On The Definition Of State-Owned Enterprises From The Perspective Of The China-EU Comprehensive Investment Agreemen

In recent years,the proportion of Chinese State-owned Enterprises(SOEs)in the international market has been increasing,and the importance of Chinese SOEs in the global economy continues to increase.More and more international agreements have special regulations on SOEs.The EU-China Comprehensive Agreement on Investment(EU-China CAI)concluded at the end of 2020 is a bilateral agreement between China and the EU in the field of international investment,which not only stipulates competition neutrality,but also innovatively introduced the concept of "covered entities" in relation to SOEs,which essentially expands the scope of definition of SOEs so that most operating entities in China might are subject to the agreement’s commercial considerations,non-discriminatory treatment and transparency obligations.Based on the analysis of the definition of SOEs in Chinese domestic laws and the comparison with the definition of SOEs in international agreements,this paper discusses the definition of SOEs on EU-China CAI and its impact on Chinese laws to provide ideas for improving relevant laws and regulations in China.This paper consists of six parts including introduction and conclusion.Introduction starts with China General Nuclear Power Corporation(CGN)with Electricité de France a joint bid for British NNB case,the European Commission denied the CGN as independent market main body question,therefore our country should define the SOEs in market main body angle,cultivating or increase the independence of the SOEs,reduce the risk of antitrust review or restrictions on overseas mergers and acquisitions,etc.The conclusion of EU-China CAI provides an opportunity to solve these problems.Therefore,it is of great significance to study how to define SOEs from the perspective of EU-China CAI.To this end,a literature review was conducted.According to the results of Chinese and English literature search,there are no articles or books that compare the concept of "covered entities" in EU-China CAI with other agreements.This paper may fill this gap.This paper mainly uses the methods of literature analysis and comparative research and analyzes the concept of "covered entities" and its impact of EU-China CAI based on comparing the provisions of different agreements on the definition of SOEs.The first chapter combines the challenge faced by SOEs and the background of EU-China CAI negotiations to proposes and explains the definition of SOEs.The European Commission is considering the merger of China National Petroleum Corp.with Switzerland’s Ineos AG and Sinochem Corp,with the Netherlands’ Koninklijke DSM N.V.In the case of merger and acquisition,the case of Makhteshim Agan Industries of Israel acquired by China National Chemical Corporation and Israel Koor Industries,and the case of NNB of Britain acquired by CGN and France Electricité de France,it was doubted whether the Chinese SOEs involved were independent operating entities independent of State-owned Assets Supervision and Administration Commission of the State Council of China.The emergence of this problem is closely related to the vague legal definition of Chinese SOEs.Aiming at this problem,this paper uses data to explain the development situation of Chinese SOEs and the difficulties encountered in expanding overseas markets and points out that Chinese SOEs have attracted great attention from the international level.As a result,the EU and China are seeking a comprehensive investment treaty that addresses the perceived independence and unfair competition of SOEs.In the negotiation of EU-China CAI,the focus is always on the regulation of SOEs.Clarifying the concept of SOEs is the basis for the application of non-discrimination and other rules in EU-China CAI.The agreement innovatively uses "covered entities" to regulate SOEs.Compared with the concept of SOEs in previous agreements,this concept has a wider scope.This change may not only include all SOEs in the "covered entities",but also some private entities in China.Therefore,it is of great significance to study the definition of SOEs from the perspective of EU-China CAI.The second chapter takes China’s domestic law as the angle of view,analyzes Chinese definition and legal regulation of SOEs to lay a foundation for the latter research EU-China CAI about SOEs,its judgment elements and the possible impact on Chinese SOEs.This chapter analyzes the evolution of the definition of SOEs in China from the perspective of domestic laws and related laws and regulations.It is concluded that the number of laws and regulations related to the definition of SOEs promulgated in China is rare,and the content is scattered,the system is messy.There is no formed clear definition of SOEs.The third chapter compares the SOEs definition clauses with other international agreements,studies the SOEs judgment requirements stipulated by EU-China CAI,and