In recent years, China has strengthened its enforcement of the laws around national security. These laws involve the protection of state secrets, counter-espionage, export control, the administration of overseas non-governmental organizations, and foreign investment. In practice, foreign nationals visiting China for academic purposes, study programs and other similar activities may be subject to China’s national security laws and regulations regardless of their chosen field—whether in education, finance, technology, energy, healthcare, or other fields. Simply ‘not being a spy’ does not render the national security framework irrelevant to such individuals. In fact, the scope of interests protected by China’s national security laws is considerably broader than commonly assumed. For foreign nationals and institutions undertaking short-term visits, long-term study, research exchanges or business activities in China, understanding these national security laws and the associated risks is an indispensable precondition for lawful compliance.
In particular, the State Council’s Provisions on Outbound Investment (State Council Order No. 837, hereinafter referred to as the “Provisions”) establish a national security review mechanism, further extending the scope of national security reviews. While academic visits and study programs undertaken by foreign nationals in China are not directly tied to outbound investment, such activities may entail the cross-border transfer of information, data and technology, and thus trigger a security review under the Provisions. In light of this, we analyze herein the legal issues regarding national security reviews most closely associated with academic visits, study programs and research activities in China conducted by overseas institutions, together with the corresponding compliance recommendations.
I. National Security Review Mechanism for Outbound Investment
1. Principles of Outbound Investment
Article 3 of the Provisions set up the fundamental principles governing outbound investment: upholding the opening-up policy; implementing a comprehensive national security concept; balancing development with security and domestic interests with international considerations; improving outbound investment management and services; enhancing investment quality; and promoting open cooperation for mutually beneficial, win-win outcomes.
Article 5 of the Provisions requires investors to comply with the laws, regulations and the international practices, while respecting local customs and cultural traditions. Investors shall also adhere to business ethics, act with honesty and integrity, compete fairly, fulfill social responsibilities, and safeguard China’s image. They must not disrupt market competition, damage the environment, violate workers’ rights or endanger national security interests.
2. Security Reviews
Article 15 of the Provisions establishes a national security review mechanism for outbound investment (hereinafter referred to as “Security Review Mechanism”). The State Council’s investment authority, together with the commerce authority, and other relevant departments, shall conduct security reviews of outbound investment activities that affect or may affect national security, and the related transfers of assets, rights and interests. Entities and individuals must cooperate but not obstruct the review and comply with the review decisions.
3. Legal Liability for Violations of the Security Review Mechanism
Article 28 of the Provisions sets out the legal liability for violations and includes the following:
- Where a party refuses to cooperate with a security review, provides false materials, conceals material facts, or fails to comply with a review decision, the competent authority shall order rectification, confiscate the unlawful gains, and impose a fine;
- If national security is endangered, the relevant authority shall order measures to eliminate the impact and may prohibit outbound investment activities for a period of one to three years;
- Where the investment has already been made, the competent authority may order the suspension of the investment activities and require the disposal of the equity, assets or interests within a prescribed time limit.
Under Article 25 of the Provisions, where a foreign organization or individual endangers China’s sovereignty, security or development interests, the eligibility of the persons to work, stay or reside in China may also be restricted.
4. Controls on the Cross-Border Transfer of Technology, Data and Related Items
Article 13 of the Provisions prohibits investors from (i) exporting or using goods, technologies, services and related data whose export is prohibited by the State, or (ii) exporting or using export-restricted items without approval. It further prohibits the cross-border transfer of such items through dispatching technical personnel, organizing work abroad, providing technical guidance, or arranging cross-border training. Cross-border technology and data transfer is not limited to the physical export of goods; intangible transfers through personnel training, technical guidance, and academic exchange may also trigger regulatory scrutiny. The Security Review Mechanism therefore covers not only investment conduct, but also potentially the information acquisition, technical exchange, and data flows associated with such activity. This is particularly significant for overseas institutions organizing visits or conducting research and exchange programs in China.
II. Implications of the Security Review Mechanism for Study and Research by Foreign Nationals in China
For overseas institutions organizing visits, study programs, and research projects in China, the impact of the Security Review Mechanism may be indirect yet substantive. This arises not only from a review of a foreign visitor’s ‘investment conduct’, but also from the connection between the movement of people and the cross-border flow of technology, data and information.
Where a visiting foreign national works for a company that has already invested, or plans to invest in, sectors affecting China’s national security, the individual may undergo a security review. This review aims to prevent sensitive technologies, data and other national security information from being collected, accessed, or transferred overseas. Likewise, the following circumstances also warrant attention:
- Industry materials, market information, and other data collected during visits or research may fall within the scope of national security protection, export control lists, or cross-border data transfer requirements;
- Academic exchanges, research projects, or educational activities may involve investment and technology cooperation subject to national security reviews or export control reviews;
- Information sharing, data transmission, and cross-border research result exchanges in sensitive sectors require careful compliance management.
The principle of ‘coordinating development and security’ set up in Article 3 of the Provisions reflects China’s approach to national security governance. China continues to advance opening-up, while encouraging lawful international exchange and cooperation, with national security as a core policy consideration. National security and international cooperation are not mutually exclusive, but rather parallel objectives within the regulatory framework.
III. Compliance Recommendations
1. Pre-Departure Compliance Training
Before arranging travel to China, overseas institutions should provide compliance training covering:
- China’s national security legal framework, including the Counterespionage Law, the State Secrets Protection Law, and the Export Control Law;
- Identification principles of state secrets, controlled technologies and data;
- Compliance boundaries for information collection during stays in China;
- Response procedures when approached by national security authorities, including how to lawfully cooperate while protecting rights;
- Requirements under the Overseas Non-governmental Organizations Law for registration activity filing and fund management.
2. Risk Management for Visits and Study Programs
Prior to each visit or study program in China, overseas institutions should develop a tailored risk management plan including:
- An assessment of whether any planned activities involve sensitive sectors, key facilities, or controlled technology fields;
- For technical exchanges, joint research or training, an advance assessment of the export control implications and confirmation with the Chinese counterparts;
- Designation of a dedicated compliance officer for real-time support;
- Contingency planning including communication channels with the overseas institution’s legal department, external counsel and diplomatic/consular missions.
3. Practical Considerations During Stays in China
Foreign nationals should observe the following:
- When visiting enterprises, government authorities or research institutions, refrain from requesting unpublished materials and do not review, copy, photograph or disseminate classified documents;
- Avoid any photography, surveying, audio or video recording at military facilities, critical infrastructure, or other sensitive areas;
- Without lawful authorization, do not transmit non-public information obtained in China to overseas headquarters or third parties;
- Materials and data for cross-border transmission should undergo legal/compliance reviews to assess the risks of disclosing state secrets, or breaching export control or data-export regulations;
- When approached by national security authorities for a lawful investigation, cooperate while promptly contacting legal personnel to protect rights.
IV. Conclusion
China has strengthened the development of its legal national security regime in recent years. For foreign individuals and institutions conducting study tours, inspection visits, or academic research in China, staying informed about the evolving legal landscape is essential, thus there is no need for undue concern. The key lies in the thorough understanding of the applicable laws, establishing robust compliance management mechanisms, and conducting activities within permitted scopes.
Stakeholders should understand the meaning of ‘coordinating development and security’ set out in Article 3 of the Provisions. National security compliance requirements are not intended to restrict all international exchanges, but rather to guide overseas institutions towards lawful and compliant activities in China while safeguarding national security interests. China’s market opportunities remain substantial for those operating within the rules and regulations.
For further information, please contact:
LAO, Chengzhe, Partner, JunHe
laochzh@junhe.com
