A Heng Wang (2018) China's Approach To The Belt and Road Initiative: Scope, Character and Sustainability

Journal of International Economic Law, 2018, 00, 1–27
doi: 10.1093/jiel/jgy048
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Article
China’s Approach to the Belt and Road Initiative:

Scope, Character and Sustainability
Heng Wang*
ABSTRACT
As a new form of regional multilateralism, the Belt and Road Initiative is China’s
most significant strategic move for external engagement in international economic
law, following its World Trade Organization accession. This paper analyses China’s
approach towards the Belt and Road Initiative from a legal perspective, focusing
on three questions: first, what is the proper scope of the Belt and Road Initiative?
Second, is there an identifiable approach that China adopts in the Belt and Road
Initiative context, and, if so, what is its key legal characteristic? Third, is China’s
Belt and Road Initiative approach sustainable? Employing a functional approach in
defining the Belt and Road Initiative, the article identifies three qualities to China’s
approach to the Belt and Road Initiative: (i) that it is a hub-and-spoke network,
(ii) it adopts a three-track institutional and mechanism approach, and (iii) a dual-
track normative approach. Compared with the US trade approach (particularly the US–
Mexico–Canada Agreement), these qualities reveal the key characteristic underpinning
China’s Belt and Road Initiative approach: maximised flexibility regarding institutions
and norms to address uncertainties and challenges in the Belt and Road Initiative. Such
flexibility will likely assist in ensuring that China’s Belt and Road Initiative approach
is sustainable by enabling trial-and-error, if properly managed. However, it also gives
rise to concerns around China’s Belt and Road Initiative approach, especially as to its
predictability, coherence, and transparency.
∗ Associate Professor and Co-Director of Herbert Smith Freehills China International Business and Eco-
nomic Law (CIBEL) Centre, Faculty of Law, the University of New South Wales, Sydney; Univer-
sity Visiting Professorial Fellow, Southwest University of Political Science and Law (SWUPL). Email:
heng.wang1@unsw.edu.au.
I am grateful to the Editors-in-Chief, anonymous reviewers, Tomer Broude, Markus Wagner, Shen Wei,
Mark Feldman, David A. Gantz, Locknie Hsu, Pasha L. Hsieh, Yip Man, Bin Gu, Donald Lewis, Jingxia
Shi, Manjiao Chi, Peter K. Yu, Rosalind Dixon, Bronwen Morgan, Daniel Joyce, Simon Lester, Giuseppe
Martinico, Julien Chaisse, Qingjiang Kong, Congyan Cai, Tong Qi, and participants at the 2017 Tsinghua-
UNSW Workshop, Oxford University One Belt One Road Summit, the conference “The Emergence of
New and Dynamic China-Africa Economic Relationships,” my lectures at SWUPL, and China University of
Political Science and Law for their insightful comments, and to Melissa Vogt, Hamish Collings-Begg, and
Talina Hurzeler for excellent assistance and comments. All errors are my own.
© The Author(s) 2018. Published by Oxford University Press. All rights reserved.
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2 • China’s Approach to the Belt and Road Initiative: Scope, Character and Sustainability
INTRODUCTION
As ‘the most ambitious geo-economic vision in recent history’, the Belt and Road Initia-

tive (BRI) is an international development program spearheaded by China, involving
70 countries and over two-thirds of the global population.1 From ports, to roads, to
critical aviation infrastructure, the BRI is intended to improve trade and investment rela-
tionships with many of China’s economic partners. As such, the BRI represents China’s
most significant strategic move for engagement in an extra-regional arrangement after
its accession to the World Trade Organization (WTO) in 2001. It is considered an
exemplar of regional multilateralism,2 where policies with global import are coordinated
through ‘groups of three or more states, through ad hoc arrangements or by means of
institutions’.3
Despite its importance, the BRI remains understudied as a matter of legal analysis.4
Research on China’s approach is often conducted through lenses other than law,
including political science and international relations.5 Yet, legal analysis is critical in
understanding the initiative as both an instrument of cross border legal relations and as
a matter of geopolitical strategy. This article seeks to fill this analytical lacuna by asking
three key questions.
First, what is the proper scope of the BRI? BRI-related practices can only be mean-
ingfully evaluated by reference to the BRI’s scope. This article proposes delineating the
scope of the BRI through a functional view; that is, a focus on the actual measures and
mechanisms put in place to serve the purposes of the BRI, regardless of whether they
are externally labelled as part of the BRI. A functionalist view is more pragmatic and
helps better clarify the operation of the BRI, the underlying considerations, and what
the future holds for the BRI.
Second, what is China’s approach to the BRI? This article argues that China (i)
approaches the BRI as a hub-and-spoke network, (ii) has adopted a three-track institu-
tional and mechanism approach that is less institutionally focused, and (iii) has adopted
a dual-track normative approach that maximizes the use of soft law.
1 Jonathan Hillman, ‘China’s Belt and Road Initiative: Five Years Later’ (2018), available at https://csis-prod.
s3.amazonaws.com/s3fs-public/publication/ts180125_hillman_testimony.pdf?mSTOaqZbgZdRpx4QWo
St1HtIa4f N42uX.
2 Weifeng Zhou and Mario Esteban, ‘Beyond Balancing: China’s Approach Towards the Belt and Road Initia-
tive’, 27 Journal of Contemporary China 487 (2018), at 487 and 496.
3 Robert O. Keohane, ‘Multilateralism: An Agenda for Research’, 45 International Journal 731 (1990), at 731.
4 It seems that current research often addresses investment treaty issues concerning the BRI. See, e.g., Shu
Zhang, ‘China’s Approach in Drafting the Investor–State Arbitration Clause: A Review from the “Belt and
Road” Regions’ Perspective’, 5 The Chinese Journal of Comparative, (2017) at 79–109, Vivienne Bath, ‘“One
Belt, One Road” and Chinese Investment’, in Chao Xi and Lutz-Christian Wolff (eds), Legal Dimensions of
China’s Belt and Road Initiative (Hong Kong: Wolters Kluwer Hong Kong Limited, 2016), 165–218.
5 For the most recent research, see, e.g., Zhou and Esteban, above n 2, at 487–501; Yong Wang, ‘Offensive for
Defensive: The Belt and Road Initiative and China’s New Grand Strategy’, 29 The Pacific Review 455 (2016),
at 455–463.
China’s Approach to the Belt and Road Initiative: Scope, Character and Sustainability • 3
These three qualities reveal the major legal characteristic behind China’s BRI
approach, which is to maximize flexibility in addressing uncertainties and challenges

in the BRI. Significantly, this maximised flexibility contrasts with the more rigid6 US
trade approach, particularly reflected in the recent US–Mexico–Canada Agreement
(USMCA).
Third, is China’s approach to the BRI viable? A major benefit of normative and
institutional flexibility is that it allows for trial-and-error in addressing uncertainties in
the BRI. Such flexibility is thus likely to be sustained as a crucial tool of China’s BRI
approach going forward. However, it also raises potential concerns, especially regarding
predictability, coherence, and transparency in the BRI.
In considering these issues, the article identifies the specific treaties, regulations, and
forums related to the BRI. It should be acknowledged, however, that it is to some extent
difficult to identify China’s approach independently, as while China leads the BRI, it
works in collaboration with other states.7 In addition, although the paper endeavours to
discuss many BRI-related documents, institutions, and mechanisms, it is not possible
to address all of them within one article. This article does not analyse the merits of
BRI-related rules, which deserve careful and separate legal, social, economic, and
geopolitical study.
This article comprises five Sections, following this introduction. Section I sets out
the scope of the BRI through a functional approach. Section II explores three facets of
China’s BRI approach: first, that it treats the BRI as a hub-and-spoke network; second,
that it is less institutionally focused; and third, that it is not treaty-based. Section III
examines the underlying characteristic of China’s BRI approach—maximised flexibility
regarding norms and institutions in shaping the BRI. It discusses how maximised
flexibility contrasts with US practice, along with considering possible explanations for
China’s emphasis on flexibility. Section IV analyses the sustainability of China’s BRI
approach, arguing that maximizing flexibility largely supports sustainability while also
addressing key counterpoints. The article concludes by reflecting on the present and
future of China’s BRI approach.
I. HOW TO DEFINE THE BRI? A FUNCTIONAL APPROACH

It is necessary first to clarify the scope of the BRI before analysing China’s BRI approach.
It is difficult to define the BRI given there is no clear and widely accepted statement of
the BRI’s scope, and a functional approach is adopted to develop some clarity around
what the BRI is.
6 The term ‘rigid’ is not necessarily the same as formal hard law. Rigidness implies that norms have some kind of
compliance pull or coerciveness. See, e.g., Chris Brummer, ‘Why Soft Law Dominates International Finance—
and not Trade’, 13 Journal of International Economic Law 623 (2010), at 623–643.
7 Other countries have participated in the shaping of the BRI. That said, the BRI is led by China, and it appears
that the BRI is largely shaped by China, particularly from the BRI-wide perspective. This is because China, as
the hub of the BRI system, is the only country that links with all other BRI countries to develop the BRI plan.
A. What is a functional approach?

