China's 'Going global' policy: Transnational production subsidies under the WTO SCM agreement

Abstract

As China is increasingly 'going global', foreign direct investment under its Belt and Road Initiative is becoming heavily scrutinized. One of the concerns is that Chinese companies establishing themselves in third countries would be unfairly advantaged by the financing they receive under China's expansionist strategy. This financing gives rise to a situation that had long been described as 'unrealistic', in which a government subsidizes a firm outside of its territory. When such a firm's products are exported to third countries, could such financing be disciplined under the World Trade Organization Agreement on Subsidies and Countervailing Measures? Should such financing, which enhances development in the receiving countries, be disciplined at all? The authors shed light on these issues and provide a preliminary guidance on how to structure this problem under international trade law.