The Chinese Cabinet has announced that it will constitute a panel to look into foreign acquisitions of local companies, especially those operating in the areas of national defence, agriculture, energy, resources, infrastructure, transport, technology and equipment manufacturing.
The panel, led by the National Development and Reform Commission jointly with the Chinese commerce ministry, will retain the powers to block any acquisition or foreign investment if it feels that it poses any sort of threat to economic stability, social order or the nation's ability to research and develop key technology linked to national security, according to a briefing from the State Council.
The circular also mentions that foreign firms looking to acquire a Chinese enterprise will now have to mandatorily file an application with the Ministry of Commerce.
Any enterprise in China is currently governed by the anti-monopoly law of 2008 that was initiated as a part of the country's efforts to promote fair competition in the market and crack down on monopoly activities. Under the law, foreign firms have been reviewed for their impact on security and key Chinese industries.
In 2009, for example, the Chinese government had blocked Coca-Cola Co.'s planned purchase of China Huiyuan Juice Group Ltd. citing Coca Cola's monopolistic control over the nation's juice and beverage market in the event of the merger.