China's National Security Review System For Mergers And Acquisitions By Foreign Investors

In recent years China has witnessed an increasing size and scale of foreign M&A. Although it gives a boost to China's economy, it brings some negative impact on China's national security. Due to a lack of comprehensive national security review system, some transnational corporations have taken advantage of these loopholes to enter into sensitive industries which have a direct bearing on national security. What's worse, they are gradually forming a monopoly on some industries, seriouly threatening China's national security.This paper focuses on the national security review system in China,comparing it with those mature systems already established in countries such as US, Canada, Japan. Through analyzing the deficiencies of the current system, this paper puts forward some suggestions on how to build China's own national security review system.In addition to introduction and conclusion,this paper consists of five parts. The first part raises the question and points out the nessessity and urgency for China to set up its own national security review system through two typical M&A cases of " Chinese National Petroleum Corp(CNPC) merging and aquiring Unocal Corporation" and "the Carlyle Group merging and aquiring XCMG GroupThe second part provides a brief account of national security review system, expounding the differences and connections among the concept of national security, the legal basis of national security review system, the national security system, the industry access system, antitrust review system respectively.The third part illustrates the necessity for China to establish its own national security review system. It identifies the problems from the practices of M&A by foreign investors, examines the status quo of China's national security review system, and pinpoints the deficiencies existing in the current system.The fourth part puts the emphasis on the national security review systems in other countries, and centers on the contens of natinal security laws from both the substantive and procedual aspects in US, Canada and Japan, with the aim to draw useful lessons for China's own legislative process.The fifth part comprises the suggestions for China's national security review system. It comes up with its proposals for value orientation, legislative models, review standards, review bodies and review procedures, etc. Futhermore, it puts forward the suggestion that China should establish the industry access system and antitrust review system to supplement the national security system to form a comprehensive national security review system for M&A by foreign investors. This ensures that China's use of foreign capitals will not come at the expense of national security.