On August 21, 2026, the National Development and Reform Commission (the NDRC) issued the Measures for the Administration of Outbound Investment (Revised Draft for Public Comment) (the Draft Measures), which made systematic revisions to the Measures for the Administration of Outbound Investment by Enterprises (Order No. 11 of the NDRC, issued in December 2017; Order No. 11), in response to the significant growth of China’s outbound investment in recent years, the profound and complex changes in the external environment as well as the Provisions of the State Council on Outbound Investment issued in June this year (the New State Council Regulation). The Draft Measures also reflect the latest regulatory trends of the NDRC with respect to outbound investment.
I. Key Changes under the Draft Measures
(A) Outbound direct investment is extended to resident individuals and other organizations
Order No. 11 expressly provides that it does not apply where a domestic natural person directly makes an outbound investment. In practice, outbound direct equity investment by domestic resident individuals has primarily been conducted under the Notice of the State Administration of Foreign Exchange on Issues Concerning Foreign Exchange Administration for Domestic Residents Engaging in Outbound Investment and Financing and Round-trip Investment through Special Purpose Vehicles (No. 37 [2014] of the State Administration of Foreign Exchange). That notice, however, addresses outbound investment or financing combined with round-trip investment and does not generally apply to ordinary, standalone outbound equity investments.1 Historically, domestic individuals have also made outbound equity investments through domestic enterprises established by them. Where a resident individual establishes a new domestic enterprise specifically for outbound investment, the ‘quick set-up and exit’ pattern is a regulatory red flag and may make the outbound direct investment filing or approval more difficult.
For the first time, the New State Council Regulation expressly recognizes domestic resident individuals as outbound investors through legislation (in addition to the foreign-exchange registration route described above). In response to this higher-level regulation, the Draft Measures provide for the first time that resident individuals as investors are subject to the same outbound-investment approval, filing and overseas reinvestment reporting procedures as enterprises and other organizations. This change fills a longstanding regulatory gap at the departmental-rule level concerning resident individuals as outbound investors. Nevertheless, where a resident individual makes an outbound direct investment, the procedures and operational guidance concerning the regulation by the Ministry of Commerce of the People’s Republic of China (or its local branches, MOFCOM) on outbound direct investment, foreign-exchange registration and the outward remittance of individual funds are awaiting the promulgation of the NDRC’s final rules, new rules from other government departments or corresponding supporting documents.
The Draft Measures also bring other organizations within the definition of investors, including public institutions, social organizations and other non-enterprise bodies.
(B) Clarifying when ODI regulation applies to outbound investments made through QDII and similar channels
Question 32 of the NDRC’s FAQs in July 2021 on the Approval and Filing of Outbound Investment stated: ‘Where an investor makes overseas investment through QDII, QDLP, QDIE or other channels and such investment activities constitute outbound investment as defined in Article 2 of Order No. 11, the investor shall complete the relevant outbound investment procedures in accordance with Order No. 11’. Because this point was not expressly addressed in legislation, in practice it has been interpreted and implemented inconsistently.
Article 73 of the Draft Measures addresses this issue. As a general rule, investment in overseas financial markets through QDII, Southbound Stock Connect, Cross-boundary Wealth Management Connect and similar channels is not subject to the NDRC’s direct outbound-investment filing/approval or overseas reinvestment reporting. The exceptions are when: (1) following the investment, the investor, alone or together with persons acting in concert, acquires control of the investee enterprise; (2) following the investment, the investor, alone or together with persons acting in concert, holds an aggregate percentage of the equity or voting rights in the invested enterprise that reaches an integral multiple of 10%; or (3) other circumstances as specified by the NDRC apply.
(C) Earlier regulatory intervention and broader oversight of overseas reinvestment
1. New preparatory-work reporting system
The Draft Measures introduce an ex-ante reporting system for important preparatory work. Article 41 requires an investor to submit a Report on the Preparatory Work for Outbound Investment through the online system at least 10 working days before undertaking material preparatory work where (1) the Chinese investment amount is USD 100 million or more, or (2) the outbound investment concerns China’s diplomatic relations with a relevant country. Material preparatory work includes: (1) making an investment commitment to a foreign government; (2) signing an investment agreement or similar document; and (3) other preparatory work that may affect China’s diplomatic relations with a particular country.
In form, this reporting system resembles, but is not identical to, the pre-signing reporting system under the Measures for the Administration of Approval and Filing of Outbound Investment Projects (Order No. 9 of the NDRC; Order No. 9), which applied before Order No. 11. Both involve ex-ante regulatory intervention before an outbound investment agreement is signed, but differ in the scope of projects covered and in whether the NDRC issues a document akin to an official confirmation.