This article proposes delineating the scope of the BRI through a functional approach,8

that is, a focus on the functions of measures put in place for the implementation of the
BRI, whether or not they are explicitly labelled as being linked to the BRI. A functional
view is pragmatic and avoids the extremes of pure formalism9 and values substance over
form. Crucially, a functional approach has ‘a focus on a range of substantive legal goals or
values in resolving areas of formal legal indeterminacy’10 and may highlight the purpose
of a social institution or biological organ.11 It thus helps better understand the operation,
underlying considerations, and future of the BRI.
A functional approach is adopted largely because the BRI is a holistic exercise: China
promotes the BRI through all possible means and coordinated efforts. This approach
echoes and builds on its efforts to advance regional economic cooperation in various
forums including the Regional Comprehensive Economic Partnership (RCEP),12 the
Asia-Pacific Economic Cooperation (APEC; e.g., China’s strong support for the devel-
opment of a Free Trade Area of the Asia-Pacific), the G20 (e.g., the G20 Guiding Prin-
ciples for Global Investment Policymaking13 ), and preferential trade and investment
agreements (PTIAs) before the announcement of the BRI (e.g., an incremental PTIA
approach reflecting its sensitivity to the specific needs of its neighbours14 ). Moreover,
it is not easy to differentiate between BRI projects and pre-existing ones. China’s
movements concerning the BRI will naturally benefit from China’s previous practice
and practice elsewhere.
In this paper, a functional approach considers various measures that serve the
purposes of the BRI (these purposes can, at least to some extent, be identified from BRI
policy documents and statements). Among these documents and statements, the Joint
Communique of the Leaders Roundtable of the Belt and Road Forum for International
Cooperation (the BRF Joint Communique) is arguably the most representative of
the BRI plan and is probably the closest to a kind of rather rudimentary BRI charter
(although not all of the BRI parties are involved). It is the most recent and collective
statement of China, nearly thirty BRI states, and three international organizations at
the BRF. The BRF is probably the only institution where heads of certain BRI states
and other leaders participate directly (likely on a regular basis15 ), focus on the BRI,
8 A similar functional approach has been proposed in other areas including consitutional law. See, e.g.,
Rosalind Dixon, ‘The Functional Constitution: Re-reading the 2014 High Court Constitutional Term’, 43
Federal Law Review 455 (2015), at 456 (Courts should rely on substantive values of consitutional law than
more formal legal source); Felix S. Cohen, ‘Transcendental Nonsense and the Functional Approach’, 35
Columbia Law Review 809 (1935), at 809–849; Gabrielle J. Appleby, ‘Imperfection and Inconvenience:
Boilermakers’ and the Separation of Judicial Power in Australia Worst Top Court Decisions of the Last
Quarter Century’, 31 University of Queensland Law Journal 265 (2012), at 265–286.
9 Dixon, above n 8, at 456.
10 Ibid, at 459.
11 Cohen, above n 8, at 822.
12 For an analysis of RCEP and China, see, e.g., Heng Wang, ‘The RCEP and Its Investment Rules: Learning
from Past Chinese FTAs’, 3 The Chinese Journal of Global Governance 160 (2017), at 160–181.
13 G20 Guiding Principles for Global Investment Policymaking (2016), available at http://www.oecd.org/daf/
inv/investment-policy/G20-Guiding-Principles-for-Global-Investment-Policymaking.pdf.
14 Peter K. Yu, ‘Sinic Trade Agreements’, 44 UC Davis Law Review 953 (2011), at 1009.
15 The second BRF will be held in China in 2019.
and perhaps gradually shape its agenda. Judging from the cooperation objectives of the
BRF Joint Communique, the purposes of the BRI seem to mainly include international

cooperation (which essentially involves global economic governance), economic inte-
gration (particularly trade and investment), connectivity (concerning infrastructure,
people-to-people exchange, and institutional linkage), and sustainable development.16
These objectives echo the measures that the BRI prioritizes, which are ‘policy consulta-
tion, trade promotion, infrastructure connectivity, financial cooperation and people-to-
people exchanges’.17 These measures cover areas ranging from e-commerce and digital
economy to intellectual property and payment systems.
External measures are listed in Table 2 as part of the BRI approach. Because China
appears to seek recognition, legitimacy, or development of the BRI through engagement
with international organizations (e.g., at the United Nations (UN)), these measures
form part of the BRI for the purposes of this article. That said, these international
institutions are usually not considered part of the BRI itself but are involved in China’s
measures to promote the BRI in terms of international cooperation, economic integra-
tion, and other purposes.
Internal measures, like international commercial courts (CICCs) and Free Trade
Zones (FTZs), also constitute part of the BRI in this analysis. From China’s perspective,
CICCs are expected to resolve BRI-related disputes, although CICCs are not limited to
the BRI, so as to not exclude non-BRI states. Additionally, FTZs are closely linked to
the BRI18 : both are regarded as ‘new reform and opening-up strategies proposed in line
with the changed domestic and international circumstances’.19 Broadly, the FTZs make
a number of contributions to the BRI, including providing a platform for BRI projects,
and dealing with nascent issues pertinent to it.20 This ranges from hosting foreign
businesses participating in the BRI, and serving as transit hubs for it, to exploring risk
management techniques21 and permitting for ad hoc arbitration (although the practice
of such ad hoc arbitration remains to be seen).22
B. Case study: financial measures under the BRI

Financial issues are a good example to illustrate the functional approach, under which
external and internal measures are considered part of the BRI. According to the func-
tional view, the Asian Infrastructure Investment Bank (AIIB), the Silk Road Fund
(SRF), the New Development Bank, other development banks of China, renminbi
16 ‘Joint Communique of the Leaders Roundtable of the Belt and Road Forum for International Cooperation’
(2017), available at http://www.fmprc.gov.cn/mfa_eng/zxxx_662805/t1462012.shtml, paras 8-13.
17 Ibid, at para 15.
18 ‘One Belt One Road, FTZ Plans Go Hand in Hand’, Global Times, 25 February 2015, available at
http://www.globaltimes.cn/content/908837.shtml.
19 Justin Yifu Lin, ‘“One Belt and One Road” and Free Trade Zones—China’s New Opening-up Initiatives’, 10
Frontiers of Economics in China 585 (2015), at 590.
20 Chen Yin, ‘Chinese FTZs and Their Contributions to BRI’ (2017), http://www.rksi.org/sites/
default/files/document/911/sez-2017-c-yin-chinese-ftzs-and-their-contributions-bri.pdf.
21 Ibid.
22 Jiaxiang Hu and Jie ( Jeanne) Huang, ‘Dispute Resolution Mechanisms and Organizations in the Implemen-
tation of “One Belt, One Road” Initiative: Whence and Whither’, 52 Journal of World Trade 815 (2018), at
834.
(RMB) internationalization, and FTZs are all part of the BRI approach, as they work
together to promote the BRI.

A wide range of institutions are utilized to fund BRI projects. The common view is
that the AIIB is utilized to finance the BRI,23 although it may also fund other projects.
The AIIB and SRF have provided funding for major ocean cooperation programs under
the BRI.24 The SRF, policy banks (e.g., the China Development Bank and the Export-
Import Bank of China), and China’s big four state-owned banks are the major channels
for financial resources to be injected into the BRI projects.25 Additionally, the capital,
financial intermediation tools, and financial management related to the BRI projects
could be provided by the China Investment Corporation, the State Administration of
Foreign Exchange Investment Company, and their investment platforms.26
The internationalization of China’s RMB works hand in hand with the BRI, AIIB,
and other development banks of China. RMB internationalization is related to the
BRI concerning trade payment, investment, and finance, and therefore falls within the
actual scope of the BRI.27 Certain financial institutions from BRI states (like Central
and Eastern European Countries (CEEC)) also participate in the RMB Cross-border
Inter-bank Payment System.28
FTZs serve to promote the financing of the BRI. For example, the Shanghai FTZ
(SFTZ) has vowed to develop its financial functions (e.g., financial lease, reinsurance,
and the establishment of branches in the SFTZ by financial institutions from BRI states)
to support the BRI.29 The SFTZ has lifted capital control, relaxed banking regulations
in selected aspects,30 and explored financial liberalization.31
23 Jiangyu Wang, ‘International Economic Law and Asia’, in Simon Chesterman, Hisashi Owada and Ben
Saul (eds), Oxford Handbook of International Law in Asia and the Pacific (Oxford University Press,
Oxford, 2019 Forthcoming); NUS Law Working Paper No. 2018/026, available at https://ssrn.com/
abstract=3204016, at 17.
24 National Development and Reform Commission & the State Oceanic Administration, ‘Vision for Mar-
itime Cooperation under the Belt and Road Initiative’ (2017), available at https://www.yidaiyilu.gov.cn/
wcm.files/upload/CMSydylgw/201706/201706200153032.pdf, Part V.
25 Tomas Casas i Klett and Omar Ramon Serrano Oswald, ‘Free Trade Agreements as BRI’s Stepping-Stone to
Multilateralism: Is the Sino–Swiss FTA the Gold Standard?’, in Wenxian Zhang et al. (eds), China’s Belt and
Road Initiative: Changing the Rules of Globalization (Cham, Switzerland: Palgrave Macmillan, 2018), 76.
26 Christoph Lattemann et al., ‘Final Reflections’, see ibid, 341.
27 Fan Zhang et al., ‘The Effect of RMB Internationalization on Belt and Road Initiative: Evidence from Bilateral
Swap Agreements’, 53 Emerging Markets Finance & Trade 2845 (2017), at 2845.
28 Je˛drzej Górski, ‘China’s Strategy Toward Central and Eastern Europe Within the Framework of 16 + 1
Group: The Case of Poland’, in Wenxian Zhang et al. (eds), China’s Belt and Road Initiative: Changing the
Rules of Globalization (Cham, Switzerland: Palgrave Macmillan, 2018), 117.
29 Governing Council of China (Shanghai) Pilot Free Trade Zone, Opinions of China (Shanghai) Pilot
Free Trade Zone on the Expansion of Financial Service Industry Opening-Up and the Further
Formation of New Advantages from Development and Liberalisation (21 June 2018), available at
http://iftzr.sysu.edu.cn/node/16472, Articles 5, 14.
30 Weitseng Chen, ‘Lost in Internationalization: Rise of the Renminbi, Macroprudential Policy, and Global
Impacts’, 21 Journal of International Economic Law 31 (2018), at 41; Hal S. Scott and Anna Gelpern,
International Finance: Transactions, Policy, and Regulation, 21st ed. (St. Paul, Minnesota: Foundation Press,
2016), 1404, 1405.
31 Chris Brummer, Renminbi Ascending: How China’s Currency Impacts Global Markets, Foreign Policy, and
Transatlantic Financial Regulation (Washington, DC: Atlantic Council, 2015), 17.
That said, the functional approach is not without challenges,32 as the actual effects of
the abovementioned measures on the BRI remain to be seen. For example, the above-

mentioned finance measures in FTZs have had less impact on the BRI than expected.33
II. CHINA’S APPROACH TO THE BRI

Drawing on the functional definition of the BRI, this Section discusses China’s current
approach to the BRI. It focuses on three major aspects: (i) China’s shaping of the BRI as
a hub-and-spoke network; (ii) the lack of rigid institutions and adoption of a three-track
approach towards developing and creating BRI-related institutions and mechanisms;
and (iii) the adoption of a dual-track normative approach, making greater use of soft
law while also utilizing hard law treaties.
A. An overview: the BRI as a hub-and-spoke network
The BRI can be seen as a sort of hub-and-spoke network, with China as the hub
(Table 1), developing ‘an international environment of prosperity and stability friendly
to China’.34 The spokes therefore are ‘software’ (mechanisms and agreements) and
‘hardware’ (e.g., devising economic corridors with BRI states)35 with different BRI
states. The BRI strategy aims for ‘an ambitious China Circle’36 and is ‘quasi-multilateral’
engagement.
Table 1. BRI as a hub-and-spoke network

