China tightens outbound tech investment rules following Nexperia and Manus disputes
A new regulation will also grant Beijing the authority to counter foreign entities it views as harming its interests
The State Council, China’s cabinet, released a new set of regulations governing outbound investment from the Chinese mainland – including to Hong Kong, Macau and Taiwan – requiring approval for the overseas transfer or use of goods, technologies, services and related data subject to export controls.
Dated May 5 but released on Monday, the 34-article regulation also barred indirect transfers through the cross-border deployment of technical personnel, consulting services, training programmes and other arrangements.
The rules take effect on July 1 and authorise Beijing to impose retaliatory measures on foreign entities viewed as undermining China’s national interests, including those that suspend certain transactions with Chinese enterprises or adopt discriminatory measures against the country’s investors.
Such measures would be “protective and defensive” in nature and would not affect normal market trading activities or interfere with the ability of enterprises to resolve commercial disputes in accordance with the law, Chinese officials said in a statement on Monday.
Beijing would update its outbound investment rules based on economic needs and the perceived risk of doing business in certain countries, clearly labelling which overseas projects are encouraged, limited or completely banned, according to the statement.
The move followed authorities blocking Meta’s planned US$2 billion acquisition of Manus, a Chinese-founded artificial intelligence start-up that had relocated to Singapore.