The House of Representatives on Tuesday voted in favour of such a motion, despite opposition by the government and most members of centre-right parties.
The Senate had approved the proposal last year.
Opponents argued that state intervention was counter-productive and went against the rules of the World Trade Organization (WTO).
Economics Minister Guy Parmelin said innovative Swiss companies needed direct foreign investment and restrictions risked harming the country’s economy.
However, supporters said it was time to establish a legal basis to stop foreign investors who might “pose a threat to Switzerland’s security and public order”.
About 50 Swiss companies have been taken over by Chinese firms over the past five years, according to a survey cited by the Neue Zürcher Zeitung newspaper.
The Swiss government now has to draft a bill which includes a legal basis to monitor direct investments by foreign companies and the creation of a control authority. The more detailed proposals still need to be discussed by parliament at a later stage.
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Volunteering can have a positive effect on mental health. According to a survey conducted in Switzerland, Germany and Austria, people who volunteer for others also strengthen themselves.
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Twint is being used more and more frequently to make purchases at the till or transfer money to friends using a smartphone. By the middle of the year, the payment app already had more than six million users in Switzerland.
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If you want to start a conversation about a topic raised in this article or want to report factual errors, email us at english@swissinfo.ch.
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Swiss government rejects takeover restrictions on Chinese firms
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The Swiss government has dismissed talk of introducing investment controls on Chinese companies despite requests from parliament to examine the risks.
As Chinese economy slows, Swiss seek greater access
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Presence of China’s vice president at WEF comes at a time of slowing economic growth at home and growing scrutiny of Chinese investments abroad.
Sinochem and ChemChina move closer with Syngenta appointment
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A Sinochem executive is taking over the China operations of Syngenta, the Swiss subsidiary of rival agribusiness giant ChemChina.
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If you want to start a conversation about a topic raised in this article or want to report factual errors, email us at english@swissinfo.ch.