• BRI-related institutions and mechanisms
◦ General mechanisms, including G16+137
◦ Specific mechanisms on dispute settlement, including China–ASEAN Justice
Forum, the Conference of Presidents of Supreme Courts of China and CEEC
◦ Specific mechanisms on finance and other aspects, particularly AIIB
• BRI-specific mechanisms, including an organizing framework (particularly BRF)
• Rules and documents, including a network of bilateral agreements
(like MOUs, PITAs) with China
• Facilities: transit or transport along the BRI
32 Peter Anastasius Gerangelos, ‘The Separation of Powers and Legislative Interference with Judi-
cial Functions: A Comparative Analysis’ (2004), available at http://classic.austlii.edu.au/au/journals/
UNSWLawTD/2004/2.pdf , at 57.
33 Bin Sheng, ‘How to Develop the Upgraded Free Trade Zones?’, Shanghai Securities News, 28 March 2017,
available at http://news.cnstock.com/paper,2017-03-28,796736.htm.
34 William H. Overholt, ‘One Belt, One Road, One Pivot’, 26 September 2015, available at
http://theoverholtgroup.com/media/Article-Southeast-Asia/One-Belt-One-Road-One-Pivot-Global-
Asia-Corrected-Oct2015.pdf.
35 HKTDC, ‘The Belt and Road Initiative’, 13 September 2017, available at http://china-trade-
research.hktdc.com/business-news/article/The-Belt-and-Road-Initiative/The-Belt-and-Road-Initiative/
obor/en/1/1X000000/1X0A36B7.htm.
36 Shuaihua Cheng, ‘China’s New Silk Road: Implications for the US’, 2015, available at
http://e15initiative.org/blogs/chinas-new-silk-road-implications-for-the-us/.
37 For the analysis of G16+1, see, e.g., Górski, above n 28, at 115–134.
The BRI can be seen as a loosely connected network of new or existing bilateral
and multilateral mechanisms,38 based on ‘a series of unrelated but nonetheless inter-

connected bilateral trade pacts and partnerships’.39 It is neither a top-down (through
the imposition of multinational treaties) nor bottom-up approach.40 Instead, China
intends to build ‘a global network of partnerships’ through the BRF.41 An analysis of
BRI-related and BRI-specific documents shows China’s intent to gradually form a set
of instruments for policy coordination on financial integration, trade liberalization, and
people-to-people connectivity across Asia and beyond.42 The following two sections
consider more closely China’s BRI approach from the perspectives of institutions (and
mechanisms) and norms.
B. Three-track institutional and mechanism approach:

a less institutionally-focused approach
As indicated in Table 2, China has adopted a three-track approach concerning insti-
tutions and mechanisms. These three tracks serve different functions: (i) track one:
existing institutions and mechanisms working to recognize the BRI; (ii) track two: BRI-
related international institutions or mechanisms predominantly serving to develop the
BRI; and (iii) track three: BRI-related domestic institutions and mechanisms, arguably
exploring and creating the tools for the BRI (such as CICCs as an institutional creation).
1. Track one: recognition of the BRI by existing institutions and mechanisms

China seeks the recognition of the BRI and the ‘uploading’ of BRI-related principles to
international law. First, China endeavours to have the BRI and its principles recognized
by the UN in various ways, including the resolutions of the UN General Assembly and
Security Council. The BRI has been included in a UN Security Council Resolution for
38 National Development and Reform Commission et al., ‘Full text: Action Plan on the Belt and
Road Initiative’ (2015) , available at http://english.gov.cn/archive/publications/2015/03/30/content_
281475080249035.htm, Part V.
39 Wade Shepard, ‘Why the Ambiguity of China’s Belt and Road Initiative Is Perhaps Its Biggest Strength’,
Forbes, 19 October 2017, available at https://www.forbes.com/sites/wadeshepard/2017/10/19/what-
chinas-belt-and-road-initiative-is-really-all-about/#49dc2a4be4de.
40 Rochelle Cooper Dreyfuss, Harmonization: Top down, Bottom Up — And Now Sideways? The Impact
of the IP Provisions of Megaregional Agreements on Third Party States (March 1, 2018) in Megaregulation
Contested: Global Economic Ordering After TPP (Benedict Kingsbury, et al., eds., Oxford University Press,
Forthcoming); NYU School of Law, Public Law Research Paper No. 17-21; NYU Law and Economics
Research Paper No. 17-17, available at SSRN: https://ssrn.com/abstract=2995756, p. 4.
41 Xinhua, ‘Xi Eyes More Enabling Int’l Environment for China’s Peaceful Development’, Global Times,
30 November , available at http://www.globaltimes.cn/content/894240.shtml; Xinhua, ‘Belt and Road
Forum Agenda Set’, China Daily, 18 April 2017, available at http://europe.chinadaily.com.cn/china/2017-
04/18/content_28982925.htm.
42 Tommi Yu, ‘China’s “One Belt, One Road Initiative”: What’s in It for Law Firms and Lawyers?’, 5 The Chinese
Journal of Comparative Law 1 (2017), at 2.
Table 2. Examples of institutions and mechanisms engaging with the BRI

Pre-existing BRI-related international institutions and BRI-related
international mechanisms domestic
institutions and institutions and
mechanism mechanisms
International institutions ‘Overarching’ mechanisms, particularly BRF Institutions, including

and arrangements, CICCs, China
particularly the UN (e.g., International
UN General Assembly, Development
UN Security Council) Cooperation Agency
(CIDCA)
Regional and Institutions and mechanisms on finance, including Mechanisms,
extra-regional institutions AIIB and AFCA including FTZs, and
and arrangements, cross-border
including China–Arab e-commerce zones
States Cooperation Forum
Mechanisms on dispute settlement, including a
permanent dialogue between judiciaries of China
and the CEEC
Mechanisms on trade, including customs clearance
facilitation between China, Hungary, Serbia, and
Macedonia under G16+1 summits,43 Chongqing
Connectivity Initiative (CCI), China International
Import Expo44
Mechanisms on investment, including a multilateral
dialogue mechanism on public–private partnership
under MOU between China’s National Development
and Reform Commission (NDRC) and United
Nations Economic Commission for Europe
(UNECE) (UNECE-NDRC MOU)45
Mechanisms on intellectual property, including the
High-Level Conference on Intellectual Property for
Countries Along the Belt and Road
Mechanisms on other areas, including the creation of
the Silk Road Think Tanks Network (SiLKS) under
the MOU between the Development Research
Centre of China’s State Council and United Nations
Industrial Development Organization (UNIDO)46
43
Górski, above n 28, at 117.
44
Yicai, ‘China International Import Expo Builds an Expressway for Trade Under the Belt and Road Initiative’, 8 March
2018, available at https://www.yicai.com/news/5405065.html.
45
‘Memorandum of Understanding between the United Nations Economic Commission for Europe and
the National Development and Reform Commission of China’ (2017), available at https://www.unece.org/
fileadmin/DAM/MoU_between_UNECE___the_NDRC_in_China_2017-05-14.pdf.
46
Mariana ‘Tian, The Participation of Bulgaria in the Initiatives of the “New Silk Road”—Achievements and Chal-
lenges’, in Duško Dimitrijević and Huang Ping (eds), Initiatives of the ‘New Silk Road’ - Achievements and Challenges
(Belgrade, Serbia: Institute of International Politics and Economics, 2017), 187.
the first time, regarded as one of the ‘regional development initiatives’.47 Efforts are being
made to possibly upload BRI principles to international law. China put forward the

principle of ‘extensive consultation, joint contribution and shared benefits’ (which is the
‘guiding principle for the cooperation under the Belt and Road Initiative proposed by
China’) for incorporation in a resolution titled ‘the United Nations in global economic
governance’ under the theme of the ‘Central role of the United Nations system in global
governance’, adopted in the 71st session of the UN General Assembly in September
2017.48
Second, China is ambitious in utilizing existing mechanisms. Such efforts are often
intended to achieve recognition of the BRI, at least at this early stage. The Action Plan
on the BRI (BRI Action Plan) indicates the plan to ‘make full use’ of various current
mechanisms including the ASEAN Plus China (10+1).49 Some of the mechanisms are
not limited to BRI states, such as the APEC.
2. Track two: development of BRI-related international institutions and mechanisms
China has undertaken selective development concerning BRI-related international
mechanisms or informal institutional arrangements. They range from overarching
mechanisms (particularly the BRF) to institutions and mechanisms in specific areas
(including finance, dispute settlement, trade, investment, and intellectual property).
These mechanisms include bilateral or multilateral ones. An example of a bilateral
mechanism is the CCI between Singapore and China, which could be replicated as part
of China’s efforts to develop investment and trade under the BRI region.50
China has actively sponsored BRI multilateral mechanisms, including the BRF
that is to be regularly held,51 and BRI platforms for commercial arbitration.52 For
instance, the BRF could develop as a major BRI negotiation avenue or forum53 and a
way to collect ideas and responses according to which the BRI could be shaped and
adjusted.54 The Asian Financial Cooperation Association (AFCA) has been established
47 ‘Security Council Authorizes Year-Long Mandate Extension for United Nations Assistance Mission
in Afghanistan, Adopting Resolution 2344 (2017)’, available at https://www.un.org/press/
en/2017/sc12756.doc.htm (para 34 of Resolution 2344 ‘Welcomes and urges further efforts to strengthen
the process of regional economic cooperation, including measures to facilitate regional connectivity,
trade and transit, including through regional development initiatives such as the Silk Road Economic Belt
and the 21st-Century Maritime Silk Road (the Belt and Road) Initiative ... ’).
48 ‘Foreign Ministry Spokesperson Geng Shuang’s Regular Press Conference on September 13, 2017’, 2017,
available at https://www.fmprc.gov.cn/ce/cgct/eng/fyrth/t1492681.htm.
49 National Development and Reform Commission et al., above n 38, Part V.
50 Basil C. Bitas, ‘ASEAN’, in Guiguo Wang et al. (eds), Essentials of the Laws of the Belt and Road Countries: EU,
ASEAN (Hangzhou, China: Zhejiang University Press, 2017), 152.
51 China.org.cn, ‘Full text: List of Deliverables of the Belt and Road Forum for International Cooperation, 7
June 2017’, available at http://www.china.org.cn/chinese/2017-06/07/content_40983146.htm (the Belt
and Road Forum for International Cooperation is to be held regularly).
52 Alice Ekman, ‘China’s New Silk Roads: A Flexible Implementation Process’, in Alice Ekman et al., Three
Years of China’s New Silk Roads: From Words to (Re)action? (Paris, France: Institut français des relations
internationales, February 2017), 15.
53 ‘Ministry of Foreign Affairs Holds Briefing for Chinese and Foreign Media on President Xi
Jinping’s Attendance and Chairing of Related Events of the BRF’, 18 April 2017, available at
http://www.fmprc.gov.cn/mfa_eng/zxxx_662805/t1455115.shtml, (During the BRF, it is expected
that ‘China will negotiate and sign cooperation documents with nearly 20 countries and over 20
international organizations’).
54 Ekman, above n 52, 13.
as one BRF outcome, which will reportedly work to ‘establish a liaison mechanism,
. . . an information sharing platform, as well as a regional financial idea exchange

