According to the Measure for Security Review of Foreign Investments, the types of transactions carried out by foreign investors directly or indirectly in China that may be subject to security review include the following: (i) investments by foreign investors by themselves or jointly with other investors, that are investing in any new project or establishing a business in China; (ii) foreign investors that are acquiring equity or assets of domestic business through mergers and acquisitions; and (iii) foreign investors making investments into China through other methods
Foreign investments in the important information technology and Internet products and services, major equipment, key technologies sectors must be declared to the office of the Operational Mechanism (the office is set up under the Measure for the review of foreign investments), to the extent that the investment has a bearing on national security and the that actual control of the investee enterprise is required. Actual control has been been said to exist when the total amount of foreign investment is larger than 50% or the foreign investor is able to affect the board, shareholder meetings or the essential personnel who decide the operation, human resources, finance or key technology of the company.
Pursuant to review, the Operational Mechanism can decide that the foreign investment will not affect national security, in which case the security review has been passed. If it is decided that the foreign investment will affect national security, the parties to the investment may be required to accept the attached conditions which will govern the investment. If the Operational Mechanism decides to prohibit the investment, the same shall not be carried out.

According to the revised Art. 4 of the "Decision of the State Council on Amending the Rules for the Implementation of the Law of the People's Republic of China on Foreign-funded Enterprises", sectors in which the establishment of foreign-capital enterprise is forbidden or restricted will be determined as per the state guidance for foreign investment orientation and guiding catalogue of industries for foreign development. According to the Art. 5, an application for the establishment of foreign-funded enterprises will not be approved under one of the following circumstances: (a) detrimental to the sovereignty of China or the public interest of society; (b) endangering China's national security; (c) violation of Chinese laws and regulations; (d) does not meet the requirements of China's national economic development; (e) may cause environmental pollution; (f) may cause environmental pollution.

According to Art. 14 of the Provisions on the Administration of Telecommunications Enterprises with Foreign Investment, the project proposal and feasibility study report of the joint venture must include a business forecast and development planning, as well as an analysis of the return on investment. The aforementioned requirement to submit a joint venture project proposal and feasibility study report is no longer applicable. Instead, according to Art. 11-13 of the Regulations on the Administration of Foreign-Invested Telecommunications Enterprises, for the establishment of foreign-invested telecommunications enterprises operating basic telecommunications services or value-added telecommunications services, investors must submit a project application report, among other details on foreign investors regarding the quality of foreign investors. The project application report includes details such as the names and basic information of the parties to the joint venture, the total investment of the business to be established, the registered capital, the proportion of the capital of each party, the type of business applied for and the duration of the joint venture. In addition, according to Art. 3 of the Implementing Rules of the Law of the People's Republic of China on Foreign Capital Enterprises, foreign capital enterprises to be established must benefit the development of China's national economy and be capable of achieving remarkable economic results.

According to Art. 2 of the Provisions on the Administration of Foreign Invested Telecommunications Enterprises (FITE Provisions), in order to operate as a foreign-invested telecommunications enterprise, the enterprise providing telecommunications services has to be established as joint venture between foreign and Chinese investors within the territory of China. The formation of such a joint venture must be pre-approved by the Ministry of Industry and Information Technology (MIIT) and approved by the Ministry of Commerce. Moreover, according to Art. 10 of the law, it is also required that foreign investors in value-added telecommunications services must have good performance and operational experience in operating value-added telecommunications services.

China's telecom laws require all foreign firms that provide data center or cloud computing services to enter into a joint venture with a Chinese firm and obtain an internet data center license. So far, the data center industry is not open to foreign investment in principle, but qualified Hong Kong and Macau capital is actually allowed to set up sino-foreign joint ventures to operate a data center business, with the proportion of equity interest of Hong Kong and Macao not exceeding 50%. Moreover, they need to obtain the approval of the Ministry of Industry and Information Technology's Communications Development Department for the "validation of foreign investment in operational telecommunications business" and the Ministry of Commerce's approval of the "Foreign Investment Enterprise Approval Certificate".

