CELIS Country Note on China, 2023

In recent years much light has been shed on Chinese outbound investment, inter alia its geopolitical, economic and security-related implications in Europe, North America and the Asia-Pacific regions. Perhaps less attention has been paid to China’s FDI screening system of its own on the ground of national security. This Note discusses the policy background, legislative development, and key features of China’s national security review of foreign investment. Debuted in 2011 and updated in 2020, China’s national security review mechanism for foreign investment has been up and running for more than a decade. However,
very little information has been known to the public as to how the system is enforced in practice.
In addition to the lack of transparency, China’s national security review of foreign investment also repels any form of administrative or judicial redress, which is a development not in conformity with prevalent international practices. One may argue that the distinct features of China’s investment screening on the ground of national security, compared with other jurisdictions monitored by the CELIS project, are ultimately attributed to China’s unique economic and governance models.