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On 19 December 2020, China’s National Development and Reform Commission (NDRC) and Ministry of Commerce (MOFCOM) jointly issued the Measures on National Security Review of Foreign Investments (the FINSR Measures), with a view to implementing the regime governing the national security review (NSR) of foreign investments, as mandated by the PRC Foreign Investment Law (please refer to our client alert on the law). The FINSR Measures will come into force on 18 January 2021.

Authors: Eric Lin Michael Fosh Mao Rong Katherine Yang Hong Zhao

Background

The NSR regime for foreign investments was first introduced by the Chinese government in 2006 under the Provisions on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors.1 Since then, the PRC Anti-Monopoly Law (2007), the PRC National Security Law (2015) and the PRC Foreign Investment Law (2019), as well as notices issued by the State Council in 2011 and 2015, have reaffirmed and further developed the regime governing the NSR foreign investments.

In the light of China’s further opening up to foreign investment (see our client alert) in the past two years, the FINSR Measures, as the latest development in the NSR regime for foreign investments, are expected to become a major policy tool to mitigate the negative impact of foreign investments on the PRC’s national security.