The Regulations of the State Council on Outbound Investment (State Council Order No. 837) were approved at a State Council executive meeting on 17 April 2026 and will take effect on 1 July 2026. The Regulations are guided by China’s policy of high-level opening-up and broader national security objectives, and establish a framework for the full-process, classified, and graded supervision of overseas investment activities. While promoting the high-quality development of outbound investment, the Regulations seek to prevent security and compliance risks, safeguard national sovereignty, security, and development interests, and strengthen protections for Chinese investors and overseas projects.

Applicable entities and investment scope: Broader definition of outbound investment

The Regulations significantly expand what constitutes "outbound investment” compared to the prior framework, which was largely limited to greenfield investments, mergers and acquisitions, and equity joint ventures. The new definition now explicitly covers the provision of financing and guarantees, the acquisition of control or management rights, and indirect investment structures—categories that were either unaddressed or regulated only by informal guidance under the previous regime. The definition of "investor" also expands beyond enterprises to include other organizations and resident individuals within China, whereas the prior rules applied primarily to enterprises.

Management system and security review: Outbound investment is no longer solely an economic matter

Classified, graded, and full-process supervision and policy tools

Under the prior framework, outbound investment management was split between MOFCOM (which administered an approval and filing system for overseas investment) and NDRC (which managed project approvals and filings), with limited coordination between them. The Regulations require the state to improve the management system for outbound investment, implement classified, graded, and full-process supervision and risk prevention measures throughout the process, clarify categories of encouraged, restricted, and prohibited investments, and require investors to comply with obligations relating to approvals, filings, information reporting, and cross-border fund registration, and cooperate with regulatory supervision and inspections.

Establishment of an overseas investment security review system

The Regulations specifically establish an overseas investment security review system. This represents a fundamental departure from the prior regime, under which national security was merely one consideration within the general approval process administered by NDRC and MOFCOM. Under the new arrangement, national security review is elevated to a standalone mechanism, with dedicated security reviews being implemented for overseas investments that affect or may affect national security—rather than being subsumed within broader economic assessments.

Coordination between outbound investment and other regulatory systems 

The prior rules operated largely in isolation from other regulatory regimes. By contrast, the new Regulations require that compliance requirements relating to outbound investment must be addressed in parallel with requirements relating to foreign exchange, customs, commerce, network and data security, antitrust law, and the oversight of state-owned assets. This cross-regime coordination represents an expansion of the compliance burden compared to the previous framework.

Export controls and data security: The technology and data dimensions of outbound investment

Article 13 of the Regulations closely links export controls and data security regimes to outbound investment supervision—a connection that did not exist in the prior framework. Previously, export controls and data security were governed by separate statutes (notably the Export Control Law enacted in 2020 and the Data Security Law enacted in 2021) without explicit application to outbound investment activities. The Regulations impose significant restrictions on the cross-border transfer of technology, services, and data in connection with investors’ overseas investment activities, and explicitly incorporate personnel deployment, technical guidance, training, and other service activities into the export control and data security framework. This directly affects outbound investment projects involving technology transfers, production process transfers, software deployment, data processing, and personnel training—areas previously outside the scope of outbound investment regulation.

Anti-barriers, anti-discrimination, and anti-sanctions: Protective measures for outbound investment

The prior outbound investment rules did not contain provisions addressing trade barriers, discriminatory measures, or sanctions. The Regulations fill this gap by addressing trade and investment barriers, discriminatory restrictive measures, and other conduct that may endanger China’s sovereignty, security, and development interests. They establish a framework that extends from addressing investment barriers to anti-discrimination and counter-sanctions measures, aligning outbound investment supervision with mechanisms for anti-discrimination, counter-sanctions, and the protection of overseas interests—a protective dimension entirely absent from the earlier framework.

Legal liability: From administrative constraints to property-related penalties and qualification restrictions

The prior framework relied primarily on administrative penalties (such as warnings, fines, and suspension of approval authority) for non-compliance. The Regulations significantly strengthen legal liabilities for investors and responsible personnel, extending beyond administrative sanctions to cover civil and criminal liability. They also introduce property-related penalties and qualification restrictions—a substantial escalation from the prior regime’s relatively limited enforcement toolkit.

Practical tips for enterprises and investors

With the Regulations taking effect on 1 July 2026, overseas investment activities by Chinese investors will be subject to a more unified and systematic regulatory and support framework. When planning or advancing overseas investment projects, enterprises and financial institutions should focus on the following:

• Assess whether existing and proposed projects fall within the scope of the Regulations, and consider the specific regulatory requirements applicable to investments in Hong Kong, Macao, and Taiwan.
• At the strategic level, incorporate national security, industrial chain security, and compliance costs into outbound investment decision-making.
• Coordinate early with relevant government departments, professional service providers, and industry organisations to enhance information gathering and risk management capabilities.
• Improve internal compliance and reporting systems to ensure compliance with requirements relating to filing, information reporting, and cross-border fund registration.
• Fully consider dispute resolution and overseas legal risks in contract and transaction structures, and protect their rights through a range of mechanisms.

Client Alert 2026-121