Other BriefingsChina’s New Foreign Investment Action Plan: The Measures That Matter Most for FIEs
China’s foreign investment action plan for 2026 sets out 15 measures to reverse declining FDI, spanning market access, facilitation, and regulatory reform. This article examines the five most consequential for foreign-invested enterprises – financial sector access, pharma and biotech pathways, revised M&A rules, cross-border data negative lists, and reinvestment incentives – and what companies should do now.
On June 22, 2026, China’s Ministry of Commerce (MOFCOM), National Development and Reform Commission (NDRC), and Ministry of Finance (MOF) jointly issued the 2026 Action Plan for Stabilizing and Improving Foreign Investment Utilization, a 15-point plan built around five priorities: market access, investment facilitation, investment promotion, service guarantees, and regulatory optimization.
Arriving in a time of declining FDI inflows, the plan reads less like a policy wish list and more like a checklist of specific, implementable fixes to problems foreign-invested enterprises (FIEs) have raised for years, from restrictive cross-border data rules to outdated M&A procedures. Not all 15 measures carry equal weight for foreign investors. Below, we focus on the five most likely to open real opportunities or remove real friction, and what companies should do →now.
Financial sector access becomes more concrete
The plan commits to letting more foreign institutions use risk management tools, including treasury bond futures, and to permitting qualified foreign institutions to conduct fund investment advisory business. It also calls for cross-border financing facilitation quotas for key FIEs, “proxy documentation” international settlement services for large foreign enterprises through domestic banks, and better pre-application communication with exchanges for FIEs planning to list and raise capital onshore.
Why it matters
This matters because previous rounds of financial opening tended to focus on headline market access such as qualified investor schemes and bond market access, while leaving day-to-day treasury and financing friction unaddressed. Explicit support for derivatives access and financing quotas signals regulators are now targeting the operational bottlenecks that large FIEs actually face.
FIEs with material China treasury operations should raise cross-border financing quotas directly with their banks now, since implementation will likely favor early movers on the “key enterprise” lists. Companies weighing an onshore listing should start pre-application dialogue with exchanges well ahead of a formal filing.
Faster market access pathways for pharma and biotech
The plan calls for implementation rules on segmented, cross-border production of biologics and chemical drugs by offshore marketing authorization holders, further expansion of pilot zones for biotechnology and wholly foreign-owned hospitals, and encouragement for insurers to bring more innovative drugs and devices into commercial insurance coverage.
Why it matters
Segmented production would let a drug’s manufacturing steps be split across facilities in different countries, something China’s drug administration rules have historically constrained by favoring more localized production. Wholly foreign-owned hospital pilots, first floated years ago, have expanded slowly; renewed commitment here suggests the pace may pick up.
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Biopharma and device companies should track the segmented-production implementing rules closely, since the details will determine whether existing overseas manufacturing networks can finally serve the China market without a full local production build-out.
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An overdue rewrite of the foreign M&A rules
China’s core rules governing foreign acquisitions of domestic companies date back to 2006 and have seen only limited updates since. The plan commits to accelerating a revision that will streamline M&A procedures and consideration/payment requirements and strengthen coordination between regulators. Separately, it will allow qualified foreign equity investment institutions to participate as strategic investors in securities issuances by listed companies outside their own industry, removing a long-standing requirement that strategic investors operate in a “related industry” to the target.
Why it matters
The industry-relatedness requirement has for years pushed foreign private equity and strategic investors into portfolio-style stakes rather than strategic ones whenever a target sat outside their core sector. Lifting it opens a genuinely new route into China’s listed-company market.
Foreign PE and strategic investors should revisit deals previously shelved solely because of the sector-relatedness rule, and track the revised M&A provisions closely once released, since the payment and consideration terms are expected to change alongside the procedural streamlining.
Cross-border data flow moves toward negative lists, not blanket restriction
Free trade zones and pilot cities for expanded services-sector opening are directed to develop “scenario-based, field-level” negative lists for data export, rather than applying uniform rules across all data types. In parallel, national standards are being developed to define “important data” catalogs by industry, covering manufacturing, telecoms, geographic information, automotive, pharmaceuticals, seed technology, aerospace, and civil aviation.
Why it matters
China’s existing cross-border data transfer regime, including security assessments, standard contracts, and certification, has been criticized by foreign business for its broad, hard-to-scope definition of sensitive or “important” data. Sector-specific negative lists and catalogs would replace that uncertainty with narrower, more predictable compliance obligations.
Data-intensive FIEs, particularly in technology, automotive, and life sciences, should watch which pilot cities publish negative lists first and consider routing relevant data flows through FTZs once lists are in place, rather than waiting for a single national standard.
Reinvested profits gain clearer tax and priority treatment
The plan reaffirms the existing tax incentives for foreign investors who reinvest distributed profits directly into China, with instructions to ensure the benefit is “precisely delivered” rather than inconsistently applied. It also directs more reinvestment projects to be added to the major and key foreign investment project lists, which come with expedited land, utility, and approval support.
Why it matters
Historically, priority project status and facilitation services have skewed toward new greenfield investment, leaving reinvestment by existing FIEs comparatively underserved. Placing reinvestment on equal footing is a signal that Beijing wants existing investors to plow profits back into China rather than repatriate them elsewhere.
FIEs holding retained earnings onshore should model reinvestment structures now and apply for major or key project status where reinvestment scale qualifies, in order to access the same facilitation new investment already receives.
Other measures worth tracking
Several remaining measures are worth monitoring even though they are less transformative on their own:
- Stricter enforcement of national treatment through fair competition review in government procurement and bidding
- Expanded support for foreign-invested r&d centers (including easier work permits for senior foreign researchers)
- Explicit protection against exclusion of foreign brands from consumption-promotion campaigns
None of these change the rules of the game outright, but together they narrow the gap between stated policy and on-the-ground treatment that FIEs have long flagged as inconsistent.
How Dezan Shira & Associates can help
Much of this plan’s real impact will depend on implementation details that are still to come. Dezan Shira & Associates works with FIEs across China to interpret these implementing rules as they are released, assess M&A and reinvestment structures against the revised requirements, and build cross-border data and tax compliance plans that hold up as the regulatory detail firms up. For companies evaluating whether and how to act on this plan, our advisory teams can help translate the policy into a concrete entry, expansion, or restructuring plan. To arrange a consultation, please contact our local team.
Whether launching, restructuring, or expanding, we ensure our clients benefit from coordinated input across legal, HR, tax, and financial teams. From startup to exit, our advisory scales with your business—designed to meet both immediate needs and long-term goals. About Us China Briefing is one of five regional Asia Briefing publications. It is supported by Dezan Shira & Associates, a pan-Asia, multi-disciplinary professional services firm that assists foreign investors throughout Asia, including through offices in Beijing, Tianjin, Dalian, Qingdao, Shanghai, Hangzhou, Ningbo, Suzhou, Guangzhou, Haikou, Zhongshan, Shenzhen, and Hong Kong in China. Dezan Shira & Associates also maintains offices or has alliance partners assisting foreign investors in Vietnam, Indonesia, Singapore, India, Malaysia, Mongolia, Dubai (UAE), Japan, South Korea, Nepal, The Philippines, Sri Lanka, Thailand, Italy, Germany, Bangladesh, Australia, United States, and United Kingdom and Ireland. For a complimentary subscription to China Briefing’s content products, please click here. For support with establishing a business in China or for assistance in analyzing and entering markets, please contact the firm at china@dezshira.com or visit our website at www.dezshira.com.
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