The ex-ante reporting system in Article 10 of Order No. 9 applied to overseas acquisitions or bidding projects with a Chinese investment amount of USD 300 million or more and requires the NDRC to issue a confirmation letter (commonly known in practice as ‘pre-clearance’) as evidence that the project complied with China’s outbound investment policies. The Draft Measures however cover a broader range of projects, with a lower Chinese investment threshold of USD 100 million, and without being limited to acquisitions or bidding projects; they also incorporate, as an additional assessment factor, considerations relating to diplomatic relations. Under Article 45 of the Draft Measures, once the information submitted by an investor is true, accurate and complete, the outbound-investment information report is deemed complete; an investor needing evidence may print a certificate of completion through the online system. The NDRC therefore does not need to issue a written response resembling a confirmation letter for a Report on Preparatory Work for Outbound Investment. It nevertheless retains the power to require the investor to further supplement or correct information. For material matters arising during an outbound investment, the NDRC may also issue an inquiry letter on material matters (Article 43 of the Draft Measures) and require the investor to submit a written response within a prescribed time period.
The evolution of the ex-ante reporting system from Order No. 9 through Order No. 11 to the Draft Measures is instructive. Order No. 11 reflected the policy of streamlining administration and delegation powers in response to the growth of China’s outbound investment. In contrast, the Draft Measures are shaped more by the complex and volatile international political and economic environment of recent years – including instability, policy shifts and rising political and security risks in certain countries and regions – and signal a clear intention to strengthen the oversight of outbound investment.
Although the Report on Preparatory Work under the Draft Measures is not formally equivalent to the historical pre-clearance system, it does recreate an early stage point of regulatory communication in practical terms. For large investments and acquisitions, and for projects that may be diplomatically sensitive, the project timetable will need to be worked backward from the intended implementation date of the material preparatory work, with sufficient time reserved for the preparatory-work report and other outbound-investment procedures administered by the NDRC.
2. Broader scope of overseas reinvestment reporting systems
(1) Removal of the Chinese investment threshold for overseas reinvestment reports
Article 14 of the Draft Measures substantially expands the coverage of overseas reinvestment reporting. Order No. 11 merely covers large, non-sensitive overseas reinvestment projects with a Chinese investment amount of USD 300 million or more. The Draft Measures extend the system to all non-sensitive overseas reinvestment projects, with no monetary threshold. They also specify, more precisely than Order No. 11, that the report must be submitted at least 20 working days before the investment is made.
This revision will extend investors’ compliance obligations for overseas reinvestment. Once the new rules take effect, subsequent acquisitions, capital increases, profit reinvestments and similar activities undertaken by an overseas entity using its own offshore funds will trigger an overseas reinvestment reporting obligation, regardless of the amount. Corporate groups that have established multi-tier offshore holding structures and continue to reinvest abroad will face ongoing compliance-reporting pressure.
(2) Overseas reinvestment reporting applies to round-trip investment
Article 14 of the Draft Measures further provides that overseas reinvestment reporting shall apply where an investor makes a round-trip investment in China through an overseas enterprise or other organization under its control. Formally, round-trip investment does not fall within the Draft Measures’ definition of outbound investment, i.e. activities whereby an investor, by contributing assets or rights and interests or providing financing or guarantees, directly or indirectly acquires ownership, control, management rights or other related rights and interests in an overseas enterprise, asset or otherwise. An investor’s reinvestment outside China constitutes outbound investment for purposes of these Measures. Nevertheless, this revision would help the NDRC establish a full-chain information closed loop oversight of the cross-border capital, from outward remittance to return flow, complementing foreign-exchange and foreign-investment systems.
(D) Establishment of outbound-investment security reviews
Order No. 11 requires the NDRC, when approving or filing an outbound investment, to examine whether the project threatens or harms China’s national interests or national security, and to withhold approval or filing where it does. It does not, however, establish outbound investment security reviews as standalone procedures. Because Order No. 11 contains no corresponding procedures regulating the exit from or termination of a completed outbound investment project, this examination has been understood as limited to the pre-investment stage.
The Draft Measures, building on the New State Council Regulation, restate the newly established outbound investment security reviews. Under Article 15, outbound investments that affect or may affect national security are subject to outbound investment security reviews in accordance with the applicable rules. The Draft Measures make clear that after an outbound investment project is completed, the security review also applies at the exit stage, including the transfer or disposal of the assets, rights and interests.
Neither the New State Council Regulation nor the Draft Measures currently specifies the applicable standards or initiation procedures for outbound investment security reviews. Supporting implementing rules and regulatory guidance are still pending.
