Today, July 1, 2026, the Chinese State Council’s Decree No. 837 comes into effect. This 34-article regulation for the first time comprehensively governs the outward investment of Chinese companies, organisations and individuals. From now on, their investments will be subject to ongoing state oversight: reporting to authorities, undergoing security reviews, and adapting their activity to China’s national objectives, including the protection of the country’s image and the so-called general security concept.
Although at first glance it may appear to be a measure focused on internal affairs, its reach extends further: China is the third-largest outward investor in the world, so a large part of global industry could be directly affected by the conditions this decree imposes on Chinese investors. This tighter control is particularly relevant in the case of Spain.
“China is the third-largest outward investor in the world, therefore a large part of global industry can be directly affected”
During Sánchez’s latest visit to Beijing, there was an explicit inclusion of promoting sustainable and high value-added investments, aiming to generate employment and build local capacity through training and technology transfer. However, Article 13 of this new decree prohibits the sending of technical personnel abroad, the organization of cross-border training, and the provision of remote technical assistance when it concerns state-restricted technologies: those related to rare earth processing, lithium battery manufacturing for electric vehicles (EVs), artificial intelligence algorithms, biotechnology, and aerospace guidance systems.
From informal practice to regulatory strategy
This decree does not introduce a radically new policy, but formalises a set of practices that had previously been applied in a patchwork fashion. The most recent illustration is how, on April 27, 2026, Beijing blocked the acquisition of ManusAI by Meta, demonstrating that Chinese companies cannot evade state control through corporate domicile changes. ManusAI, a Chinese-origin AI startup, had relocated its headquarters to Singapore before selling it for $2 trillion in a maneuver commonly described as Singapore washing. Article 13 states that, when technology and strategically sensitive know-how originate from China, the state enforces its control policy regardless of the registered domicile.
The key of the decree lies in the formalisation within a single legal framework of what had until now been applied inconsistently. In this way, it officially makes Chinese companies part of an institutional strategy rather than mere commercial actors. It also demonstrates how China has shifted from prioritising the volume of outward investment to the quality of that investment, safeguarding its most strategic assets. Decree 837 is, ultimately, the legal instrument that materialises that change.
“The decree officially makes Chinese companies part of an institutional strategy rather than commercial actors”
In a sense, Beijing is now applying to its own outward investors the logic that for decades it used with foreign companies seeking to enter its market: no tech transfer, no deal. In the 1980s and 1990s, foreign firms wanting access to China had to do so through joint ventures with local partners, designed not only to attract capital but also to transfer know-how.
Relevance for Spain
In the last two years, there has been a wave of investment in Spain with projects such as the CATL and Stellantis battery plant in Figueruelas, the electric vehicle assembly plant of Chery and Ebro in Barcelona, the Envision AESC battery factory in Extremadura, and the announced SAIC project to establish Europe’s first electric car factory in Galicia. All of them have been framed as reindustrialisation processes that will bring capital, employment, and technological know-how to regions with limited industrial capacity. The Memorandum of Understanding on Exchange and Cooperation in the Field of Economic Development, signed with China’s National Development and Reform Commission during Sánchez’s latest visit to Beijing, aims to fulfil that promise by promoting technology transfer activities. Yolanda Díaz has also met with some of these investors, including SAIC Motors, to push training tailored to the profiles demanded by the Asian multinationals.
“The assembly is carried out in Spain, but the technical knowledge that makes it possible remains in China”
The issue is that the underlying model behind several of these projects runs counter to this direction. The Figueruelas plant, for instance, requires the arrival of around 2,200 Chinese workers to operate the battery manufacturing technology. Assembly takes place in Spain, but the technical know-how that makes it possible remains in China. Although details of many of the other announced projects are not yet known, Article 13 of this new decree suggests they will follow a similar pattern. If Chinese investments cannot include a transfer of know-how linked to strategic technologies—such as EV batteries—then projects arriving in Spain related to those technologies will be subject to numerous restrictions.
The underlying logic
Decree 837 is structurally incompatible with the European Commission’s Industrial Action/Acceleration Act, known by its English acronym IAA. The IAA aims to raise the weight of the manufacturing sector in the EU’s GDP through four channels: streamlining permissions for industrial projects; imposing sectoral requirements for European participation and emissions limits in public procurement; conditioning foreign investment in strategic sectors; and designating industrial acceleration zones.
The so-called made-in-Europe criterion is the most controversial element of the IAA, triggering a vocal response from the Chinese government. This measure is a protectionist reaction to China’s trade and technology disruption in the market. Specifically, the requirement of 70% European participation in the automotive sector is intended to curb dumping, since Chinese EVs receive state subsidies that enable them to compete at a substantially lower price. Chinese investments arriving in Spain in this sector seek to establish themselves within European borders before this IAA requirement comes into effect. Yet the model used in these investments currently offers little real value to European manufacturing, being based solely on final assembly while the strategic phase occurs in China. Decree 837 now legally shields that model by retaining technology and know-how on Chinese soil, while the IAA and the memoranda signed by Sánchez attempt to attract real technology transfer.
