Legal Promotion Mechanisms and Conflict of Laws Adjustment: The

Interaction Between Investment Facilitation and Business

Environment Optimization in Countries Along the “Belt and Road”

Route

Xuanyu Mei

Faculty of Law, Tianjin University of Commerce, Tianjin, China

Keywords: Belt and Road Initiative, Business Environment, Investment Facilitation.

Abstract: Amid intensifying trade frictions, geopolitical tensions, and structural shifts in the global economy, the Belt

and Road Initiative (BRI) has emerged as a critical framework for multilateral cooperation. Evolving

international dynamics and investment policy uncertainties, exacerbated by recurring trade wars, have

heightened challenges to global and domestic business environments. This study adopts a comparative and

data-driven approach to explore the symbiotic relationship between investment facilitation and business

environment optimization in BRI partner countries. Key findings reveal that enhancing judicial efficiency,

strengthening legal frame-works, advancing digital trade rules, and establishing robust dispute resolution

mechanisms significantly improve investment climates and commercial ecosystems. By prioritizing legal

harmonization and institutional coordination, the BRI can mitigate risks, bolster cross-border collaboration,

and catalyse post-pandemic economic recovery. The research provides actionable insights for aligning BRI

implementation with evolving global governance needs, offering a pathway to resilient, rules-based

international economic integration.

1 INTRODUCTION

On July 6, 2023, negotiations on the text of the

Agreement on Investment Facilitation (AIF) reached

a successful conclusion. Since the conclusion of the

twentieth century, with the deepening of economic

globalization, the trend of investment facilitation has

become increasingly prominent. The international

community promotes investment facilitation and

optimizes the business environment. This is being

achieved by emphasizing the use of international

rules to reduce trade barriers. Additionally, there is an

effort to integrate ESG (environmental, social, and

governance) standards into evaluating the business

environment. By 2023, over 5,000 organizations

worldwide had endorsed PRIs, with assets under

management reaching US$120 trillion. For instance,

the Norwegian Sovereign Wealth Fund has

incorporated ESG ratings into its investment

decisions and divested from over 50 coal companies,

compelling them to enhance their governance

structures. The Hainan Free Trade Port establishes a

nexus between corporate ESG ratings and cross-

border investment and financing credits, enabling

highly rated companies to access the international

carbon trading market directly. In 2023, the

Agreement on Investment Facilitation (AIF)'s

international framework was established, focusing on

issues such as transparency and the digitalization of

processes. Concurrently, disputes over the definition

of the obligation to stabilize the legal environment in

international investment arbitration can result in

divergent decisions on analogous facts. For instance,

in the case of CMS v. Argentina (2005), the arbitral

tribunal ruled that Argentina's emergency measures,

including freezing utility rates, in response to the

economic crisis, violated the FET obligation and

necessitated compensation.

In contrast, in LG&E v. Argentina (2007), the

tribunal upheld Argentina's invocation of the state of

emergency defense, determining that the measures

implemented during the crisis did not constitute a

breach of contract. In light of the international context

and the prevailing circumstances, the dynamic

interplay between investment facilitation and

business environment optimization in the countries

476

Mei, X.

Legal Promotion Mechanisms and Conﬂict of Laws Adjustment: The Interaction Between Investment Facilitation and Business Environment Optimization in Countries Along the “Belt and

Road” Route.

DOI: 10.5220/0014384800004859

Paper published under CC license (CC BY-NC-ND 4.0)

In Proceedings of the 1st International Conference on Politics, Law, and Social Science (ICPLSS 2025), pages 476-481

ISBN: 978-989-758-785-6

along the Belt and Road route has emerged as a

pivotal research domain. This study area is paramount

in fostering cooperation and attaining sustainable

development. The dismantling of trade barriers and

the promotion of resource allocation optimization

have become inevitable choices for investment

facilitation and business environment optimization.

