New Measures Ease Cross-Border Investment

China’s FX rules in 2025 have been updated to facilitate cross-border investment for foreign firms and investors. The reforms lift barriers on property purchases, ease reinvestment rules for FIEs, and expand financing options for innovative SMEs. Together, they reflect China’s push to create a more open, predictable, and business-friendly investment environment. 

On September 15, the State Administration of Foreign Exchange (SAFE) released the Notice on Deepening the Reform of Foreign Exchange Administration for Cross-border Investment and Financing (hereinafter, the “Notice”), introducing nine new foreign exchange (FX) measures as part of China’s “steady foreign investment” strategy.  

The measures aim to streamline cross-border investment and financing processes, notably enabling overseas individuals to more easily purchase property in China, simplifying domestic reinvestment by foreign-invested enterprises, reducing restrictions on the use of capital account income, and expanding cross-border financing access for technology SMEs. 

The measures outlined in the Notice took effect on September 15, 2025.

What are the new measures?

1. Cancelling registration of basic information on upfront expenses for domestic direct investment

In the past, foreign investors who needed to remit upfront expenses before establishing a foreign-invested enterprise (FIE) in China were required to register the basic information about these expenses at the bank in the place where the FIE is registered before opening an account and remitting the funds. Under the new policy, foreign investors can directly open an upfront expense account at a bank and remit funds without registering this basic information first.

2. Cancelling registration for domestic reinvestment by FIEs

The Notice cancels the registration requirement for domestic reinvestment by FIEs, making it easier for them to channel funds into onshore projects. Under the new rules, FIEs can use their foreign exchange capital, as well as the RMB proceeds obtained from foreign exchange settlement, to reinvest domestically without going through the previous process of registering basic information for the receiving entity. Instead, the reinvested funds can be transferred directly into the relevant accounts, so long as the reinvestment complies with foreign investment access regulations and the domestic project is genuine and legally compliant.

Under the prior system, domestic institutions receiving reinvestment from FIEs or other domestic entities using foreign capital had to apply for a basic information registration at the local foreign exchange bureau and then open a dedicated domestic reinvestment account at a bank. This procedure often led to delays and additional compliance burdens, creating friction for companies looking to expand or restructure their investments in China. 

The reform, which builds on earlier pilots in select provinces and cities, gives FIEs more flexibility in adjusting their investment structures, expanding into new business areas, or consolidating operations through equity investment. At the same time, regulatory safeguards remain in place: the funds must comply with China’s foreign investment access policies, and reinvestment activities must be authentic and in line with domestic legal requirements. 

Read also: China Grants 10% Tax Credit for Overseas Investors Reinvesting Profits

3. Reinvestment of FDI foreign exchange profits

FIEs and foreign investors can reinvest their foreign exchange profits domestically, with funds transferred to the capital account of the invested enterprise or the capital account settlement account of the equity transferor. The use of funds is managed according to relevant account management requirements. The foreign exchange profits must be legally generated and obtained in China.

4. Facilitating foreign capital for domestic research institutions 

Domestic non-enterprise scientific research institutions receiving foreign capital will follow the same procedures for FDI in terms of foreign exchange registration, account opening, and fund transfers. They may also use foreign exchange remitted from abroad and the RMB proceeds from settlement for domestic reinvestment following FDI procedures. Eligible institutions may participate in policies facilitating the payment of capital account income. 

This new measure is an expansion of the “Science and Technology Exchange” pilot program, which was initially implemented in select provinces and cities. The “Science and Technology Exchange” pilot program, which sought to facilitate the entry and use of start-up funds by eligible non-enterprise research institutions, allows institutions to use foreign exchange capital and the RMB proceeds from conversion for operational needs within the scope of their business, similar to FIEs. 

The expansion of this pilot to the whole country will provide significantly more funding flexibility for scientific research institutions and make it easier for foreign investors to invest in these institutions.

5. Expanding cross-border financing facilitation

The Notice introduces new measures to expand cross-border financing channels for innovative enterprises. Qualified “specialized, refined, unique, and innovative” (专精特新) companies and technology SMEs across the country may now borrow foreign debt up to the equivalent of US$10 million. Companies that achieve higher scores under the Ministry of Science and Technology’s “Innovation Points System” can borrow up to US$20 million.

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The Innovation Points System, introduced by MOST to quantify and evaluate firms’ innovation capacity, is designed to channel financial resources toward technology-driven companies. It has already been piloted in national high-tech zones, where it helped identify promising enterprises and match them with financing opportunities. With the release of the Notice, the system is now being applied nationwide, providing a broader framework to direct cross-border funding to high-growth, innovation-oriented firms. 

This reform also builds on earlier regional pilots. For example, in Guangdong, certain high-tech enterprises had already been permitted to borrow up to US$100 million from overseas under special arrangements. Those pilot programs demonstrated how easing access to foreign debt could help firms fund R&D, scale up operations, and strengthen international cooperation. The nationwide expansion now brings a more inclusive, tiered framework, ensuring that a larger pool of smaller but dynamic technology firms, especially SMEs, can access cross-border financing on favorable terms, while still maintaining prudent limits. 

