China’s New Measures on Security Review of Foreign Investments

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Author: Paul, Weiss
Published: December 28th, 2020
Original Article Link

This memorandum is not intended to provide legal advice, and no legal or business decision should be based on its content.


The National Development and Reform Commission (“NDRC”) and the Ministry of Commerce (“MOFCOM”) of the People’s Republic of China issued the Measures on Security Review of Foreign Investments (the “Measures”) on December 19, 2020. The Measures will take effect on January 18, 2021.

This is not the first time that China has issued regulatory guidance on national security matters. The first was the Notice on the Establishment of a Security Review System for Mergers and Acquisitions of Domestic Enterprises by Foreign Investors (the “Notice”) in 2011, accompanied by the Stipulations of the Ministry of Commerce on the Implementation of the System of Security Review for Mergers and Acquisitions of Domestic Enterprises by Foreign Investors. These were followed by the Trial Measures on the Security Review in Free Trade Zones issued in 2015 (the “Free Trade Zone Trial Measures”).

Without introducing radical changes to the previous regulatory guidance, the Measures expand the list of industries’ foreign investments that will be subject to security review. The Measures also give the regulatory authorities more discretion in determining the type of transactions that may fall within their ambit. Helpfully, the Measures set out a clear declaration and clearance process, including statutory timetables within which applications are to be processed. However, whether the actual processing time will adhere to the statutory timetables will need to be tested in practice.

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