platform’.55
These mechanisms (such as forums) have vague legal status, if any, and institutional
development remains limited. The mechanisms appear to operate on consensus, and
the commitments made thereunder are not binding. The major institution is the AIIB,
which provides some but not all of the funding for the BRI projects. Many of the
BRI-related mechanisms are usually bilateral ones, with corresponding institutions and
mechanisms at their early stage, and are often the outcome of China’s engagement
with existing international and regional organizations (e.g., World Intellectual Property
Organization (WIPO), UNIDO). Further, the line between track one and track two is
not always clear. China may endeavour to engage with existing international institutions
and mechanisms under track one to develop track two–style BRI-related institutions
and mechanisms.
3. Track three: creation of BRI-related domestic institutions and mechanisms
Compared with the other two tracks, track three is comprised predominantly by China’s
own efforts rather than joint arrangements between China and international institu-
tions and mechanisms. China proactively develops domestic institutions and mech-
anisms related to the BRI. As a major institutional development, China prioritizes
dispute settlement in the BRI (particularly CICCs) that influences China’s internal dis-
pute settlement system. Related movements include BRI-related ‘typical cases’ (guiding
cases)56 and a plan on wide-ranging issues to support the BRI.57 Another domestic
institutional development is CIDCA, which aims to ‘better serve’ the BRI58 through
consolidating foreign aid (including its planning and coordination).
As to mechanisms, these range from an increasing number of FTZs to cross-border e-
commerce zones (with the first cross-border e-commerce zones established in 2015).59
FTZs help to promote the BRI by piloting selected measures (like free trade accounts
(FT accounts)) in regions, which may be applied nationwide.
C. A dual-track normative approach: greater use of soft law

rather than hard law treaties?
To illustrate China’s dual-track normative approach, it is helpful to look at the structure
of non-domestic law60 documents and rules that may apply to the BRI. Although it
55 Li Xiang, ‘Asian Financial Cooperation Association Launched in Beijing’, 24 July 2017, available at
https://news.cgtn.com/news/3d67444e796b444e/share_p.html.
56 At the time of writing, there are 18 BRI-related guiding cases, and the number is likely to increase; Stanford
Law School China Guiding Cases Project, ‘B&R Cases Archive—China Guiding Cases Project’, available at
https://cgc.law.stanford.edu/belt-and-road/b-and-r-cases/?page=1.
57 ‘Several Opinions of the Supreme People’s Court on Providing Judicial Services and Safeguards
for the Construction of the ‘Belt and Road’ by People’s Courts’ (2015), available at http://lwww.
lawinfochina.com.wwwproxy1.ibrary.unsw.edu.au/display.aspx?id=22512&lib=law&SearchKeyword=
Providing%20Judicial%20Services%20and%20Safeguards%20for%20the%20Construction%20of%20the
%20%A1%B0Belt%20and%20Road%A1%B1&SearchCKeyword=#.
58 ‘China is to establish International Development Cooperation Agency’, 16 March 2018, available at
http://fj.china-embassy.org/chn/zt/lh5555/t1542878.htm.
59 Xinhua, ‘China customs pushes int’l rules on cross-border e-commerce’, 1 December 2018, available at
http://www.xinhuanet.com/english/2018-01/12/c_136891181.htm.
60 Given space limits, it is not possible to analyse the national law of the large number of BRI states.
is difficult to list all of them, these documents and rules can be classified under two
categories (as indicated in Table 3, although the examples here do not exhaust all BRI

documents).
Table 3. Examples of BRI-applicable documents and rules

BRI-specific documents BRI-related rules
Memorandum of Arrangement (MOA) on the BRI between China WTO norms

and New Zealand
Memorandum of Understandings (MOUs, e.g., UNECE-NDRC FTAs concluded between China
MOU, MOU in the Field of Water Resources with the government of and other jurisdictions
Malaysia, MOU on the BRI between Victoria and China, MOU on
cooperation concerning the Eurasia Initiative and the BRI between
Ministry of Strategy and Finance of Korea and NDRC of China)
Joint communiques (e.g., BRF Joint Communique) Investment treaties (including the
China–Japan–Korea Investment
Agreement)
Guiding principles (e.g., Guiding Principles on Financing the WIPO treaties
Development of the Belt and Road)
Joint statements (e.g., Chongqing Joint Statement related to Other treaties and documents (e.g.,
quarantine cooperation, Joint Statement on the Belt and Road Food Customs Convention on the
Safety Cooperation) International Transport of Good
under Cover of TIR Carnets, and
United Nations Convention against
Corruption,61 and the Charter of
the United Nation62 )
Letters of Intent (e.g., Letter of Intent between the United Nations
Economic and Social Commission for Asia and the Pacific and the
Ministry of Foreign Affairs, People’s Republic of China on Promoting
Regional Connectivity and the BRI)
Initiatives (e.g., Initiative on Promoting Unimpeded Trade
Cooperation along the Belt and Road Released in Beijing)
Consensus (e.g., Suzhou Consensus on the Conference of Presidents
of Supreme Courts of China and CEEC)
Protocols (e.g., Protocol on the Establishment of Joint Ocean
Observation Station with the Ministry of Environment of Cambodia)
Visions and plans of action (e.g., Vision for Maritime Cooperation
under the BRI, Plan of Action to Implement the Joint Declaration on
ASEAN–China Strategic Partnership for Peace and
Prosperity(2016–2020))
Declarations (e.g., China–Arab States Cooperation Action
Declaration on the Belt and Road)
Other agreements and documents (e.g., Intergovernmental
Agreement on the Peaceful Use
of Nuclear Energy with the government of Thailand)
61 ‘Statement of the Co-Chairs of the Forum on the Belt and Road Legal Cooperation’ (2018), available at
http://aoc.ouc.edu.cn/26/72/c9828a206450/page.htm, para 17.
62 ‘China–Arab States Cooperation Action Declaration on the Belt and Road’ (2018), available at
http://www.chinaarabcf.org/chn/zagx/gjydyl/t1577010.htm.
The first category comprises BRI-specific documents,63 including bilateral docu-

ments, that specifically refer to the BRI and deal with relevant issues. Most of these

documents focus on the BRI, while others may only refer to the BRI (e.g., the Plan
of Action to Implement the Joint Declaration on ASEAN–China Strategic Partnership
for Peace and Prosperity (2016–2020) referring to the link between the BRI and the
Master Plan on ASEAN Connectivity64 ). Nearly all the sources of BRI-specific rules are
informal ones instead of formal treaties and legally non-binding.
The other category consists of BRI-related rules, which do not refer to the BRI
but can be applied to trade, investment, and related issues. They include WTO rules
and PTIAs. Other relevant rules include treaties (such as WIPO treaties, the Charter
of the United Nations) and, more generally, international law.65 As per the functional
approach, China’s measures related to these rules also form part of the BRI. Over-
all, BRI-specific documents are representative of how the initiative is intended to
operate, while BRI-related rules play an important role in the actual practice of the
initiative.
1. The maximized mobilization of soft law

China has frequently mobilized soft law under the BRI, which is understood here as
consisting of hortatory rather than legally binding obligations.66 Despite the lack of
a universally accepted definition of soft law, the term usually refers to ‘any written
international instrument, other than a treaty, containing principles, norms, standards,
or other statements of expected behaviour’.67
BRI-related soft law documents arise through a myriad of forms and involve a
large number of parties. In terms of form, these instruments are generally found to
be cooperation agreements,68 including joint communiques, joint statements, agree-
ments, a MOA, MOUs, a letter of intent, initiatives, and consensuses. In relation
to parties involved, China proactively engages with numerous stakeholders through
soft law, ranging from governments (including central governments, ministries, and
local governments) and international organizations to courts, local governments, and
63 For many BRI-specific documents, see, HKTDC, ‘The Belt and Road Initiative: Implementation
Plans and Co-operation Agreements’, 27 August 2018, available at http://china-trade-research.hktdc.
com/business-news/article/The-Belt-and-Road-Initiative/The-Belt-and-Road-Initiative-Implementation-
Plans-and-Co-operation-Agreements/obor/en/1/1X000000/1X0A3857.htm.
64 ‘Plan of Action to Implement the Joint Declaration on ASEAN-China Strategic Partnership for Peace
and Prosperity (2016–2020)’, available at https://www.asean.org/storage/images/2015/November/27th-
summit/ASEAN-China%20POA%20%202016-2020.pdf, Article 4.4.
65 ‘China–Arab States Cooperation Action Declaration on the Belt and Road (2018)’, available at
http://www.chinaarabcf.org/chn/zagx/gjydyl/t1577010.htm, para 17 (the respect for the purposes and
principles of the Charter of the United Nations and international law).
66 Andrew T. Guzman and Timothy L. Meyer, ‘International Soft Law’, 2 Journal of Legal Analysis 171 (2010),
at 172.
67 Dinah L. Shelton, ‘Soft Law’, available at https://scholarship.law.gwu.edu/cgi/viewcontent.cgi?article=2048
&context=faculty_publications, at 3.
68 Vivienne Bath, ‘The South and Alternative Models of Trade and Investment Regulation: Chinese Investment
and Approaches to International Investment Agreements’, in Fabio Morosini and Michelle Ratton Sanchez
Badin (eds), Reconceptualizing International Investment Law from the Global South (New York: Cambridge
University Press, 2017), 80.
other actors (such as businesses).69 In particular, China actively engages on BRI-related

issues with UN agencies, including UNECE, United Nations Development Programme

(UNDP), WIPO, and UNIDO. The Chinese government has signed BRI documents
with at least nine international organizations,70 while Chinese government departments
have signed at least ten such documents.71
While these BRI-specific soft law documents are not binding, they nonetheless
should not be ignored. China currently prefers to avoid engaging through treaties,
with measurable compliance requirements, in favour of less formal, but more flexible,
arrangements.72 BRI-specific documents usually call for voluntary forms of cooperation,
or statements of future intent, instead of imposing hard law treaty obligations backed by
enforcement mechanisms. For example, the MOA and MOUs under the BRI are non-
binding documents.73
However, they are nonetheless essential to BRI implementation. Soft law can be
more coercive than might initially be assumed and may constitute a kind of ‘non-binding
coercion’.74 Under arguably exceptional situations, BRI-related soft law is not devoid of
any discipling power. For instance, the BRI cooperation agreements signed between
China and various states ‘include provisions that the host countries will take up the
security responsibility’.75
2. The continued relevance of treaties