These qualified innovative enterprises won’t be subject to the foreign debt limit based on the registered capital–total investment ratio or the macroprudential management of foreign debt mechanism.

6. Simplifying registration and management requirements for cross-border financing facilitation 

Companies participating in cross-border financing facilitation services are no longer required to provide audited financial reports for the previous year or the most recent period during contract registration. Previously, pilot enterprises had to submit an audited report along with extensive other documentation, including certification as a “specialized, refined, unique, and innovative” company, and loan agreements.

7. Reducing the negative list for the use of capital account income

The Notice includes a new measure to shorten the negative list for the use of capital account income. Under the updated rules, the use of capital funds, foreign exchange income from external debt, and RMB funds obtained from foreign exchange settlement by non-financial enterprises must remain genuine and for self-use. These funds may not be used for expenditures prohibited by national laws and regulations, and, unless otherwise specified, cannot be invested directly or indirectly in securities or high-risk financial products, nor used to provide loans to non-affiliated enterprises (except where explicitly permitted). Low-risk products such as structured deposits or wealth management products with a risk rating of Level 2 or below remain allowed.

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Among the most significant adjustments to the negative list is the removal of restrictions on using capital account income to purchase non-self-use residential property. This prohibition was originally introduced when China’s property market was overheating, as part of broader efforts to cool speculative inflows and prevent “hot money” from destabilizing the sector. At the time, SAFE’s measures complemented other national real estate controls and contributed to stabilizing the market. 

However, according to an official Q&A from SAFE, macro-level real estate controls have been recalibrated, and SAFE has responded by optimizing its foreign exchange measures to reflect this new environment. By shortening the negative list, the new policy offers enterprises greater flexibility in managing and deploying their capital account funds, while still keeping safeguards in place against misuse. The adjustment also supports the stable and sustainable development of the real estate market under its reformed policy framework.

8. Optimizing facilitation of foreign exchange payments for capital account proceeds

Banks will now be permitted to determine the proportion and frequency of post-process random inspections of facilitation services based on client compliance and risk levels, while coordinating facilitation services with risk prevention. 

According to SAFE, this will improve the experience for businesses and foster a better environment for foreign investment and business development in China.

9. Facilitating foreign exchange settlement for domestic home purchases by overseas individuals

The Notice also introduces a facilitation measure for foreign exchange settlement in domestic home purchases by overseas individuals. Under the new rule, foreign individuals who meet the requirements of real estate regulators and comply with local purchase qualifications may, prior to obtaining a home purchase registration certificate, use a signed purchase contract or agreement to settle and pay foreign exchange funds through a bank. The purchase registration certificate can then be submitted later to complete the process. Importantly, this measure does not change the underlying policies that govern whether overseas individuals are eligible to buy property in China; it only simplifies the payment procedure.

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According to an official Q&A from SAFE, the policy responds to practical obstacles faced under the previous system. Before the Notice, overseas buyers were required to provide a purchase registration certificate from the real estate authorities before their funds could be settled and paid. However, developers and second-hand sellers typically demanded an initial down payment before handling registration formalities, creating a sequencing problem for buyers. To address this, SAFE had earlier piloted a “settle first, supplement later” arrangement in the Greater Bay Area, allowing Hong Kong and Macao residents to make settlement and payment on the basis of a purchase contract or agreement, and then provide the registration certificate afterward 

Building on this experience, SAFE has now extended the facilitation nationwide. By allowing settlement and payment based on contracts at the initial stage, the measure better accommodates the reasonable housing needs of overseas individuals living and working in China, while also promoting regional integration and talent mobility. SAFE emphasizes, however, that the reform is strictly procedural, streamlining banks’ verification requirements while still maintaining the substantive restrictions on foreign individuals’ property purchases, which continue to be determined by real estate regulators and local qualification rules. 

Facilitating cross-border investment 

These reforms collectively reduce administrative burdens, expand access to foreign financing, and provide more flexibility in the use of capital account funds, reflecting China’s broader push to attract and retain FDI by creating a more predictable and business-friendly environment. By aligning procedures for non-enterprise research institutions with FDI standards, facilitating foreign individuals’ access to housing payments, and simplifying reinvestment processes for FIEs, the measures also demonstrate a willingness to respond to practical concerns raised by market participants and to translate pilot experiences into nationwide practice. 

At the same time, by facilitating funding channels for “specialized, refined, unique, and innovative” enterprises and technology SMEs, the measures also seek to direct foreign capital toward strategic sectors that are vital for China’s industrial upgrading and technological self-reliance. The shortening of the negative list and the streamlining of settlement and reinvestment procedures also indicate a shift toward a more facilitative approach in foreign exchange management, while maintaining guardrails against speculative risks.