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The National Development and Reform Commission and the Ministry of Commerce issued the Rules on Security Review of Foreign Investment
【2020-12-31】

With the approval of the State Council, on December 19, 2020, the National Development and Reform Commission and the Ministry of Commerce issued the Rules on Security Review of Foreign Investment (hereinafter referred to as the Rules).

It is an international common practice to conduct security review on foreign investment that affects or may affect national security. In 2011, China established a security review system for foreign investment. In the past ten years, the foreign investment administration system has undergone substantial reforms. In particular, the Foreign Investment Law of the People's Republic of China (hereinafter referred to as the Foreign Investment Law), which came into effect this year, formally established the administration system of pre-establishment national treatment plus negative list, established the foreign investment information reporting system, and greatly facilitated foreign investment from a legal perspective. At the same time, in order to make overall plans for the promotion of foreign investment and offering effective safeguard for national security, the Foreign Investment Law stipulates that the state establishes a security review system for foreign investment to conduct security reviews on foreign investment that affects or may affect national security.

With the Foreign Investment Law and the State Security Law as the main legal basis, the Rules follow a holistic view of national security and new development philosophy, ensure development and security, pay equal attention to openness and security, summarize the review in practice in the recent ten years, draw on the major achievements of national review systems, and introduce fairly comprehensive and systematic regulations on the foreign investment security review system, so as to actively promote and protect foreign investment, effectively prevent and resolve national security risks, safeguard opening-up at a higher level, and help foster a new development paradigm with domestic circulation as the mainstay and domestic and international circulations reinforcing each other.

The Rules consists of 23 articles, which stipulate the types of foreign investment subject to review, review body, scope of review, review procedures, supervision for the implementation of review decisions and handling violations, etc., which further regulate the review and improve its accuracy and transparency, minimize its impact on foreign investment activities as much as possible, and protect the enthusiasm and legitimate rights and interests of foreign investors. According to the Rules, the state establishes a working mechanism for the security review of foreign investment. The working mechanism office is located in the National Development and Reform Commission, led by the National Development and Reform Commission and the Ministry of Commerce, and responsible for daily work on security reviews of foreign investment. The Rules will come into force 30 days after the date of promulgation.