China’s 2025 Foreign Investment Action Plan: Key Measures and Opportunities

China has reaffirmed its commitment to fostering a more open and investment-friendly economy with the release of a new action plan aimed at stabilizing and promoting foreign investment in 2025. In this article, we explore the key measures outlined in the plan and the broader implications for foreign investors.

On February 19, 2025, China introduced a comprehensive action plan to stabilize foreign investment (hereinafter referred to as the “action plan”), reaffirming its commitment to high-standard opening-up and advancing economic modernization. Approved during a State Council executive meeting, the action plan outlines key measures to attract and retain foreign investment by expanding market access, easing financial restrictions, and fostering a fair business environment. With a focus on sectors such as biotechnology, telecommunications, education, and healthcare, the initiative seeks to enhance foreign participation in China’s industrial and service sectors.

The move comes as China continues to be a major global investment hub, having established over 59,000 new foreign-invested enterprises (FIEs) in 2024 and maintaining an annual foreign investment inflow exceeding RMB 1 trillion (US$137.29 billion) for three consecutive years.

In this article, we explore the key measures outlined in the plan, its impact on various sectors, and the broader implications for foreign investors.

China’s strategy to stabilize and boost foreign investment in 2025 at a glance

China’s newly announced action plan reflects a concerted effort to enhance foreign investment, strengthen economic stability, and maintain momentum in its industrial development. At its core, the plan underscores China’s commitment to creating a more attractive and equitable business environment. A pivotal aspect of this strategy is the continuous evolution of the Invest in China brand, which will be refined each year through an organized roadmap that emphasizes targeted promotion and collaboration.

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In light of the shifting global economic landscape, China has set out to address the diverse needs of international investors by tailoring its approach based on the unique characteristics of major investment sources. By building on bilateral investment promotion mechanisms and fostering closer cooperation between central and local governments, China is positioning itself as a reliable and strategic partner for foreign enterprises.

A key focus of the action plan is reinforcing existing FIEs and encouraging reinvestment within the country. The government aims to optimize the business climate to ensure equal treatment for all enterprises, fostering an environment where companies are not only encouraged to invest but also to reinvest their profits domestically. To support this, revisions to the Catalogue of Encouraged Industries for Foreign Investment will direct foreign capital toward high-value sectors, including advanced manufacturing, modern services, and underdeveloped regions in central, western, and northeastern China. Additionally, efforts to enhance transparency in foreign enterprises’ reinvestment activities will ensure a more predictable and stable investment process.

To facilitate foreign mergers and acquisitions (M&A), the action plan also outlines steps to simplify regulations under the framework of the Foreign Investment Law. By streamlining M&A procedures, lowering barriers for cross-border equity swaps, and improving regulatory oversight, China aims to create a more investor-friendly landscape that supports long-term engagement and innovation.

Moreover, the government is lifting restrictions on domestic loans for foreign enterprises, enabling them to leverage local financing for equity investments and regional expansion. Multinational corporations are also encouraged to establish regional headquarters in China, with regulatory adjustments aimed at easing foreign exchange management, personnel mobility, and data flow.

Through targeted efforts across strategic sectors such as biotechnology, animal husbandry, high-tech industries, and modern services, the action plan lays the foundation for deeper foreign involvement in China’s industrial modernization. These measures align with China’s broader objectives of fostering sustainable development and integrating international expertise into its key industries.

Finally, to boost investor confidence, the plan includes initiatives aimed at enhancing transparency and communication about economic policies. Regular press conferences, expert briefings, and media outreach will serve as platforms to reinforce China’s openness to foreign investment and demonstrate its commitment to a stable, transparent, and competitive investment environment.

key measures proposed in China’s foreign investment action plan 2025?

The newly introduced action plan outlines 20 key measures designed to bolster foreign investment by broadening market access, fostering equitable competition, and enhancing financial mechanisms. These initiatives signal China’s commitment to further opening its economy and ensuring a stable investment environment.

How to read China’s foreign investment action plan 2025?

