An Introduction to Doing Business in China 2025

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An Introduction to Doing Business in China 2025, the latest publication from Dezan Shira & Associates is out now and available for complimentary download through the Asia Briefing Publication Store.

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Doing business in China is getting more challenging than ever. With heightened geopolitical risks, growing pressure to diversify supply chains, a slowdown in China’s economic growth, and uncertainties surrounding the potential implications of Trump’s second presidency, companies must navigate an increasingly complex environment.

Nevertheless, China remains one of the world’s largest consumer markets, essential for any ambitious businesses pursuing global success. China’s unparalleled supply chains are difficult to replace, and its proposed standards to clearly define “Made in China” and offer preferential treatment to domestic products in government procurement may necessitate local manufacturing. Furthermore, China’s continued market opening and intensified fiscal support present new opportunities to foreign investors.

Despite fluctuations, China will likely remain one of the most important investment destinations in emerging Asia for most foreign investors. Under these circumstances, it is vital that foreign investors stay informed about the changes in China’s business landscape and adapt their strategies accordingly. By identifying potential risks in advance and preparing for new market opportunities, investors can remain agile in an otherwise challenging environment.

Designed to introduce the fundamentals of investing in China, this publication is compiled by experts at Dezan Shira & Associates, a specialist foreign direct investment firm providing corporate establishment services, business advisory, tax advisory and compliance, accounting, payroll, due diligence, and financial review services to multinationals investing in emerging Asia.

Designed to introduce the fundamentals of investing in China, An Introduction to Doing Business in China 2025 is compiled by experts at Dezan Shira & Associates, a specialist foreign direct investment firm providing corporate establishment services, business advisory, tax advisory and compliance, accounting, payroll, due diligence, and financial review services to multinationals investing in emerging Asia.

Doing Business in China 2025 covers:

  • Establishing and Running a Business
  • Tax, Audit, and Accounting
  • Human Resources and Payroll
  • Cybersecurity and Data Protection

Within these chapters, we discuss a range of different topics that affect doing business in China, including investment models, intellectual property considerations, key taxes applicable to foreign companies, various types of employment contracts, and a chapter explaining the evolving data and cybersecurity compliance requirements in China.

DOING BUSINESS IN CHINA EXPLORE IN-DEPTH INVESTMENT AND BUSINESS GUIDES.
Explore vital economic, geographic, and regulatory insights for business investors, managers, or expats to navigate China’s business landscape. Our Online Business Guides offer explainer articles, news, useful tools, and videos from on-the-ground advisors who contribute to the Doing Business in China knowledge. Start exploring

What’s new in Doing Business in China 2025?

  • China’s ramping up support on businesses: The recently concluded Central Economic Work Conference (CEWC), an annual meeting of China’s top leadership to discuss economic priorities and policies for the next year, China signaled plans to intensify fiscal and monetary measures in 2025 to address this issue. The government’s approach underscores a commitment to stimulating consumption and investment to bolster economic recovery and growth.
  • The proposed “Made in China” standards in government procurement: Not only China’s unparalleled supply chains are not easily replaceable, but also China’s proposed standards that clearly define what constitutes “Made in China” and offer preferential treatment to domestic products in government procurement may necessitate local manufacturing in China.
  • China’s new Company Law: The sixth revision of China’s Company Law represents the most extensive amendment in its history. From stricter capital injection rules to enhanced corporate governance, the changes introduced in the New Company Law have far-reaching implications for businesses, including foreign invested enterprises (FIEs) operating in or entering the China market. We updated the relevant chapters accordingly.
  • China’s Enhanced Beneficiary Owner Filing System: China’s new beneficiary owner filing measures require business entities, except individually owned businesses, to submit their beneficiary owner information starting November 1, 2024. A one-year grace period is available for entities registered before that date. We added a section introducing relevant requirements.
  • Eased cross-border data transfer rules (CBDT): China’s cybersecurity regulator has released new data export regulations that will significantly facilitate cross-border data transfer for companies in the country. Important changes in the new regulations include increasing the limits on the volume of personal information that a company can handle before it is required to undergo additional compliance procedures. In addition, they outline scenarios in which companies are exempt from compliance procedures and clarify the handling of “important” data. We have updated the “Cybersecurity and Data Protection” chapter with the latest developments.