2 LITERATURE REVIEW

Investment facilitation and business environment

optimization issues have recently received increasing

attention internationally. In response, international

multilateral organizations have developed an active

programmatic agenda to guide the process of

promoting investment and business environment

optimization. This report's literature review focuses

on two closely related themes: the dynamic

relationship between the business environment and

FDI, and the factors influencing the construction of

the Belt and Road investment.

2.1 The Belt and Road Investment and

Construction Impact Factors

2008 the Asia-Pacific Economic Cooperation

(APEC) released the Action on Investment

Facilitation. This plan considers investment

facilitation actions taken by governments to attract

foreign investment and maximize the effectiveness

and efficiency of their administration at all stages of

the investment cycle (APEC,2009). Chinese scholars

think investment facilitation is a multifaceted concept

in the context of evolving economic and societal

landscapes. Some scholars argue that this

multifaceted nature encompasses not only the

efficiency of procedures and processes that comprise

the various phases of the international investment

cycle, the international harmonization of applicable

laws and regulations, and the openness and

transparency of the investment environment. It also

extends to the host country's endeavors in the

domains of human capital, the efficiency of financial

services, and infrastructure (Zhang,2016). In

addition, other scholars have posited that the Belt and

Road Initiative has the potential to foster the

establishment of an institutional framework that

incentivizes investment. This, in turn, can catalyze

the enhancement of the regional business

environment across various dimensions, including the

political environment, tax environment, market

environment, public service environment, innovation

environment, and investment environment.

Furthermore, this initiative has been shown to exert a

positive spatial spillover effect on neighboring

regions (Ma & Zhao,2023). Concurrently, other

scholars have proposed an alternative hypothesis

positing that the fundamental driver of international

trade is the discrepancy in commodity prices across

nations, which is attributed to the variation in factor

endowments. Instead of the aforementioned, it would

be more judicious for a nation to concentrate on

producing and exporting commodities that make

intensive use of its abundant factors and import

commodities that use its scarce factors (Ohlin &

Harrod,1934). Therefore, it can be posited that

investment facilitation and business environment

optimization in countries along the Belt and Road

form a dynamic and benign interactive relationship.

According to the dynamic adaptation theory of

"factor endowment-industrial structure-institutional

environment" proposed by relevant scholars, the

interaction between investment facilitation and

business environment optimization exhibits a spiral

upward trend (Lin et al.,2017).

2.2 The Dynamic Relationship Between

the Business Environment and FDI

Recent academic research has led to a substantial

advancement in comprehending the interplay

between the business environment and foreign direct

investment (FDI). Many studies have demonstrated

that the relationship under scrutiny is

multidimensional, encompassing direct and indirect

effects across diverse economic systems. A related

study analyzed the green business environment in

Chinese cities and found that environmental

sustainability enhances FDI quality by optimizing

public services, financial markets, and ecological

conditions, and that spillover effects are mainly

concentrated in the eastern region (Li,2022). This is

consistent with the findings of other scholars on the

relationship between business environment, FDI

quality, and economic growth in Eastern European

countries, which emphasize that a better business

environment attracts high-quality FDI, which in turn

promotes economic growth (Olha, 2024). The case

study of Kosovo underscores the notion that

implementing legal and governance reforms is

imperative for attracting foreign direct investment

(FDI), even in economies that are abundant in natural

resources.

Notwithstanding the advances made, research

gaps still need to be addressed. Current research has

rarely examined how digitization or global crises

(e.g., Coronavirus Disease 2019) change the

Legal Promotion Mechanisms and Conﬂict of Laws Adjustment: The Interaction Between Investment Facilitation and Business

Environment Optimization in Countries Along the “Belt and Road” Route

477

interaction between the business environment and

FDI. Future research should focus on these

dimensions and clarify causal relationships through

longitudinal analysis. Integrating big data and cross-

country comparative studies can reveal more detailed

mechanisms and help policymakers design effective

FDI attraction strategies responsive to global

economic changes.