Expansion of opening-up policies

China’s commitment to “opening up” remains a central pillar of its foreign investment promotion strategy. In 2024, the government introduced several key policy updates aimed at further improving market access for foreign enterprises:

• Foreign investment negative list – On August 19, 2024, Premier Li Qiang chaired a State Council executive meeting approving the Special Administrative Measures for Foreign Investment Access (Negative List) (2024 Edition). This marks the first revision since the previous edition was released in late 2021, signaling adjustments in market access restrictions for foreign investors.
• Encouraged catalogue – On December 20, China’s National Development and Reform Commission (NDRC) and the Ministry of Commerce (MOFCOM) issued the Catalogue of Encouraged Industries for Foreign Investment (Exposure Draft) (Draft FI Encouraged Catalogue), which expands the 2022 version. The 2024 draft includes 1,700 items—620 in the national catalogue and 1,080 in the regional catalogue, representing a 15 percent increase from the previous 1,474 items.
• Healthcare and telecommunications sector – On September 8, MOFCOM announced an expansion of pilot programs in the healthcare industry. The newly issued circular lifts restrictions on foreign-invested enterprises (FIEs) engaged in cell and gene therapy (CGT) within select free trade zones (FTZs) and allows wholly foreign-owned hospitals in designated cities.
• Telecommunications – In October, China launched a pilot program allowing 100 percent foreign ownership of data centers and value-added telecom services in Beijing, Shanghai, Hainan, and Shenzhen.

The 2025 Action Plan builds on these efforts and indicates a further expansion of pilot programs in healthcare and telecommunications. It also outlines research and planning for an orderly opening-up of the education and cultural industries, with implementation expected at an appropriate time. Additionally, China has reiterated its commitment to expanding market access in the services sector, which saw an added value of RMB 76.56 trillion (US$10.56 trillion) in 2024, growing by 5 percent year-on-year and accounting for 56.7 percent of GDP. The plan also places a strong emphasis on the biopharmaceutical industry, supporting qualified foreign-invested enterprises in pilot programs for segmented biopharmaceutical production. It pledges to accelerate the approval of provincial pilot projects and quality supervision plans while ensuring regulatory coordination. Further initiatives will focus on streamlining market entry for innovative drugs, optimizing bulk pharmaceutical procurement, and improving the predictability of medical device procurement policies.

These key sectors –healthcare, telecommunications, services, and biopharmaceuticals—are expected to present significant opportunities for foreign investors in 2025. As China continues to refine its foreign investment policies, businesses can expect a more accessible, predictable, and stable regulatory environment, fostering deeper international participation in the Chinese market.

Deepen foreign participation in its capital markets

The proposed measures in China’s action plan to encourage foreign equity investment, improve financing flexibility, and streamline M&A reflect a strategic effort to deepen foreign participation in its capital markets. These measures are designed to attract long-term foreign capital, support multinational corporations in establishing investment headquarters, and create a more predictable and efficient investment environment.

The move to encourage foreign investors to engage in equity investments in China is expected to bring greater institutional capital into the Chinese stock market. Against the backdrop of China’s drive to cultivate new-quality productive forces and support technological innovation, equity investment is playing an increasingly critical role. Beyond providing substantial capital inflows, foreign investors bring value-driven investment philosophies, global market insights, and professional management expertise. These factors help identify high-potential industries and enterprises, support full-cycle business growth, and enhance the global presence of China’s emerging industries. As part of this broader push, various regions are refining investment policies to improve the business environment for foreign investors. For example, Shanghai recently expanded its new foreign exchange policy under the Qualified Foreign Limited Partner (QFLP) program from the Lingang New Area to the entire city, further facilitating foreign investment.

Despite global economic headwinds, foreign investment institutions remain highly engaged with the Chinese market. Key concerns for offshore investors typically revolve around policy consistency, legal and regulatory frameworks, exit mechanisms, and market prospects. While the Action Plan does not provide detailed measures to improve foreign investment convenience, industry experts suggest that stability in market access policies, regulatory approvals, and supervisory mechanisms are particularly crucial in influencing long-term investment decisions. China may further refine the QFLP framework. This could involve streamlining entry procedures, expanding permissible investment scopes, optimizing post-investment management, and creating standardized, transparent rules for dividend distribution and capital repatriation. Additionally, tax policies and exit mechanisms are likely to be a focus, ensuring the smooth and compliant cross-border movement of capital.