Alongside this use of soft law, the BRI does still involve treaties to some regard. However,
these treaties largely already existed before, or outside of the BRI, or they do not refer
to the BRI itself. WTO rules arguably remain the core of the international norms
applicable to BRI-related trade. The fate of the multilateral system will profoundly affect
69 Bitas, above n 50, at 171–178 (for instance, the Memoranda of Understanding for Implementation of the
Chongqing Connectivity Initiative).
70 These international organizations include the United Nations Development Programme, the United Nations
Industrial Development Organization, the United Nations Human Settlements Programme, the United
Nations International Children’s Fund, the United Nations Population Fund, the United Nations Conference
on Trade and Development, the World Health Organization, WIPO, and the International Criminal Police
Organization; China.org.cn, above n 51, Part I .2.
71 These international organizations include the United Nations Economic Commission for Europe, the
World Economic Forum, the International Road Transport Union, the International Trade Center, the
International Telecommunication Union, the International Civil Aviation Organization, the United Nations
Alliance of Civilizations, the International Development Law Organization, the World Meteorological
Organization, and the International Maritime Organization; Ibid, at Part I.4.
72 Michael M. Du, ‘China’s “One Belt, One Road” Initiative: Context, Focus, Institutions, and Implications’, 2
The Chinese Journal of Global Governance 30 (2016), at 40.
73 James Laurenceson, Simone van Nieuwenhuizen, and Elena Collinson, ‘Decision Time: Australia’s
Engagement with China’s Belt and Road Initiative’, available at http://www.australiachinarelations.org/
sites/default/files/20171109%20ACRI%20Research_Decision%20Time_Australia%27s%20engagement
%20with%20China%27s%20Belt%20and%20Road%20Initiative.pdf, at 9.
74 Filippo M. Zerilli, ‘The Rule of Soft Law: An Introduction’, 56 Focaal—Journal of Global and Historical
Anthropology 3 (2010), at 5.
75 fmprc.gov.cn, ‘Transcript of Vice Foreign Minister Le Yucheng’s exclusive interview with the Finan-
cial Times’, China Daily, 26 September 2018, available at http://usa.chinadaily.com.cn/a/201809/
26/WS5bab2f67a310c4cc775e8304.html.
the BRI, since the BRI relies upon multilateral mechanisms in its global governance.76
WTO norms overall benefit China as a major goods exporting country through, inter

alia, non-discriminatory treatment available to the goods and services of China in BRI
states that are WTO members.
Other treaties, including PTIAs, may also be used to address certain legal issues of
the BRI, and are ‘part of a long-term multilateral approach with the potential to be
included in the institutional infrastructure of the BRI’.77 However, they are not specific
to the BRI and are not tailored as such.
To sum up, soft law is preferred to treaties in China’s BRI approach. Although
existing treaties remain relevant, the BRI does not have many formal international
law instruments. There is no BRI-wide treaty or similar international law instrument
establishing the BRI. The BRI neither has a constituting treaty with all BRI states (a
BRI-wide treaty) nor formal membership protocols.78 China, as such, does not appear
to have a strong intention to bring in BRI-wide hard law obligations at this stage.79
III. THE KEY CHARACTERISTIC OF CHINA’S BRI APPROACH:

MAXIMISED FLEXIBILITY
This Section will argue, first, that an understanding of China’s approach to the
BRI—in particular the absence of rigid institutions and the preference for soft law—
demonstrates a particular intent underlying this approach: a desire to maximize
flexibility. China’s BRI strategy is to shape legal frameworks that are fluid and malleable
enough to implement a vast array of different kinds of projects, across differing
jurisdictions and an increasingly wide range of areas. This article terms this strategy
‘maximised flexibility’. Second, this Section contrasts this maximised flexibility with
the more rigid US trade approach, to demonstrate its distinctive character.
What is maximised flexibility?

A.
Flexibility can determine how an institution addresses uncertainties and challenges,
including ‘unanticipated circumstances or shocks’ or ‘new demands from domestic
coalitions or clusters of states wanting to change important rules or procedures’.80 In
this paper, flexibility relates to how China’s BRI approach addresses the uncertainties
and challenges in designing and implementing the BRI. Why can China’s BRI approach
be said to be ‘maximised’ flexibility?
Maximised flexibility in China’s BRI approach meets three conjectures about flex-
ibility: flexibility increases with uncertainty about the state of the world (such as
the uncertain distributional implications of an agreement), with the severity of the
76 Lingliang Zeng, ‘Conceptual Analysis of China’s Belt and Road Initiative: A Road towards a Regional
Community of Common Destiny’, 15 Chinese Journal of International Law 517 (2016), at 541.
77 Klett and Oswald, above n 25, at 79.
78 Shepard, above n 39.
79 Given the different definitions of soft law, it is perhaps more accurate to use the term ‘non-treaty-based
approach’.
80 Barbara Koremenos et al., ‘The Rational Design of International Institutions’, 55 International Organization
761 (2001), at 773.
distribution problem, and with the number of players involved.81 For the first two
conjectures, the BRI projects have distributional effects (such as possible economic

disparities arising from the distribution of economic activities within regions that
these projects are implemented82 and asymmetric distribution implications for ‘special
interests in affected jurisdictions’ arising from market access83 ), since they often deal
with long-term infrastructure that will affect society at large. Moreover, the BRI involves
probably the largest number of states in an extra-regional arrangement. China has signed
agreements or MOUs (as informal mechanisms to develop the BRI) with over 130 states
under the BRI84 and over 30 international organizations.85
Accordingly, flexibility is reflected in related institutions and mechanisms. China
aims to remain as elastic as possible when engaging with BRI partners. Shying away from
rigid institutions or explicit coordination mechanisms, China usually relies on bilat-
eral and loose cooperation arrangements, which vary significantly depending on the
partners and issues involved. They are often either one-on-one or group+1, involving
states and political blocs across Asia, Europe, and Africa.86 These institutions and mech-
anisms neither have binding rules nor non-binding by-laws, which enable flexibility.
China’s use of domestic measures related to the BRI is a self-driven process, largely
without international obligations specifically to promote the BRI. These measures
include the use of China’s courts and FTZs. Although FTZs also work for the PTIA
negotiations (like the previous US–China investment treaty negotiation), China retains
full flexibility in the use of these mechanisms for the BRI, being able to avoid sensitive
systemic issues.
In another sense, maximised flexibility is greater than treaty flexibility, which consists
of informal flexibility mechanisms (such as statements of future intent) and formal
flexibility mechanisms (such as declarations).87 Maximised flexibility is reflected in the
unprecedented mobilization of soft law in China’s practice of international economic
law (IEL).
While soft law itself may be coercive, the soft law under the BRI does not empha-
size coerciveness. With few exceptions (e.g., the security of China’s investment as
discussed above), the BRI soft law instruments usually incorporate hortatory general
81 Ibid, at 793–795.
82 Bradley Parks, ‘Will Chinese Development Projects Pave the Way to Inclusive Growth?’, 11 September
2018, available at https://www.brookings.edu/blog/future-development/2018/09/11/will-chinese-
development-projects-pave-the-way-to-inclusive-growth/.
83 Brummer, above n 6, at 624.
84 Jamil Anderlini, ‘Interview: “We Say, If You Want to Get Rich, Build Roads First”’, The Financial Times, 26
September 2018, available at https://www.ft.com/content/4ec28916-9c9b-11e8-88de-49c908b1f264.
85 Jingxia Shi, ‘The Belt and Road Initiative and International Law: An International Public Goods Perspective’,
in Yun Zhao (ed.), International Governance and the Rule of Law in China under the Belt and Road Initiative
(Cambridge: Cambridge University Press, 2018), 30.
86 Wade Shepard, ‘China’s Challenges Abroad: Why the Belt & Road Initiative Will Succeed’, Forbes, 17 October
2017, available at https://www.forbes.com/sites/wadeshepard/2017/10/17/chinas-challenges-abroad-5-
reasons-why-the-belt-road-will-succeed/#34972eba4a82.
87 Laurence R. Helfer, ‘Flexibility in International Agreements’, in Jeffrey L. Dunoff and Mark A. Pollack (eds),
Interdisciplinary Perspectives on International Law and International Relations: The State of the Art (New York:
Cambridge University Press, 2012), 179.
statements of cooperation rather than standards and best practices and lack various
complex enforcement technologies that would render it more coercive.88 As an illustra-

tion, soft law under the BRI, in contrast with international financial law in which soft
law plays a crucial role, does not often incorporate detailed norms on best practices
(including standard setting, codes of conduct for non-Chinese entities), regulatory
reports, and observations, although it deals with information-sharing and enforcement
cooperation.89 Neither does it have institutional disciplines, unlike the soft international
financial law (e.g., name and shame strategy, membership sanctions).90
Soft law provides for substantial flexibility and could serve as a coordinating mecha-
nism.91 When engaging with different parties, China can thus adapt to the dynamics of
international, regional, and domestic politics as needed. First, flexibility enables ‘cherry-
picking international agreements without embracing them comprehensively’.92 Second,
the BRI-related soft law is highly flexible in terms of forms, contents, and the parties
involved. It is adapted to BRI states and international organizations, areas, sectors, or
projects.93 Third, BRI-specific soft law documents can evolve and be modified easily
since they are devised ad hoc. As an illustration, the guidelines of G16+1 summits
have developed from listing planned symposia to covering increasingly concrete plans
(e.g., the building of Serbo–Hungarian railway connections) and mechanisms (e.g.,
the conclusion of the framework agreement on customs clearance facilitation between
China, Hungary, Serbia, and Macedonia and the participation of the CEECs’ financial
institutions in the RMB Cross-border Inter-bank Payment System).94
To sum up, maximised flexibility is revealed in China’s efforts to create and shape
a nascent, extra-regional arrangement, through norms (particularly the frequent use of
soft law) and institutions (particularly predominantly ad hoc mechanisms). They reflect
underlying flexible attitudes on key issues such as sovereignty that are addressed ‘with
ad hoc policy objectives in mind’.95
How does China use maximised flexibility?

