Lynch on Wu, “The China, Inc. Challenge”

On March 2, 2018, the Sawyer Seminar on Corporations and International Law welcomed Professor Mark Wu of Harvard Law School for the third public seminar event of the spring. Professor Wu addressed his 2016 article, The “China, Inc.” Challenge to Global Trade Governance,[1] as well as a discussion essay he prepared for the seminar titled, Blurred Lines and the Invisible Hand: How Ought International Law Respond to Informal, Non-Collusive Actions in a World of Complex Inter-Firm Dynamics?[2]

 

Professor Wu began his talk with a question to the group drawn directly from his discussion piece. He queried whether there was any situation in which a company (X) should be held liable for the actions of another company (A) that benefited a third party (B). In this scenario, although there is no formal relationship between X and B, there is an informal connection between the two that A is aware of. Company A takes action in these circumstances to benefit B because it hopes that this action will allow it to curry favor with X. Interestingly, no one in the class raised their hand to indicate that X should be held liable in any situation. The response from the class was more or less the same when Professor Wu raised the possibility of liability for a common shareholder in both A and X.

 

This question and the audience response (or lack thereof) connected directly to the problem highlighted by Professor Wu in his 2016 piece regarding the structure of the Chinese economy.[3] Professor Wu summarized his article for the group and explained how underlying the Chinese economy is a complex web of connections between business, the State, and the ruling Party. His view is that the Chinese economic structure is organized differently from the models that we are used to and does not fit neatly within the conceptual frameworks created during the Cold War. The problem with this reality, according to Professor Wu, is that our current international trade regime is not structured to account for the unique issues created by the Chinese System. He took care to point out that although the Chinese structure is different in nature it is in fact a pragmatic response to China’s own historical problems and influences.

 

Responding to questions from the audience, Professor Wu explained that he does not view the difficulties arising from the interaction between China and the international trade regime as necessarily entirely fatal to the regime. He believes that, even as States look outside of the traditional Bretton-Woods structures, the structures themselves will remain. What will change instead is the efficacy of those structures as more areas become simultaneously unregulated and more economically important. Professor Wu sees the threat to the WTO and other bodies as a threat to their level of power, with the response to China’s rise potentially leading to these structures being pushed to the sidelines.

 

Professor Wu concluded his talk by pointing out that, although China and its unique structure pose a threat to the international trade regime, China is very aware of how other States perceive it. International law does matter to China and it makes an effort to play by the rules for the most part. Interestingly, in general China will only violate international law where the United States has previously committed violations. Professor Wu stated that moving forward with China in adapting the international trade regime multilaterally would require something that the West has not been willing to do so far, which is to articulate what we would be willing to capitulate on in order to come to an agreement.

[1] Mark Wu, The “China, Inc.” Challenge to Global Trade Governance, 57 Harv. Int’l L. J. 261 (2016).

[2] Mark Wu, Blurred Lines and the Invisible Hand: How Ought International Law Respond to Informal, Non-Collusive Actions in a World of Complex Inter-Firm Dynamics? (2018).

[3] See Wu, supra note 1 at 264–67.

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