China unveils rules to control overseas tech investments

China has introduced comprehensive new regulations granting authorities sweeping powers to review, restrict, and even reverse overseas investments and technology transfers involving Chinese entities. The rules, issued by the State Council and set to take effect on July 1, establish a formal legal framework for controlling outbound flows of goods, technologies, services, and related data.

The regulations require government authorization for the export of restricted items. They also explicitly prohibit indirect transfers through cross-border personnel deployments, technical guidance, or training programs without official approval. For the first time, the rules provide a legal basis for authorities to conduct national security reviews of overseas investments and asset transfers, order divestments, halt operations, and impose penalties for non-compliance.

This move follows a recent case where Chinese authorities ordered Meta to unwind its planned acquisition of Manus, an artificial intelligence startup founded in China that had relocated to Singapore. Analysts say the regulations appear aimed at practices sometimes used by firms to relocate operations and intellectual property...