Special Focus: Leveraging Increased Policy Support in China’s Dynamic Business Environment

Despite the evolving business landscape and growing challenges, China remains a vital and irreplaceable market for many organizations. The country offers unmatched access to one of the world’s largest consumer markets, a highly efficient and competitive supply chain, a world-class infrastructure, and a skilled labor force. Additionally, the proposed “Made-in-China” requirements for public procurement highlight the strategic importance of local manufacturing. To stay competitive, informed executives should leverage these advantages by optimizing operations within China, adapting to local policies, and continuing to capitalize on the country’s unique strengths.

Tremendous domestic market

China’s rising purchasing power, expanding middle class, and a population over 1.4 billion, touts it to become the largest retail market in the near future. In the first 10 months of 2024, total retail sales amounted to RMB 39.90 trillion (US$5.46 trillion), up 3.5 percent year-on-year.

Increasing disposable income, rising by 6.1 percent in 2023 to reach RMB 39,218 (US$5,451), allows many foreign companies to produce goods specifically for local consumption, rather than use the country as a production base for export-led manufacturing—making China their largest market for growth.

Despite ongoing concerns about consumer confidence, the Chinese government has identified weak domestic demand as the primary challenge facing the nation’s economy. At the recently concluded Central Economic Work Conference (CEWC), an annual gathering of China’s top leadership to discuss economic priorities and policies for the coming year, the government signaled plans to intensify fiscal and monetary measures in 2025 to address this issue. The approach highlights the government’s commitment to stimulating consumption and investment to bolster economic recovery and growth.

Global manufacturing capacity

China’s manufacturing dominance remains substantial despite the disruptions caused by the pandemic, contributing 28.7 percent of total global production output. The country continues to be an attractive destination for manufacturing due to several competitive advantages:

  • A skilled workforce
  • Advanced shipping and logistics infrastructure
  • Government incentives supporting the sector, among others

Although a shrinking workforce and stricter government regulations are driving up labor costs, China is striving to maintain its competitiveness by enhancing productivity and focusing on the production of higher-value goods. As certain labor-intensive industries, such as apparel, shift to lower-cost locations like Vietnam and India, China is responding by urging manufacturers to move up the value chain and create more innovative products. The country’s significant financial resources and vast domestic market offer promising opportunities during this industry transition.

Moreover, China’s well-developed logistics infrastructure enables it to increasingly serve as both a producer and a key market for manufactured goods, allowing businesses to capitalize on proximity and reduce shipping costs.

Trade and investment agreement framework

China has been proactive in establishing a wide range of bilateral agreements, including bilateral investment treaties (BITs), free trade agreements (FTAs), and double taxation agreements (DTAs). These agreements have had a substantial impact on the Asian region, playing a key role in shaping trade flows and supply chain development.

In total:

  • China has signed 22 FTAs, covering 29 countries and regional blocs (including ASEAN, which consists of 10 nations), providing direct trade benefits with these countries and regions. An additional 10 FTAs are currently under negotiation, with 8 more under consideration.
  • China has 110 BITs in force, with another 17 signed but not yet in effect.
  • China has also signed DTAs with 114 countries or regions.

Innovation and emerging industries

China’s push to develop new and emerging technologies is creating a wealth of opportunities for foreign investors and companies. This initiative is rooted in the country’s shift towards an innovation-driven growth model, represented by concepts such as new quality productive forces (NQPFs), new-type industrialization, and “future industries.”

