To develop a legal system that will assure the safety of current and future investments, the Chinese have had to overcome centuries of viewing the law as a regrettable necessity, as well as a century and half of mistrust in its legal dealings with the West. To promote international trade, contracting parties need a system for the efficient resolution of disputes. Arbitration is becoming the preferred method, largely because of the reluctance of international trading partners to become involved international court litigation. In addition, many countries have agreed to the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards ratified in 1958. China is not a signatory to the Convention, but experience demonstrates that Chinese trading organizations abide by international arbitral awards pursuant to the principle of honoring contracts. Institutional arbitration centers and international systems of arbitration rules are of increasing importance to American and Chinese trading partners, because the U.S.-China Trade Agreement endorses the use of third country arbitration and international arbitration rules. Similar terms, although vague, are included in China's Joint Venture Law. Negotiation, conciliation, and arbitration involving Chinese parties are conducted under the auspices of two commissions, the Foreign Economic and Trade Arbitration Commission and the Maritime Arbitration Commission. Because the Chinese still prefer to avoid litigation, the settlement of international disputes with a Chinese party has four steps: friendly negotiations by the parties, friendly negotiations with the assistance of conciliators, conciliation with a nonbinding recommendation, and arbitration. Most Chinese contracts now provide for arbitration, although few cases have actually occurred. While the Chinese prefer arbitration under Chinese rules, acceptance of third country arbitration is increasing. The paper includes a diagram of China's arbitral systems and 206 footnotes.