China has introduced a comprehensive strategy to enhance its attractiveness as a destination for foreign investment. The Foreign Investment Guide of China (2023 Edition) outlines key objectives under the 14th Five-Year Plan (2021–2025), with a focus on:
Expanding sectors open to foreign investment.
Strengthening foreign investment frameworks and creating a more favourable business environment.
Consolidating China’s position as a global leader in foreign investment.
By 2025, China aims to:
Establish itself as a top destination for transnational investments.
Strengthen its role as an innovation and high-end manufacturing hub in East Asia.
Improve its competitive advantages in global economic cooperation.
The China International Fair for Investment & Trade (CIFIT) continues to be a key platform for promoting foreign direct investment (FDI) and supporting outbound Chinese investment. Recognised globally, CIFIT fosters bilateral and multilateral trade and investment.
Applicable Domestic Laws
China’s Foreign Investment Law (FIL), effective since 2019, governs foreign investment activities, including:
Investment Forms: Establishing foreign-invested enterprises (FIEs), mergers and acquisitions (M&A), and new project investments.
Reporting Obligations: FIEs must report investment details to commerce authorities via the enterprise registration and credit information disclosure systems.
National Security Review: M&A in sensitive sectors such as defence, energy, infrastructure, and critical technologies are subject to scrutiny to safeguard national interests.
Pre-Establishment National Treatment and the Negative List:
Foreign investors receive the same treatment as domestic investors during market entry, except in sectors on the Negative List for Foreign Investment Access, which outlines prohibited and restricted industries.
The 2021 Edition of the Negative List applies nationwide and to pilot Free Trade Zones (FTZs).
In addition, international treaties or agreements providing more favourable terms for foreign investors take precedence over domestic regulations.
Regulatory Oversight
Foreign investment in China is jointly managed by the following key agencies:
Ministry of Commerce (MOFCOM):
Leads foreign investment policy implementation and promotion.
Develops a national foreign investment service network and encourages local-level promotion efforts.
National Development and Reform Commission (NDRC):
Oversees the approval of foreign investment projects.
Ensures alignment of foreign investment initiatives with national development strategies.
Additional organisations involved in investment promotion include:
China Association of Enterprises with Foreign Investment.
China International Investment Promotion Agency.
China Council for the Promotion of International Trade.
Dispute Resolution
Investor-state disputes involving China are typically handled by the Department of Treaty and Law at the Ministry of Commerce (MOFCOM). Several bilateral investment treaties (BITs), such as the Canada-China BIT (2012) and the Angola-China BIT (2023), explicitly require that notices of arbitration be served to this department.
However, some treaties, like the modified China-Cuba BIT (2010), only specify MOFCOM without identifying a specific department, making the Department of Treaty and Law the default point of contact in most cases.
China continues to position itself as a global leader in attracting foreign investment by improving its regulatory framework, expanding market access, and offering robust institutional support. The evolving policies under the Foreign Investment Law, alongside initiatives like the Negative List and international trade fairs like CIFIT, reflect China’s strategic intent to balance openness with economic security.
With streamlined regulations, greater market transparency, and strengthened dispute mechanisms, China offers foreign investors an increasingly attractive and competitive environment for sustainable growth and collaboration.
Woodburn Accountants & Advisors is one of China’s most trusted business setup advisory firms.
Woodburn Accountants & Advisors is specialized in inbound investment to China and Hong Kong. We focus on eliminating the complexities of corporate services and compliance administration. We help clients with services ranging from trademark registration and company incorporation to the full outsourcing solution for accounting, tax, and human resource services. Our advisory services can be tailor-made based on the companies’ objectives, goals and needs which vary depending on the stage they are at on their journey.