The Analysis Of The National Security Review Of Foreign Investment In China And The Improvement Suggestions

Accompanied by the in-depth development of economic globalization and therise of the fifth of foreign mergers and acquisitions, foreign M&A, as a major way offoreign direct investment, has drawn wide attention of host countries. Since China’saccession to the WTO, the scale of foreign M&A in China has been expanding. Onthe one hand, foreign investors have brought great economic benefits to China viaM&A; and on the other hand, foreign M&A has some negative effects on China’sfundamental industries and national brands driven by the capital profitability, and thenmay cause some threats to its national security. Consequently, it is necessary toestablish and improve the national security review of foreign investment, which canplay the positive role and reduce the threats of foreign investment.By using comparative study methods, this paper studies and analyzes thesubstantive rules and procedural regulations of the national security review of foreigninvestment in the US, the UK and Germany, on the basis of clarifying relevantconcepts of foreign M&A and the national security review of foreign investment.Meanwhile, combined with the legislation and practice of the national security offoreign investment in China, this paper analyzes the merits and inadequacies of thenational security system, explores the reasons and puts forward suggestions forimprovement learning from the effective legislation and practice in these foreigncountries.The whole paper can be divided into two parts—introduction and the main body, while the main body consists of four parts:The first part is an overview of foreign M&A and the national security review offoreign investment. Specifically, the author at first defines the meaning of foreignM&A and the motives for foreign investors to use M&A. Secondly, the author makesa summary on new characteristics of foreign M&A shown in China by the study ofM&A practice. Thirdly, the author analyzes the necessities to establish the nationalsecurity review of foreign investment from three aspects.The second part is to study the legislation of the national security review offoreign investment in the US, the UK and Germany, and the author lists substantiveand procedural provisions of the review system in these countries, as well as makingcomments.The third part mainly introduces the current condition of the national securityreview of foreign investment in China, including the legislation and progressesachieved of the review system. Then the author puts more emphasis on the analysis ofinadequacies of the review system. Besides the legislation hierarchy, there areinadequacies in substantive and procedural systems. And the author discusses thecauses of these inadequacies.In the fourth part, based on learning from the effective legislation and practice inthe developed countries, the author puts forward seven suggestions to improve thereview system in regards to the inadequacies.