A 15-point action plan for the stable and optimized utilization of foreign investment was recently jointly released by the Ministry of Commerce (MOFCOM), the National Development and Reform Commission and the Ministry of Finance. The plan lays out measures for achieving five main objectives: expanding market access, strengthening investment facilitation, intensifying investment promotion, improving services, and optimizing supervision and administration.

The plan is a key part of China's efforts to continuously promote high-level institutional opening up amid the presence of uncertainties such as the contraction of global cross-border investment and mounting international competition for investment. This high-level institutional opening up aims to stabilize the fundamentals of foreign investment, increase the confidence of multinational companies in investing in China and promote the deep integration of foreign investment with the domestic industrial chain.

In recent years, global geopolitical conflicts, regional restructuring of industrial chains and policies introduced by major economies to encourage industrial repatriation and investment have put pressure on global foreign direct investment (FDI), and some multinational corporations have readjusted their regional layouts. According to figures from MOFCOM, China had 533,000 foreign-invested enterprises at the end of 2025, with a total foreign investment stock of nearly $4 trillion, recording an average annual growth of 4.5 percent and 3.6 percent respectively since the end of 2020. China remains the largest user of FDI among developing countries. However, from January to May this year, China's paid-in capital dropped 8.6 percent year on year.

Against this backdrop, the action plan adheres to the principles of stabilizing the stock of foreign-invested enterprises, retaining their existing projects in the industrial chain, optimizing the structure of FDI, guiding it to key sectors of advanced manufacturing, innovation, modern services as well as green and low-carbon development, and saying no to unsustainable investment.

Market access is one of the most critical concerns for foreign investors, and the action plan targets broader market access in the fields of services, finance and biopharmaceuticals. In the service sector, the plan expands the pilot programs for opening up vocational education institutions and higher education institutions specializing in science, engineering, agriculture and medicine to foreign investment. In the financial sector, the plan continues to deepen institutional opening up, allowing foreign institutions to use risk management tools such as treasury bond futures and engage in fund investment advisory business. It also increases cross-border financing facilitation quotas for leading foreign-invested enterprises, supports eligible foreign companies to list in the domestic market for direct financing and opens up channels for the domestic circulation of foreign capital.

In the biopharmaceutical sector, the plan requires implementation of detailed rules for cross-border segmented drug production, expands the scope of pilot programs for wholly foreign-owned hospitals and biotechnology firms, removes barriers for foreign innovative drugs and medical devices to access medical insurance and retail distribution, and attracts global pharmaceutical research and development capacity to settle in China. In addition, the plan also simplifies procedures for the approval of foreign mergers and acquisitions, cross-border data transfer, profit reinvestment and research and development innovation.

Notably, the action plan was jointly issued by China's three major macroeconomic regulators, coordinating policy tools such as industrial planning, opening up of market access, and fiscal and tax support. It reduces the fragmentation of policies between different departments and builds a full-lifespan foreign investment service system that includes market access, project execution, daily operations and reinvestment. This releases a clear signal that China will continue to expand its opening up and give equal treatment to both domestic and foreign business entities.

The action plan requires local governments to develop replicable experiences during implementation, indicating that it is not merely a short-term stimulus policy, but a top-down design balancing short-term relief with long-term institutional development. This demonstrates China's unwavering determination to foster a first-rate business environment that is market-oriented, law-based and internationalized.

Copyedited by G.P. Wilson 

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