(E) Filing takes on more substantive reviews
Article 31 of the Draft Measures introduces a ‘general review’ requirement for projects subject to filing, although the Draft Measures do not explain any further what such a review entails. It also extends to filed projects, when the filing authority considers it necessary, the systems under Order No. 11 for commissioning an advisory institution to conduct an assessment and for soliciting opinions from entities, both of which previously only applied to projects subject to approval. Although Order No. 11 requires filing to be completed within seven working days after acceptance, the Draft Measures allow the filing period for a complex project, or one requiring opinion from other entities, to be extended by up to seven working days. The time spent on soliciting opinions from competent authorities is included in the filing period, but the time taken by an advisory and assessment institution is excluded. If these provisions are adopted, an investor should, on basis of a project’s complexity, anticipate whether an assessment by the NDRC may be triggered and allow sufficient time accordingly.
(F) More detailed administrative tools (regulatory measures) for the NDRC
Article 17 of the Draft Measures introduces regulatory measures that the NDRC may take in respect to unlawful or non-compliant outbound investment activities. The measures include regulatory interviews, warning letters, orders to rectify, periodic reporting, adjustment of the investment plan and suspension of the investment. They give the NDRC a clearer toolkit for continuing intervention in a project’s substantive risks.
(G) Strengthened post-investment reporting obligations
Under Article 42 of the Draft Measures, the project-completion reporting is proposed to be extended to overseas reinvestment, and a new reporting obligation would apply when a project is terminated. The deadline would be shortened from 20 working days after project completion under Order No. 11, to 10 working days after completion or termination. The Draft Measures also introduce a definition of the termination of an outbound investment, i.e. an investor ceases to carry out the outbound investment or no longer holds any overseas ownership, control, management rights or other rights and interests arising from it. In practice, this would include the sale of equity or assets, or the dissolution and deregistration of an overseas enterprise.
(H) Stronger protection for outbound investment
According to the NDRC’s Explanatory Note on the Measures for the Administration of Outbound Investment (Revised Draft for Public Comment), Order No. 11 established a material-adverse-circumstances reporting system to protect the safety of outbound-investment personnel and assets. In recent years, a small number of countries and regions have adopted discriminatory measures, including requirements that Chinese parties provide technology or data, or dispose of equity or assets, thereby harming Chinese interests. The Draft Measures improve the material-adverse-circumstances reporting system and establish an annual outbound-investment information reporting system. Notifying the competent authorities of such circumstances will help coordinate efforts to protect outbound-investment rights and interests.
1. Broader scope of the material-adverse-circumstances report
Compared with Order No. 11, Article 53 of the Draft Measures changes the deadline for reporting material adverse circumstances from within five working days from occurrence to immediately. In addition to major casualties among dispatched personnel, major losses of overseas assets and harm to China’s diplomatic relations with relevant countries, it adds circumstances where: (1) a foreign party demands the provision of technology, data or similar items, thereby threatening or harming China’s national interests or national security; or (2) a foreign party demands the transfer or disposal of the assets, rights and interests relating to an outbound investment, thereby threatening or harming China’s national interests or national security.
This will require investors, whenever a pertinent circumstance arises, to promptly determine whether it may threaten or harm China’s national interests or national security and to align and coordinate that assessment with existing compliance processes and risk-response measures for technology exports, cross-border data transfers and related matters. The Draft Measures, however, refer only to a ‘demand by a foreign party’ and do not expressly cover voluntary provisions initiated by a Chinese party.
2. New annual reporting
Article 54 of the Draft Measures requires investors to now submit an annual report by March 31 each year. Previously, post-completion annual reporting obligations for outbound investment applied only under the MOFCOM and foreign-exchange administration systems，i.e. an investor must under the Statistical System for Outbound Direct Investment, use the Ministry of Commerce’s unified business system platform to report the basic information of the domestic investor and overseas enterprise, information on the reinvestment through the overseas enterprise, and the total amount of the outbound direct investment during the relevant period, among other information. The investor must also complete annual registration of the existing rights and interests in the outbound direct investment through the State Administration of Foreign Exchange’s capital-account information system.
For investors, this new rule is both an additional compliance obligation and a channel through which to seek investment protection. Article 54 further provides that an investor may state in its annual outbound investment information report that its outbound investment has been affected by discriminatory measures taken by a foreign organization or individual or has been unreasonably deprived or restricted thereby. At an investor’s request, the NDRC may, within the scope of its duties, take countermeasures, including prohibiting or restricting domestic or foreign parties from investing, trading or cooperating in China.
