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49 Stan. J. Int'l L. 239 (2013)
China's National Security Review: Motivations and the Implications for Investors

handle is hein.journals/stanit49 and id is 251 raw text is: CHINA' S NATIONAL SECURITY REVIEW: MOTIVATIONS AND THE IMPLICATIONS FOR INVESTORS CATHLEEN HAMEL HARTGE Foreign direct investment in China has been a bright spot in the midst of a global recession. The economic powerhouse attracted a record $244 billion in foreign direct investment in 2010, up more than eighty percent from the previous year's total of $131 billion. Over the past decade, twenty percent of foreign direct investment to developing countries has gone to China. While these investment dollars generate significant economic benefits, they have also aroused concerns among Chinese leaders that they pose a potential threat to China's national security. Responding to these concerns, on February 3, 2011, China announced a formal process for reviewing mergers and acquisitions (M&A) of domestic companies by foreign investors for national security implications. Theories abound among commentators as to China's motivations in announcing a new national security review mechanism. Some analysts have expressed concern that China will use the review process to make it increasingly difficult for foreign investors, especially those from countries that have traditionally restricted Chinese investment in their own economies, to carry out M&A transactions in China. But this Note demonstrates, though historical analysis and a comparison of the U.S. and Chinese systems, that China merely seeks to clarify its investment regulations and that investors will benefit from this development. Although the Chinese system is farfrom perfect, it will at least systematize what has been, until now, an ad-hoc review process. INTRODUCTION ............................................................240 1. CHINA'S GRADUAL, INCREMENTAL DEVELOPMENT OF A NATIONAL SECURITY REVIEW SYSTEM ............................. .......242 A. The National Security Review Has Existed for Years, and Its Evolution Has Been Shaped by Genuine Economic Security Concerns .... ......244 1. The Journey Towards a Formal National Security Review Begins: From the 2003 Interim Provisions Through the 2008 Anti- J.D. Candidate, Stanford Law School, 2013. I am grateful to Mei Gechlik for her guidance and helpful comments in writing this Note. 239 49 STAN. J. INT'L L. 239 (2013)

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