China to Bolster Controls on Outbound Investment to Safeguard National Security

China is set to implement sweeping new regulations on outbound investments, tightening controls on ventures deemed to impact national security. The enhanced rules, effective July 1, will significantly expand the government's oversight of overseas investments made by both individuals and corporations.

This regulatory shift comes just about a month after Chinese authorities blocked Meta's acquisition of the AI startup Manus. Analysts suggest the new measures are designed to prevent similar situations, indicating a more stringent stance on foreign investments. The State Council, with Premier Li Qiang's signature, announced the revised 'Regulations on Outbound Investment' on June 1, according to state media outlet Xinhua.

The updated regulations empower authorities with increased scrutiny over the entire investment process. Crucially, they prohibit the transfer of goods, technologies, and data that China has restricted for export. Investments involving items on a restricted list will require prior government approval. Furthermore, the rules address the potential outflow of sensitive technology through personnel, including restrictions on sending technical staff abroad, cross-border technical guidance, and overseas training programs that could facilitate the transfer of prohibited technologies and data.