New Catalogue to Take Effect in Early 2026
Beijing, China – China's National Development and Reform Commission (NDRC) and the Ministry of Commerce (MOFCOM) officially unveiled the 2025 Edition of the Catalogue of Encouraged Industries for Foreign Investment on Wednesday, December 24, 2025. This significant policy update, approved by the State Council, is set to become effective on February 1, 2026, replacing the previous 2022 version. The move underscores China's commitment to stabilizing and attracting foreign capital amidst global economic uncertainties.
Strategic Focus on Advanced Industries and Regional Development
The updated catalogue is designed to strategically guide foreign investment towards sectors deemed crucial for China's high-quality economic development and industrial upgrading. Compared to the 2022 version, the new document features a substantial expansion, with a net increase of 205 items and a total of 303 modifications.
Key areas targeted for increased foreign investment include:
- Advanced Manufacturing: The catalogue adds and expands items related to terminal products, high-end components, and raw materials, aiming to enhance the development level of industrial and supply chains.
- Modern Services: Support is strengthened for foreign investment in modern services, with new or expanded entries covering business services, technical services, scientific research, and service consumption.
- High-Tech Industries: A continued emphasis is placed on attracting foreign capital into high-tech sectors.
- Energy Conservation and Environmental Protection: The catalogue incentivizes global firms to bring green technologies and practices to the Chinese market.
- Regional Development: The policy aims to channel more foreign investment into China's central, western, and northeastern regions, as well as Hainan Province, to promote more balanced regional development.
Incentives and Policy Objectives
Industries listed in the encouraged catalogue are eligible for a range of preferential policies. These include tariff exemptions on imported equipment for self-use, priority access to industrial land with lower upfront costs, and a reduced 15 percent corporate income tax rate for investments in western China and Hainan. Additionally, tax incentives are offered for overseas investors who reinvest profits in encouraged industries within China, provided specific conditions are met.
The introduction of the new catalogue is part of China's broader effort to stabilize foreign investment, which has seen a prolonged decline in recent months. Data from the Ministry of Commerce indicated that foreign direct investment in China totaled $98.84 billion from January to November 2025, marking a 7.5% decrease from the same period in 2024. By expanding the list of encouraged sectors and offering attractive incentives, Beijing aims to reverse this trend and signal its continued commitment to high-level opening-up and economic growth.
6 Comments
Kyle Broflovski
Still too many restrictions and state interference. It's a risk most businesses aren't willing to take anymore.
Eric Cartman
While the expanded catalogue and incentives are a positive step to attract investment, global geopolitical tensions and past regulatory crackdowns might still deter some foreign companies from fully committing.
Stan Marsh
Smart move to target regional development. It will help spread prosperity beyond the major cities.
Kyle Broflovski
What about fair competition? These incentives put domestic firms at a disadvantage. Not equitable.
Eric Cartman
This policy aims to stabilize the economy and foster innovation, which is commendable. Nevertheless, its success hinges on whether it genuinely addresses the root causes of the FDI slowdown, rather sweeter.
Eugene Alta
Incentives won't fix the underlying issues of trust and arbitrary regulatory changes. Just window dressing.