The recent US action in Venezuela, in which President Nicolas Maduro was kidnapped in the United States to face criminal charges, has triggered a dramatic rupture not only in Western Hemisphere geopolitics, but also in the assumptions that have underpinned global sovereign lending for decades.
In Washington, the action was presented as a criminal law enforcement measure; in Beijing and much of the Global South, this was seen as an illegal excess and militarization of American power.
China’s response was particularly significant: rather than threatening military escalation, Beijing framed its response in legal and diplomatic terms, signaling an aggressive defense of contracts, sovereign debt instruments and investment treaties. In doing so, China asserts that the future of geopolitical competition may be defined as much by law firms and arbitration tribunals as by aircraft carriers.
To understand why this matters, it is necessary to place the current impasse in the broader context of Chinese overseas lending and the legal frameworks on which they rely. Over the past two decades, China has become the largest lender to developing countries, largely through state policy banks and under the Belt and Road Initiative, which covers infrastructure, mining, energy and other strategic sectors in Asia, Africa, Latin America and beyond.
Although authoritative global estimates vary, independent research has shown that Chinese sovereign loans amount to hundreds of billions and, according to some, more than $1 trillion in more than 100 countries. This debt is structured by bilateral agreements, commercial contracts and, in some cases, formal bilateral investment treaties (BITs).
Underlying these arrangements is a fundamental legal assumption: when a sovereign borrows money or grants concessions for projects, whether a railway in Africa, a port in Southeast Asia, or energy infrastructure in Latin America, successor governments will honor the obligations undertaken by their predecessors.
This assumption is not simply a matter of accounting; it is the cornerstone of modern sovereign lending and investment. Creditors assess risk, investors commit capital, and entrepreneurs deploy resources hoping that contracts and treaties will be honored through shifts in political power. International financial institutions, private creditors and commercial lawyers depend on this continuity. When this hypothesis collapses, the entire structure of cross-border investment is called into question.
This is why China’s response to the Venezuela operation is so telling. Rather than responding with threats of force, which would be widely understood as escalation, Beijing’s public statements have emphasized the illegality of the U.S. action under international law, principles of sovereignty, and basic norms of state conduct.
China’s Foreign Ministry condemned the operation as a violation of the United Nations Charter and basic norms of international relations, and called on the United States to respect Venezuela’s sovereignty, release its president, and resolve disputes through negotiation and dialogue. These statements reflect a deliberate framing of the issue in legal terms.
Above all, recent developments show that China and Venezuela have already deepened their legal and economic ties. In late 2024, Venezuela ratified a bilateral investment treaty with China, establishing protections such as fair and equitable treatment, comprehensive protection and security, and most favored nation treatment for covered investments.
The treaty also prescribes mechanisms for resolving disputes, including through arbitration within specified international frameworks. Although China has not yet ratified the treaty, its existence illustrates a legal architecture that both sides have built around their economic relations.
This legal framework assumes a sovereign and functioning Venezuelan government to which obligations can be attached. But what happens when that sovereign is violently removed from office at the behest of a rival power and subjected to external legal processes unrelated to the underlying investments?
It is this scenario that motivates the most dramatic claim circulating in some analytical circles that China is prepared to wage “legal war” by invoking investment treaties, international arbitration, and global legal institutions to defend its interests and impose legal costs on governments that fail to honor their commitments to Chinese creditors. In other words, Chinese strategy could consider the law itself as a geopolitical instrument.
At first glance, this may seem hyperbolic: how could legal claims match the strategic weight of military force? The answer lies in the nature of China’s global exposure. Unlike traditional Western creditors whose sovereign bonds are often issued under the laws of New York or London with clear enforcement mechanisms, China’s loans are much more diffuse, spread across jurisdictions with varying legal capacities and often supported by project revenues, raw material deliveries or bilateral conventions.
The enforceability of these obligations has always been uncertain.
If these obligations were suddenly disavowed by successor governments, particularly those aligned with U.S. policy preferences after regime change, the economic consequences for China’s creditors could be devastating. Defaults would pile up, infrastructure deals would collapse, and Chinese capital would risk losses on a scale that would dwarf any bilateral dispute. Legal proceedings constitute a lever to prevent such an outcome.
Seen in this light, China’s emphasis on legal norms and international judgment is not just about Venezuela; it is about protecting the institutional foundations of its global lending model. Conventional protections, arbitration forums and bilateral investment agreements are mechanisms through which sovereign obligations can be enforced or at least negotiated in the event of disputes.
If China succeeds in bringing a case against a post-Maduro Venezuelan government or gaining recognition of its rights based on existing treaties, it will set a precedent that sovereign debt and contracts cannot be canceled by external intervention. This would strengthen the confidence of Chinese creditors and investors in the sustainability of their claims, thus mitigating the political risk which now seems existential.
This legal strategy also aligns with broader developments in China’s approach to dispute resolution. The country cultivates a network of domestic and international arbitration institutions capable of handling commercial and investment disputes involving Chinese parties.
From the China International Economic and Trade Arbitration Commission (CIETAC) to the China International Commercial Court (CICC) and related bodies, these institutions provide venues for resolving transnational disputes involving China. Although their scope and global acceptance continue to evolve, they represent a growing toolkit for legal policymaking under the Belt and Road Initiative.
There are, however, limitations and countervailing forces that deserve recognition. International arbitration and the enforcement of investment treaties are highly contested areas. Western legal institutions, such as those in The Hague or under the auspices of the International Center for Settlement of Investment Disputes (ICSID), have historically been viewed with skepticism in China and other emerging powers, leading to alternative arrangements and hybrid mechanisms.
The enforcement of arbitral awards against sovereign States often depends on reciprocal legal frameworks and political will, rather than simple legal determination. In other words, achieving a legal victory is one thing; implementing it is another. The political dimensions of this impasse also cannot be separated from the legal arguments.
China’s official stance of non-intervention and respect for sovereignty is itself a strategic narrative that resonates across much of the Global South, where memories of colonialism and unilateral interventionism remain powerful.
By framing its challenge to U.S. behavior in terms of international law, China presents itself as a defender of a rules-based global order, even as it simultaneously pursues a web of bilateral agreements that serve its own strategic interests. This duality complicates Western efforts to describe China’s growing influence solely in terms of debt dependence or coercive economics.
For the United States, the focus has been on immediate security and criminal justice concerns related to drug trafficking and international law enforcement. But Washington’s actions, unprecedented in the direct capture of a sitting head of state on foreign territory, challenge long-held assumptions about sovereign conduct and invite pushback from countries that see their own investments and legal claims under threat. If U.S. policy adheres to the idea that external intervention can reset a country’s legal obligations, the implications for global sovereign contracts could be profound.
The story that China is “declaring war on lawyers” is more than a rhetorical flourish; it reflects a deeper shift in the tools of global competition. Military power and traditional geopolitics are important, as are legal norms, treaty rights, and the enforceability of agreements that bind sovereign states to their external obligations. China’s response to the Venezuelan crisis illustrates the extent to which law has become an arena of strategic contestation, one where contracts, arbitration, and investment protection can shape the calculus of power in the 21st century.
As geopolitical rivalry intensifies, the question of who writes the rules and who can enforce them will be at the heart of the global order. And in this struggle, legal strategy can indeed be one of the most important instruments of statecraft.
The author is a trade facilitation expert working with the Federal Government of Pakistan.
Disclaimer: The views expressed in this article are those of the author and do not necessarily reflect the editorial policies of PK Press Club.tv.
Originally published in The News