At the national level, Article 55 of the Draft Measures provides that, where any country, region or international organization violates the international law or the basic norms governing international relations by taking discriminatory prohibitions, restrictions or similar measures against China in investment, business operations or other areas, the NDRC may take corresponding measures. This is to protect the safety and legitimate rights and interests of investors and their outbound investments and to protect China’s overseas interests from threats and infringement.
How these measures will ultimately be implemented, and how they will be coordinated with existing systems concerning countering foreign sanctions, the Unreliable Entity List, and the rules on blocking the improper extraterritorial application of foreign laws and measures, remain to be clarified in the final measures and supporting rules.
(I) Liability extends to professional service providers and the cost of unlawful overseas investment increases significantly
1. Liability extends to professional service providers
Article 48 of the Draft Measures introduces compliance obligations for professional service providers, i.e. they must comply with the laws and regulations, perform their duties diligently, observe professional standards and the regulatory rules, and ensure that the documents they prepare or issue contain no concealment, false record, misleading statement or material omission. Article 67 correspondingly adds legal liability for a professional service provider that: (1) provides services or issues documents while knowing or having reason to know that an investor is acting unlawfully; or (2) prepares or issues a report, opinions, certification or other documents containing concealment, a false record, a misleading statement or a material omission. The NDRC may circulate a notice of the violation and request regulators to take regulatory measures.
This arrangement reflects an extension to the outbound investment field of a regulatory philosophy similar to the ‘gatekeeper liability’ borne by professional service institutions in the capital markets. Although professional service institutions are not the primary decision-makers for investment, they are held to a higher standard of responsibility when engaged to provide services or issue documents. Their practice risks will focus on the identification and handling of key matters including project classification, control relationships, the amount of Chinese investment, assessments of sensitivity and the quality of the application materials.
2. Significant increase in the cost of unlawful overseas investment
The Draft Measures also refine and increase investors’ legal liability for non-compliant overseas investment. Article 59 provides that an investor undertaking a prohibited project, failing to complete approval or filing, or obtaining approval or filing by improper means may, in addition to the warnings and orders to rectify within a prescribed period already provided for under Order No. 11, be required to cease the investment or dispose of shares or assets within a prescribed period, have its unlawful gains confiscated, and be subject to a fine calculated in reference to the Chinese investment amount, with the responsible individuals also subject to fines. An offender’s outbound investment approval or filing application may also be rejected for three years, or the offender may be prohibited from conducting outbound investment for one to three years. The criminal liability provision serves as a bridging clause for conduct that may constitute a criminal offense; its specific application will continue to depend on the relevant criminal laws.
II. Conclusion
As the above analysis shows, the Draft Measures give detailed effect to the principles of the New State Council Regulation. Its issuance signals a systematic upgrade of the NDRC’s outbound investment regulatory framework. The Draft Measures broaden the scope of investors, extend the regulatory chain and scope, introduce national security reviews, strengthen substantive reviews and improve post-investment administration. They refine and tighten legal liability, respond to new forms of cross-border capital flows and the increasingly complex external environment in recent years, while embodying a regulatory approach of ‘full-process coverage, look-through supervision and coordinated governance’.
For investors, outbound investment compliance obligations administered by the NDRC may deepen comprehensively, both vertically and horizontally. Vertically, the system may move beyond the ‘strict entry, light exit’ model – focused on ex ante approval, filing or overseas reinvestment reporting for an individual project – and develop into lifecycle compliance obligations for the entire outbound investment. Horizontally, in addition to procedures administered by the NDRC, the Draft Measures demand closer coordination and integration with compliance systems for national security reviews, cross-border data transfers and technology exports. At the same time, the imposition of ‘gatekeeper’ liability on professional service providers, together with the substantial increase in the cost of violations for investors, will require all parties to reassess their transaction structures, timetables and internal controls. Although the final measures and supporting rules must still clarify the individual provisions and operational details, the overall direction towards a more stringent, substantive and granular regulation is clear. Outbound investment compliance will become more complex, demanding and consequential. Therefore market participants should closely monitor legislative developments, review and adjust their internal compliance processes at an early stage, and allow sufficient time for NDRC compliance procedures in material transactions, to effectively manage their legal and business risks.
For further information, please contact:
HE, Fang, Partner, JunHe
hef@junhe.com
[1] Where the investment involves participation in an equity incentive plan of an overseas listed company, the Notice of the State Administration of Foreign Exchange on Issues Concerning Foreign Exchange Administration for Domestic Individuals Participating in Equity Incentive Plans of Overseas Listed Companies (No. 7 [2012] of the State Administration of Foreign Exchange) applies.
