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National security review for FTZ foreign investment

Updated: Apr 20,2015 1:51 PM

Trial procedures for a national security review of foreign investment in all free trade zones in Shanghai, Tianjin, and the provinces of Guangdong and Fujian, were published by the State Council’s general office on April 20.

The circular clarifies standards for conducting security reviews of foreign investment that may affect national security or involve sensitive investors, acquisition targets, industries and technology as well as other areas.

Investment by foreigners in military-related fields, or in key agricultural products, energy, infrastructure, transportation, culture, information technology and equipment manufacturing that concern national security will be reviewed.

The review will evaluate the influence of foreign investment on national security, economic stability, social order, morality, Internet safety and the development of key technology concerning State security.

The evaluation will be conducted by a joint council, in which the National Development and Reform Commission and the Ministry of Commerce will work with relevant departments to work on different cases.

The local governments of free trade zones are required to inform foreign investors when their businesses need to go through a national security review, and halt their business application procedures until further notice from the joint council.

For foreign investments that may have a negative effect on national security that can be resolved by additional conditions, the joint council will ask the investors to provide written undertakings to revise their business plan and make decisions accordingly.

Foreign investment in financial areas will be subject to different national security reviews.

The trial procedures will come into effect 30 days after they were issued to relevant departments on April 8.