B.
Selective proactiveness
The BRI faces various challenges from a legal perspective, which China seeks to address
by adopting a strategy of maximised flexibility. In terms of these issues, for one, BRI
projects involve far more complicated legal, political, and economic issues (e.g., land
88 Chris Brummer, Soft Law and the Global Financial System: Rule Making in the 21st Century (Cambridge
University Press, 2011), 5.
89 For soft international financial law, see Brummer, above n 6, at 628–630.
90 Brummer, above n 88, at 147–156.
93 See, e.g., China.org.cn, above n 51.
94 Górski, above n 28, at 117.
95 Samuli Seppänen, ‘Performative Uses of Sovereignty in the Belt and Road Initiative’, in Yun Zhao (ed.),
International Governance and the Rule of Law in China under the Belt and Road Initiative (Cambridge:
ownership,96 debt sustainability, national security, local protectionism97 ) than ordinary

trade and investment. As such, China faces external difficulties in reaching consen-

sus with BRI states and internal capacity limits in respect of thorny issues, such as
labour. Additionally, China must engage with a large number of BRI parties, including
states with vastly differing legal, cultural, and political systems and levels of economic
development.98
Maximised flexibility has allowed China to address these uncertainties and chal-
lenges in the BRI, through employing a selective strategy regarding the issues on which
China chooses to be proactive in engaging with other parties (selective proactiveness)
and those on which it does not do so (selective passiveness). For example, China has
been more active in exploring flexible MOUs with international organizations. The
UNECE-NDRC MOU is the first ever China–UN MOU99 and arguably marks the
beginning of an epoch in China–UN interactions regarding the BRI. China’s proactive
approach under the BRI is a departure from its predominantly reactive approach to the
WTO,100 although it is becoming increasingly active in WTO dispute settlement.
In terms of said selectiveness, China is proactive in relation to only selected aspects of
the BRI (e.g., dispute settlement, trade and investment facilitation and promotion, intel-
lectual property, technical standards, e-commerce101 ) and passive in relation to other
more sensitive aspects (such as governance, debt sustainability, labour, other social
impacts). In relation to norms, China selectively chooses to engage with international
norms that serve the functions of the BRI. China may utilize treaties (including joining
treaties) in certain areas, to promote its prioritized aims (like trade facilitation and
dispute settlement). In relation to institutions, China’s selected proactiveness is based
on path dependence. China has accumulated experience in various venues (such as the
UN, WTO, and IMF), which it utilizes to seek the recognition of the BRI (e.g., through
the UN General Assembly) and its development (e.g., through the AIIB).
China’s proactive approach as evinced reflects an underlying profound shift in
China’s foreign policy from ‘keeping a low profile’ to ‘striving for achievement’.102
This echoes the rise of China. China’s proactive position in the BRI contrasts with
96 Marlene Laruelle, ‘Introduction. China’s Belt and Road Initiative. Quo Vadis?’, in Marlene Laruelle (ed),
China’s Belt and Road Initiative and Its Impact in Central Asia (Washington, D.C.: The George Washington
University, Central Asia Program, 2018), xii.
97 Lattemann et al., above n 26, at 342.
98 Ernst-Ulrich Petersmann, ‘Trade and Investment Adjudication Involving “Silk Road
Projects”: Legal Methodology Challenges’, EUI Working Paper LAW 2018/02, available at
http://cadmus.eui.eu/bitstream/handle/1814/51225/LAW_2018_02.pdf?sequence=1, at 15.
99 Donald J. Lewis and Diana Moise, ‘OBOR Roadmaps: The Legal and Policy Frameworks’, Transnational
Dispute Management 3 (2017), at 10–11.
100 Gisela Grieger, ‘China’s WTO Accession: 15 Years on Taking, Shaking or Shaping WTO Rules?’,
December 2016, available at http://www.europarl.europa.eu/RegData/etudes/BRIE/2016/593570/
EPRS_BRI (2016)593570 EN.pdf , at 1.
101 ‘First Global Cross-Border E-Commerce Conference Beijing Declaration’ (2018), available
at http://www.wcoomd.org/-/media/wco/public/global/pdf/about-us/legal-instruments/declarations/
beijing-declaration-1022018.pdf?db=web.
102 Zhou and Esteban, above n 2, at 488.
China’s previous approach of ‘hide brightness and nourish obscurity’,103 and its role
as a participant rather than a leader in multilateral and megaregional negotiations

(particularly the WTO and the RCEP as the only megaregional that China joins104 ).
C. Maximised flexibility in the BRI as a break from other

practices: BRI v the US trade approach
Although it is difficult to find a relatable equivalent to the BRI, it is useful to compare the
US trade approach (particularly the recently concluded USMCA) with that of China
and maximised flexibility under the BRI. US practice is comparable to the BRI, as
it seeks to serve similar functions in promoting connectivity among involved parties,
but differs from the BRI in its ‘organising principles and modes of connectivity’.105
Additionally, it is observed that ‘some view the BRI initiative as a response or even
challenge to US efforts to promote new US-centric economic zones’, including the
Transatlantic Trade and Investment Partnership (TTIP).106 Further, the comparison
between such approaches is pertinent to any legal analysis of the BRI, and more broadly
to approaches to IEL, given that China and the US are the two largest economic powers
in the world and are essentially pursuing polar opposite approaches to IEL. In essence,
the maximised flexibility under China’s BRI approach starkly contrasts with the rigidity
of the US trade approach.
1. Institutions and mechanisms

The US approach is evidently much less flexible than China’s BRI approach. The
US relies heavily on treaty-based institutional mechanisms, while the BRI takes a less
institutionally focused approach (a flexible framework). An analysis of the USMCA
reveals this to be the case. First of all, the USMCA established that a Free Trade
Commission is to be set up,107 which is much stronger than the counterpart in China’s
PTIAs. This body will perform crucial functions that will directly impact the operation
of the USMCA, including a joint review of USMCA operations within six years after the
treaty enters into force and possible joint reviews annually thereafter, for the remainder
of the USMCA’s term.108 Such an overarching review body is evidence of the enhanced
institutional environment within which the USMCA will operate, in comparison to the
BRI context.
103 Simon Chesterman, ‘Asia’s Ambivalence about International Law and Institutions: Past, Present and
Futures’, 27 European Journal of International Law 945 (2016), at 967.
104 Chinese government ‘firmly supports Asean’s core leading role’ in the RCEP negotiations. See, ‘Beijing
“Firmly Supports” Asean’s Core Role in RCEP Negotiations,’ The Straits Times, 31 January 2018, available
at http://www.straitstimes.com/asia/beijing-firmly-supports-aseans-core-role-in-rcep-negotiations.
105 Alice D. Ba, ‘TPP, OBOR and ASEAN: Where Will They Lead To?’, 11 May 2018, available at
http://www.rsis.edu.sg/wp-content/uploads/2016/05/CO16108.pdf.
106 Wei Shen, ‘The Belt and Road Initiative, Expropriation and Investor Protection under BITs’, in Yun Zhao
(ed.), International Governance and the Rule of Law in China under the Belt and Road Initiative (Cambridge:
107 US–Mexico–Canada Agreement (USMCA), Article 30.1.
108 Ibid, at Article 34.7.4.
Second, despite the Trump administration’s original opposition to dispute settle-

ment for trade remedies, the USMCA emphasizes rigid treaty-grounded enforcement

mechanisms, which are said to have the ‘[m]ost [c]omprehensive’ enforcement stipula-
tions of any trade pact (e.g., those on the environment).109 Concerning implementation
mechanisms under the BRI, there are only scarce details on these mechanisms provided
in the BRI Action Plan.110
Third, a new treaty-based mechanism is being developed under the USMCA, which
will limit the flexibility of USMCA parties in future negotiations with non-market coun-
tries. Besides the Free Trade Commission, the USMCA provides for a strict mechanism
to notify and review a free trade agreement (FTA) between a non-market country and
USMCA party and to terminate the USMCA.111 All of the above evidences what is a
substantially differing approach, in terms of institutions and mechanisms, between the
US and China.
2. Norms
In respect of norms, the US takes an increasingly stringent and less flexible approach in
comparison with China’s maximised flexibility. The latest US trade approach generally
employs new and stringent rules. By comparison, China’s approach utilizes market
openings and frequently uses soft law, with heavy reliance on general statements. In
this regard, soft law is not seen as mainstream in US trade practice, although it has
been employed in regards to certain sensitive issues (e.g., the Joint Declaration of the
Macroeconomic Policy Authorities of Trans-Pacific Partnership Countries).
US-style trade pacts seem to reduce treaty flexibility, due to their highly specified
nature in relation to various aspects, ranging from treaty withdrawal provisions (the
USMCA and Trans-Pacific Partnership (TPP) specify that a withdrawal takes effect six
months after the written withdrawal notice112 ), to labour clauses (the USMCA includes
clarification footnotes to respond to the US–Guatemala labour case panel report113 ). For
future US FTAs under the Trump administration, their flexibility will be limited as the
USMCA will be a template for these trade pacts.114 As such, in relation to engagements
with norms, the US has taken a divergent approach from that of China and the BRI.
109 USTR, ‘United States–Mexico Trade Fact Sheet: Modernizing NAFTA into a 21st Century
Trade Agreement’ (2018), available at https://ustr.gov/about-us/policy-offices/press-office/fact-
sheets/2018/august/united-states–mexico-trade-fact-sheet-1.
110 ‘Greening the Belt and Road Initiative: WWF’s Recommendations for the Finance Sector’ (2018), available
at http://www.sustainablefinance.hsbc.com/our-reports/greening-the-belt-and-road-initiative, at 8.
111 USMCA, Article 32.10.
112 Simon Lester, ‘The U.S.–Mexico–Canada (AKA the New NAFTA) Trade Deal: Withdrawing from the New
NAFTA’ (2018), available at http://worldtradelaw.typepad.com/ielpblog/2018/10/withdrawing-from-
the-new-nafta.html.
113 Kathleen Claussen, ‘Guest Post: The U.S.-Mexico-Canada (AKA the New NAFTA) Trade Deal:
Labor’ (2018), available at http://worldtradelaw.typepad.com/ielpblog/2018/10/guest-post-the-us-
mexico-canada-aka-the-new-nafta-trade-deal-labor.html.
114 ‘Remarks by President Trump on the United States-Mexico-Canada Agreement’ (2018), available
at https://www.whitehouse.gov/briefings-statements/remarks-president-trump-united-states-mexico-
canada-agreement/.
3. Why does the US rigid approach contrast with China’s maximised flexibility

approach?
The contrast between the US and Chinese approaches is a result of essentially divergent,
underlying attitudes towards trade. First, the primary concern of the US in relation
to trade has been in ensuring predictability (e.g., strong regulatory protection) over
flexibility, whereas the BRI clearly prefers flexibility (and resulting efficiency) over pre-
dictability. This has been due, internally, to China’s capacity limitations and unwilling-
ness to adopt regulatory disciplines and, externally, to the need to engage with various,
less-developed BRI states. Second, the US has always sought to have its domestic law act
as a kind of threshold in certain areas including investment protection and intellectual
property, which is not the case with the BRI at this stage.115 Additionally, the flexibility
of the US trade approach has been constrained by its internal congressional pathways to
concluding trade deals, including that of the Bipartisan Trade Deal and the Bipartisan
Congressional Trade Priorities and Accountability Act. Third, the rule-based structure
employed by the US aims to encourage the adoption in foreign states of market-oriented
domestic policies that treat private actors fairly.116 Finally, the Trump Administration’s
zero-sum ‘America First’ foreign policy requires rigid rules to, inter alia, reduce US trade
deficit. This, in addition, provides less flexibility overall.
The comparison of China’s BRI approach to that of the rigid US approach reveals
the extent to which China has placed an emphasis on flexibility. Contrasting with the
less flexible US-style, treaty-based integration arrangement (e.g., clearly pre-defined key
rules on geographic scope, partners, principles and rules), the BRI can currently be
characterized as a ‘development strategy’117 with an Action Plan that underscores the
BRI’s nature as ‘highly flexible’.118
IV. IS CHINA’S BRI APPROACH SUSTAINABLE?

