining why he had asked the students to think through the problems he had provided. As he explained, when considering problems about legal liability and creative corporate structures in the abstract, one realizes that there are no easy answers. Of the hypotheticals that he provided, certain behaviors seemed slightly more or less ethical, but none lent themselves to a liability analysis under modern corporate—or international business—law. This matters when talking about China. It highlights that certain responses to China’s economic model are not so much responses to the model, but to the country.

Still, Wu argued that China does present real and pressing challenges to traditional international structures. Because international law was constructed through the lens of the Cold War, where capitalist and socialist states were pitted against each other, it divides companies along public/private lines. But this distinction is a fallacy. In reality, firms exist on a spectrum of public to private. Due to its size, economic power, and specific historical context, China occupies a unique spot on that continuum. Thus, the challenge China presents: International law frameworks are already under pressure. China distinctly adds to that pressure due to its sheer market power.

Ultimately, Wu’s work begs the question whether the current international law framework can survive the China challenge. Perhaps, he said, the modern era of international law, from approximately 1944 through the 1990s, was an anomaly. Perhaps the way that China views its corporations—not as extensions of the state, per se, but certainly as instruments of its public policy—is a more salient (it was by far more historically common). And if this is so, what comes next? Do we return to the era of the Dutch East India Company, or does China (with Xi at its helm) present a new way of conceptualizing the state as primary market manipulator and market beneficiary? In other words, as one student asked: Has China gotten it right?

Wu’s thesis elicited several probing questions. They ranged from the specific (regarding China’s currency manipulation policies) to the profound (will China usher in a new world order? And if so, are we happy about it, or does that frighten us?). Wu graciously took each question in turn. As the conversation progressed, Wu tightened his threads of thought. He explained the relationship between State and Party more thoroughly, and argued that with Xi’s recent power grab, China has reached an inflection point. Either things will go very wrong, or they will go very right. In parallel, the world, too, is at a inflection point. If the China model does fizzle, our old-world international law systems may remain intact. But if does not, then apparatuses like the WTO will likely not survive, or at least not maintain their stature.

Wu also provided several compelling insights about China’s current approach to international law. For example, he noted that China is “hyper self-aware” and closely monitors international law developments. It is also largely abiding by international rules—and when it does exceed them, it carefully does so along a path the U.S. has  already forged. In short, as Professor Brewster highlighted, China is playing a very long game.

Wu masterfully wove the specific story of China into a much larger conversation about state sovereignty, history, and future challenges, leaving his audience with questions that will continue to inform the seminar’s discussions in the future.