China unveiled a significantly expanded foreign investment incentive list on December 24, 2025, aiming to stem falling inbound investment. The updated 2025 catalogue, issued jointly by the National Development and Reform Commission and Ministry of Commerce, takes effect February 1, 2026. This move seeks to invigorate foreign investment flows into China, particularly within advanced manufacturing, modern services, and green technology.

Expanded Incentives Cover More Industries and Regions

The new catalogue introduces more than 200 new sectors and revises about 300, focusing on high-tech and environmentally sustainable industries. It maintains key policy benefits such as tariff exemptions on imported machinery, preferential land pricing, corporate income tax reductions in designated areas, and tax credits for reinvested profits by foreign enterprises. Notably, the scope of incentives now covers China’s central, western, and northeast regions along with Hainan, extending beyond the traditional coastal hubs. This aims to promote balanced geographic investment distribution and support less developed areas.

Recent pilot programs in Beijing, Shanghai, and other major cities additionally broaden market access to sectors including telecommunications, healthcare, and education. These efforts come amid ongoing trade tensions with the United States, underscoring China’s commitment to enhancing its foreign investment environment.

Market Reaction and Policy Implications

Data from the Ministry of Commerce reveal that foreign direct investment (FDI) in China totalled 693.2 billion yuan ($98.84 billion) from January to November 2025, a 7.5% decline compared to the same period last year. This downturn has prompted the government to revise the incentive catalogue as a countermeasure to attract overseas capital.

Industry observers and investors will be watching closely to see how these expanded incentives affect China’s competitiveness in the global investment landscape. The enlargement of eligible sectors and regions signals a strategic shift geared toward diversifying and sustaining China’s inbound investment amid geopolitical uncertainty and economic challenges.

Investment: Market Outlook

With the foreign investment incentive list effective from February 2026, China aims to reverse the declining investment trend by strengthening policy support for foreign enterprises. The country’s focus on advanced manufacturing, green industries, and modern service sectors across broader regions highlights its proactive approach to fostering a more attractive investment climate. Market participants should consider these developments pivotal in shaping investment decisions related to China over the coming years.