The Third Plenary Meeting of the 18th Party Central Committee of the Communist Party of China decided to establish a State Security Committee.  This part of the decision is presented at the sector of social governance for the purpose of improving the national security system and the country's security strategy.  It seems that the State Security Committee would be relevant more with maintaining internal domestic order than with safeguarding national security against foreign interference and invasion, which is collaborated with the explanations of the spokesman of the Ministry of Foreign Affairs, Mr. QIN Gang.

On November 13, 2013, in answering the inquiry of a journalist upon the purpose of China to set up the State Security Committee, Mr. Qin said the purpose is to improve the national security system and the country's security strategy.  In furtherance, Mr. Qin said the State Security Committee would make three kinds of people nervous, which are terrorists, separators, and extremists.  In short, all of the forces trying to threaten and sabotage the State security of China are sure to get nervous. 

It remains to be seen how the three kinds of people would be defined in practice and in law.  If it is easy to understand, by common sense though, what are the terrorists and separators, it is unclear who would fall within the definition of extremists. 

Compared with the “state security” as the safeguarding target of the State Security Committee to be established in China, there is “national security” as the regulatory target of the State Council regarding the merger and acquisition (M&A) transactions by foreign investors in China.

On  February 3, 2011, the State Council promulgated the “Notice of the General Office of the State Council on Launching the Security Review Mechanism for Mergers and Acquisition of Domestic Enterprise by Foreign Investors” (the Notice), which established the national security review system for M&A transactions by foreign investors in China.  On August 25, 2011, after a trial period of about six months of an interim regulation on the security review system, on August 25, 2011, the Ministry of Commerce (MOFCOM) finalized and issued the “Regulation on Implementing of the Security Review System for Mergers and Acquisitions of Domestic Enterprises by Foreign Investors” (the Regulation), which came into effect  September 1, 2011.  As you may see, the national security review system as established and specified under the Notice and the Regulation may have a broad impact on prospective foreign M&A transactions in China, but have nothing to do with “improving the national security system and the country's security strategy.”  An M&A of Chinese enterprise by foreign investors in China shall go through security review if foreign investors take de facto control of the Chinese enterprise and the Chinese enterprise is:

·         -A military or military-related enterprise surrounding a key or sensitive military infrastructure or a unit otherwise related to the military

·         -A national security-related enterprise regarding an important agricultural product, important energy and resource, important infrastructure, important transportation, key technology or major equipment manufacturing

By the way, there is no difference between “state security” and “national security” in Chinese.  They both are written as 国家安全 in characters or guo jia an quan in pinyin.