Background: The Scale and Challenges of Chinese Companies Going Global
On June 1, 2026, the Provisions of the State Council on Outbound Investment (the “Provisions”) were formally promulgated and will take effect on July 1, 2026. The Provisions are an important administrative regulation in the field of outbound investment in China and represent an integration and upgrade of the existing outbound investment regulatory framework against the backdrop of Chinese companies’ continued acceleration in “going global.”
According to data released by MOFCOM, SAFE and other authorities, Chinese companies’ overseas expansion has reached significant scale and continues to become more global and diversified. China’s outbound direct investment by all sectors reached USD 147.85 billion in 2023, representing a year-on-year increase of 0.9%; further increased to USD 162.78 billion in 2024, up 10.1% year-on-year; and reached USD 174.38 billion in 2025, up 7.1% year-on-year. By the end of 2025, Chinese investors had established more than 50,000 overseas enterprises across 190 countries and regions, and China remained among the world’s leading outbound investment countries.
As the scale of outbound investment has expanded and investment structures have become more diverse, the limitations of the previous regulatory model, which primarily relied on departmental rules and regulatory documents, have become increasingly apparent. Before the Provisions were issued, China’s outbound investment administration mainly relied on rules issued by authorities such as the NDRC, MOFCOM and SAFE. Requirements relating to national security, data security, technology export and export controls, meanwhile, were scattered across different sector-specific laws and regulations. In the official Q&A issued by the Ministry of Justice, the NDRC and MOFCOM, the authorities also noted that, with rising geopolitical risks and intensifying international competition, the long-standing model of administering and servicing outbound investment primarily through departmental rules and regulatory documents could no longer fully meet practical needs.
Against this background, the significance of the Provisions does not lie in simply adding another approval or filing requirement, nor do they fundamentally overhaul the existing ODI approval and filing regime. Rather, amid Chinese companies’ accelerated overseas expansion and a tightening international regulatory environment, the Provisions represent an integration and upgrade of China’s outbound investment regulatory framework. For participants in cross-border transactions, the Provisions send a clear message: outbound investment compliance should no longer be viewed merely as a pre-closing administrative formality, but should become a foundational variable in transaction structuring, technology and data arrangements, post-investment management and exit planning.
Key Changes under the New Rules for Cross-Border Transactions
Clearer regulatory boundaries: resident individuals and indirect investments come into view
Article 2 of the Provisions adopts a relatively broad definition of “outbound investment.” Where an investor, by contributing assets or equity interests, or by providing financing or guarantees, directly or indirectly obtains ownership, control, management rights or other related rights and interests in overseas enterprises or assets, such activity may fall within the scope of the Provisions. The scope of investors includes not only Chinese domestic enterprises, but also other organizations and resident individuals.
This has direct implications for cross-border transactions. Companies should not determine whether a transaction is subject to outbound investment regulation solely by reference to whether it takes the form of establishing an overseas entity or acquiring offshore equity. Where overseas rights and interests are obtained through multi-layer SPVs, offshore structures, nominee arrangements, contractual control, financing or guarantee arrangements, a substantive assessment should also be conducted based on the nature of the transaction, control arrangements and source of funds.
In addition, investments in Hong Kong, Macao and Taiwan are to be administered by reference to the Provisions. Further overseas investment of overseas assets or rights and interests obtained through outbound investment will also be subject to the Provisions and other applicable rules. The Provisions also, for the first time at the level of an administrative regulation, expressly include resident individuals as regulated outbound investors, thereby filling a regulatory gap in relation to individual outbound investments.
Greater emphasis on technology export, export controls and data security
Article 13 of the Provisions sets out clear requirements for the cross-border transfer of goods, technologies, services and related data in outbound investment activities. Investors must not export or use goods, technologies, services or related data that are prohibited from export by the State. Where the relevant items are subject to export restrictions, investors must not export or use them without obtaining the required approval.
The key point is not limited to “technology export contracts” as such, but rather the regulator’s focus on actual transfer activities. The Provisions expressly cover arrangements such as cross-border dispatch of technical personnel, sending personnel overseas to work, providing cross-border technical guidance, and arranging overseas training. In other words, even where a company has not entered into a formal technology export contract, the transfer of controlled technologies, services or data overseas through personnel deployment, remote guidance, sharing of technical documents, process training or granting system access may still trigger relevant compliance requirements.
Legal liabilities become more substantive: ODI compliance may affect transaction certainty and future outbound investment capacity
Historically, liability mechanisms in the outbound investment area were mainly scattered across departmental rules such as the Administrative Measures for Outbound Investment by Enterprises and the Foreign Exchange Administrative Provisions on Outbound Direct Investment by Domestic Institutions. The relevant consequences generally included refusal to accept applications, revocation of approval or filing, orders to suspend or stop projects, warnings and credit-related sanctions. The Provisions, however, establish more substantive and stringent legal liabilities for unlawful outbound investment activities at the level of an administrative regulation. For the first time, it introduces hefty fines calculated as a percentage of the investment amount, establishes a link to criminal liability, and represent a marked upgrade in regulatory enforcement.
For prohibited outbound investments, failure to complete required approval or filing procedures, obtaining approval or filing through false materials or improper means, or failure to cooperate with outbound investment security review, the Provisions provide for measures such as orders to stop the investment, disposal of equity interests or assets within a specified period, confiscation of illegal gains, fines, refusal to accept approval or filing applications for a certain period, and prohibition from engaging in outbound investment activities. This means that outbound investment compliance is no longer merely a question of whether procedures can be supplemented. Non-compliance may directly affect whether a transaction can continue, whether overseas assets can be retained, and whether the investor can continue to pursue outbound investment opportunities in the future. The cost of non-compliance will further increase, and compliance in overseas expansion has effectively shifted from a “nice-to-have” to a “must-have.”
Takeaway: Bring Compliance Review Forward into Cross-Border Transaction Structuring
The issuance of the Provisions does not mean that the existing ODI approval and filing regime has been fundamentally reshaped, but it does change how companies should understand outbound investment compliance. For participants in cross-border transactions, ODI should no longer be treated merely as an administrative procedure to be completed before closing. Instead, it should become a foundational compliance variable in transaction structuring, funding arrangements, cross-border technology and data flows, post-investment management and exit arrangements.
Accordingly, for projects such as cross-border acquisitions, overseas manufacturing facilities, offshore joint ventures, overseas R&D centers, and outbound licensing or transfer of intellectual property rights, companies should assess requirements relating to the NDRC, MOFCOM, foreign exchange, tax, state-owned assets, merger control, export controls, technology export, data export and national security review at an early stage of the project. Relevant approvals, filings or review arrangements should be reflected in transaction steps, closing conditions, representations and warranties, covenants and risk allocation clauses. For companies in technology-intensive or high-risk sectors, arrangements involving personnel deployment, technical support, system access and data sharing should also be included in upfront compliance review, rather than being treated merely as post-investment implementation matters.
Overall, the Provisions mark China’s move from fragmented outbound investment rules toward a unified regulatory framework, and mean that overseas compliance will extend from “procedural compliance” to “transaction governance”, where substantive compliance, process compliance, and end‑to‑end chain compliance become the new normal. Looking ahead, the certainty and sustainability of overseas investment projects will depend not only on business opportunities and deal negotiations, but also on whether companies can, at an early stage, properly address regulatory requirements under Chinese law, manage overseas operational risks, and make effective use of rights protection instruments.
