New rules to protect overseas investments: China Daily editorial

In the first four months of this year, China's outbound direct investment across all industries was 429.42 billion yuan ($63.50 billion), an increase of 3.9 percent year-on-year. And the country's total outbound direct investment reached $174.38 billion last year, with over 50,000 enterprises having overseas investments.

But recent events, such as the decision by the Dutch government late last year to take over Nexperia, a Chinese-owned semiconductor company, on the grounds of "national security", and a Panamanian court's ruling earlier this year that annulled Hong Kong-based CK Hutchison's contract to operate two ports at the Panama Canal, highlight the challenges Chinese enterprises are encountering abroad amid rising unilateralism, protectionism and heightened geopolitical tensions.

A new regulation is therefore a timely response to safeguard the legitimate rights of Chinese companies with investments overseas, and help protect the nation's sovereignty, security and development interests. The regulation on outbound investment, issued by the State Council, China's Cabinet, and set to take effect on July 1, marks China's first administrative rule specifically targeting the overseas investment activities of Chinese enterprises. The regulation, comprising 34 articles, aims to promote the country's high-standard opening-up and enhance the quality of its outbound investments.

First and foremost, it provides a comprehensive protective shield for Chinese enterprises at various stages of their overseas investments. These include risk assessment and early warning systems based on the security situations in target countries before investments begin, as well as consular protection and assistance during major emergencies.

Additionally, if Chinese investors encounter trade-related investment barriers in the host country or region, the relevant departments of the State Council will conduct investigations and, based on the results of these investigations, may adjust country-specific investment policies and implement measures such as import or export bans or restrictions on certain goods and technologies.

While encouraging enterprises to resolve disputes related to their outbound investments through various means such as negotiation, mediation, arbitration and litigation, the regulation offers an enhanced legal "toolbox" that enables a precise and robust response to any discriminatory measure taken by a foreign government.

Additionally, the new regulation emphasizes service guidance for outbound enterprises. The government will establish a comprehensive overseas service system, coordinating resources across areas such as foreign affairs, law, finance, taxation, logistics, customs and trade promotion to offer comprehensive service guarantees.

The regulation states that China will actively align with international high-standard economic and trade rules, promote high-quality Belt and Road cooperation, participate in the formulation of international investment rules, and foster international cooperation in industry and supply chains. This will be conducive to opposing unilateralism and protectionism, and to the construction of an open world economy.

The new rules mark a milestone in the legal framework for China's outbound investment sector. They are expected to help improve China's foreign investment management system, enhance oversight of direct investments overseas and strengthen risk prevention and control.

The measures markedly elevate the quality of China's outbound investments, paving the way for new opportunities in mutually beneficial international cooperation.