BEIJING: China unveiled new rules for reviewing foreign investment on security grounds over the weekend in a major move to align with global practice in regulating foreign investment in the military, key energy and information technology sectors, and financial services.
Arguing against misleading claims that distort the nation’s efforts to fill the regulatory gap as a tit-for-tat response to US sanctions, experts noted that the new rules are intended to strengthen China’s legal framework for greater opening-up and they would augur well for legitimate foreign businesses looking to the Chinese market while serving as a sharp weapon to battle offenders.
The National Development and Reform Commission (NDRC) and the Ministry of Commerce (MOFCOM) on Saturday jointly released the new rules, scheduled to come into force in 30 days. The 23-clause new rules rest upon the Foreign Investment Law and the National Security Law as a legal basis.
Foreign investment in the military sector, among other national defense and security related areas, and investments involving foreign persons near military facilities would be subject to the new rules.
Foreign investment in key areas that implicate national security such as important agricultural production, energy and resources, cultural products and services, information technologies and internet products and services, and financial services where such investment amounts to actual control of the investment targets will also fall under the purview of the new review regulation.
The significance of the security review on foreign investments in China’s arms sector and national defense is self-evident amid the country’s continued and expanding reform and opening-up, Song Zhongping, a Chinese military expert and TV commentator, told the Global Times on Sunday. If foreign investments manage to tap into China’s arms industry and military development without proper supervision, the risk is high that foreign capital gets some say in China’s national defense development that would harm China’s national security.
– The Daily Mail-Global Times News exchange item