3 COMPARISON AND

DIAGNOSIS OF PROBLEMS IN

LEGAL PROMOTION IN A

GLOBAL PERSPECTIVE

3.1 Comparison of Problems in Legal

Promotion from a Global

Perspective

In the context of global governance, law, as the core

of national governance, plays a pivotal role in

developing countries. Singapore, regarded as a

paragon of the rule of law in Asia, exemplifies the

symbiotic relationship between case law and

administrative efficiency within a common law

framework. This remarkable integration of legal

principles offers a valuable reference point for the

global rule of law.

Singapore's legal system is based on English

common law, emphasizing judicial precedent and

statutory intervention to deal with the complexity of

cases. The jurisprudence of the Supreme Court of

Singapore is nationally binding. At certain times in

history, decisions of the Privy Council of the United

Kingdom and the Federal Supreme Court of Malaysia

have also influenced Singapore's courts. Singapore's

judiciary is judicially independent, with judges

deciding cases independently and without executive

interference, ensuring consistency in applying the

law. At the same time, judges rely not only on

domestic precedents but also on the jurisprudence of

other countries in deciding cases. This open model of

legal borrowing and judicial supremacy has enabled

Singapore's jurisprudence to continuously assimilate

advanced international theoretical and practical

experience, strengthen judicial credibility, and

maintain the flexibility and adaptability of the law in

complex modern cases.

Singapore's administrative efficiency is not only a

product of judicial rigor but also of institutional

design.2023 An International Guide to Patent Case

Management for Judges, published by WIPO,

quantifies this relationship, with the average

commercial dispute resolution time in Singapore at

six months, 67% faster than the global median. In

terms of contract enforcement, the Doing Business-

Enforcing Contrast published by the World Bank

shows that by streamlining the litigation process,

Singapore's average contract dispute resolution time

is only 150 days (global average 580 days), with

enforcement costs amounting to 15% of the claim

amount (global average 31%). This should be directly

attributed to the Singapore judicial system through

the regular release of the jurisprudence impact

assessment report, based on the guidance of the

administrative efficiency has been dramatically

improved, the report realizes the quantitative analysis

of the adjudication rules of the administrative

efficiency of the marginal effect of the legal

economics thinking into the design of the system. In

cross-border commercial dispute resolution, courts

have adopted pre-trial conference procedures and

diversified alternative mechanisms to shorten the case

processing cycle by 60%. This efficiency-oriented

judicial trend directly underpins Singapore's core

leadership as an international arbitration center.

The positive interaction between Singapore's

jurisprudence and the efficiency of administrative

coordination provides a valuable reference for the

global construction of the rule of law. From a global

perspective, countries should actively learn from

Singapore's experience, strengthen the construction

and improvement of their legal systems, enhance the

efficiency of administrative coordination, and

promote the state's development and society's

progress through the law.

3.2 Diagnosis of Legal Problems in

Interactive Relationships

Regulatory fragmentation and lack of stability pose

significant institutional challenges to global

investment flows, particularly in emerging markets.

Douglass North's institutional theory suggests a stable

property rights regime is the basis for long-term

investment (North, 1990).

According to the World Bank's Global Investment

Competitiveness Report 2020, 67 percent of

multinational companies cite regulatory

inconsistency as a key barrier to cross-border

investment, with Southeast Asian and African

economies most affected.

Indonesia's nickel industry is a classic example: in

2014, Indonesia banned local nickel exports, but the

central government's policy has been repeatedly

adjusted to suddenly ban nickel exports in 2020,

creating supply chain disruption risks for companies

ICPLSS 2025 - International Conference on Politics, Law, and Social Science

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such as China's Qingshan Group. According to

Indonesia's Investment Coordinating Board (BKPM),

FDI volatility in the mining sector will exceed 40%

in 2015-2020.

