On December 15, 2025, with the approval of the State Council, the National Development and Reform Commission (NDRC) and the Ministry of Commerce (MOFCOM) released the Catalogue of Industries for Encouraged Foreign Investment (2025 Edition) (the "2025 Catalogue"). As the latest policy framework for directing foreign capital, the 2025 Catalogue will officially take effect on February 1, 2026, at which time the 2022 edition Encouraged Industries Catalogue for Foreign Investment (the "2022 Catalogue") will be superseded.
I. Key Highlights of the 2025 Catalogue
The 2025 Catalogue maintains its dual-structure approach:
- The National Catalogue: Applicable across all mainland provinces.
- The Catalogue of Priority Industries for Central and Western Regions (the “Regional Catalogue”): Applicable to the Central, Western, and Northeastern China, as well as Hainan Province.
The new edition features a significant expansion in the number of listed items, widening the scope of incentives for foreign investors. Key highlights include:
1. Advanced Manufacturing: Expanding into High-End, High-Precision, and Frontier Sectors
While the 2022 Catalogue focused on addressing supply chain vulnerabilities and technical iterations, the 2025 Catalogue continues to prioritize manufacturing in the National Catalogue but places greater emphasis on cutting-edge technologies in niche manufacturing fields, major new highlights include:
- Biopharmaceuticals: Development and production of nucleic acid drugs.
- High-end Medical Device: R&D and manufacturing of zero-magnetic medical equipment.
- Intelligent Manufacturing & Inspection: Intelligent inspection equipment manufacturing; R&D and production of high-speed cameras; smart energy management and control systems, along with related metrology, testing, and monitoring devices.
- Marine & Aerospace: Design, R&D, and manufacturing of vessels and deep-sea underwater work robots; key fundamental robotic components.
2. Modern Services: Extending from Producer Services to Consumer Services
A notable shift in the 2025 Catalogue is the substantial expansion into consumer-facing services to boost domestic demand, while maintaining continued support for industrial producer services (reflected by the inclusion of generic technology platforms for new materials and virtual power plant operations, for example):
- Pet Economy: For the first time, veterinary hospitals and pet grooming services have been included in the National Catalogue
- Culture, Tourism & Leisure: Nationwide encouragement for (i) travel agency operations; (ii) camping industry consulting, planning and operation; (iii) boutique homestay (B&B) design, brand development, and operations; (iv) sports tourism services.
- Other Services: Inclusion of property management services and "Internet+Healthcare" services.
3. Regional Catalogue: Localized Strategic Alignment
The 2025 Catalogue introduces targeted items that leverage the unique resource endowments and industrial strengths of specific regions, promoting the development of distinctive high-tech industries in line with resource, reflecting greater openness in the service industry. New highlights include:
- Heilongjiang: Winter sports equipment (R&D and manufacturing); specialized cold-region industries.
- Liaoning: Cruise tourism products and operations; modern maritime shipping services.
- Henan: Modern logistics; High-end automated hoisting machinery and components; R&D of Artificial Intelligence (AI) Software.
- Hubei: Advanced energy storage equipment; R&D, manufacturing, and production of power batteries, related non-ferrous metals and composite materials.
- Hunan: R&D of key technologies and equipment for general aviation (GA) aircraft.
- Guizhou: Computing infrastructure (R&D and production of core hardware and software for compute-power hubs).
- Qinghai: Wind farm operations.
- Ningxia: Digital transformation related industries for the dairy industry.
- Shaanxi: R&D and manufacturing of ceramic matrix composites (CMCs); R&D and manufacturing of intelligent robotics.
- Chongqing: R&D and manufacturing of small and medium-sized agricultural machinery specifically designed for hilly and mountainous areas.
- Sichuan: Development of metaverse infrastructure technologies and product manufacturing; design and production of digital content (games, digital audio, etc.).
- Hainan: Marine remediation and ecological restoration; tropical disease research, diagnosis, and prevention; deep-sea search and rescue equipment and technology.
II. Key Deletions or Adjustments in the 2025 Catalogue
Removal of "Complete Vehicle Manufacturing" from Regional Lists
In the 2022 Catalogue, "Complete Vehicle Manufacturing" was listed as an encouraged industry for several provinces in Central and Western China, including Inner Mongolia, Guangxi, Chongqing, Sichuan, Guizhou, Yunnan, Shaanxi, Gansu, Qinghai, Ningxia, and Xinjiang. In the 2025 Catalogue, this general category has been removed, the new focus are as follows:
- Pivot to New Energy Vehicles (NEVs): Encouragement has shifted exclusively toward NEV design, R&D, and parts manufacturing in provinces like Hubei, Hunan, Anhui, Liaoning, and Hainan.
- Core Automotive Supply Chain Focus: Emphasis is now on the R&D, "Three-Electric" (batteries, electric motors, and electronic control systems) and "Three-Intelligent" (autonomous driving, smart cockpits, and intelligent connectivity) systems, alongside battery recycling and repurposing as well as charging and battery-swapping infrastructure.
- Special-Purpose Vehicles: Remains encouraged, provided that projects comply with the Provisions on the Administration of Investment in the Automotive Industry.
III. Preferential Policies for Encouraged Industries
Foreign-invested enterprises (FIEs) falling under the "Encouraged" categories are eligible for the following benefits:
- Customs Duty Exemption: Duty-free import of self-use equipment within the total investment amount, subject to the standard negative lists for tax-exempt imports as listed in the Catalogue of Imported Goods Not Eligible for Tax Exemption in Foreign Investment Projects and Catalogue of Major Technical Equipment and Products Not Eligible for Import Duty Exemption.
- Land-Use Incentives: Eligible projects will receive priority site allocation with reserve prices (starting bids) set as low as 70% of the national minimum benchmark for industrial land. Flexible models like long-term leasing, "lease-before-own", variable-term grants are encouraged to reduce entry costs.
- Corporate Income Tax (CIT) Incentives: A reduced CIT rate of 15% for investments in the Western regions and Hainan Province.
- Reinvestment Tax Incentives: Foreign investors who reinvest profits generated in China directly into encouraged projects listed in the National Catalogue, and satisfy the prescribed conditions, are eligible for tax credit incentives.
Conclusion
The 2025 Catalogue signals a transition in China’s foreign investment policy to "deep systemic integration". Against a volatile global investment backdrop, beyond stabilizing the total volume of investment and continuously optimizing the structure of foreign investment utilization, China is repositioning foreign capital to serve domestic economic goals such as expanding internal demand, boosting consumption, and fostering technological innovation. The government also emphasizes providing higher-quality services to foreign investors, strengthening support for key foreign investment projects, promoting reinvestment of foreign investment within China, and encouraging in-country manufacturing. As the February 1, 2026 effective date approaches, foreign investors are encouraged to proactively position themselves in emerging sectors, leveraging a more profound localization strategy to tap into the potential of China’s massive domestic market.
References：
[1]www.mofcom.gov.cn/syxwfb/art/2025/art_e78e09254e1242069f1d5ad97f366b2b.html
[2]www.mofcom.gov.cn/syxwfb/art/2026/art_b8453ad04370455dbf99ddb2eb0d353c.html
