Editor's note: Wu Fang is director and researcher of the Institute of Overseas Investment and Economic Cooperation, Chinese Academy of International Trade and Economic Cooperation, Ministry of Commerce, China. The article reflects the author's views and not necessarily those of CGTN.

Recently, the State Council issued a new regulation on outbound investment, which will take effect on July 1, 2026. At a time when global changes unseen in a century are accelerating, unilateralism and protectionism are on the rise, and Chinese companies face growing uncertainties in overseas markets, the Regulation, which is the first dedicated administrative system governing outbound investment, systematically improves the frameworks for services, administration, and protection. Its introduction marks a significant step forward in the law-based governance of China's outbound investment and provides stronger institutional safeguards for protecting investors' lawful rights and interests.

Legislative purpose: Balancing promotion & protection with a distinctive market orientation

From the perspective of legislative intent, Article 1 of the Regulation identifies both "promoting the high-quality development of outbound investment" and "protecting the legitimate rights and interests of investors and their outbound investment, and safeguarding national sovereignty, security, and development interests" as legislative objectives. This reflects the Regulation's dual emphasis on both promotion and protection. Meanwhile, Article 5 explicitly stipulates that "the country supports investors in carrying out outbound investment activities in accordance with market principles" and that "investors enjoy autonomy in outbound investment in accordance with the law, whereby they make independent decisions, assume their own risks, and bear their own profits and losses." These provisions effectively reinforce the autonomy of enterprises in making outbound investment, underscore a market orientation, and help unleash the full vitality of overseas investment by Chinese enterprises.

Institutional framework: A full-cycle system of services, administration and protection

To achieve these objectives, the Regulation establishes a comprehensive system of services, administration, and protection that spans the entire lifecycle of outbound investment.

In terms of services, the Regulation seeks to build a comprehensive overseas service system characterized by central-local coordination, regional cooperation, resource aggregation, and connectivity between Chinese and international networks. It calls for refining a comprehensive overseas service system at the national level, promoting trade-investment integration, and coordinating service resources across sectors. Governments at or above the provincial level and relevant authorities are expected to provide public goods and services in areas such as policy support, intellectual property protection, and risk prevention and response. At the same time, the Regulation also supports professional service providers, including legal, consulting, mediation, and arbitration institutions, in delivering high-quality services to help reduce information asymmetries and compliance costs associated with overseas corporate operations. It encourages banking institutions and policy-oriented insurance providers to offer financing and insurance services for outbound investment, which are conducive to alleviating the long-standing challenges of difficult and costly financing faced by enterprises. In addition, industry associations, chambers of commerce, and trade and investment promotion organizations are encouraged to provide services such as information and consulting, market expansion, rights protection, and dispute resolution. These efforts can strengthen industry self-regulation, help enterprises deepen their international presence, resolve disputes more effectively, and enhance brand visibility.

Regarding administration, the Regulation establishes a classified and tiered framework for full-cycle supervision. It defines the scope of encouraged, restricted, and prohibited investments; standardizes procedures for approvals and filings, information reporting, and cross-border capital registration; and clarifies restrictions and prohibitions on the transfer of goods, technologies, services, and related data. These provisions provide enterprises with clearer policy expectations and well-defined compliance boundaries. Drawing on internationally recognized practices, the Regulation also introduces a security review mechanism for outbound investment. Notably, these administrative provisions are closely linked with the protective ones, forming a coherent institutional framework. Approval, filing, and information-reporting requirements help authorities accurately identify the distribution of overseas interests and provide a basis for prompt protection or countermeasures when needed. Compliance management and security reviews are not designed simply to constrain outbound investment; rather, they clarify regulatory boundaries, enhance policy predictability, and provide institutional safeguards for preventing systemic risks and protecting overseas interests.

With respect to protection, the Regulation establishes a multi-tiered, comprehensive framework for safeguarding investors' rights and interests. Relevant departments of the State Council work to strengthen monitoring, early warning, and risk assessment for outbound investment; expand international cooperation and exchanges; negotiate international economic and trade agreements; improve overseas consular protection and assistance mechanisms; and encourage investors to resolve disputes through diverse channels. In order to address actions that harm China's overseas investment interests, the Regulation draws on internationally recognized practices to establish defensive mechanisms such as investment-barrier investigations and countermeasures. It expressly provides that where investors encounter investment barriers or other obstacles to overseas investment and business operations, the competent authorities may conduct investigations according to law and take appropriate action based on the findings. This institutional design helps uphold the normal order of international economic and trade relations as well as market principles, fosters a more stable and predictable investment environment, and provides stronger legal protection for Chinese enterprises investing abroad.

Overall, the Regulation organically brings together services, regulation, and investor protection within a unified framework grounded in market principles, the rule of law, and international approaches, thereby creating a more stable and predictable institutional environment for Chinese enterprises expanding overseas.

(Cover via VCG)