Lack of legal stability is often seen as a sign of

inadequate governance capacity, which can easily

lead to a lack of confidence in the country by foreign

investors, resulting in massive divestment and

undermining the international long-term investment

ecosystem. The fundamental reason for the

fragmentation and lack of stability of Indonesian laws

and regulations lies in the conflict between local and

central governments, which rely on tax revenues from

coal mining but cannot legislate, making laws and

regulations changeable and focusing too much on

short-term interests at the expense of the effectiveness

of long-term investment.

Empirical studies have shown that environments

with low rule credibility, such as unclear laws,

frequent policy changes, and high levels of

corruption, can lead to lower investment rates, with

investment growth increasing by about 0.7-1.2

percentage points for every standard deviation

increase in investment growth (Brunetti & Weder,

1998). This pattern is supported by data from

Indonesia, where the government effectiveness score

(48.4/100) is negatively correlated with the volatility

of mining FDI (42%) (World Bank, 2022). North's

theory reveals the root cause of the system - the lack

of "adaptive efficiency" leading to fragmentation.

Indonesia's decentralized legislation reflects

institutional stickiness, while Singapore's regulatory

quality score of 92.1 is one of the highest in the world,

as it reconciles conflicts through the Law

Harmonization Commission. This is consistent with

North's emphasis on "credible commitment" (World

Bank, 2022).

The World Bank has advocated for impact

assessments to mitigate similar barriers to prevent

fragmentation. Indonesia's Integrated Employment

Law 2020 eliminated 78 conflicting regulations and

reduced approval time by 40 percent, demonstrating

the feasibility of institutional coordination (Database

Peraturan, 2020). Emerging economies and

developing countries should take a long-term view of

the global investment environment, open up to the

public from the legislative stage, listen to the advice

of relevant industry professionals, improve their

legislative capacity, and incorporate North's theory of

adaptive efficiency into sustainable development.

4 POLICY DESIGN FOR

LAYERED GOVERNANCE

4.1 International: The Struggle for

Rules Discourse in Digital Trade

Agreements

In international digital trade agreements, there is an

escalating competition for establishing rules

concerning investment facilitation and optimizing

business environments. In the contemporary

geopolitical landscape, nations are engaged in a

dynamic competition to influence the formulation of

rules that align with their respective economic

interests and developmental agendas. Developed

economies, characterized by technological

advantages and mature market systems, vigorously

promote rules favoring their digital enterprises. The

objective of these measures is twofold: to expand

market access and to secure advantages in data flow.

Conversely, through platforms such as the Regional

Comprehensive Economic Partnership (RCEP)

negotiations, emerging economies have endeavored

to incorporate rules that enhance digital infrastructure

connectivity and regulatory transparency. By actively

formulating regulations, nations can safeguard digital

sovereignty while fostering a more inclusive and

equitable global digital trade ecosystem, facilitating

sustainable economic development.

4.2 National: Promoting Contractual

Dispute Settlement to Reduce

Domain Joint Cooperative

Interaction Mechanisms

In the context of globalization, a core challenge for

improving national governance systems is reducing

cross-regional transaction costs and facilitating the

introduction of foreign investment through

institutional innovation, while activating the

administrative effectiveness of local governments.

Consequently, countries must establish a localized

regional joint policy framework for cost reduction,

complemented by a contractual dispute settlement

mechanism. The novel mechanism is composed of

two primary components. The initial component is

the reduction of transaction costs, whereas the

secondary component is enhancing regional

cooperation (Ma & Zhao,2023).

Legal Promotion Mechanisms and Conﬂict of Laws Adjustment: The Interaction Between Investment Facilitation and Business

Environment Optimization in Countries Along the “Belt and Road” Route

479

4.2.1 Reduction of Transaction Costs

The promotion of contractual dispute resolution, cost

reduction, and coordination mechanisms is predicated

on the objective of reducing transaction costs.

According to prominent scholars in the field,

transaction costs play a pivotal role in the efficiency

of contract enforcement. These costs can be

substantially mitigated through optimizing contract

design and the dispute resolution mechanism

(Williamson, 2007).

