New regulations for foreign investment released, to be implemented from July 1st

On June 1st, the "Regulations of the State Council on Outward Investment" (hereinafter referred to as the "Regulations") were officially released to the public. The 34 articles of the Regulation have improved the main systems for foreign investment services, management, and protection, and will be implemented from July 1, 2026.

The new regulations mention that the state supports investors to carry out outbound investment activities in accordance with market-oriented principles and actively participate in international cooperation and competition. Investors have the right to make independent decisions, bear their own risks, and be responsible for their own profits and losses when investing abroad in accordance with the law. At the same time, the investment and commerce authorities of the State Council, together with relevant departments, will formulate, adjust, and implement foreign investment policies based on the needs of national economic and social development, changes in investment environment, and risk levels. They will clearly encourage, restrict, and prohibit foreign investment, strengthen supervision, and guide and supervise investors to operate in a standardized manner.

In terms of investment red lines, the new regulations have made clear restrictions. Investors conducting outbound investment activities are not allowed to export or use goods, technologies, services, and related data that are prohibited from export by the state, or to export or use goods, technologies, services, and related data that are restricted from export by the state without permission. In addition, it is not allowed to transfer goods, technologies, services, and related data that are prohibited or restricted from export by the state to other countries (regions) through cross-border dispatch of technical personnel, organization of personnel to work overseas, cross-border provision of technical guidance, and arrangement of personnel cross-border training.

Investors who invest in foreign investments prohibited by the state shall be ordered by the investment and commerce authorities of the State Council to cease investment activities, dispose of shares and assets within a specified period of time, and confiscate illegal gains in accordance with their duties; Those who refuse to comply shall be fined between 5 ‰ and 10 ‰ of the investment amount; Impose a fine of no less than 50000 yuan and no more than 100000 yuan on the directly responsible supervisors and other directly responsible personnel.

If investors fail to fulfill the approval and filing procedures as required, or apply for approval and filing by submitting false materials, concealing true information, etc., the approval and filing authority shall order them to make corrections, confiscate illegal gains, and impose a fine of not less than 1 ‰ and not more than 5 ‰ of the investment amount; Those who refuse to make corrections shall be ordered to cease investment activities, have their shares and assets disposed of within a specified period of time, and be fined between 5 ‰ and 10 ‰ of the investment amount; Impose a fine of no less than 20000 yuan and no more than 50000 yuan on relevant personnel.

If investors obtain approval and filing through improper means such as bribery or deception, the approval and filing authority shall revoke the documents, confiscate the illegal gains, and impose a fine of not less than 1 ‰ and not more than 5 ‰ of the investment amount; For those who have already invested, they shall be ordered to stop investment activities, have their shares and assets disposed of within a specified period of time, and be fined not less than 5 ‰ but not more than 10 ‰ of the investment amount; Impose a fine of no less than 20000 yuan and no more than 50000 yuan on relevant personnel.