China’s Ministry of Commerce (MOFCOM), the National Development and Reform Commission (NDRC) and the Ministry of Finance (MOF) have jointly released the Action Plan for Stabilising and Optimising the Utilisation of Foreign Investment. The plan sets out 15 measures across five areas: market access, investment facilitation, investment promotion, service guarantees and foreign capital management. It succeeds the 2025 Action Plan for Stabilising Foreign Investment. The addition of the MOF as a co-issuer signals a stronger fiscal component to this year’s approach.
Market access in finance, pharmaceuticals and services
With restrictions on foreign investment in manufacturing now fully lifted nationwide, the plan turns its attention to the services sector. The measures include:
- Foreign institutions can participate in treasury bond futures risk management and fund investment advisory services.
- Cross-border financing is facilitated for foreign financial institutions, alongside clearer listing pathways and a new route for foreign private equity and venture capital funds to act as strategic investors in listed company issuances.
- Pharmaceuticals and healthcare pilots are extended, including cross-border segmented production of biologics and, prospectively, chemical drugs.
- New education pilots are proposed for vocational training, schools and high-level universities.
For multinationals in these sectors weighing an entry into China, the plan points to a market that is opening in a targeted way. This differs from the broader manufacturing liberalisation seen in previous years.
Cross-border M&A and data flow changes
The plan commits to revising the regulatory framework for foreign investors acquiring domestic Chinese enterprises. The stated aim is to make cross-border mergers and acquisitions more straightforward to execute. It also addresses the cross-border data negative list, which sets out what categories of data can move out of China without additional approval. These measures target the practical friction points that have slowed foreign transactions in China. They do not appear to expand the scope of what foreign investors are permitted to do.
Reinvestment incentives and fair treatment
For existing foreign-invested enterprises (FIEs), the plan’s most relevant provision concerns reinvestment. It reaffirms the existing withholding tax deferral for foreign investors who reinvest distributed profits directly into China. This policy has been in place for some years but has, according to the plan, been applied inconsistently by local authorities. The stated intention is to ensure consistent delivery rather than to introduce a new incentive.
The plan also sets out several related commitments:
- More reinvestment projects will be added to the major and key foreign investment project lists, which carry expedited land, utility and approval support.
- National treatment for foreign-funded enterprises is reiterated, with stronger fair competition review in government procurement and a new mechanism for handling online infringement complaints affecting foreign enterprises.
- Foreign firms taking part in domestic consumption initiatives, such as consumer goods trade-in programmes and tax refunds for overseas shoppers, gain further support.
Investment promotion and capital management reforms
The plan also advances the “Invest China” brand initiative. It calls on local governments to publish clearer lists of foreign investment projects eligible for local incentives. A pilot evaluating provincial investment promotion effectiveness is also set to expand nationally.
Separately, the plan commits to digitalising foreign investment registration and reporting. This includes streamlining processes such as foreign exchange registration and fixed-asset investment approvals.
Implications for foreign investors
For multinationals considering market entry, the sector-specific measures are more relevant than the headline announcement. Finance, pharmaceuticals, healthcare and education are named specifically, and companies in these fields should track how the pilot programmes are implemented at the local level, since national policy of this kind typically depends on provincial and municipal follow-through.
For FIEs already operating in China with accumulated profits, the reinvestment provisions warrant a closer look at the underlying mechanics rather than an assumption of a new tax break. Since the withholding tax deferral itself is not new, the practical questions are whether a company’s planned reinvestment qualifies under the applicable criteria and how those criteria are applied by the relevant tax authorities. This should form part of the comparison between reinvesting profits and proceeding with dividend repatriation.
The revisions to cross-border M&A rules are also relevant for companies planning acquisitions in China. Businesses should monitor how these changes interact with the revised negative list for cross-border data transfers, particularly where an acquisition involves the transfer of data across borders or requires post-acquisition integration of systems and operations. As with the other measures in this plan, the practical benefit will depend less on the announcement itself and more on how consistently it is implemented at the local level.
