HDFC SKY | Updated: 2025-12-23
BEIJING – China’s top economic planner, the National Development and Reform Commission (NDRC), together with the Ministry of Commerce, on Wednesday unveiled the 2025 edition of the Catalogue of Industries Encouraging Foreign Investment, significantly expanding the scope of incentives in a bid to reverse a persistent decline in inbound foreign direct investment (FDI).
The new catalogue adds more than 200 new items and revises approximately 300 existing entries, marking one of the most substantial expansions in recent years. The revisions are heavily weighted toward advanced manufacturing, modern services, green and low-carbon industries, and high-tech sectors — all areas Beijing has identified as strategic priorities for its industrial upgrading drive.
Foreign-invested enterprises operating in the newly added or revised categories will be eligible for a suite of support measures, including reduced corporate income tax rates, priority land allocation, streamlined administrative approvals, and easier access to domestic financing, according to the official document.
The move comes as China grapples with its first annual drop in FDI since the early 1990s. Official data released earlier this month showed that actual utilized foreign capital in the first eleven months of 2025 fell 8.3% year-on-year, with manufacturing FDI sliding 12% and services FDI declining 6.5%. Analysts attribute the downturn to lingering trade tensions with the United States, rising labour costs, and a shifting global supply chain landscape.
“The 2025 catalogue is a targeted response to the structural challenges facing foreign investors,” said a spokesperson for the NDRC’s Foreign Capital Utilization Department. “By widening the ‘positive list’, we aim to stabilise foreign investors’ expectations and channel more capital into precisely those sectors that will define China’s future competitiveness.”
The revision also reflects Beijing’s broader pivot from quantity to quality in attracting overseas capital. While the overall number of encouraged items has grown, labour-intensive, low-end manufacturing activities have been removed from the list, aligning with the country’s “new quality productive forces” strategy.
Industry observers noted that the catalogue’s emphasis on green hydrogen, carbon capture equipment, advanced battery materials, and integrated circuit design tools signals China’s determination to build self-reliant supply chains in emerging technologies, even as it continues to court foreign know-how.
“The message is clear: China still wants foreign investment, but it wants the right kind of foreign investment,” commented Zhang Wei, chief economist at Anbound Consulting. “Multinationals with cutting-edge green or digital technologies will find generous support; those relying solely on cost arbitrage will not.”
The new catalogue took effect on December 24, 2025, and will serve as the baseline for investment promotion work throughout 2026. Local governments have been instructed to align their regional incentive policies with the national list within 30 days.
