China has disclosed that it had drawn up new rules and formulated policies that would allow the country to review its foreign investment laws.
It explained that the need to strengthen its national security and protect the country from internal and external aggression through trade necessitated the new rules.
The country’s State Planning Agency said on Saturday that it would begin moves to review the rules on national security grounds.
Also, China’s National Development and Reform Commission (NDRC) said that the review system was in line with international practice.
This is as it added that the review would also help balance the economic benefits of further opening with the need to ensure national security.
“The new review system will cover foreign investments in military sectors as well as “important” investment in energy, natural resources, agriculture, internet technology, and financial services.
“Only by tightening the fence against security risks can China lay the solid foundations for a new round of opening up that is broader, wider, and deeper,” the commission said.
The announcement comes as U.S. President Donald Trump ratchets up tensions with China in his final weeks in office. Washington added dozens of Chinese companies to a trade blacklist on Friday.
Publishing the investment rules is “not protectionism or backtracking from opening-up policies,” the NDRC said, asserting that “opening up without protection is not sustainable.”
According to the commission, major economies like the United States, the European Union, Australia, Germany, and Japan have established or improved their review mechanisms on foreign investment in recent years.
The new system will establish a body dedicated to security reviews, headed by the NDRC and the Ministry of Commerce. The rules, which take effect in 30 days, follow a foreign investment law published last year aimed at broadening market access for overseas investors.
Last year’s foreign investment law made it clear China would set up a review mechanism for foreign investment, and foreign companies and trade associations have been awaiting the new rules so that they can make investment decisions, the NDRC said.