Improving the foreign investment security review system to escort a higher level of opening to the outside world-the head of the foreign investment security review working mechanism office answers reporters’ questions on the "Foreign Investment Security Review Measures"
Approved by the State Council, on December 19, 2020, the National Development and Reform Commission and the Ministry of Commerce issued the "Measures for the Security Review of Foreign Investment" (hereinafter referred to as the "Security Review Measures"), which will be implemented 30 days after the date of promulgation.
In order to understand the relevant situation of the "Security Review Measures", the reporter interviewed the relevant person in charge of the Office of the Foreign Investment Security Review Working Mechanism in response to the concerns of all sectors.
Question: Please introduce the background of the "Security Review Measures".
Answer: Opening to the outside world is my country's basic national policy.
Since the 18th National Congress of the Communist Party of China, China has adhered to a mutually beneficial and win-win opening strategy, continued to promote wider opening up, strived to create a market-oriented legalized international business environment, greatly reduced restrictions on foreign investment access, and reduced foreign investment for four consecutive years from 2017 to 2020. The negative list for investment access, the national version and the pilot free trade zone version have reduced restrictions to 33 and 30, respectively. Manufacturing, energy resources, infrastructure, agriculture, finance and other fields have achieved significant opening up to foreign investment, and China has become a global One of the most popular destinations for foreign investment.
Since the beginning of this year, the new crown pneumonia epidemic has caused a huge impact on global cross-border investment. Under this severe situation, my country's use of foreign investment is still increasing steadily, and it is one of the few major economies in the world that has absorbed foreign investment to maintain growth.
While promoting high-level opening to the outside world, the state is also steadily promoting the reform of the foreign investment management system.
The "Foreign Investment Law" and its implementation regulations promulgated in 2019 established the basic framework of my country’s foreign investment legal system in the new era, and formally established a pre-access national treatment plus a negative list management system at the legal and regulatory level, in order to promote a higher level of foreign investment. Openness provides a strong guarantee of the rule of law.
The "Foreign Investment Law" and its implementing regulations also provide for a foreign investment security review system, clarifying that the state has established a foreign investment security review system to conduct security reviews on foreign investments that affect or may affect national security.
Foreign-invested enterprises, foreign business associations and other relevant parties are very concerned about the implementation of the foreign investment security review system, and look forward to the introduction of specific regulations on foreign investment security review so that investment decisions can be made in accordance with laws and regulations.
The foreign investment security review is an internationally accepted foreign investment management system, which plays an important role in balancing economic interests and maintaining national security.
In recent years, major countries and regions in the world have successively introduced or improved foreign investment security review systems. The United States has issued the "Foreign Investment Risk Review Modernization Act", the European Union has issued the "Foreign Direct Investment Framework Regulations", Australia has issued the "Foreign Investment Reform Act", Germany, Japan The "Foreign Trade and Payment Act" and the "Foreign Exchange and Foreign Trade Act" were revised separately, and the United Kingdom is formulating the "National Security and Investment Act."
In this context, the National Development and Reform Commission and the Ministry of Commerce, on the basis of summarizing our foreign investment security review practices since 2011, submitted to the State Council for approval and formulated and promulgated the "Security Review Measures."
Question: What is the general idea of formulating the "Security Review Measures"?
Answer: General Secretary Xi Jinping emphasized that the more open, the more we must pay attention to safety, the more we must coordinate development and safety, and strive to enhance our competitiveness, open supervision capabilities, and risk prevention and control capabilities, so as to make the King Kong indestructible.
The Fourth Plenary Session of the Nineteenth Central Committee of the Party made arrangements to build a new higher-level open economic system and improve the foreign investment security review system.
The Fifth Plenary Session of the Nineteenth Central Committee of the Communist Party of China requires that development and security should be coordinated, security development should be integrated into all fields and the entire process of national development, and the national security review and supervision system should be improved.
In the process of formulating the Security Review Measures, we insisted on taking Xi Jinping’s thoughts on socialism with Chinese characteristics for a new era as the guide, and conscientiously studied and understood the spirit of the 19th National Congress of the Communist Party of China and the 2nd, 3rd, 4th and 5th Plenary Sessions of the 19th Central Committee. Implement the overall national security concept and new development concepts, improve the foreign investment security review system, escort a higher level of opening to the outside world, and help build a new development pattern with the domestic cycle as the main body and the domestic and international dual cycles mutually promoting each other.
The first is to coordinate development and security.
Adhere to both openness and security, grasp the relationship between actively promoting foreign investment and safeguarding national security, establish a foreign investment security review system that is compatible with the pre-access national treatment plus negative list management system, and promote the coordinated progress of openness and risk prevention and control , To effectively control foreign investment that affects or may affect national security, resolutely build national security barriers, prevent and defuse national security risks, and at the same time enhance pertinence to avoid generalization of security reviews.
The second is to summarize the review practice and fill the regulatory gap.
my country has established a security review system for foreign investors' mergers and acquisitions of domestic enterprises in 2011, and has implemented pilot free trade pilot zones in 2015 to implement foreign investment security review measures that are compatible with the negative list management model.
The "Security Review Measures" summarizes the work practices in the past ten years, especially the useful practices of foreign investment security review in the pilot free trade zone, and makes appropriate adjustments to review institutions and review scopes, and incorporates sensitive areas such as finance into the review scope.
The third is to base ourselves on my country's national conditions and appropriately learn from international experience.
