China stepping up efforts to attract foreign investment — New measures and new trends

This document has been prepared by Charles Russell Speechlys LLP for informational purposes only. Refer here for the PDF version.

As 2026 marks the outset of China’s 15th Five-Year Plan, foreign investment is being positioned as a key lever to stabilise China’s foreign trade and support high-quality development. From 10 to 11 January 2026, the National Commerce Work Conference was convened in Beijing, during which the Ministry of Commerce (the “MOFCOM”) stated it will further deepen the promotion of foreign investment through a range of measures such as expanding opening-up, optimising services, and strengthening safeguards. 

Specifically, the national commerce system will implement initiatives to boost domestic consumption, build the “Shop in China” brand by cultivating new service sector growth engines, and optimise trade-in policies for consumer goods. On the trade front, efforts will be made to upgrade goods trade, broaden service trade and exports, and accelerate the development of digital and green trade, reinforcing the “Export to China” brand. To attract foreign investment and enhance the “Invest in China” brand, China will further open up the services sector, enhance investment‑promotion mechanisms, and strengthen support services for foreign enterprises. In addition, China will adopt a more strategic approach to outbound investment, guiding the global deployment of industrial and supply chains, expanding overseas service networks, deepening Belt and Road cooperation, and improving risk‑management capabilities.

To advance these strategic ambitions, the MOFCOM has outlined several key action plans. One of plans focuses on deepening market liberalisation through the continued “subtraction approach” to the Negative List for Foreign Investment Access (the “Negative List”), further easing market entry and safeguarding fair competition among all market participants. With all foreign investment restrictions in the manufacturing sector now removed nationwide, the authorities will revise and release the 2026 Negative List, consolidating the progress made in manufacturing while steadily widening opening‑up in service industries, promoting pilot openings in telecommunications, healthcare, education and other sectors. 

Most recently, on 24 December 2025, the National Development and Reform Commission (the “NDRC”) and the MOFCOM issued the 2025 edition of the Catalogue of Encouraged Industries for Foreign Investment, setting out measures aimed at attracting and deploying foreign capital more effectively. The catalogue, which took effect from 1 February 2026, aims to attract more foreign investment towards advanced manufacturing, modern services, high-tech, energy conservation and environmental protection sectors. It also encourages greater foreign investment in the central and western regions, the northeastern region and Hainan.

Another noteworthy action plan is the emphasis on improving the overall business environment and safeguarding the principle of national treatment for foreign‑invested enterprises. In this connection, the MOFCOM and the NDRC have jointly released the 2025 Action Plan for Stabilising Foreign Investment (the “2025 Action Plan”). 

The 2025 Action Plan is significant in that it signals the Chinese authorities’ determination to reduce regulatory friction, remove practical barriers and further promote foreign investment given the geopolitical and economic challenges facing China. Authorities are to implement 20 measures under the 2025 Action Plan, including:

• Support pilot zones in implementing opening-up policies related to value-added telecommunications, biotechnology and wholly foreign-owned hospitals, providing full-cycle services for foreign-invested projects in these areas.
• Facilitate multinational corporations to establish investment companies in China in terms of foreign exchange administration, cross-border movement of personnel and cross-border data flows. Foreign-invested investment companies will also be allowed to access domestic loans for equity investments in China.
• Optimise the framework for mergers & acquisitions (M&A) by foreign investors in China. Existing M&A rules will be amended under the framework of the Foreign Investment Law, the legal processes for M&A transactions will be further streamlined and the requirements for cross-border share swaps will be simplified. 
• Accelerate negotiations on mutual visa exemption agreements and continue to expand the coverage of China’s unilateral visa-free policies. Policies on port visa, visa-free transit and regional visa-free entry will be optimised to promote cross-border movements.

At the local and municipal level, authorities have been rolling out measures to boost foreign investment. For instance, on 18 December 2025, China marked a historic milestone in its economic opening-up by initiating full-island special customs operations in the Hainan Free Trade Port (the “Hainan FTP”). As the world’s largest free trade port by geographic area, the overarching goal of this full‑island customs regime is to transform Hainan into a globally competitive centre for trade, investment, tourism, and technological innovation, creating new and expanded opportunities for foreign businesses. Under this new arrangement, the entire island is designated as an independent customs supervision zone—effectively creating a “domestic yet offshore” environment, allows Hainan to adopt unique trade policies distinct from Mainland China, such as more relaxed customs controls, broader tariff exemptions, and simplified cross‑border movements of goods and capital. 

In addition, the People’s Government of Shenzhen has released the Implementation Methodology for Further Enhancing the Attractiveness and Utilisation of Foreign Investment in Shenzhen, which took effect on 1 January 2026 and will be valid for three years. The methodology provides financial incentives to qualified foreign-invested enterprises. In broad terms, foreign-invested enterprises in Shenzhen with annual “new actual foreign investment amount” exceeding USD50 million during 2023-2027 are entitled to receive incentives ranging from 1% to 3% of such amount, capped at RMB50 million or RMB20 million for each enterprise per year, depending on the industrial sectors.
 
Shanghai has also introduced measures to encourage reinvestment. On 26 December 2025, the Shanghai Municipal Development and Reform Commission, along with ten other municipal authorities, issued the Several Measures to Encourage Reinvestment by Foreign-Invested Enterprises in Shanghai (the “Shanghai Measures”). These local measures implement the national policy framework established by the Circular on the Implementation of Several Measures to Encourage Foreign-invested Enterprises to Reinvest in Mainland China (the “Circular”) issued on 18 July 2025 by several Chinese authorities including the MOFCOM and the NDRC. While the Circular focuses on overarching issues such as land resources, taxation, foreign exchange, and financing, the Shanghai Measures drill down into more industry‑specific and locally tailored provisions aligned with Shanghai’s economic structure and investment priorities. Its key measures include flexible land‑use means, optimise the process of foreign exchange registration and funds utilisation, streamlined licensing for foreign‑invested food retail chains, and expanded Qualified Foreign Limited Partner (QFLP) pathways to better facilitate the deployment of foreign capital.

In light of the above, it is widely expected that the Chinese authorities will continue their efforts to promote foreign investment in China and more preferential measures will be issued in the near future. We will closely monitor the progress and provide updates as appropriate.

If you would like to discuss the latest regulatory developments affecting foreign investment in China, please do not hesitate to reach out to the authors, Shirley Fu and Keira Wu.

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