Under the Negative list, foreign investment in radio stations, television stations, radio and television transmission networks, radio and television satellites, satellite uplink stations, satellite receiving stations, microwave stations, internet audio-visual program services, cyber culture operations (except for music) and internet information dissemination services (except for contents opened up in China's WTO commitments) is prohibited. It is also prohibited to engage in the business of video broadcasting by order of radio and TV and the installation services of ground receiving facilities for satellite TV broadcasting.

Internet news collecting, editing and publishing services are reserved for State media (or its controlled subsidiaries) and news media controlled by the Party news department. Private investment is expressly prohibited in news collecting and editing services.
As per the 2020 Negative List, investment in internet news services is prohibited. It also provides that the printing of publications must be controlled by the Chinese Party.
The New Regulations also provide that the Government may have a “special management share” in certain internet news providers. The Cyberspace Administration of China (CAC) does not elaborate on the meaning of the special management share. It is understood that the Government could use any special management share in a Internet News Provider to retain its control over certain issues. It is not clear whether the regime would apply to all types of Internet News Providers, including those which are privately-owned.
Additionally, the Provisions on the Management of Internet News Services issued by the CAC, like the old rules, ban Sino-foreign equity joint ventures, Sino-foreign cooperative joint ventures, or wholly foreign-invested enterprises from engaging in the internet news industry. Any cooperation involving internet-based news information services and foreign-invested enterprises must be reported to the national CAC for security assessment.
The Provisions on the Management of Internet News Services also broadened the definition of “internet news information services” to “services of collecting, editing, and releasing internet news information; reposting such news information; and providing a platform to spread such news information.” They also broaden the definition of “news information” to include relevant reports and commentaries on politics, the economy, military affairs, foreign affairs, and other public affairs, as well as relevant reports and commentaries on social emergencies.

According to Art. 2 of the Provisions on the Administration of Foreign Invested Telecommunications Enterprises (FITE Provisions), in order to operate as a foreign-invested telecommunications enterprise, the enterprise providing telecommunications services has to be established as joint venture between foreign and Chinese investors within the territory of China. In addition, pursuant the Art.6 of the law, foreign investment in value-added telecommunication services (including basic telecommunications services in the wireless paging business) is capped at 50%. The formation of such a joint venture must be pre-approved by the Ministry of Industry and Information Technology (MIIT) and approved by the Ministry of Commerce. Moreover, according to Art. 5, to run the value-added telecommunication services, the minimum registered capital of a foreign investment to operate a national or cross-provincial, autonomous regions, municipalities enterprise is 10 million RMB, the minimum registered capital of a foreign investment to operate a provincial, autonomous regions and municipalities is 1 million RMB.

Internet publishing, including online games, is a sector where investment is prohibited. This sector has been added in the 2015 Foreign Investment Industrial Guidance Catalogue. As per the 2020 Negative List, foreign investment in internet publishing service (except music) is prohibited.

Since 2015, investment in the manufacturing of telecommunication facilities and other electronic devices is no longer prohibited as restrictions were relaxed in the 2015 Foreign Investment Industrial Guidance Catalogue. However, caps might still apply. As per the 2020 Negative List, investment in the manufacturing of satellite television broadcasting ground receiving facilities and key component production is prohibited.

According to Art. 6 of the Provisions on Administration of Foreign-Invested Telecommunications Enterprises, the capital contribution ratio of foreign investors in foreign-funded telecommunications enterprises operating basic telecommunications services (excluding wireless paging services) shall not exceed 49% in the end. However, in practice, all telecommunication companies are Chinese. In addition, the proportion of capital contribution between Chinese investors and foreign investors in foreign-invested telecommunications enterprises in different periods shall be determined by the industry and information technology department of the State Council in accordance with relevant regulations.
In addition, according to Art. 5, if the enterprise is engaged in the basic telecom business within a province, autonomous region, or municipality directly under the Central Government, it shall have a registered capital of not less than 100 million yuan (Approx. USD 14,000,000). However, if the enterprise is engaged in the basic telecom business nationwide or beyond a single province, autonomous region, or municipality directly under the Central Government, it shall have a registered capital of not less than 1 billion yuan (approx. USD 140,000,000).
Under the Special Management Measures for Foreign Investment Access (Negative List) 2020, authorities must treat foreign investors with the same degree of accommodation as domestic investors unless set out otherwise in the negative list. While no caps have been set out in the negative list with regard to basic telecommunication services, the negative list provides that the basic telecommunication business must be controlled by the Chinese party.