analyzes the differences and influences.This chapter selects Trans-Pacific Partnership Agreement(TPP)and Comprehensive and Progressive Agreement for Trans-Pacific Partnership(CPTPP)and The United States-Mexico-Canada Agreement(USMCA)which has the representative definition terms of SOEs as comparison objects.Through comparative research,it is found that the SOEs definition of EU-China CAI has three significant changes.First,replaced the SOEs with "covered entities" when stipulating related issues of the SOEs.Second,"mainly engaged in commercial activities" is not a necessary prerequisite for judging SOEs.Thirdly,in judging whether an entity is "state-owned",we should not only consider the government’s shareholding ratio,ownership,control and executive appointment and removal,but also increase the government’s indirect control of the enterprise or the government’s substantive influence on the enterprise through legal and policy means.These changes indicate that the concept of "covered entities" of EU-China CAI not only inherits the definition of SOEs in other agreements,but also further solves the remaining problems in other agreements on this basis,so that EU-China CAI can identify SOEs more comprehensively and accurately.The fourth chapter draws lessons from the definition of SOEs on EU-China CAI to perfect the legal rules of Chinese SOEs.From the comparative study in chapter 3,the concept of "covered entities" includes both SOEs and designated monopoly enterprises,which in fact includes state trading enterprises in article 17 of GATT1994.Therefore,on the one hand,China should improve the existing legal definition and judgment standards of SOEs in combination with the signed international agreements and incorporate the appointment and removal of senior executives of SOEs into the Company Law of the People’s Republic of China,to ensure the independence of SOEs as market subjects.On the other hand,the core value of the principle of competitive neutrality is consistent with the goal of Chinese SOEs reformation,so we should establish Chinese competitive neutrality system as soon as possible,which can not only create a fair competition market environment between SOEs and private enterprises,but also make the development of SOEs conform to the international trend and enhance their international competitiveness.According to the previous five parts of the study,the following conclusions are drawn.First of all,from the case of CGN with Electricité de France a joint bid for British NNB,it is found that Chinese law does not define SOEs from the perspective of market entities,and only classifies SOEs in the form of administrative working documents based on the amount of investment or shareholding ratio.Not only the laws and regulations are scattered,but also the content is not scientific,not comprehensive,and even there are mistakes,which is the problem of SOEs European mergers and acquisitions.Therefore,combined with the challenges faced by SOEs and the background of EU-China CAI,it is very important to study the concept of "covered entities" of EU-China CAI for the development of Chinese SOEs.After analyzing the definition and law of Chinese SOEs,it is concluded that there is no clear definition and judgment standard of SOEs from the perspective of market subjects in the current legislation.Therefore,based on the comparison of CPTPP and USMCA definitions of SOEs,the meaning,constitutive elements,characteristics of EU-China CAI "covered entities" are revealed,as well as the possible impact on China.Finally,combining with the "covered entities" clause,this paper discusses the improvement and adjustment of the legal rules for Chinese SOEs,which can be adopted in two ways.First,formulate special laws or regulations to transform the relevant contents of EU-China CAI into Chinese domestic laws.That is,special legislation on SOEs,clear and unified concept of SOEs,constitutive requirements,non-discriminatory treatment,commercial considerations and transparency obligations.Second,modify or interpret the current laws and regulations,clarify the concept of SOEs,and subject to EU-China CAI constraints.That is,combined with the actual situation in China,the relevant content of the Law of the People’s Republic of China on Industrial Enterprises Owned by the Whole People 1988 should be amended,or Article 257 of the Civil Code of the People’s Republic of China should be interpreted to clarify that SOEs refer to two types of entities: government-controlled enterprises and government-designated monopoly enterprises,while they are subject to EU-China CAI.At the same time,the appointment and removal of senior executives of SOEs should be incorporated into the Company Law of the People’s Republic of China,and the principle of competitive neutrality should be introduced into the Anti-Monopoly Law of the People’s Republic of China at the right time to reduce the legal risks of overseas investment of SOEs and enhance their market competitiveness.