Since January, Beijing has had a new tool that has remained on standby so far: the screening of all investments throughout the country that must pass through the criteria for their impact, current but also only potential, on national security. An office for verifying security with respect to foreign investments set up within the National Commission for Development and Reforms is in charge of this. Once completed, the verification, which takes place rather quickly, is definitive. The offending investment can be admitted with reserve or blocked, canceled or even sold.
The field of action is broadened, previously only the hypotheses of Merger & Acquisition aimed at Chinese targets by foreign investors were included in the screening, today the whole range of foreign investments within the Chinese territory is included, including greenfield investments , the acquisition of shares or assets of a Chinese party and other forms of investment.
What does it mean, however, other forms of investment?
The formula is rather vague. «The law does not provide details on“ other forms of investment ”- say Laura Formichella and Enrico Toti of the Nctm studio -; if we refer in particular to the pilot free trade zones, the possibility of carrying out an analysis based on safety extends to multiple forms of investment, including operations that aim to achieve forms of control on Chinese targets through contractual constructions, trusts, multi-level investments, extraterritorial transactions. Any purchase of stakes in domestic companies by foreign investors made through the stock exchange or other securities trading platforms approved by the Council of State Affairs may result in the application of the new discipline, where the purchase has or may have an impact on the national security “.
Another novelty is that there is no longer a difference between foreign-owned companies and all the others and that the acquisition could be both direct and indirect. For the danger to the economy to materialize, a 50 percent stake is required. In case of danger for the defense, proceeding directly regardless of the corporate element. In addition, services fall fully within, from culture, to IT, to financial ones, to energy.