China Overhauls Outbound Investment Rules with New State Council Decree
Chinese Premier Li Qiang has signed State Council Order No. 837, promulgating comprehensive new regulations on foreign investment that consolidate and modernize China’s legal framework governing outbound investment by Chinese enterprises and individuals. The 34-article regulation, published on June 1, 2026, will take effect on July 1, 2026, according to Xinhua News.
A Unified Legal Framework
The “Regulations on Foreign Investment” (《国务院关于对外投资的规定》) were approved at the State Council’s 83rd executive meeting on April 17, 2026, and signed by Premier Li on May 5, 2026. The regulation is grounded in China’s Foreign Relations Law and Foreign Trade Law, marking a significant shift from the previously fragmented system of administrative measures to a formal, unified legal framework.
According to the full text of the regulations, the new rules cover scope, general requirements, comprehensive services, management implementation, and investment protection. They apply to all Chinese domestic investors — including enterprises, other organizations, and for the first time in a State Council regulation on outbound investment, resident individuals.
Key Provisions and Innovations
Inclusion of Resident Individuals
A landmark feature of the regulation is the explicit inclusion of “resident individuals” (居民个人) as investment subjects alongside enterprises and organizations. Previously, China’s outbound investment regulatory framework focused primarily on corporate entities. The regulation states that specific management measures for individual outbound investment will be formulated separately by the National Development and Reform Commission (NDRC) and the Ministry of Commerce (MOFCOM), signaling potential future liberalization of individual overseas investment channels.
National Security Review Mechanism
The regulation establishes a formal national security review system for outbound investments that affect or may affect national security. Article 15 mandates that the State Council’s investment and commerce authorities, together with other relevant departments, conduct security reviews of outbound investments and the transfer or disposal of related assets and rights. This mirrors similar mechanisms in other major economies, such as the Committee on Foreign Investment in the United States (CFIUS).
Countermeasures Against Foreign Discrimination
In a significant geopolitical signal, the regulation includes provisions for countermeasures against foreign discriminatory actions. Article 24 states that if any country or international organization adopts discriminatory prohibitions or restrictions against the PRC in investment and business operations, the Chinese government may take corresponding measures. The regulation also references the Anti-Foreign Sanctions Law, allowing authorities to designate entities and individuals for countermeasures.
Investment Barrier Investigations
The regulation establishes an investment barrier investigation system, empowering MOFCOM to investigate trade-related investment barriers encountered by Chinese investors abroad. Depending on findings, authorities may adjust country-specific investment policies or restrict goods, technology, or services trade.
Comprehensive Service and Support System
Articles 6 through 9 mandate the establishment of an overseas comprehensive service system covering legal, financial, tax, customs, and consular services. The government is directed to improve public service platforms and coordinate resources across foreign affairs, finance, trade, logistics, and customs to support Chinese investors operating abroad.
Compliance and Enforcement
The regulation imposes significant penalties for violations. Investors engaging in prohibited outbound investments face fines of 0.5% to 1% of the investment amount, along with potential bans on outbound investment activities for one to three years. Failure to comply with national security review requirements can result in similar penalties, and criminal liability applies for serious offenses.
Broader Policy Context
The new regulation comes amid intensifying geopolitical tensions and ongoing trade and technology competition between China and Western nations. It follows a series of legislative actions by the Li Qiang administration, including the Regulations on Industrial and Supply Chain Security (March 2026) and the Anti-Foreign Improper Extraterritorial Jurisdiction Regulations (April 2026).
As CCTV reported, the regulation explicitly aligns with China’s Belt and Road Initiative strategy, promoting “high-quality” international cooperation while opposing unilateralism and protectionism.
Implications and Outlook
The regulation represents a maturing of China’s outbound investment governance, moving from administrative measures to a formal legal framework. For Chinese enterprises and individuals engaged in outbound investment, compliance with the new framework will be mandatory by July 1, 2026.
The inclusion of resident individuals as investment subjects could pave the way for more formalized individual overseas investment channels, potentially impacting capital flows. Meanwhile, the national security review mechanism and countermeasure provisions signal China’s intent to more actively protect and manage its overseas economic interests through a geopolitical lens.
As the NDRC and MOFCOM prepare to formulate specific measures for individual outbound investment management, market participants will be watching closely for further details on how this landmark regulation reshapes China’s engagement with the global economy.