Maximised flexibility constitutes the key feature of China’s new approach to
international law in the context of regionalism and extra-regionalism. A question
arises here: is China’s BRI approach sustainable? The paper argues that China’s
BRI approach is likely to be sustained if properly managed, but there are serious
challenges.
A. The promotion of the BRI: trial-and-error

Among the advantages to China employing a flexible structure in relation to the BRI
(such as lowering ‘sovereignty costs’ by avoiding formal legal formality119 ), a major
one is the use of a ‘trial-and-error’ type approach towards institutions and norms in
115 Heng Wang, ‘Divergence, Convergence or Crossvergence of Chinese and US Approaches to Regional
Integration: Evolving Trajectories and Their Implications’, 10 Tsinghua China Law Review 149 (2018),
at 178.
116 Kate Hadley, ‘Do China’s BITs matter? Assessing the effect of China’s investment agreements on foreign
direct investment flows, investors’ rights, and the rule of law’, 45 Georgetown Journal of International Law
255 (2013), at 261.
117 Shi, above n 85, at 25.
118 National Development and Reform Commission et al., above n 38, Part VIII.
119 Brummer, above n 6, at 630–634.
implementing the BRI project, which has allowed for ongoing improvements to be
made to the efficiency of the BRI’s design and implementation. The BRI endeavours

to ‘knit together existing structures and initiatives into a loose quilt that will promote
operational efficiency’.120
Maximised flexibility allows China to learn by practice and test its pathway. In
particular, maximised flexibility helps to strike a balance between China’s capacity
limits and difficulties in engaging with various jurisdictions, on the one hand, and the
need to lead the BRI, on the other hand. Flexibility may help to address collective
action problems through bilateralism and informal settings instead of binding norms
and formal institutions.121 In this sense, maximised flexibility has been cultured in a
pragmatic manner by China’s efforts to ensure the viability of the BRI.
Institutional flexibility (particularly the less institutionally focused approach) helps
China avoid being checked by a strict external institutional structure and allows it
to pragmatically engage with stakeholders, under distinct terms and structures that
can evolve over time.122 The BRI incorporates certain elements of regional economic
integration and of a partnership arrangement between states,123 without addressing
thorny institutional issues.
Normative flexibility allows China leeway in adapting or innovating international
norms, since the BRI is at its early stage and has not been fully shaped. Soft law can
obfuscate existing legal norms124 (e.g., soften hard law mechanisms, particularly in the
case of distributive conflicts between powerful nations125 ) and set the agenda in regional
governance through the BRI as an ambitious extra-regional multilateral126 arrangement.
Eventually, the BRI could help China ‘write new rules, establish institutions that reflect
Chinese interests, and reshape “soft” infrastructure’127 and largely follow its national
prerogatives.
In summation, the ‘trial-and-error’ function of the BRI approach has both positive
and negative connotations in terms of sustainability. On the one hand, it allows China to
be reactive and malleable to the specific and developing needs of projects. However, on
the other hand, it makes it difficult to predict whether such a strategy can be sustained
over the longer term.
120 Bitas, above n 50, at 135.

121 Shi, above n 85, at 26.
122 Shepard, above n 39.
123 Zeng, above n 76, at 517.
124 Gregory C. Shaffer and Mark A. Pollack, ‘Hard vs. Soft Law: Alternatives, Complements, and Antagonists
in International Governance’, 94 Minnesota Law Review 706 (2010), at 709.
125 Ibid.
126 Gregory T. Chin, ‘True Revisionist: China and the Global Monetary System’, in Jacques deLisle and Avery
Goldstein (eds) China’s Global Engagement: Cooperation, Competition, and Influence in the 21st Century
(Washington, D.C.: Brookings Institution Press, 2017), 47.
127 Lily Kuo and Niko Kommenda, ‘What is China’s Belt and Road Initiative?’, The Guardian, 2018, available
at https://www.theguardian.com/cities/ng-interactive/2018/jul/30/what-china-belt-road-initiative-silk-
road-explainer.
B. Challenges
Maximised flexibility is a double-edged sword. While it allows for a more versatile

and malleable approach to employing economic relations for China, it also creates
nascent problems, for example, in respect of consistency, coherence, predictability, risk
management, and transparency.
1. Issue-specific challenges
Maximised flexibility does not address certain thorny issues related to the BRI, partic-
ularly in relation to non-trade concerns. These range from labour, land ownership, and
environmental and national security concerns to issues related to state-owned enter-
prises.128 For instance, BRI-specific documents often contain statements of expected
behaviour, which frequently utilize vague and general language, such as ‘a long-term,
stable, sustainable financing system that is well-placed to manage risks’.129 They set out
principles, including ‘wide consultation, joint contribution and shared benefits’, the
enhancement of existing bilateral and multilateral mechanisms, and consistency with
international good practice, market orientation, and professional principles.130 These
documents do not bring much normative development regarding non-trade concerns.
As such, the lack of efficient solutions can imply negative consequences for the BRI, in
its overall treatment of these issues, in a consistent and coherent manner. This reduces
predictability and transparency and creates a more complex scenario in terms of risk
management for BRI-involved parties.
By contrast, a BRI-wide treaty with a formal institutional arrangement and more
clarity on certain aspects of the BRI could help build the legitimacy of and trust in the
BRI131 and could deal with the specific concerns of BRI countries, including as to the
transparency of the bidding process, and social and environment standards.
2. General challenges
Maximised flexibility may lead to new challenges concerning consistency, coherence,
predictability, risk management, and transparency in regards to the BRI more
generally.
First, in terms of consistency and coherence, there is a concern that the BRI may
‘spawn a number of competing normative commitments’ in the substantive and juris-
dictional sense, which is a type of global legal pluralism132 that could reshape the
world order.133 They are like ‘the alphabet soup of trade commitments, depending
128 Guiguo Wang, ‘Legal Challenges to the Belt and Road Initiative’, 4 Journal of International and Comparative
Law 309 (2017), at 322.
129 ‘Guiding Principles on Financing the Development of the Belt and Road’ (2017), available at
http://m.mof.gov.cn/czxw/201705/P020170515761133537061.pdf.
130 ‘Memorandum of Arrangement on Strengthening Cooperation on the Belt and Road Initiative Between
the Government of the People’s Republic of China and the Government of New Zealand’ (2017), available
at https://eng.yidaiyilu.gov.cn/zchj/sbwj/10479.htm, para II.
131 Zeng, above n 76, at 532.
132 For the analysis of global legal pluralism, see, e.g., Paul Schiff Berman, ‘Global Legal Pluralism as a
Normative Project’, 8 UC Irvine Law Review 149 (2018), at 149–182.
on the agreements and organisations governing or coordinating these relationships’.134

Maximised flexibility means that issues are addressed on a case-by-case basis.135 The

BRI Action Plan explicitly indicates that the BRI is a ‘highly flexible’ process of coop-
eration that ‘does not seek conformity’.136 As such, the same issues may be addressed
in a different manner. For example, there may be difficulties in ensuring the same
standards of procedure, efficiency, and safety across BRI countries along the high-
speed railroads.137 Looking into the future, there may be compatibility issues between
existing commitments in BRI-related documents and those under future BRI projects
and treaties.138
Second, the BRI will face challenges in regards to predictability. Maximised flexibil-
ity is a moving target. From an institutional perspective, there does not seem to be a clear
plan for the development of a strict BRI legal framework and norms. This may result in
lower standards, the lack of predictability in the action of BRI states, and uncertainty
over the outcomes of BRI measures.139
BRI-specific soft law documents are patchy among BRI jurisdictions. The ubiquity of
informal agreements may be regarded as the product of power relations between states,
instead of ‘an independent variable informing the behavior of a host of regulatory . . .
actors’.140 This will negatively affect predictability under the BRI (e.g., the predictability
of protecting investors and traders and of addressing legal risks ranging from political
unrest, project delays, and cost overruns due to project abandonment).141 In particular,
it remains to be seen how the BRI will strike a balance between market considerations
(like economic benefits arising from investment and trade liberalization), social values
(including environment, labour, and human rights,142 which involves relationships with
civil society and local communities143 ), and other considerations (e.g., security issues,144
the political relationship between China and BRI states, economic assistance145 ). How
will these considerations be turned into operational norms? Which shall prevail if there
is a conflict between business profits and social values? For instance, it is yet to be seen
134 Ibid.
135 Klett and Oswald, above n 25, at 76.
136 National Development and Reform Commission et al., above n 38, Part VIII.
137 Yiping Huang, ‘Understanding China’s Belt & Road Initiative: Motivation, framework and assessment’, 40
China Economic Review 314 (2016), at 320.
139 Helfer, above n 87, at 176–177.
141 Clifford Chance, ‘Belt and Road: Dispute Resolution from a Chinese Perspective’, June 2018,
available at https://financialmarketstoolkit.cliffordchance.com/content/micro-facm/en/financial-
markets-resources/resources-by-type/thought-leadership-pieces/belt-and-road–dispute-resolution-
from-a-chinese-perspective–ju/_jcr_content/parsys/download/file.res/BRI___Dispute_Resolution_
from_a_Chinese_Perspective. pdf, at 2.
142 For the analysis of social values under PTIAs, see, e.g., Lorand Bartels, ‘Social Issues: Labour, Environment
and Human Rights’, in Simon Lester et al. (eds), Bilateral and Regional Trade Agreements: Commentary and
Analysis (Cambridge: Cambridge University Press, 2016), Volume 1, 2nd edition, 364–384.
143 Hao Tian, ‘China’s Conditional Aid and Its Impact in Central Asia’, in Marlene Laruelle (ed.), China’s Belt
and Road Initiative and Its Impact in Central Asia (2018), 33.
144 National Development and Reform Commission & the State Oceanic Administration, above n 24, Part IV
(maritime security).
145 Lattemann et al., above n 26, at 342.
whether China’s PTIAs and their practices promote both economic and non-economic
public welfare in their partnering states under the BRI.146

