China unveils 12 new measures to encourage foreign reinvestment

China unveiled 12 targeted measures on Friday to further attract and utilize foreign investment, with a specific focus on encouraging foreign enterprises to reinvest in the domestic market.

The new document, jointly issued by the National Development and Reform Commission and six other central departments, calls on local governments to establish project databases tailored for reinvestment by foreign enterprises and to enhance support and services for such projects. Eligible reinvestment projects will be included in the country's major or key foreign investment project lists, granting them access to relevant support policies.

To lower upfront costs, foreign companies reinvesting in China will be allowed to make flexible use of industrial land through long-term leasing, lease-before-transfer arrangements and land transfers with flexible durations, in line with existing policies that encourage investment.

The notice also emphasizes the importance of implementing and enforcing tax incentives to promote foreign reinvestment in China. Foreign-invested projects in line with the catalog of encouraged industries for foreign investment will benefit from preferential policies related to the importation of equipment.

Additionally, foreign enterprises that use legally generated foreign exchange profits, and overseas investors that use foreign exchange profits lawfully obtained within China for domestic reinvestment, may transfer the relevant foreign exchange funds within the country in accordance with regulations.

Under the document, the country pledges to streamline the approval process and offer "green channel" management for eligible reinvestment funding sources such as shareholder loans from foreign affiliates and panda bonds, or yuan-denominated bonds issued by overseas institutions in the Chinese onshore market. Financial institutions are also encouraged to innovate products and services, under prudent risk management, to support foreign firms' reinvestment activities.