A new dimension of foreign investment law in China – evolution and impacts of the national security review system

This article discusses the evolutional trajectory of China’s nationalsecurity review system (NSRS) and its potential impacts on inwardforeign investment. By analysing the law-making process as wellas merger cases of major significance, this article explores theemergence of China’s NSRS in, followed by its decade long(–) legal construction. The formation process of the NSRSthat has evolved from interim administrative regulations to nationallaw complies with the pragmatic, incremental character of the lawmakingin China in general. The key features of the NSRS providedin the draft Foreign Investment Law (FIL) is examined in detailto demonstrate the legislative headway as well as room for furtherrefinement. In response to the ongoing concerns on the potentialimpacts of the NSRS on future foreign investment in China, thisarticle attempts to argue that China’s newly established NSRS, setforth in Chapter of the draft FIL, is an anticipated and rationaloutcome, though further modification of the relevant provisions inthe final text of the FIL could be expected. While the NSRS mightcause rejection or delay of approval to some foreign investmentprojects, the clarified and delineated NSRS offers greater legalcertainty and predictability. In view of China’s continuous andadamant policies of attracting foreign direct investment (FDI), theNSRS is unlikely to have a significant impact on most foreigninvestment projects in the future.