Some Chinese state-owned entities…have adopted a controversial defense when they face U.S. lawsuits: You can't touch us because we enjoy sovereign immunity. Aviation Industry Corporation of China (AVIC), China's biggest state-owned aerospace and defense company, has used the strategy twice, while state-owned China National Building Materials Group Co (CNBM), a state-owned building products company, successfully used it in a case involving allegations that Chinese-made drywall led to health problems for U.S. homeowners.

China's Foreign Ministry in October complained to the U.S. government over attempts by plaintiff lawyers to serve the drywall lawsuit…The ministry argued in a diplomatic note that U.S. courts have no jurisdiction over suits against a country's "state-owned properties." The legal argument concerns whether companies controlled by the Chinese government can be protected under the U.S. Foreign Sovereign Immunities Act (FSIA), which was passed by Congress in 1976, even when their U.S. subsidiaries are involved in commercial disputes.

The use of sovereign immunity by Chinese state-owned conglomerates is a reflection of how China's state capitalism and legal regime is increasingly running into conflict with Western regulation and jurisprudence…

…AVIC did not respond to a request for comment. A CNBM spokesman said case had been decided according to U.S. law but declined further comment. SASAC did not respond to a request for comment. [also refers to Bank of China, Global Technology, Tang Energy