China, security check for foreign investment

Since January, Beijing has had a new device that has remained on standby until now: screening of all investments across the country that must pass the criteria for their impact, current but also only potentially on national security. An office is in charge of verification of security in respect of foreign investments established within the National Development and Reform Commission. Once completed, verification, which takes place quickly, is certain. Abusive investments can be reserved or blocked, canceled or even sold.

The field of action has been broadened, previously only involving screening mergers and acquisitions aimed at Chinese targets by foreign investors, today covering a full range of foreign investments within the Chinese sector, including greenfield investments, shares Acquire or include a Chinese party’s assets and other types of investments.

But what do other forms of investment mean?

The formula is rather unclear. «The law does not provide details on” other forms of investment “- says Enrico Totti of Lorma Farmichella and Enertum Studios – if we specifically refer to pilot free trade zones, the possibility of conducting an analysis based on safety Extends to many forms of investment, including operational creation, trust, acquiring forms of control over Chinese targets through multi-level. Investments, additional transactions. The purchase of stakes made by foreign investors through stock exchanges or other securities trading platforms in domestic companies may result from the application of a new discipline approved by the Council of State Affairs, where the purchase may have an impact on national security or It is possible. “.

Another novelty is that there is no difference between foreign-owned companies and all others and acquisitions can be both direct and indirect. To jeopardize the economy, a 50 percent stake is required. In the case of threats to defense, proceed straight ahead regardless of the corporate element. Furthermore, services fall entirely from culture, from IT, from financial people, to energy.