Regional Market Integration of the GBA in the Field of Cross-border Investment:

Might China be Inspired by the EU?

Dan Wei

Hongling Ning

 

ABSTRACT: The Guangdong-Hong Kong-Macao Greater Bay Area (GBA) is seen as a testing ground for enhancing regional integration between Mainland China and HK and Macao Special Administrative Regions (SARs). Unlike the Closer Economic Partnership Arrangement (CEPA) concluded between Mainland China and the two SARs, GBA is not a legally binding framework but primarily an economic and political initiative. It faces the same challenge with CEPA, i.e., how to deepen market integration within the ‘One country, two systems’ framework. The EU is a supranational organization which is successful in economic and regulatory integration. In contrast, China maintains a centralised political system. So, the EU's model may not be directly applicable to China. Nonetheless, the success of GBA construction hinges on intergovernmental cooperation between Guangdong and HKSAR and Macao SAR. This is similar to the EU model, which involves cooperation among Member States. So, China may draw inspiration from certain EU practices in areas like cross-border investment, which function on both supranational integration and intergovernmental cooperation. After careful examination of cross-border investment policies, it concludes that China can be inspired more in external relations and less in internal dimensions. Specifically, as EU institutions and EU law play an important part in the Single Market, the EU’s approaches to investment liberalisation and investment protection are generally inapplicable in the GBA construction, whereas lessons of the European Free Trade Association (EFTA) Convention and the success of the Benelux Court of Justice are inspiring. In external dimensions of investment policies, the EU’s practices in balancing diversity and unification are worth learning for China. This is particularly relevant when considering the applicability of Bilateral Investment Treaties (BITs) and the International Centre for Settlement of Investment Disputes (ICSID) Convention to SARs, and national security reviews over cross-border investments.