Security review of foreign stakes

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December 21, 2020

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Security review of foreign stakes

Source: Agencies | 00:05 UTC+8 December 21, 2020 |

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Chinese authorities on Saturday released rules on foreign investment security review to safeguard national security while spurring foreign investment.

The rules, jointly released by the National Development and Reform Commission and the Ministry of Commerce, specified provisions concerning the security review mechanism on foreign investment, including the types of investments subject to review, review scopes, and procedures, among others.

The review system covers foreign investments in military sectors and the acquisition of controlling stakes in such sectors as energy, natural resources, agriculture, Internet technology and financial services.

Approved by the State Council, the 23-clause rules aim to effectively forestall and resolve national security risks while actively promoting and protecting foreign investment to support the country’s higher-level opening-up and facilitate the new development paradigm, said a statement released by the two government departments.

Conducting security reviews on foreign investments that affect or may affect national security is a regular international practice.

China adopted a review mechanism in 2011, and the country’s management system on foreign investment has undergone significant reforms over the past decade.

The office of the working mechanism of the security review will be set up under the NDRC, which will lead the task along with the MOC, according to the statement.

The rules will take effect 30 days after the release.

An office official stressed that releasing the security review rules is not a protectionist move or refusal to further open up. Instead, it accords with China’s commitment to opening-up on all fronts and aims at strengthening the security mechanism for opening-up.

While encouraging and protecting foreign investment, the rules should prevent and dissolve national security risks and safeguard opening-up at a higher level, the official said. He added that opening-up without security protection is unsustainable in the long run.

Meanwhile, the official said that the office would cooperate with related authorities to promote and protect foreign investment under the Foreign Investment Law. While implementing the security review rules, it will step up efforts to advance institutional opening-up.

The country will improve the “pre-establishment national treatment plus negative list” management system for foreign investment and be fair to both domestic and overseas companies in tax and fee cuts, licensing, and standard-setting, the official said. Also, efforts to encourage foreign investment in advanced manufacturing, modern services, and environmental protection sectors will continue and create a market-oriented, law-based, and internationalized business environment with high standards.

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Security review of foreign stakes

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