I. Key Points of Policy Content

 

1. Expand independent opening up in an orderly manner. Promote the implementation of open pilot projects in fields such as telecommunications, healthcare and education, and support the pilot regions in effectively implementing policies and projects in areas such as value-added telecommunications, biotechnology and wholly foreign-owned hospitals.

2. Reduce the "negative list" for market access and expand the scope of encouragement. We will continue to reduce the restrictions on the negative list for foreign investment, relax market access conditions in manufacturing, services and other sectors, and promote the expansion of institutional opening up in free trade zones and national-level development zones.

3. Encourage foreign reinvestment and facilitate financial support. Research and introduce policy measures to encourage foreign-funded enterprises to keep their profits in China for reinvestment, relax financing restrictions such as domestic loans for foreign-funded enterprises, and support foreign investment in participating in the upgrading of local industrial chains.

4. Strengthen policy implementation and provide "one-stop" service guarantees. The central and local governments have worked together to establish project "task forces" and follow-up service mechanisms, optimize the rules and transaction procedures for foreign investment mergers and acquisitions, and accelerate the approval process and ensure the implementation of policies.

5. Build a platform for investment promotion actions and international cooperation. Design and implement a series of "Invest in China" activities, and attract high-quality foreign investment and high-quality projects through bilateral investment promotion mechanisms.

 

Ii. Interpretation by the chivoy lawyers Team (Personal Opinion

  

1. Policy Purpose

This action plan aims to simultaneously advance three goals - stabilizing the scale and quality of foreign investment: against the backdrop of the global capital's reconfiguration, stabilize the scale of foreign investment and guide high-quality foreign investment to deeply engage in the Chinese market in the long term; Structural opening-up: Through pilot projects and phased expansion of key service sectors (such as telecommunications, healthcare, and education), we will gradually break through previously restricted areas and expand opening-up at the institutional level. Enhance business convenience: By measures such as expedited approval, dedicated team services, and encouraging reinvestment, reduce the time and compliance costs for foreign investment projects to be implemented, and boost foreign investment confidence.

 

2. Policy Context

The dual international and domestic pressures: fluctuations in global investment flows, geopolitical and supply chain restructuring, as well as the structural changes in China's demand for foreign capital in the process of achieving "high-quality development", constitute the external and internal background for the formation of this policy.

The trajectory of institutional evolution: Since 2017, China has continuously optimized its foreign investment system through multiple rounds of reforms (including the Foreign Investment Law, the Negative list system, and the reform of free trade zones). The action plan for 2025 is a "focus and acceleration" action within this long-term reform context.

 

3. Impact on Foreign Investors' investment or market expansion in China

 

(1) The overall market access threshold has been relaxed, but there are significant differences among industries

Positive news: New opening-up measures in manufacturing, some service industries and within the free trade zone will provide more entry channels and simpler approval procedures for foreign investment. It is particularly beneficial for projects in science and technology, green energy, medicine and high-end manufacturing.

Caution is still needed: Key areas (such as some telecommunications infrastructure, sensitive data processing, media and culture) may still adopt pilot and phased opening. Investors need to confirm item by item whether they meet the negative list for foreign investment and local specific policies.

 

(2) The merger and acquisition and transaction processes may become more efficient, but the compliance requirements will increase simultaneously

The government has proposed to optimize the rules and transaction procedures for mergers and acquisitions, and at the same time set up a dedicated team to follow up, which will accelerate the speed of project implementation. However, mergers and acquisitions reviews, national security reviews, and foreign exchange/fund supervision will not be relaxed. It is still necessary to make compliance arrangements and prepare documents in advance.

 

(3) Encouraging reinvestment and facilitating financing is conducive to long-term capital layout

For foreign companies willing to develop in China for the long term, the plan encourages them to keep their profits in China for reinvestment and relax some financing restrictions. This will improve the efficiency of capital utilization and facilitate the establishment of localized industrial chains and R&D investment.

 

(4) Local implementation and incentives are differentiated, and site selection decisions are more important

In the "Invest in China" campaign and preferential policies, various regions will carry out more proactive investment promotion. Foreign-funded enterprises should compare local policy dividends, industrial support and landing service capabilities when choosing locations and partners.

 

4. Practical Advice (For Foreign Investors Planning to Invest in China)

To seize the policy dividends and avoid implementation risks, the Qi Hui team suggests taking the following six practical measures:

(1) Preliminary due diligence: Prioritize the judgment of negative lists and licensing paths

First, verify whether the industry to be invested in is on the latest negative list or local restricted directory; If it involves sensitive or restricted business, assess whether to enter through joint ventures, business spin-offs or applying for pilot programs.

 

(2) Structural design: Combining the dual-path planning of mergers and acquisitions and establishment

For merger and acquisition projects, a path of "temporary shareholding → application for approval → regularization" should be designed simultaneously, and the conditions for the release of regulatory approval and compensation arrangements should be included in the transaction agreement.

 

(3) Taxation and Capital Arrangement: Plan the reinvestment and profit distribution mechanism

By taking advantage of the window in the plan that encourages reinvestment, design a feasible profit reinvestment plan; At the same time, collaborate with tax advisors to assess the optimal repatriation/retention structure under domestic and foreign tax agreements.

 

(4) Compliance and Data Governance: Lay out national security and data compliance provisions in advance

If the business involves personal information or important data, assess in advance the restrictions on data export stipulated in the Data Security Law, the Personal Information Protection Law, and industry regulations, and build a compliant technical and contractual defense line.

 

(5) Local connection: Utilize "Invest in China" and the dedicated task force mechanism to secure support for implementation

Actively connect with local investment promotion teams through business institutions and industry associations in China to strive for "dedicated team" services, tax incentives or R&D support. Qihui can assist in drafting project proposal materials for government coordination.

 

(6) Phased flexible strategy: Pilot first, then expand steadily

For projects that are sensitive to senior management and equity structure, it is recommended to first carry out incubation/pilot projects in free trade zones or pilot areas, and then gradually expand the scale based on the results, so as to gain a first-mover advantage during the policy easing window.

 

Overall, the "2025 Action Plan for Stabilizing Foreign Investment" is a positive signal of opening up released by China in the current global economic environment: it offers both policy benefits (relaxed market access, encouragement of reinvestment, and facilitation of approval) and clear compliance red lines (differentiated management of industries, data and security requirements). For foreign investors, this is an era that requires both seizing the window of opportunity and doing a good job in compliance.

Chivoy Lawyers can provide the following services for clients planning to invest in China: industry access assessment, legal due diligence for company formation and mergers and acquisitions, preparation of materials for local government connection, data compliance and labor law compliance advice, and can also provide "one-stop" legal and compliance support for project implementation in collaboration with local Chinese teams.