National Security Review in China: New Obstacles for Foreign Investment?

Abstract

Even before the establishment of a unified legal system at the end of 2020, national security review had already existed for foreign investment in China, having been put in place shortly after the beginning of the era of reform and opening-up. While the formal aspects of national security review are now regulated to varying degrees, substantive criteria continue to be absent. Also absent are oversight mechanisms. Neither administrative appeal nor administrative lawsuit can be filed against a national security review determination. However, the extent to which national security review hinders foreign investment should not be exaggerated. Taking into consideration particularly the long-term policy of opening-up, it can be assumed that national security review will be used only in extremely critical cases in the future.