Beijing says the changes are needed for national security, but they could complicate efforts by Chinese companies to find growth overseas …
This week, the State Council, China’s cabinet, announced new rules requiring national security screening for Chinese companies seeking to invest overseas. The move follows regulations introduced in April that allowed the authorities to intervene when foreign companies tried to relocate supply chains out of China …
The new State Council rules extend that effort to the overseas activities of Chinese companies and outline how Beijing could retaliate against foreign companies and individuals when Chinese investments are restricted.
The rules also give the authorities new powers to scrutinize Chinese companies seeking opportunities abroad, subjecting them to national security reviews that place investments into one of three categories: encouraged, restricted or prohibited.
Part of the motivation for this, lawyers say, is to keep money, talent and intellectual property in fields where China has a competitive edge from leaving the country …
The rules also lay the legal groundwork for regulators to bar foreign entities from investing or operating in China, including expelling them from the country, in retaliation for actions taken by their governments against Chinese investments.
Source: https://www.nytimes.com/2026/06/05/business/china-investment-rules.html
Unlike this article suggests, there is not much new: these rules only strengthen existing ones, both for inbound and outbound investment and for import/export whenever China considers that the subject-matter is strategic. National security screening exists ever since China opened up to FDIs. It is expressly mentioned in the 2020 Law on Foreign Investment. Likewise, technology imports and exports are subject to approval under the Regulations on the Administration of Import and Export of Technologies, last revised in 2020. What is new is that a Negative List may now apply the other way round, to Chinese outbound-, not only to foreign inbound investment. That said, China does nothing else but what the U.S. (TikTok, NVIDIA) and the E.U. (Nexperia, ASML) are doing. What is also new, and of interest to foreign investors in China, is that the Chinese authorities may prevent them to leave if they deem that such move may threaten China’s supply chain. Only Switzerland is naive enough not to do anything about it.