China’s National Development and Reform Commission (NDRC) is now in charge of reviewing foreign investments to ensure they are in line with “economic security” through the new foreign investment law, which has been made a top governmental priority, said the South China Morning Post.
The new security review procedure was introduced through a brief notice published online by the NDRC. The note stated that its public service department would start accepting applications for national security reviews of foreign investment deals because of an “adjustment of departmental responsibility.”
What appears to be a simple logistical adjustment for applicants, however, could signal a bigger change in the national security review process for foreign investors, especially in sectors that the Chinese government deems sensitive, according to analysts and lawyers, reported the South China Morning Post.
“This article provides the legal basis for China to launch investigations and sanctions against companies based in the US, or possibly Europe, similar to the steps taken by the Trump administration in the ZTE and Huawei cases,” said Sherry Gong, a partner with the law firm Hogan Lovells in Beijing.