In particular, a contractual dispute resolution

mechanism should prioritize formulating explicit and

transparent terms to mitigate transaction costs from

information asymmetry and uncertainty.

Standardized contractual templates and efficient

dispute-resolution procedures have been

demonstrated to increase the efficiency of

cooperation and reduce the costs of negotiation and

supervision. The contemporary utilization of artificial

intelligence (AI) in dispute prediction and evidence

analysis can potentially reduce the cost of legal

counsel by 30-50 percent (Institute of World

Economics and Politics, Chinese Academy of Social

Sciences, 2023). To illustrate, natural language

processing (NLP) technology can expeditiously

identify contractual loopholes and potential risk

points, furnishing contracting parties with real-time

early warning. Furthermore, the Guangzhou

Arbitration Commission's Online Dispute Resolution

(ODR) platform has been shown to enhance the

efficacy of dispute mediation for SMEs by

approximately 40% compared to conventional

methods that rely on non-contact negotiation and

automated adjudication. This platform is especially

well-suited for low- and medium-value commercial

disputes within the context of countries along the Belt

and Road initiative (United Nations, 2024).

4.2.2 Enabling Regional Cooperation

The core of a contractual mechanism is to reduce the

transaction costs of cross-domain collaboration

through institutionalized rule design while enhancing

the stability of collaborative governance. Research

has demonstrated that combining information

transparency and monitoring incentives is

fundamental to the mechanism's efficacy. For

instance, an empirical study based on the fiscal

reform of China's provincial directly managed

counties found that increased information

transparency significantly strengthened the ability of

higher-level governments to supervise lower-level

governments. The study also found that increased

information transparency prompted county-level

governments to adopt more proactive fiscal policies

and reduce frictions and disputes in policy

implementation (Jia et al., 2023). This conclusion can

be extended to transnational regional cooperation

scenarios. By building a unified information-sharing

platform (e.g., a cross-border data exchange system),

policy differences and implementation deviations

among member States can be monitored in real-time,

thus reducing the probability of disputes. Further,

institutional stability and balance of power and

responsibility are key to the regional cooperative

effect. Local governments have an economic

stabilization effect on fiscal spending due to local

information advantages, but vertical fiscal

imbalances can weaken this effect. This observation

indicates the necessity for regional cooperation

mechanisms to balance central coordination and local

autonomy. This balance is critical in avoiding the

potential pitfalls of institutional rigidity, which can

result from excessive centralization and the

fragmentation of rules due to decentralization. For

instance, the dispute settlement chapter (Chapter 19)

of the Regional Comprehensive Economic

Partnership Agreement (RCEP) ensures the territorial

integrity of member states through explicit

consultation procedures, third-party participation

guidelines, and a multilateral notification system.

Additionally, it enhances the predictability of rulings

through a transparent process, thereby reducing

implementation costs.

5 CONCLUSION

This study employs a dual approach of data analysis

and case study to examine the legal promotion of

countries along the "Belt and Road" initiative from a

global perspective. The analysis concludes that the

international community must encourage countries to

continuously promote judicial innovation, cultivate

an efficiency-led judicial environment suitable for the

local community, enhance the efficacy of the

governance system, and strengthen the unity of

governmental power at all levels. This is imperative

to prevent the consequences of legal fragmentation.

Furthermore, the study emphasizes the

importance of integrating the principle of adaptive

efficiency into the process of national sustainable

development, emphasizing the need for governments

to unify their powers to achieve this objective. The

policy design of layered governance is further

delineated in terms of competing for the right to

designate the international community's rules by

leveraging technological advantages or means such as

ICPLSS 2025 - International Conference on Politics, Law, and Social Science

480

negotiation, reducing transaction costs, and

strengthening regional cooperation through

institutional design. It is incumbent upon the

international community to direct its attention to the

linkage and promote the theory of dynamic adaptation

of "factor endowment-industrial structure-

institutional environment" into a practical path.

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Environment Optimization in Countries Along the “Belt and Road” Route

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