Shanghai unveils 20 measures to encourage foreign reinvestment

Shanghai has rolled out a comprehensive set of measures to encourage reinvestment by foreign-invested enterprises.

Here is a breakdown of some of the key points from the policy:

Supporting diverse reinvestment methods 1

FIEs legally established in China are encouraged to reinvest undistributed profits, while foreign investors are encouraged to reinvest earnings legally obtained in China in either local or foreign currencies.

Reinvestment methods include establishing new enterprises in Shanghai, increasing capital in existing enterprises, acquiring shares, equity, property shares or other similar interests of domestic enterprises, as well as investing in specific projects.

Strengthening project coordination services 2

Shanghai will establish a project database for reinvestment by FIEs and promote faster project implementation through cross-departmental coordination.

For reinvestment projects included in the list of major and key foreign-invested projects at the municipal level, coordinated services will be provided by dedicated teams, and relevant support policies will apply.

Optimizing land resources allocation 3

FIEs are encouraged to adopt flexible approaches to industrial land use, including leasing before land use rights are granted, leasing combined with land use rights, or long-term leasing.

Encouraging technological upgrades 4

FIEs are encouraged to carry out reinvestment activities such as expanding production capacity and undertaking technological transformation projects, with eligible projects receiving support.

FIEs are also supported in applying for China's ultra-long-term special treasury bonds to invest in large-scale equipment renewal projects in key areas.

Promoting domestic production 5

FIEs acting as applicants for medical device registration are supported in transferring imported products held by registrants under the same actual controller to domestic production. Enhanced consultation services will be provided on product testing, application procedures, evaluation requirements, and system inspections.

FIEs are also encouraged to participate in the pilot program for cross-border segmented production of bioproducts.

Bolstering research and development 6

FIEs are supported in reinvesting to establish R&D institutions, municipal key laboratories, and technology innovation centers, and may benefit from related support policies.

R&D institutions established through reinvestment are encouraged to engage in service outsourcing, with projects that meet development criteria for trade in services receiving funding.

Boosting service sector participation 7

Shanghai will accelerate the implementation of China's comprehensive pilot program for expanding opening-up in the service sector. Eligible FIEs are encouraged to reinvest in areas such as value-added telecommunications, healthcare, biotechnology, culture, education, and finance.

Streamlining production transfer processes for medical devices 8

For FIEs that transfer the production of products with an existing Class II medical device import registration certificate to Shanghai, on-site inspections of the registration and production systems will be reduced or waived.

Where multiple licensing applications are submitted by the same enterprise, on-site inspections will be conducted jointly.

Coordinating pharmaceutical logistics 9

Foreign-invested pharmaceutical wholesale enterprises with a unified quality management system may, subject to meeting modern pharmaceutical logistics requirements for entrusted storage and transportation, designate an eligible wholesale enterprise as the operating entity.

Through the application of information technology, participating enterprises may share resources such as personnel, information, warehousing, and transportation to carry out cross-regional multi-warehouse collaborative logistics.

The operating entity shall assume the core responsibilities for managing multi-warehouse collaboration.

Facilitating food chain operations 10

For foreign-invested chain food sales enterprise headquarters that are registered in Shanghai, operate under a unified brand name, and have a unified food safety management system, new stores that meet conditions for streamlined licensing may be exempt from on-site inspections when applying for food business licenses.

Implementing tax policies for reinvestment 11

Shanghai will provide convenient policy consultation services. Measures will be implemented to ensure effective application of tax credit policies for foreign investors who reinvest distributed profits, as well as deferral of withholding income tax.

Guiding reinvestment in encouraged industries 12

FIEs that reinvest in industries listed in the Catalogue of Encouraged Industries for Foreign Investment may enjoy relevant support policies for imported equipment.

Facilitating forex registration and capital use 13

FIEs are supported in using legitimately earned foreign exchange profits, and foreign investors in using foreign exchange profits legally obtained within China, to carry out domestic reinvestment.

Under eligible and compliant circumstances, the investee enterprise or equity transferor is not required to separately register or update basic information for domestic reinvestment. Relevant foreign exchange funds may be credited to the capital account of the investee enterprise or the capital account settlement account of the equity transferor, and used in accordance with applicable account management requirements.

Expanding the QFLP pilot program 14

Shanghai will further deepen the Qualified Foreign Limited Partner pilot program by broadening funding sources.

Foreign-invested private equity fund managers are supported in using part of their registered capital to invest in the private equity funds they initiate. Application and processing procedures under the pilot program will be optimized to facilitate domestic investment by overseas investors through the QFLP mechanism.

Expanding reinvestment financing channels 15

Shanghai will facilitate related-party shareholder loan applications for reinvestment projects, making use of streamlined review and registration arrangements for medium- and long-term foreign debt.

Restrictions on the use of domestic loans by foreign-invested holding companies will be lifted, allowing such loans to be used for equity investment. Financial institutions are encouraged to provide tailored financial products and services that better match domestic reinvestment needs.

Fostering new models of investment promotion 16

Shanghai will foster a fair and competitive business environment. Targeted policy support will be enhanced to encourage FIEs to undertake activities such as capital increases, capacity expansion, scale upgrading, technological transformation, equipment renewal, digital and intelligent transformation, R&D innovation, talent recruitment, and vocational training.

Strengthening coordination between central districts and new towns 17

Industrial policies of Shanghai's five new towns will be regularly promoted to regional headquarters of multinational companies, and dedicated activities will be organized to encourage foreign-invested headquarters enterprises to expand reinvestment by making full use of resources in the new towns.

Boosting reinvestment information reporting 18

Cross-departmental information sharing will be improved. Through channels such as electronic business licenses, FIEs will be guided to complete reinvestment information reporting in a timely manner, facilitating their access to relevant support policies.

Evaluating foreign investment promotion performance 19

Reinvestment by FIEs will be included in the evaluation system to measure its contributions to economic and social development.

Strengthening policy outreach and guidance 20

A dedicated policy section will be set up on Invest Shanghai (the Shanghai Foreign Investment Promotion Service Platform) to provide targeted information to FIEs.

The Chinese and English versions of Shanghai's 15th Five-Year Plan (2026-30) will be published, and targeted promotional and explanatory sessions will be conducted for FIEs to support the formulation of their investment strategies.

Note: The English text is for reference only. In case of any discrepancies, the Chinese version shall prevail.

Sources: Shanghai Municipal Development and Reform Commission, VCG, IC photo