{"id":10136,"date":"2022-05-09T07:30:06","date_gmt":"2022-05-09T07:30:06","guid":{"rendered":"https:\/\/focus.cbbc.org\/?p=10136"},"modified":"2025-04-23T09:41:36","modified_gmt":"2025-04-23T09:41:36","slug":"what-does-the-national-security-investment-act-mean-for-british-businesses-in-china","status":"publish","type":"post","link":"https:\/\/focus.cbbc.org\/what-does-the-national-security-investment-act-mean-for-british-businesses-in-china\/","title":{"rendered":"What does the National Security Investment Act mean for British businesses in China?"},"content":{"rendered":"

The NSI Act pre-dates the end of the UK-China \u2018Golden Era\u2019, and should not be interpreted as the government seeking to make the UK less attractive to Chinese investors, writes Joe Cash<\/strong><\/span><\/h2>\n

The National Security Investment Act has received Royal Assent and been in force since January 2022. Long before the NSI Act became a topic for debate in Parliament, as the NSI Bill, the regime had attracted the attention of those working in UK-China trade, not least because in 2018 the British government brought a draft of the legislation to China for consultations with stakeholders in the market. The new legislation creates an independent investment screening mechanism on UK national security comparable to the US\u2019 CFIUS regime. The NSI Act is broad in its scope and powers, and companies and investors in both the UK and China should ensure they are familiar with its requirements to ensure compliance when considering deals between the two countries.\u00a0<\/span><\/span><\/p>\n

Be advised that the NSI Act is actor-agnostic; it is not orientated explicitly towards Chinese companies, nor is it expected to be a significant barrier to Chinese firms looking to invest in the UK.<\/span><\/p>\n

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Background<\/span><\/h4>\n

The bill became law on 4 January 2022, and expands significantly the UK government\u2019s existing powers to screen investments on national security grounds. The NSI Act is implemented through a mandatory notification system that is in force for acquisitions in seventeen specific sectors \u2013 similar to that used in the US CFIUS regime. In addition to this, the UK government now has the power to \u2018call in\u2019 suspect transactions for an in-depth review where it has reason to suspect that the deal presents a risk to national security. Under both circumstances, the UK government can now impose conditions and unwind or block the acquisition of a UK entity or its intellectual property. That said, analysts do not anticipate the NSI Act to be a particularly intrusive piece of legislation \u2013 what will and will not trigger an investigation is relatively intuitive.\u00a0<\/span><\/span><\/p>\n

The UK is not alone in having introduced a national security investment regime. CBBC members should already be familiar with China\u2019s 2019 Foreign Investment Law, while the European Union and Australia both introduced similar frameworks back in 2020 \u2013 all modelled on the aforementioned CFIUS regime.<\/span><\/p>\n

The NSI Act has nothing to do with China. Indeed, its legislative history predates today\u2019s tensions by several years; when it was first aired in China on its 2018 world tour, the UK and China were in the midst of their \u2018Golden Era\u2019. Rather, when passing through Parliament, the bill attracted the attention of MPs with a more hawkish disposition toward China and who saw it as a way of reducing the attractiveness of the UK as an investment destination to Chinese investors whom they considered a threat.<\/span><\/p>\n