China Introduces New Regulatory Framework for Outbound Investment

The Regulations of the State Council on Outbound Investment were adopted at the 83rd Executive Meeting of the State Council on 17 April 2026 and promulgated by Premier Li Qiang on 5 May 2026. The Regulations enter into force on 1 July 2026 and establish a comprehensive framework governing outbound investment activities conducted by Chinese enterprises, organizations and individuals.

The Regulations aim to promote outbound investment, improve the administration of overseas investment activities, protect the interests of investors, and strategic development of the country. They are formulated pursuant to several existing laws, including the Foreign Relations Law of the People's Republic of China and the Foreign Trade Law of the People's Republic of China.

The Regulations define outbound investment as activities through which investors acquire ownership, control, management rights or other interests in overseas enterprises and assets through capital contributions, equity participation, financing arrangements, guarantees or similar means. The framework applies to enterprises, other organizations and individual residents established within China.

The Regulations reaffirm China's commitment to opening-up and international economic cooperation. They support participation in international investment initiatives, and encourage cooperation in global industrial and supply chains. At the same time, they establish mechanisms intended to strengthen risk management, regulatory supervision and national security safeguards in relation to overseas investment activities.

According to the general regulatory framework, investors may be required to complete approval, filing, reporting and cross-border registration procedures in accordance with applicable regulations. They must provide accurate information to the competent authorities and cooperate with regulatory inspections.

The Regulations also clarify that outbound investments remain subject to existing rules concerning foreign exchange administration, import and export controls, cross-border trade in goods and services, data transfers, cybersecurity, taxation and other related regulatory requirements. Relevant authorities may review investments, as well as the transfer or disposal of overseas assets and interests, where national security concerns arise.

Investors and overseas subsidiaries are encouraged to establish internal control systems, compliance procedures, safety management measures and emergency response mechanisms. They are also expected to allocate sufficient personnel and resources to safeguard employees and assets operating abroad.

Furthermore, government authorities are tasked with strengthening overseas investment monitoring, publishing risk assessments and providing guidance regarding security conditions and investment risks in foreign jurisdictions.

The Regulations encourage international cooperation through treaties, agreements and law-enforcement cooperation mechanisms.

Investors are encouraged to resolve disputes through negotiation, mediation, arbitration or litigation. Where overseas legal proceedings require the provision of evidence or information abroad, investors must comply with applicable Chinese laws relating to state secrets, data security, personal information protection, export controls and judicial assistance.

Relevant authorities may conduct investigations and adopt responsive measures where foreign governments, organizations or individuals are considered to have imposed discriminatory restrictions affecting Chinese investors or China's national interest