Another notable trend is China’s potential push to encourage long-term capital, particularly from insurance funds, to participate in equity investments. This aligns with the country’s goal of fostering patient capital that supports industrial transformation and technological innovation. By providing clear operational guidelines and actively promoting the policy among listed companies, overseas funds, and investment institutions, China aims to cultivate a more stable foreign investor base. This could enhance market confidence, improve liquidity, and support the long-term valuation of Chinese companies.

In parallel, the removal of restrictions on foreign-invested holding companies using domestic loans for equity investments represents a significant shift in financing policy. This change will make it easier for multinational corporations to establish regional headquarters in China and optimize their capital structures by utilizing local financing options. The enhanced access to domestic credit may also lead to more foreign-led corporate expansions, joint ventures, and strategic partnerships within China.

Further facilitating foreign investment, China has committed to optimizing regulations surrounding the establishment of foreign-invested holding companies. By introducing supportive measures in foreign exchange management, personnel mobility, and cross-border data flow, the government is creating a more flexible operational framework for multinational firms. This is particularly relevant for companies looking to consolidate their China operations under a centralized investment entity, as the policy improvements will reduce administrative hurdles and enhance operational efficiency. Additionally, the assurance that foreign-invested enterprises established under these investment entities will continue to receive national treatment provides regulatory certainty, encouraging more companies to commit long-term resources to the Chinese market.

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In the M&A space, the planned revision of the Regulations on the Merger and Acquisition of Domestic Enterprises by Foreign Investors is expected to streamline transaction processes and reduce barriers to cross-border deals. The adjustments will likely improve procedural transparency, expand the scope of permissible M&A activities, and lower the threshold for share swaps in cross-border acquisitions. These refinements align with China’s broader goal of integrating further into global capital markets by facilitating more efficient deal-making for international investors. With fewer structural constraints, foreign investors may find it easier to pursue strategic acquisitions in China, unlocking new opportunities for market entry, technology transfer, and industry consolidation.

Taken together, these measures signal China’s proactive approach to reinforcing its attractiveness as a destination for foreign capital. By addressing long-standing investment barriers and enhancing policy clarity, the government is positioning China as a more accessible and competitive market for global investors. As these policies take effect, multinational corporations and foreign funds can expect a more predictable and efficient investment environment, fostering deeper integration into the Chinese economy.

key sectors encouraging foreign investment

China’s renewed efforts to attract foreign investment in key sectors reflect a strategic push to enhance industrial modernization, improve service quality, and drive economic transformation. By encouraging foreign participation in industries such as livestock farming, high-tech manufacturing, and various service sectors, China is signaling its intent to create more market opportunities for foreign enterprises while ensuring they receive national treatment.

In the agricultural sector, the government’s encouragement of foreign investment in livestock farming, feed, veterinary medicine, and breeding equipment manufacturing presents significant opportunities. Foreign companies with expertise in precision farming, sustainable feed production, and veterinary pharmaceuticals stand to benefit from the growing demand for efficiency and innovation in China’s livestock industry. The provision of national treatment ensures that foreign-invested firms will have equal access to subsidies, financing, and government support, making China’s agricultural sector more attractive to long-term investors.

Meanwhile, China’s push to integrate foreign capital into its new industrialization process prioritizes high-tech investments, aligning with the country’s broader goal of technological self-sufficiency and industrial upgrading. Foreign enterprises engaged in advanced manufacturing, automation, and emerging technologies—such as semiconductors, artificial intelligence, and renewable energy—may find expanded market access and policy incentives, including eased restrictions on joint ventures and improved regulatory transparency. This shift not only enhances China’s industrial competitiveness but also provides multinational corporations with greater participation in one of the world’s largest manufacturing hubs.

