Chinese Investment and Foreign Investment Screening in East Asian Developed Economies: The Role of National Security

Abstract The global proliferation of Chinese investments has raised national security concerns among many host States. Western economies such as the United States and Australia have strengthened their foreign investment screening (FIS) regimes partially in response to these concerns. Korea and Japan, as representative East Asian economies, have also joined the trend of strengthening FIS regimes to manage security risks associated with foreign investments. This article investigates whether national security has also emerged as a focal point of confrontation between developed East Asian countries and China in international investment landscape. It investigates China’s legal concept of national security and its growing importance in the country’s foreign investment policy. It then examines the FIS regimes in Korea and Japan as well as their practical operations in relation to Chinese investments, with a focus on how national security concerns have shaped their approaches to Chinese investments. This article argues that a national security-focused confrontation has emerged between developed East Asian countries and China in the international investment landscape as a result of their shared national security concerns. Korea and Japan should avoid politicising their FIS regimes in order to prevent potential violations of international investment law and contribute to East Asian economic harmony.