According to Art. 6 of the Provisions on Administration of Foreign-Invested Telecommunications Enterprises, for foreign-funded telecommunications enterprises operating value-added telecommunications services (including online database storing and searching; electronic data exchange; online data processing and transactions processing; domestic multiparty communication services; IP-VPN; ISP; ICP and video teleconferencing), the proportion of foreign investors' capital contribution in the enterprise shall not exceed 50% in the end. An exception applies to e-commerce, for which 100% foreign equity and ownership is allowed. Furthermore, the proportion of capital contribution between Chinese investors and foreign investors in foreign-invested telecommunications enterprises in different periods shall be determined by the industry and information technology department of the State Council in accordance with relevant regulations.
In addition, according to Art. 5, if the enterprise is engaged in the value-added telecom business within a province, autonomous region, or municipality directly under the Central Government, it shall have a registered capital of not less than 1 million yuan (Approx. USD 137,000). However, if an enterprise is engaged in value-added telecom businesses nationwide or beyond a single province, autonomous region or municipality directly under the Central Government, it shall have a registered capital of not less than 10 million (Approx. USD 1,370,000).
According to Art. 2, a foreign-invested telecommunications enterprise refers to an enterprise operating telecommunications business jointly invested and established by foreign investors and Chinese investors in the form of Sino-foreign joint ventures in accordance with the law within the territory of the People's Republic of China.

As per Art. 10 of the Government Procurement Law, the government must procure domestic goods, construction and services except when: (i) the goods, construction and services needed are not available in China and cannot be required on reasonable commercial terms; (ii) the items to be procured are for use abroad; (iii) otherwise provided for by other laws and administrative regulations.

In the Chinese public procurement regulatory framework, there is an active Buy Chinese policy. In principle, only Chinese companies are allowed to bid in public tenders and foreign ones are only allowed under exceptions. Government agencies and related entities are required to purchase equipment and technology from the Chinese state or privately owned manufacturing companies. There are also reports of insufficient publicity of public tenders. Furthermore, it is reported that central and local entities tend to implement in a very broad manner those provisions, going far beyond discriminations imposed by the law.

China is not a party to the World Trade Organization (WTO) Agreement on Government Procurement (GPA). However, the country has been an observer of the WTO GPA since 2002.

The Directive Number 618 aims to promote the usage of Chinese products by creating a directory of accredited products that are eligible for government procurement contracts.
In order to gain accreditation, companies and their products in these fields must satisfy a number of criteria. Accreditation is for two to four years and can be renewed. To qualify for the catalogue a product must have been produced by an enterprise that has full ownership of intellectual property in China through its own research and development. Alternatively, a product may have been produced by a Chinese enterprise, work unit, or citizen that has legally obtained the China intellectual property rights or legal rights. Furthermore, the product trademark must be owned by a Chinese company registered in China and the product must be certified by the China National Certification Administration or its provincial departmental branches.
The application guidelines attached to the notice impose additional conditions that could present a high hurdle to non-Chinese companies and products created by non-Chinese companies appear to be at a severe disadvantage in gaining accreditation under the program. In particular, any use, disposal, or improvement of the intellectual property underlying the accredited product must not be subject to any foreign restrictions. Furthermore, any trademark associated with the product must be registered in China first and may not be restricted by foreign brands.
The 2010 Notice Launching the National Indigenous Innovation Product Accreditation Work authorizes procurement of indigenous innovation products that use IP licensed from foreign firms, rather than requiring that products use IP originally developed in China. Applicants for indigenous innovation product status must have exclusive rights to the product's trademark or have the right to use the trademark in China, but the trademark no longer has to be registered in China.