NQPFs emphasize the development of cutting-edge technologies, such as AI, robotics, biotechnology, and new energy and materials, to boost global competitiveness and economic growth. The new-type industrialization initiative complements NQPFs by promoting advanced manufacturing, secure supply chains, and technological self-sufficiency, positioning China as a leader in high-tech sectors. “Future industries” focus on emerging technologies still in the early stages of development, including quantum computing and 6G networks. Together, these strategies highlight China’s broader goal of driving economic growth through technological innovation and leadership in frontier industries.

China’s drive to lead in science and technology opens up strategic partnership and market entry opportunities for foreign investors

Market reform and opening up

China has made concerted efforts to attract greater foreign investment by relaxing market access restrictions and continuously improving the business and regulatory environment. The country has consistently expressed its commitment to accelerating market-opening reforms.

A key element of these reforms is the revision of the negative lists, which outline industries subject to special administrative measures for foreign investors, guiding decisions on market entry, scope of operation, and access to local markets.

The 2024 Negative List for Foreign Investment Access removes all restrictions on foreign investment in China’s manufacturing sector and commits to further opening critical service sectors, including telecommunications, education, and healthcare. In line with these reforms, China launched pilot programs in September 2024, allowing foreign investment in cell and gene therapy across four free trade zones and permitting wholly foreign-owned hospitals in nine major cities.

In October 2024, another pilot program was introduced, enabling 100% foreign ownership of data centers and value-added telecommunications services in Beijing, Shanghai, Hainan, and Shenzhen.

These significant relaxations in market access create new opportunities for foreign investors, particularly in China’s rapidly growing biotech, healthcare, and telecommunications industries. They reinforce the country’s efforts to attract high-quality foreign capital and foster innovation in key sectors.

China business outlook 2025

The year 2025 marks a pivotal period for achieving the goals outlined in China’s 14th Five-Year Plan. Amid challenges such as US-China trade frictions, pressures from local government debt, adjustments in the real estate sector, weak consumer demand, and wavering confidence in the private economy, achieving the 5 percent GDP growth target will require robust and effective economic stimulus measures, with a strong emphasis on policy implementation.

China’s leadership is acutely aware of these needs. On December 9, 2024, the Politburo outlined its economic priorities for 2025, signaling a shift toward more aggressive fiscal and monetary policies. The readout emphasized: “[We must] implement more active fiscal policies and moderately accommodative monetary policy, enrich and improve the policy toolbox, [and] strengthen extraordinary counter-cyclical adjustments.” This marked the first return to a “moderately accommodative monetary policy” since the aftermath of the Global Financial Crisis in 2009-2010. This approach was further reinforced during the CEWC.

Externally, while uncertainties persist around tariff policies under a second Trump presidency, early indications suggest a transactional rather than ideological stance on tariffs, potentially leaving room for negotiations and exemptions. Meanwhile, strategies such as rebalancing trade, expanding overseas production facilities, and leveraging re-export channels should help mitigate external shocks.

Combining these external adjustments with intensified domestic policy support, China’s GDP growth is projected to remain resilient, potentially reaching “above 4.5 percent” or “around 5 percent,” despite prevailing uncertainties.

About Us

China Briefing is one of five regional Asia Briefing publications, supported by Dezan Shira & Associates. For a complimentary subscription to China Briefing’s content products, please click here.

Dezan Shira & Associates assists foreign investors into China and has done so since 1992 through offices in Beijing, Tianjin, Dalian, Qingdao, Shanghai, Hangzhou, Ningbo, Suzhou, Guangzhou, Haikou, Zhongshan, Shenzhen, and Hong Kong. We also have offices in Vietnam, Indonesia, Singapore, United States, Germany, Italy, India, and Dubai (UAE) and partner firms assisting foreign investors in The Philippines, Malaysia, Thailand, Bangladesh, and Australia. For assistance in China, please contact the firm at china@dezshira.com or visit our website at www.dezshira.com.