The investor-state dispute settlement (ISDS) system is such a means to an end of further economic development and wider social political goals. With major protective provisions of expropriation against compensation, fair and equitable treatment, national treatment, most-favored-nation treatment, full protection and security and umbrella clause, it helps establish a predictable, transparent, and enforceable legal regime to protect foreign investors’ legitimate expectations and lawful investment. As China intends to attract foreign investments by offering a stable business operation environment, its signing a large number of BITs and FTAs may help reduce political and socio-economic risks, which give states, businesses, and individuals the confidence to work in a coordinated manner. The economic development goal, rule of law strategy, tense US-China relations, ideology of multilateralism and community of common destiny, all add up to China’s inclination to incremental but effective ISDS reform.

I. Introduction
II. China’s Involvement in ISDS : Text Evolution
III. China’s Practice
IV. Political Economy and China’s Future Engagement
V. Conclusion
References

• Wei Shen(KoGuan Distinguished Professor of Law at Shanghai Jiaotong University Law School, China. LL.B. & LL.M. (ECUPL), LL.M. (Cantab), LL.M. (Michigan), Ph.D. (LSE))
• Shuping Li(Ph.D. candidate in law at the University of Hong Kong. LL.B. (Shandong), LL.M. (Cantab))