Japan to vet investments by firms under China state influence

New regulations remove past loopholes that avoided prior notification

20250122 China trade Japan

In a move mostly expected to affect Chinese companies, the Japanese government plans to tighten investment screening in order to remove loopholes that may have allowed leakages of national security information.

YOHEI HIROSE and RYUTO IMAO

TOKYO -- Japan's Ministry of Finance will introduce new regulations for foreign investors that could potentially cooperate with foreign governments in collecting intelligence, particularly Chinese companies, Nikkei has learned.

China enacted its National Intelligence Law in 2017 that obliged individuals and organizations to cooperate with the state's intelligence activities. The fact that a Chinese company subject to such a legal requirement had invested in a large Japanese telecommunication operator -- and therefore a part of critical national infrastructure -- led to the U.S. government to ask its Japanese counterpart about the handling of such an investment. 

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