China’s Ministry of Commerce plans to scrutinize foreign investment more closely

China’s Ministry of Commerce plans to scrutinize foreign investment more closely on the basis of national security. The ministry’s priorities for the next five years — released publicly this week — include reference to the “Measures for Security Review of Foreign Investment” that took effect in January. These measures generally require pre-review of foreign investment plans related to the Chinese military, and important agriculture, energy and technology products.

While the brief mention of the review system — on page 43 of the 46-page document — doesn’t necessarily represent new action by Chinese authorities, the reference does indicate foreign investment into China can face greater scrutiny. In the last few years the U.S. has increased its scrutiny of Chinese investment in the country, although American businesses have faced far more restrictions on where they can invest in China.

In a section about preventing risks form foreign investment, the commerce ministry said it would “improve the national security review system for foreign investment, and open security investigations into foreign investment that affects or could affect national security.” That’s according to a CNBC translation of the Chinese text. However, the ministry also said it would expand the areas that foreign capital could invest in, including strategic areas such as telecommunications, the internet, education and health care. The ministry said it would further relax the ability of foreigners to make strategic investments in publicly listed companies.

China’s Ministry of Commerce plans to scrutinize foreign investment more closely, CNBC, Jul 9