China’s National Security Measures Impact Overseas Expansion

China is implementing measures to restrict the flow of money, technology, and companies from its borders, citing national security concerns. Recently, the State Council announced new rules mandating security screenings for Chinese companies looking to invest internationally. This is part of a broader strategy launched in April to enable government intervention when foreign businesses attempt to transition supply chains away from China.

The combined regulations signify China’s effort to construct an economic fortress, influencing technology and supply chains as international tensions with Europe and the United States escalate. These policies reflect a shift from the long-standing global economic principles of open markets and free trade, which propelled China’s rapid growth.

Globally, major economies like the United States and the European Union are increasingly resorting to trade barriers. This change arises from apprehensions about China’s escalating dominance in raw materials, manufactured goods, and technology, and the proliferation of Chinese products globally.

“We’ve moved away from a world where laws facilitated the free movement of capital, people, technology, and trade,” noted Ben Kostrzewa, a partner and trade expert at Hogan Lovells in Hong Kong. He referenced the term ‘Chimerica,’ originally envisioned as a blend of China and America, now regarded as less feasible.