China’s 2025 Foreign Investment Action Plan: Unlocking Strategic Opportunities
On 19 February 2025, the Ministry of Commerce and National Development and Reform Commission officially released the 2025 Action Plan for Stabilizing Foreign Investment (hereinafter “Action Plan”), a comprehensive initiative aimed at stabilizing and promoting foreign investment.
This plan outlines 20 key measures designed to enhance market access, encourage strategic industries, and improve the overall business environment for foreign investors. In this article, we will delve into the four most significant measures of this plan and explore how they create strategic opportunities for global businesses.
Background — Understanding this Action Plan
The Action Plan is part of China’s broader strategy to maintain high-level openness and attract foreign capital despite global economic uncertainties. It builds upon existing policies and introduces new incentives to encourage foreign investment across various sectors.
Key Measures of this Action Plan
China actively promotes independent liberalization in several areas, including telecommunications, healthcare, education, and culture, by expanding the scope of pilot projects and optimizing policies to facilitate the landing of foreign-invested projects.
At the same time, it is completely removing restrictions on foreign investment in manufacturing, revising the negative list for market access, expanding pilot projects for service sector liberalization, promoting the liberalization of the biomedical sector, and encouraging foreign equity investment in China, aiming to attract more high-quality foreign investment in the long term.
- Innovative Policies for Domestic Reinvestment
One of the most notable aspects of the Action Plan is its focus on encouraging foreign companies to reinvest their China-earned profits back into the domestic market. This initiative aims specifically to create pathways for foreign businesses to deepen their commitment to the Chinese market through simplified procedures, enhanced financial services, and optimized project filing management.
Work on this reinvestment policy framework has already begun, with initial considerations focusing on improving convenience for domestic reinvestment by foreign enterprises. The policy will streamline related procedures, enhance financial services, optimize project filing management, and create more efficient channels for reinvestment.
In addition, the Action Plan removes restrictions on the use of domestic loans by foreign-invested companies; optimizes the rules for foreign-funded mergers and acquisitions and lowers the threshold for cross-border share exchanges, so that mergers and acquisitions by foreign-funded enterprises in China will be more efficient and transparent.
- Enhanced Encouragement for Strategic Industries
The Action Plan prioritizes the revision and expansion of the catalog of encouraged foreign investment industries, creating targeted incentives for investments in priority sectors. The National Development and Reform Commission has initiated the process to promptly release the 2025 version of this catalog according to established procedures, which will increase entries in advanced manufacturing, modern services, high-tech industries, and energy conservation sectors. This initiative encourages more foreign investment in China’s central, western, and northeastern regions, supporting balanced regional development and creating new market opportunities for foreign enterprises.
- Strengthened Service Guarantees and Business Environment
In terms of personnel movement and trade facilitation, the operational efficiency of foreign-funded enterprises has been further enhanced.
The facilitation of talent mobility among multinational corporations has been enhanced through expediting the negotiations of bilateral visa exemption agreements, refining visa administration policies, and implementing comprehensive updates to the Guidelines for Foreign Business People’s Working and Living in China.
In the realm of trade facilitation, the systematic optimization of origin certification processes, implementation of imported equipment verification regimes, and enhancement of AEO certification procedures under the international trade facilitation program will effectively mitigate operational expenditures for foreign-invested enterprises.
Concurrently, the establishment of enhanced intellectual property rights protection mechanisms coupled with comprehensive filing assistance initiatives will institutionalize a secure commercial ecosystem, thereby reinforcing foreign enterprises’ strategic market positioning through risk mitigation and confidence-building measures that align with long-term growth objectives in the Chinese market.
The Action Plan emphasizes implementation, with all provisions required to be executed and show effective results by the end of 2025. This focus on practical execution demonstrates China’s commitment to ensuring these measures deliver tangible benefits for foreign investors.
The plan also specifies that various departments will issue supporting policy documents to form a comprehensive “1+N” foreign investment stabilization policy framework.
Conclusion
Foreign investors play a crucial role in China’s economy, contributing significantly to employment, tax revenue, and trade. The strategically timed implementation of this initiative demonstrates remarkable synchronicity with contemporary global economic trajectories, particularly as international capital flows exhibit sustained stagnation amidst intensifying geopolitical tensions and multifaceted external challenges. This temporal alignment underscores the policy’s responsiveness to prevailing macroeconomic conditions characterized by diminished cross-border direct investment volumes and escalating uncertainty in global trade environments.
This Action Plan presents significant opportunities for global businesses looking to establish or expand their presence in the Chinese market. By focusing on expanded market access, strategic industry encouragement, domestic reinvestment promotion, and strengthened service guarantees, China demonstrates its commitment to creating a favorable investment environment.
As implementation proceeds throughout 2025, businesses should closely monitor developments and engage with relevant authorities to maximize the benefits of this comprehensive investment initiative. For foreign investors, understanding both the opportunities and regulatory requirements in China is crucial for success in this dynamic market.
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