China tightens scrutiny of foreign investments on national security grounds

China has published new rules for reviewing foreign investment on national security grounds. The review system was announced by China’s National Development and Reform Commission (NDRC) and China’s Ministry of Commerce (MOFCOM), expanding the scope of interpretation of a ‘foreign investment’ required to go through an approval process.

NDRC said, the new regime (a set of 23rules) covers foreign investment in military sectors and the acquisition by foreign entities of controlling stakes in sectors such as energy, natural resources, agriculture, cultural products and services, internet technology and financial services. Experts say this is expected to interpret national security broadly, and firms doing business in China should expect additional regulatory hurdles for major transactions.