China has released new regulations on outbound investment to strengthen legal governance of overseas investment amid rising global geopolitical and economic risks. The rules affirm investors’ autonomy while requiring compliance with laws, international norms, and national security safeguards, and they establish a more structured system for approval, filing, and security review of overseas investments.
To promote a high level of opening-up and strengthen the management of outbound investment, the State Council released the Regulations on Outbound Investment on June 1, taking effect on July 1.
The Regulations clarify that the state supports investors in conducting outbound investment on a market-oriented basis and in actively participating in international cooperation and competition. Investors are granted legal autonomy in outbound investment, enabling them to make independent decisions, bear their own risks, and assume responsibility for their own profits and losses.
Officials from the Ministry of Justice, the National Development and Reform Commission, and the Ministry of Commerce said that amid profound global changes unseen in a century, rising geopolitical risks, and intensifying international competition, the traditional reliance on departmental regulations and normative documents to manage outbound investment is no longer sufficient to meet current needs.
They emphasized the urgent need for higher-level specialized legislation to codify long-standing effective practices into a formal legal framework, better align with high-standard international economic and trade rules, and further clarify institutional arrangements for outbound investment services, management, and protection. Such legislation would help safeguard investors’ lawful rights and interests, protect national sovereignty, security, and development interests, and promote the high-quality development of outbound investment under a rule-of-law framework.
Drawing on long-term practical experience, the Regulations define outbound investment, or overseas investment, as activities in which investors acquire ownership, control, management, or other related rights in enterprises or assets abroad—either directly or indirectly—through means such as asset or equity investment, financing, or guarantees. Investors include enterprises, other organizations, and individual residents within China. Investments made by mainland investors in the Hong Kong, Macao, and Taiwan region are to be managed with reference to these Regulations.
The Regulations stipulate that investors engaged in outbound investment and related activities must comply with laws and regulations as well as international practices, respect local customs and cultural traditions, and adhere to business ethics. They are required to act in good faith, compete fairly, and fulfill their social responsibilities while safeguarding China’s national image. Investors must not disrupt market competition, damage the ecological environment, or harm the legitimate rights and interests of workers, and must not endanger China’s national security or undermine national interests or the public interest.
To better safeguard investors and their lawful rights and interests in outbound investment, the Regulations provide that the state will improve an integrated overseas service system, promote the integration of trade and investment, and enhance public platforms and service capacity. Relevant resources across foreign affairs, law, taxation, finance, commerce, logistics, entry and exit, customs, and trade promotion will be coordinated to provide stronger service support for investors. Governments at or above the provincial level, together with relevant departments, are required to strengthen public service capacity, offering investors public goods and services such as legal and regulatory information, policy guidance, investment guides, intellectual property support, risk prevention and response, and rights protection services.
At the same time, consulting and assessment institutions, legal service providers, accounting and auditing firms, credit rating agencies, mediation and arbitration bodies, and intellectual property service organizations are encouraged to expand their overseas networks and enhance their international service capabilities, so as to provide high-quality professional support for investors and their outbound investments. These professional institutions are required to establish effective risk management and internal control systems, ensure their personnel have the appropriate professional qualifications, and conduct services in accordance with the law. Banking financial institutions must adhere to market-oriented, law-based, commercially sustainable, and risk-controllable principles, and within their business scope provide financing and other financial services for outbound investment. Policy-oriented insurance institutions are also encouraged to offer overseas investment insurance and related services.
The officials stated that as China’s outbound investment becomes more deeply integrated into global industrial division of labor and cooperation, the need to better protect investors’ lawful rights and interests has grown increasingly prominent. The Regulations align with high-standard international economic and trade rules and draw on the laws and international practices of major economies, setting out provisions in four key areas.
First, relevant State Council departments will strengthen monitoring, early warning, and risk assessment of outbound investment, promptly provide security information on relevant countries and regions, alert investors to potential risks, and offer guidance and assistance in risk prevention, thereby safeguarding national overseas interests and investors’ lawful rights and interests.
Second, China will engage in law enforcement cooperation and exchanges with other countries, regions, and international organizations in accordance with international treaties and agreements it has joined or concluded, or based on the principles of equality and mutual benefit, to protect the safety of investors, their enterprises and projects, employees, and assets, as well as the legitimate rights of relevant organizations and individuals. The state will also actively negotiate and sign bilateral and multilateral trade and investment agreements and other international economic and trade accords to enhance outbound investment protection and promote investment liberalization and facilitation.
Third, the state shall provide consular protection and assistance to Chinese citizens and organizations investing abroad, as well as to Chinese employees of enterprises and projects in those countries, safeguarding their lawful rights and interests. When the Chinese government implements evacuation or emergency arrangements, relevant organizations and individuals are required to cooperate.
Fourth, investors are encouraged to resolve disputes related to outbound investment through consultation, mediation, arbitration, litigation, or other appropriate means to protect their lawful rights and interests.
The Regulations also stipulate that if any country, region, or international organization violates international law and the fundamental norms of international relations by imposing discriminatory prohibitions, restrictions, or similar measures against China in investment and business operations, the Chinese government and relevant departments may, based on actual circumstances, take appropriate measures to protect investors and their outbound investments and safeguard national overseas interests. Relevant State Council departments may decide to place organizations or individuals that directly or indirectly participate in formulating, deciding, or implementing such discriminatory measures on a countermeasure list and take corresponding actions.
While supporting investors in conducting outbound investment activities according to market principles, Article 15 of the Regulations also establishes that the state will strengthen the outbound investment security review system. The State Council’s investment authority departments, in coordination with commerce authorities and other relevant departments, are responsible for conducting security reviews of outbound investments and related transfers or disposals of assets and rights that may affect, or potentially affect, national security. Relevant organizations and individuals are required to cooperate and assist, must not refuse or obstruct the review process, and are obligated to comply with the decisions of the security review.
According to the Regulations, if an entity violates Article 15 by refusing to cooperate with a security review, providing false information, concealing relevant details, or failing to comply with security review decisions, the relevant State Council departments shall order corrective actions, confiscate any illegal gains, and impose fines. If national security is threatened, necessary measures will be taken to eliminate the risk, and the entity may be prohibited from engaging in outbound investment activities for 1 to 3 years. For investments already made, the entity may be required to cease the investment and dispose of shares or assets within a specified timeframe.
At the same time, the Regulations clarify that investors engaging in prohibited outbound investment projects shall be ordered by the State Council’s investment authority and commerce authorities, according to their respective responsibilities, to stop the investment activity, dispose of shares and assets within a prescribed time limit, and have any illegal gains confiscated. If they refuse to comply, a fine of 0.5% to 1% of the investment amount shall be imposed, while directly responsible personnel and other directly responsible individuals shall be fined between 50,000 and 100,000 yuan.
If investors fail to complete the required approval or filing procedures for outbound investment, or submit applications using false information or by concealing the truth, the approval or filing authority shall order corrections, confiscate any illegal gains, and impose a fine of 0.1% to 0.5% of the investment amount. If the investors refuse to make corrections, they shall be ordered to stop the investment activity, dispose of shares and assets within a specified time, and be fined 0.5% to 1% of the investment amount. Directly responsible personnel and other individuals directly accountable shall be fined between 20,000 and 50,000 yuan.