Massive corporate harvest awaits reaping

Over the past decades, the cumbersome "approval and filing" processes for foreign investment in China have been significantly simplified as a result of further opening up of the domestic market and China's entry into the World Trade Organization, Zhao said.

After 40 years of reform and opening-up, ensuring national security and industrial security in fields like aviation and energy has become one of the top concerns. Economic benefit alone cannot be the prime goal. For instance, the merger control review under the Anti-Monopoly Law has proved to be another effective legal tool, he said.

Even though China's Foreign Investment Law has established a negative list in its administrative regime for managing foreign investment in order to expand and diversify foreign investment opportunities, the government's security review mechanisms certainly require improvement to protect national security and better align with international regulations, said Gavin Guo, international partner of the Shanghai-based Kewei Law Firm.

A negative list determines which economic activities are prohibited, while all others are considered open to foreign investment.

In comparison with the Foreign Investment Risk Review Modernization Act adopted by the United States, the Foreign Direct Investment Regulation and Foreign Investment Reform used in the European Union and Australia, respectively, it is common for countries to carry out security reviews on foreign investment that affects or may affect national security, according to information provided by the Ministry of Commerce.

"The measures streamline the security review process and establish a new, comprehensive mechanism, which is in line with practices in other major jurisdictions," Guo said, noting the new security review mechanism takes into account both practical experiences from the previous administrative system and national security reviews internationally.