The recent US action in Venezuela, in which President Nicolas Maduro was extradited to the US to face criminal charges, has sparked a dramatic rupture not only in Western Hemisphere geopolitics, but also in the assumptions that have underpinned global sovereign debt for decades.
In Washington, the action was cast as a criminal law enforcement action; in Beijing and much of the global south, it has been seen as an illegal overreach and a weaponization of American power.
China’s response has been particularly significant: Instead of threatening military escalation, Beijing has framed its response in legal and diplomatic terms, signaling an aggressive defense of contracts, sovereign debt instruments and investment treaties. In doing so, China argues that the future of geopolitical competition may be defined as much by law firms and arbitration courts as by aircraft carriers.
To understand why this matters, it is necessary to place the current standoff in the broader context of Chinese overseas borrowing and the legal framework on which it depends. Over the past two decades, China has become the largest lender to developing countries, mainly through state-owned policy banks and under the Belt and Road Initiative, which spans infrastructure, mining, energy and other strategic sectors across Asia, Africa, Latin America and beyond.
While authoritative global estimates vary, independent research has documented Chinese sovereign lending to be well into the hundreds of billions and by some accounts over $1 trillion in more than 100 countries. This debt is structured through bilateral agreements, commercial contracts and, in some cases, formal bilateral investment treaties (BITs).
Underlying these arrangements is a basic legal assumption: when a state borrows money or grants concessions for projects, whether for a railway in Africa, a port in Southeast Asia or energy infrastructure in Latin America, successive governments will honor the commitments made by their predecessors.
This assumption is not simply a matter of accounting; it is a cornerstone of modern government borrowing and investment. Creditors price risk, investors commit capital, and contractors deploy resources based on the expectation that contracts and treaties will be honored through shifts in political power. Both international financial institutions, private creditors and commercial lawyers depend on this continuity. When this assumption breaks down, the entire edifice of cross-border investment is called into question.
That is why China’s response to the operation in Venezuela is so revealing. Instead of responding with threats of force, which would be widely understood as an escalation, Beijing’s public statements have emphasized the illegality of the US action under international law, principles of sovereignty and basic norms of state behavior.
China’s Foreign Ministry condemned the operation as a violation of the UN 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 negotiations and dialogue. These statements reflect a deliberate framing of the issue in legal terms.
Crucially, recent developments show that China and Venezuela had already deepened their legal and economic ties. In late 2024, Venezuela ratified a bilateral investment treaty with China that established protections such as fair and equitable treatment, full protection and security, and most-favoured-nation treatment for covered investments.
The treaty also prescribes mechanisms for settling disputes, including through arbitration under specified international frameworks. Although China has not yet ratified the treaty, its existence illustrates a legal architecture that both parties have built around their economic relationship.
This legal framework presupposes a functioning sovereign Venezuelan government to which obligations can be attached. However, what happens when the sovereign is violently removed from office at the behest of a rival power and subjected to external legal processes unrelated to the underlying investments?
This is the scenario that motivates the more dramatic claim circulating in some analytical circles that China is prepared to wage “lawyer wars” by invoking investment treaties, international arbitration and global legal institutions to defend its interests and to impose legal costs on governments that default on obligations to Chinese creditors. In other words, Chinese strategy may embrace the law itself as a geopolitical instrument.
At first glance, this may sound hyperbolic: how could legal requirements match the strategic weight of military power? The answer lies in the nature of China’s global exposure. Unlike traditional Western creditors, whose sovereign bonds are often issued under New York or London law with clear enforcement mechanisms, China’s lending is far more diffuse, spread across jurisdictions with varying legal capacity and often backed by project revenues, commodity deliveries or bilateral conventions.
The enforcement of these obligations has always been uncertain.
If these commitments were suddenly reneged on by successive governments, especially those aligned with US policy preferences after regime change, the economic consequences for China’s creditors could be devastating. Defaults would accumulate, infrastructure deals would unravel, and Chinese capital would be at risk of losses on a scale dwarfing any single bilateral dispute. Legal action is a lever to prevent this outcome.
Seen through this lens, 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. Treaty protection, arbitral forums and bilateral investment treaties are mechanisms through which sovereign obligations can be enforced or at least negotiated when disputes arise.
If China can successfully make claims against a post-Maduro Venezuelan government or secure recognition of its rights based on existing treaties, it would set a precedent confirming that sovereign debt and contracts cannot be invalidated by external intervention. It would strengthen the confidence of Chinese creditors and investors in the sustainability of their claims, and reduce the political risk that now seems existential.
This legal strategy is also consistent with broader developments in China’s approach to dispute resolution. The country has cultivated a network of national 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 global reach and acceptance is still evolving, they represent an expanding toolkit for legitimate statecraft under the Belt and Road Initiative.
Still, there are limitations and countervailing forces that are worth acknowledging. International arbitration and enforcement of investment treaties are highly contested domains. Western legal institutions, such as those found 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.
Enforcement of arbitral awards against sovereign states often depends on mutual legal frameworks and political will rather than simple legal decision. In other words, securing a legal victory is one thing; implementing it is another. The political dimensions of this standoff cannot be separated from the legal arguments either.
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 potent.
By articulating its challenge to US behavior in relation to international law, China portrays itself as a defender of a rules-based world order, even as it pursues a network of bilateral arrangements that serve its own strategic interests. This duality complicates Western efforts to paint 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 their outright seizure of a sitting head of state from foreign soil, are challenging long-held assumptions about sovereign behavior and inviting a backlash from countries that see their own investments and legal claims at risk. If US policy supports the idea that external intervention can reset a country’s legal obligations, the implications for global sovereign contracts could be profound.
The narrative that China is “declaring war on lawyers” is more than a rhetorical flourish; it captures a deeper shift in the tools of global competition. Military power and traditional geopolitics matter, but so do legal norms, treaty rights, and the enforcement of agreements that bind sovereign states to external obligations. China’s response to the Venezuela crisis illustrates how the law has become an arena of strategic contestation, an arena where contracts, arbitration, and investment protection can shape the calculus of power in the twenty-first 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 that competition, legal strategy can indeed be one of the most consistent instruments of statecraft.
The author is a trade facilitation expert working with the Federal Government of Pakistan.
Disclaimer: The views expressed in this piece are the author’s own and do not necessarily reflect Pakinomist.tv’s editorial policy.
Originally published in The News
