Chinese firms mull suing foreign govts over COVID-19 losses

By GT staff reporters Source:Global Times Published: 2020/4/24 1:08:53

Anti-China politics affects Chinese companies overseas


File Photo: VCG



As more foreign officials, most notably in the US, sue the Chinese government over the coronavirus pandemic, many in China, while dismissing the lawsuits as absurd, are also mulling potential countermeasures in case these lawsuits bring damage to Chinese businesses.

International legal and trade experts have argued that if Chinese companies' legitimate interests and rights are damaged by these lawsuits or other politically-motivated moves by foreign governments, there are also abundant legal means both Chinese government and businesses can take to protect themselves.

"If they insist on [carrying forward the lawsuits] and cause damage on China, then sorry, we will also have to strike back and respond in kind by suing them," He Weiwen, a former senior trade official and an executive council member of the China Society for World Trade Organization Studies, told the Global Times on Thursday, calling the lawsuits by some foreign officials "absurd" and will not be accepted by China.

So far two US states - Missouri and Mississippi - have filed a lawsuit in the US, accusing the Chinese government of not doing enough to stop the coronavirus epidemic. There have also been media reports of lawsuits filed in India and Italy, seeking compensation from the Chinese government over the pandemic. 

While few in China believe the lawsuits will bear any meaningful result, there are concerns that Chinese companies that are operating overseas could be impacted - not necessarily by the lawsuits but the overall anti-China politics. To protect their legitimate interests, some experts said that Chinese business groups can also sue foreign governments, including the US, for their inability to contain the virus that caused losses at Chinese companies.

Chinese companies, whose orders have been reduced due to the ineffectiveness of the US government in fighting the pandemic, can also collect evidence and sue the US federal government or relevant state governments for compensation, Zhu Ying, a professor of international law at Southwest University of Political Science and Law, told the Global Times on Wednesday. Zhu said that lawsuits can be filed in the US or at appropriate Chinese courts.

As the coronavirus continues to ravage abroad, many Chinese factories are seeing widespread declines in export orders, delays, or cancellations of existing orders. Some are even facing risks of going bankrupt due to declining orders. In the first quarter, China's total export dropped by 11.4 percent year-on-year.  

In fact, as the domestic epidemic has been effectively contained and economic activities have gradually resumed, top Chinese officials have deemed the deteriorating external environment as one of the biggest risks for the Chinese economy. For Chinese companies, the worry is not just the pandemic itself but also an increasingly hostile environment for Chinese products, as some foreign officials and media outlets even sought to smear life-saving Chinese medical supplies.

To help Chinese businesses handle potential disputes over business contracts, the China Chamber of International Commerce, which represents 246,000 Chinese companies, and Beijing-based Deheng Law Group have recently published a series of legal guidelines for companies to follow in an international business dispute, including legal procedures in the US and other major markets.

He, the former Chinese trade official, said that, while the WTO dispute settlement function is for member states, Chinese companies can file lawsuits over a business dispute in China or the country of their clients to protect their interests.

Still, lawsuits might be too expensive or unfeasible for many Chinese companies given the complexity of the legal systems in different countries, but there are many other ways for companies to protect themselves, said Gong Jinjun, deputy general manager of Shanxi Huanjie Petroleum Drilling Tools Co, who oversaw the company's legal battle against the US government when it imposed sanctions on the company in 2009.

One way is that Chinese companies can charge much higher prices for products exported to the US because of the high risk of doing business with the US, according to Gong. "In other words, if there exists legal procedures in the future that result in penalties for the US government, it won't be out of our pockets," he told the Global Times on Thursday.

However, Gong said that for Chinese companies, the most important thing is to improve the quality of their goods and diversify their overseas market so that it is not too dependent on one market.


Newspaper headline: Firms mull suing US govts


Posted in: POLITICS,DIPLOMACY

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