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Beyond manufacturing and agriculture, China’s commitment to attracting foreign capital into services such as elderly care, tourism, sports, healthcare, vocational education, and finance presents significant openings for global service providers. With an aging population driving demand for high-quality senior care, foreign operators with expertise in assisted living, medical care, and retirement planning are well-positioned to capitalize on this growing market. Additionally, China’s expanding middle class continues to fuel demand for premium cultural, tourism, and sports experiences, creating ample room for foreign brands to enter or expand within these sectors. The inclusion of vocational education and finance in this investment push further underscores China’s recognition of the need for skilled workforce development and financial sector innovation, areas where foreign expertise can add significant value.

For foreign investors, these policies indicate not only an expansion of market access but also a broader shift toward regulatory and operational predictability. The assurance of national treatment, combined with China’s ongoing efforts to refine its business environment, suggests a more stable and favorable landscape for long-term foreign investment. However, investors will need to closely monitor the implementation of these measures, particularly in high-tech and finance-related fields where regulatory scrutiny remains stringent.

Government procurement and fair competition

Ensuring a level playing field for all enterprises remains a priority. The action plan’s move to establish a standardized system for defining and regulating “domestic products” in government procurement marks a significant development in China’s procurement policies.

This follows a policy released by the Ministry of Finance (MOF) in December 2024, the Notice on Matters Related to Domestic Product Standards and Implementation Policies in the Field of Government Procurement–Draft for Comments, which seeks to provide a framework to ensure clarity, transparency, and fair competition for all enterprises—whether state-owned, private, or foreign-invested—that manufacture products within China.

For foreign investors, this policy change carries both opportunities and challenges. On the positive side, the establishment of a clear and standardized definition of domestic products may provide foreign-invested enterprises (FIEs) with greater certainty regarding their eligibility for government procurement contracts. By explicitly stating that all enterprises producing within China—regardless of ownership structure—can participate on equal terms, the draft policy could ease concerns about potential favoritism toward state-owned or purely domestic firms. This aligns with China’s broader efforts to improve its business environment and reassure multinational corporations about fair market access. However, the specific criteria and implementation details will determine the true impact on foreign businesses.

Foreign investment trends and opportunities in China for 2025

In 2024, China experienced a significant decline in foreign direct investment (FDI) inflows, dropping 27.1 percent compared to the previous year—the sharpest decline since records began in 2008. This downturn reflects heightened economic policy uncertainty, geopolitical tensions, and concerns over China’s future growth prospects. Despite the overall reduction in investment value, the number of newly registered FIEs increased by 14.2 percent in the first half of 2024, signaling that while investors remain cautious, there is still strong interest in China’s vast market.

Furthermore, China continues to enhance its global economic footprint through initiatives like the Belt and Road (BRI), which has facilitated US$679 billion in infrastructure investments across nearly 150 countries since 2013. By deepening economic ties and refining its investment policies, China seeks to reaffirm its position as a top destination for global capital while adapting to the evolving international economic landscape.

In this broader context, the recently unveiled action plan serves as a strategic response to reverse the decline and rejuvenate foreign investment. At its core, the plan focuses on fostering high-tech and green industries, aligning with global investment trends and sustainability objectives to attract long-term capital and enhance China’s competitive edge in emerging sectors.

Conclusion: Navigating China’s evolving investment landscape

China’s latest action plan underscores the government’s resolve to maintain its status as a premier destination for foreign investment by adapting to the evolving global economic environment. By broadening market access, streamlining investment processes, and fostering fair competition, the initiative aims to reinvigorate investor confidence and encourage sustainable capital inflows.

Despite recent challenges, China’s long-term economic strategy remains firmly rooted in high-tech development, green industries, and greater international integration. As foreign investors weigh their options, the country’s commitment to refining its business environment and addressing structural barriers signals new opportunities for engagement.

Whether these measures will be sufficient to counteract global economic headwinds and geopolitical uncertainties remains to be seen, but the Chinese government’s proactive approach marks a significant step toward ensuring continued foreign investment and economic stability in 2025 and beyond.

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