IMPLEMENTATION LEVEL

National

AFFECTED FLOW

Inflow

ANNOUNCED AS TEMPORARY

No

NON-TRADE-RELATED RATIONALE

Yes

ELIGIBLE FIRMS

all

JUMBO

No

TARIFF PEAK

No
← back to the state act
Inception date: 05 Mar 2011 | Removal date: open ended
Still in force

FDI: Entry and ownership rule

In February 2011, the Chinese Central People's Government released Guobanfa 2011/6, which introduced a requirement for foreign investors carrying out M&A-related investments in China to go through a security review process.
 
Starting from March of the same year, a joint ministerial conference system will be established that will conduct the security reviews of foreign M&A of domestic Chinese firms.
 
This procedure was in addition to existing requirements of an industrial access review and anti-monopoly investigation.
 
Officially, the security review is in place to determine whether the investee firm is:
 
  • Involved in the military industry or national defense/security;
  • Located near key and sensitive military facilities;
  • Involved in key agricultural production, major energy and resources, vital infrastructure, important transport services, core technology and major equipment manufacturing that may affect national security.

In addition, Guobanfa 2011/6 defines 'foreign M&A' as when a foreign firm invests in or purchases rights to the use of assets of a Chinese firm, such that the firm becomes either a part- or wholly-foreign-invested enterprise.

On March 4th, 2011, the PRC Ministry of Commerce released Announcement 2011/8, which stipulated some of the procedural requirements for those wishing to conduct M&A activities and requiring a security review, as well as bringing the measures officially into force. Please see second source for details.

AFFECTED COUNTRIES

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