EU adopts new foreign‑investment screening as China tightens outbound investment rules

The European Union approved a reform to tighten control over foreign direct investment, targeting third‑country investors such as China and Russia. The new framework requires member states to screen acquisitions and investments in strategic sectors—including defence, finance, semiconductors, telecommunications, transport, energy, artificial‑intelligence and critical raw materials—by entities ultimately owned or controlled by non‑EU parties. It replaces the 2020 FDI rules and will become operative 18 months after its publication in the Official Journal.

At the same time, China’s State Council issued new regulations that subject Chinese companies seeking to invest abroad to a national‑security review. The rules classify overseas projects as encouraged, restricted or prohibited, aiming to curb the outflow of capital, technology and talent and to protect strategic industries. Both measures reflect escalating geopolitical competition and a shift toward greater economic fragmentation between the EU and China.