On June 22nd, the Ministry of Commerce, the National Development and Reform Commission, and the Ministry of Finance jointly issued a new policy document titled the "Action Plan for Stabilizing, Improving, and Promoting the Use of Foreign Investment." This plan outlines 15 policy measures across five key areas, including expanding market access and enhancing the convenience for foreign investment.
At a press conference held by the State Council Information Office on the same day, a senior official from the Ministry of Commerce stated that the plan was developed in collaboration with 27 other departments to address common concerns of foreign-invested enterprises and formulate new measures to stabilize foreign investment. The official emphasized that future efforts will focus on maintaining existing investment, expanding new inflows, and improving the quality of investment.
Key Trends in Foreign Investment
An official highlighted that foreign investment in China currently demonstrates stability in four key aspects: overall scale, business operations, economic contributions, and market expectations. By the end of 2025, the total number of foreign-invested enterprises in China is projected to reach 533,000, reflecting an average annual growth rate of approximately 4.5%. Statistics indicate that over 8,000 foreign companies increased their investment in China in 2025, a year-on-year rise exceeding 10%.
Despite these positive trends, external factors such as sluggish global economic growth and geopolitical tensions have impacted cross-border investment. Data shows that China's actual utilized foreign capital from January to May of this year decreased by 8.6% year-on-year. However, this decline was 4.6 percentage points narrower than the same period last year. Officials noted that while foreign capital flows both in and out, the net inflow remains positive, with China maintaining its position as the top destination for foreign direct investment among developing nations.
Focus on Service Sector Opening
The service sector is a primary focus for expanding market access under the new plan, as it accounts for about 70% of China's actual utilized foreign capital. The national version of the negative list for foreign investment access has been reduced to 29 items, with all restrictions in the manufacturing sector now removed.
The action plan prioritizes deepening openness in the service industry. Building on pilot programs from 2024 in areas like biotechnology and wholly foreign-owned hospitals, the plan proposes to steadily expand pilot openings for vocational skills training institutions, vocational colleges, and high-level universities specializing in science, engineering, agriculture, and medicine. It also supports Beijing in enhancing its role as a national comprehensive demonstration zone for expanding service sector openness, encouraging pilot initiatives in modern service sectors like digital economy and healthcare.
An official from the Ministry of Commerce's foreign investment department stated that since 2024, pilot programs for expanded openness in cloud computing, wholly foreign-owned hospitals, and biotechnology have been launched in select regions, with several foreign enterprises already establishing or expanding operations. Furthermore, nine new cities were added as pilot zones for service sector opening in 2025, with new trial tasks assigned, such as removing foreign equity caps for services like app stores and internet access in the telecommunications sector.
Encouraging Foreign Investment in Pharmaceutical Development
Another key focus of the action plan is supporting foreign participation in the high-quality development of industries like pharmaceuticals. The plan calls for expediting research and implementation of detailed rules for segmented drug production, which would facilitate overseas marketing authorization holders in conducting cross-border segmented production of biologics and chemical drugs. It also proposes to study and approve the expansion of pilot zones for openness in biotechnology and wholly foreign-owned hospitals.
Officials explained that cross-border segmented production refers to distributing drug manufacturing processes across different countries and regions to achieve effective resource allocation. Currently, pilot openness in biotechnology is limited to the free trade zones of Beijing, Shanghai, and Guangdong, as well as the Hainan Free Trade Port. Pilot programs for wholly foreign-owned hospitals cover nine locations, including Beijing, Shanghai, Tianjin, and Nanjing.
Ensuring Fair Treatment in Government Procurement
The action plan emphasizes the full implementation of national treatment for foreign-invested enterprises. It specifically calls for the strict enforcement of fair competition review systems in areas such as government procurement and bidding. A representative from the Ministry of Finance's treasury department stated that treating all market entities, including foreign enterprises, equally is a fundamental principle of China's government procurement system.
The official outlined ongoing reforms to optimize the procurement environment, such as improving the legal framework, clarifying standards for domestic products, strengthening supervision, and enhancing administrative adjudication mechanisms. The next steps involve accelerating procurement system reforms in line with the national development plan and the new action plan to ensure fair competition and a better business environment for both domestic and foreign companies.
Comments