Finally, maximised flexibility could lead to other challenges including risk manage-
ment and suboptimal participation. As the BRI often relies on soft law instruments con-
sisting of hortatory or even promotional language, with weak enforcement mechanisms,
the management of risks under the BRI is difficult (such as political risks, which have
arisen as the major risk in the BRI).147 Similar to flexibility in international agreements,
maximised flexibility under the BRI could enable opportunism whenever ‘economic,
political, or other pressures make compliance inconvenient’.148 A major challenge is
to identify ‘appropriately constrained flexibility mechanisms’ that strike the balance
between facilitating agreement among BRI states ex ante and deterring opportunistic
(ab)uses of those mechanisms ex post.149 In addition, the lack of predictability arising
from maximised flexibility may lead to low levels of participation in the BRI from certain
states due to their different regulatory approaches (concerning issues such as non-trade
concerns).
Upon reflection, while the multitude of such challenges faced by the BRI does not
necessarily imply its current model is unsustainable over the long-term, it does require
that China address these challenges in a holistic sense. This may indeed result in China,
in the future, pursuing an approach that seeks to increase the coerciveness of current
soft law mechanisms, the hardening of soft law mechanisms, or even the implemen-
tation of an overall, hard law framework to the BRI, in order to best address these
concerns.
V. CONCLUDING REMARKS: THE PRESENT AND FUTURE

OF CHINA’S BRI APPROACH
What is China’s current approach to the BRI? The desire to retain maximised
flexibility is arguably the key legal characteristic of, and a unifying factor in, China’s
current BRI approach. China’s approach maximizes flexibility, through which the
BRI can readily respond to variations in practice. This reflects a largely instrumental
approach to law and an adaptive and pragmatic attitude. On a related note, the
underlying logic of China’s BRI approach is observed to be ‘somewhat analogous to
the functionalist approach that launched the European Coal and Steel Community
after the Second World War’, although substantial differences do exist in various
areas.150
Reflecting Chinese culture, China takes a flexible ‘middle-of-the-road’ strategy in
respect of the BRI, avoiding extremes or ‘radical’ development. Instead, China occupies
an intermediate position, balancing different considerations (e.g., trade and investment
146 Ibid, at 340–341.

147 Shi, above n 85, at 20–21.
148 Helfer, above n 87, at 176.
149 Ibid.
150 Peter Ferdinand, ‘Westward Ho—the China Dream and “One Belt, One Road”: Chinese Foreign Policy
Under Xi Jinping’, 92 International Affairs 941 (2016), at 950 (the differences include a greater sensitivity
to national sovereignty under the BRI).
liberalization and political relationship) to avoid unintended consequences. The BRI is

not a ‘traditional’ FTA-led initiative with region-wide legal commitments (at least at the

moment).
China may choose to be less or more proactive in its dealings under the BRI,
depending on the issues involved. Despite its less institutionally focused approach,
China also promotes BRI-related institutions (particularly the AIIB) and the devel-
opment of BRI-specific mechanisms that do not have a strict legal structure (like the
BRF and mechanisms for dispute settlement). Despite its heavy reliance on a non-
treaty–based approach, China also concludes PTIAs with BRI states, utilizes other
treaties (particularly WTO norms), and explores new treaty-based dispute settlement
mechanisms and institutions.
What does the future look like for China’s BRI approach? Maximised flexibility may
shrink with the development of the BRI. China may gradually come to develop BRI-
related treaties and formal institutions. Why might China reduce its flexibility in its BRI
approach? For one thing, soft law largely lacks its hard edges under the BRI. Although
soft law can be coercive, it seems China is currently adopting less coercive forms of soft
law. Put differently, the soft law China has been employing is targeted towards flexibility
and possibly legitimacy, rather than rigidity.
However, more coercive forms of soft law and even hard law could overall be more
beneficial to China in the long run if the norms are favourable to China, since it
would be more effective in helping China to realize the priorities of the BRI (including
policy coordination and financial integration) and its goal of refashioning the world
economic order.151 The BRI, in the view of China, is intended to reshape the interna-
tional order and global economic governance structures.152 After sufficient trial-and-
error experiences, China will likely promote the coerciveness of soft law, a BRI-related
treaty and related institutions and treaty-based mechanisms, in due course, to fix BRI
arrangements.
In the short term, soft law under the BRI could gain more coerciveness and even
constitute a progressive path towards developing hard law.153 Soft law under the BRI
may be more coercive in the future. If properly managed (e.g., including more detailed
norms), soft law deployed could generate less flexibility even though it is informal. If
so, various factors including reputational costs,154 market effects,155 persuasion, oppor-
tunity, and even fear156 may help to ensure the coerciveness of soft law.
In the mid- to long-term, China may want its preferred rules to progressively
obtain normative status as hard law. China could leverage its political, economic, and
technological advantages to promote its national standards in BRI countries, which
151 Petersmann, above n 98, at 5.

152 Anderlini, above n 84 (The BRI endeavours to ‘build a more fair and equitable international order and to
reform the global economic governance structure’).
153 H. Wolfgang Reincke and Jan Martin Witte, ‘Challenges to the International Legal System Interdependence,
Globalization, and Sovereignty: The Role of Non-binding International Legal Accords’, in Dinah Shelton
(ed.), Commitment and Compliance (Oxford: Oxford University Press, 2003), 95.
155 Ibid, at 143–147.
156 Zerilli, above n 74, at 5.
may even shape global standards and foster a paradigm change in global standard
development.157

It is thus likely that China will pursue the hardening of soft law under the BRI
in selective areas (such as technical standards, e-commerce, and dispute settlement)
where China has vested interests. China will in all likelihood utilize soft law to gradually
establish practices that can be elevated to hard law. The BRI is likely to promote
China’s standards, since infrastructure projects provide standard-setting opportuni-
ties.158 This may help to explain why the BRF Joint Communique contains the aim
of ‘harmonizing rules and technological standards when necessary’.159 In e-commerce,
China is reported to be planning to take the lead in shaping rules on cross-border e-
commerce regulation, through first shaping the standards and then forming the relevant
fundamental principles of the World Customs Organization.160 More broadly, China
may develop hard law through the BRI to innovate trade and investment rules161 and
to respond to emerging norms elsewhere (e.g., deep FTAs such as the Comprehensive
and Progressive Agreement for Trans-Pacific Partnership). Within China’s proposed
global FTA network, China’s strategy of free trade areas envisages the expansion of
FTAs alongside the BRI in the medium- and long-term.162 This is related to the need for
China to adapt to economic globalization and to possibly deepen domestic reform.163
These possible hardened rules deserve further study.
Occupying special space in extra-regionalism, the BRI may constitute a kind of
Chinese counter-model to deep FTAs and be subject to geopolitical dynamics. That
said, it would probably be wise to establish a BRI-wide treaty and corresponding
institutions and mechanisms, allowing for the necessary flexibility, while also ensuring
predictability, consistency, and coherence.
157 Jyh-An Lee, ‘The New Silk Road to Global IP Landscape’, in Lutz-Christian Wolff and Xi Chao (eds), Legal
Dimensions of China’s Belt and Road Initiative (2016), 424–425.
158 Jonathan Hillman, ‘Belt and Road Summit: Beijing’s Push on Trade’, 2 May 2017, available at
https://www.thecipherbrief.com/belt-and-road-summit-beijings-push-on-trade-2.
159 ‘Joint Communique of the Leaders Roundtable of the Belt and Road Forum for International Cooperation
(2017)’, available at http://www.fmprc.gov.cn/mfa_eng/zxxx_662805/t1462012.shtml, para 15(a).
160 Xinhua News Agency, ‘China to Push Formulation of Cross-Border E-Commerce International Rules for
World Customs’, 11 January 2018, available at https://eng.yidaiyilu.gov.cn/qwyw/rdxw/43482.htm.
161 For instance, there is a paper available at the website of State Council Information Office in
2017 that indicates such possibility. Monan Zhang, ‘Comprehensively Promote Cooperation on BRI
Framework Mechanism’, www.scio.gov.cn, 2017, available at http://www.scio.gov.cn/xwfbh/xwbfbh/
wqfbh/35861/36637/xgbd36644/Document/1551139/1551139.htm (The BRI should envisage major
normative and rule innovations in the trade and investment system).
162 ‘State Council, Opinions on Speeding up the Implementation of Free Trade Area Strategy’ (2015), available
at http://www.gov.cn/zhengce/content/2015-12/17/content_10424.htm.
163 Bath, above n 4, at 6.

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Journal of International Economic Law, 2018, 00, 1–27

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China’s Approach to the Belt and Road Initiative:

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I. HOW TO DEFINE THE BRI? A FUNCTIONAL APPROACH

A. What is a functional approach?

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B. Case study: financial measures under the BRI

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II. CHINA’S APPROACH TO THE BRI

Table 1. BRI as a hub-and-spoke network

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B. Three-track institutional and mechanism approach:

1. Track one: recognition of the BRI by existing institutions and mechanisms

Table 2. Examples of institutions and mechanisms engaging with the BRI

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International institutions ‘Overarching’ mechanisms, particularly BRF Institutions, including

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C. A dual-track normative approach: greater use of soft law

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Table 3. Examples of BRI-applicable documents and rules

Memorandum of Arrangement (MOA) on the BRI between China WTO norms

The first category comprises BRI-specific documents,63 including bilateral docu-

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1. The maximized mobilization of soft law

other actors (such as businesses).69 In particular, China actively engages on BRI-related

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2. The continued relevance of treaties

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III. THE KEY CHARACTERISTIC OF CHINA’S BRI APPROACH:

What is maximised flexibility?

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How does China use maximised flexibility?

ownership,96 debt sustainability, national security, local protectionism97 ) than ordinary

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C. Maximised flexibility in the BRI as a break from other

1. Institutions and mechanisms

Second, despite the Trump administration’s original opposition to dispute settle-

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IV. IS CHINA’S BRI APPROACH SUSTAINABLE?

A. The promotion of the BRI: trial-and-error

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120 Bitas, above n 50, at 135.

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on the agreements and organisations governing or coordinating these relationships’.134

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V. CONCLUDING REMARKS: THE PRESENT AND FUTURE

146 Ibid, at 340–341.

liberalization and political relationship) to avoid unintended consequences. The BRI is

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151 Petersmann, above n 98, at 5.

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