Based on the new situation and characteristics of my country's national security, referring to the new changes in the foreign investment security review system of major countries in recent years, and absorbing and learning from the useful system results, a security review system that suits my country's national conditions and conforms to international practices is formed.
The fourth is to make it as simple as possible to avoid excessive burdens on enterprises.
In accordance with the principle of necessity and reasonableness, the review procedure and time limit shall be set.
At the same time, the safety review is carried out in three stages. According to the risk of the declared project, the review is carried out in a hierarchical and progressive manner. The number of projects entering the second and third stages is reduced, and the review opinions and decisions will be promptly fed back to investors.
Question: How does the "Security Review Measures" implement both openness and safety?
Answer: For more than 40 years of reform and opening up, foreign-invested enterprises have deeply integrated into my country's economy and made positive contributions to economic and social prosperity and stability.
Looking ahead, my country’s door to opening will only open wider, the direction of my country’s opening up will not change, the determination to continue to optimize the business environment, and the attitude of actively promoting foreign investment will not change.
The promulgation of the "Security Review Measures" and the implementation of foreign investment security review are not protectionism, nor is it a retrogression in opening up. The main purpose is to adapt to the need to promote the formation of a new pattern of comprehensive opening up, improve the security guarantee system for opening up, and actively promote and protect foreign investment. At the same time, effectively prevent and defuse national security risks, and escort a higher level of opening up.
Opening to the outside world without security guarantees is not sustainable. Only by tightening the fence to prevent and control security risks can we lay a solid foundation for a new round of opening up and better implement wider, broader, and deeper levels. Open to the outside world.
During the implementation of the Security Review Measures, we will persist in seeking development and security while opening up, and accurately review foreign investment that affects or may affect national security, and avoid generalization of security review.
In the next step, we will work with relevant parties to implement the "Foreign Investment Law" and its implementing regulations on the promotion and protection of foreign investment. While implementing the "Security Review Measures", we will actively promote rules, regulations, management, and standards. Open up, improve the pre-access national treatment plus negative list management system, treat domestic and foreign companies equally in terms of land supply, tax reduction and exemption, qualification licensing, and standard setting, continue to expand opening up in an orderly manner, and issue a new version of the catalog of industries encouraging foreign investment. Continue to encourage foreign investors to invest in advanced manufacturing, modern services, energy conservation and environmental protection and other fields to create a high-standard market-oriented legalized international business environment.
Question: What is the main content of the "Security Review Measures"?
Answer: There are 23 articles in the Security Review Measures, which mainly stipulate the following contents:
One is the foreign investment security review agency.
The state establishes a foreign investment security review working mechanism. The working mechanism office is located in the National Development and Reform Commission, led by the National Development and Reform Commission and the Ministry of Commerce, to undertake the daily work of foreign investment security review.
According to the Announcement No. 4 of 2019 of the National Development and Reform Commission, the foreign investment security review application is received by the Government Service Hall of the National Development and Reform Commission.
The second is the scope of foreign investment security review.
Carry out security review of foreign investment within the following scope: investment in military industry, military industry supporting areas and other areas related to national defense security, as well as investment in military facilities and military industry facilities surrounding areas; investment in important agricultural products, important energy and resources, and major equipment manufacturing related to national security , Important infrastructure, important transportation services, important cultural products and services, important information technology and Internet products and services, important financial services, key technologies and other important fields, and obtain actual control of the invested enterprises.
If foreign investors do not know whether their investment is within the scope of the security review, they can consult the Office of the Foreign Investment Security Review Working Mechanism for specific project conditions. For contact information, please refer to the National Development and Reform Commission Announcement No. 4 of 2019.
The third is the foreign investment security review and declaration mechanism.
Foreign investors or relevant domestic parties should proactively declare investments that fall within the scope of review before implementing investments.
For foreign investment that should be reported but not reported, the Office of the Foreign Investment Security Review Working Mechanism has the right to request a deadline to declare.
Relevant agencies, enterprises, social organizations, and the general public may also submit review suggestions to the Office of the Working Mechanism.
The fourth is the procedure and time limit for foreign investment security review.
The safety review is divided into three stages. The first stage is the preliminary review. Within 15 working days from the date of receipt of the materials that meet the application requirements, it is decided whether to start the safety review.
The second stage is the general review, and the decision to pass the review is made within 30 working days from the date of initiation of the review, or the next stage of review is entered according to the procedures.
The third stage is a special review of 60 working days. This stage is not a necessary procedure for every project. Only projects that fail the general review will enter the special review; under special circumstances, the special review time limit may be extended; the special review ends A review decision will be issued later.
During the review period, the time for supplementary materials is not included in the review period.
Fifth, the foreign investment security review decision was implemented.
For those that pass the security review, investment can be implemented; for those that pass the review with conditions, the investment should be implemented in accordance with the additional conditions; for those that are prohibited from investing, no investment can be implemented.
Sixth, punishment for violations.
For non-declaration, fraud, failure to implement additional conditions and other violations, the parties may be ordered to dispose of equity or assets within a time limit, or their bad credit records may be included in the relevant state credit information system and joint punishments shall be implemented in accordance with relevant state regulations.
Question: When will the security review regulations for foreign investment in the securities sector be promulgated?
Answer: Article 22 of the "Security Review Measures" stipulates that if foreign investors purchase domestic enterprise stocks through stock exchanges or other securities trading venues approved by the State Council, which affects or may affect national security, the specific measures applicable to these Measures shall be determined by The State Council's Securities Regulatory Agency, in conjunction with the Foreign Investment Security Review Working Mechanism Office, shall formulate it.
Related work is in progress.