China introduces draft legislation on foreign investment and cyber-security

BOFIT Viikkokatsaus / BOFIT Weekly Review 2015/29

​The proposed laws e.g. would give officials the possibility to shut down online connections in some situations and require foreign firms to store their data collected in China on servers physically located in China. In addition, foreign investments would need official approval in cases where such investment could be seen as a threat to national security. The draft laws presented last week are now out for comment. The drafts are part of a larger, recently approved, legislative package on national security.

Problems arising from the tighter regulation worry foreign firms operating in China. Already tight Internet surveillance affects e.g. corporate research efforts. Many firms see the new laws as an effort to bolster the competitiveness of Chinese firms. The EU, for example, has voiced strong concerns over the impacts of the new legislation on the operations and investment climate for foreign firms, and offered comments and amendments to Chinese officials.

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