On the evening of 15 September 2025, the State Administration of Foreign Exchange (“SAFE”) released the Notice on Matters Concerning the Deepening of Reform of Foreign Exchange Administration for Cross-border Investment and Financing (hereinafter referred to as the “Notice”). The Notice represents the latest step in China’s ongoing efforts to liberalise its foreign exchange regime and to create a more transparent, efficient framework for cross-border investment and financing. By reducing administrative burdens, expanding financing channels, and broadening the permissible uses of capital, the Notice is intended to deliver tangible benefits for foreign investors while simultaneously supporting China’s broader objectives of attracting long-term capital inflows, fostering industrial upgrading, and stabilising key sectors of the economy.

Background and Significance

China has always been on its way in deepening reforms and opening up. SAFE has just made another step forward in facilitating foreign investors, and relaxing on foreign exchange control procedures. Based on extensive consultations with banks, enterprises, and individuals regarding foreign exchange matters such as foreign direct investment (“FDI”), cross-border financing, and capital account income (i.e., foreign exchange funds received under the capital account, such as FDI capital or cross-border financing proceeds) payments, SAFE has issued this Notice to further enhance the facilitation of cross-border investment and financing, attract more foreign investors, and promote high-quality development of Chinese economy through improved financial services.

At the same time, China’s domestic real estate market has undergone significant changes in recent years, and related macro-control measures for the real estate sector calls for a prompt reform. Against this backdrop, it has become necessary to refine foreign exchange administration policies to better align with the new circumstances and requirements of the economy, and to support the healthy growth of the real property market. To meet the housing demand of more foreign individuals working and living in China, as well as to promote regional integration and talent mobility, SAFE has now provided more facilitating policies and relaxed regulations on purchasing real property with foreign investment gains.

Highlights of Reform Policies

Streamlined FDI Procedures: Removal of Certain Registration Requirements and Greater Flexibility for Reinvestment

1.Removal of registration for preliminary FDI expenses

Foreign investors remitting preliminary expenses into China before establishing an FDI enterprise no longer need to complete basic information registration. They can now directly open the relevant account and transfer funds, streamlining the establishment process.

2.Reinvestment of FDI profits now permitted

Profits in foreign exchange lawfully generated by FDI enterprises in China, as well as foreign exchange profits distributed to foreign investors, may now be reinvested domestically. This provides greater flexibility in the use of retained earnings.

3.No registration required for reinvestment within China by FDI enterprises

When an FDI enterprise reinvests using its foreign exchange capital or converted RMB funds within China, the recipient enterprise or equity transferor no longer needs to register the reinvestment. Funds may be transferred directly into the designated account. This policy, already tested in certain pilot regions with positive results, has now been rolled out nationwide.

4.Greater access for research institutions to foreign capital investment

Non-enterprise research institutions in China are now allowed to receive foreign investment, with registration and foreign exchange settlement handled under the same procedures as FDI enterprises. This measure, first piloted under the “Ke Huitong” (Science-Exchange Connect) programme, is now being expanded nationwide.

Increased Cross-Border Financing Quotas, with Lighter Compliance Burdens

1.Higher financing quotas for technology enterprises

The facilitation quota for high-tech enterprises, “specialized, sophisticated, distinctive and innovative”(专精特新in Chinese) enterprises, and technology-based SMEs across the country has been uniformly raised to the equivalent of USD 10 million. For certain eligible enterprises selected under the “innovation credit system,” the quota has been further increased to the equivalent of USD 20 million.

2.Simplified registration requirements for cross-border financing

Enterprises making use of the cross-border financing facilitation mechanism are no longer required to submit audited financial statements for the previous year or the most recent period at the registration stage. This is expected to reduce compliance burdens and accelerate access to funding.

Wider Use of Capital Account Income: Expanded Options for Foreign Individuals to Purchase Property in China

1.Streamlined oversight of foreign exchange payments

The facilitation of foreign exchange payments under capital account income will also be improved. Banks may now decide, based on a client’s compliance record and risk profile, how often and to what extent they conduct post-transaction random inspections. This discretion is intended to create a more predictable and user-friendly environment for enterprises, while safeguarding regulatory oversight.

2.Shorter negative list and removal of property restrictions

The negative list governing the use of capital account income has been further reduced, and the previous restriction preventing its use for purchasing non-self-use residential property has been lifted. 

3.Expansion of property purchase facilitation for foreign individuals

Facilitation measures for foreign individuals purchasing residential property in China will also be expanded. The pilot programme previously limited to Hong Kong and Macao residents in the Guangdong–Hong Kong–Macao Greater Bay Area will now be rolled out nationwide to all foreign individuals. Foreign individuals who meet the qualification requirements set by real estate regulators and local authorities may complete foreign exchange settlement and payment for property purchases at banks with a purchase contract or agreement, even before obtaining the official purchase registration certificate from the real estate regulator. The registration certificate can then be submitted to the bank afterwards.

Implications

For foreign investors, 

1.The reforms are expected to lower entry barriers and enhance operational efficiency by reducing administrative procedures, simplifying documentation, and cutting transaction costs.

2.By allowing the reinvestment of foreign exchange profits in China and expanding cross-border financing quotas, the measures provide greater flexibility in capital management and improve the liquidity position of foreign-invested enterprises.

3.Innovation-driven sectors, particularly high-tech enterprises and “specialised, sophisticated, distinctive and innovative” SMEs, are likely to benefit the most, as the reforms explicitly broaden financing channels for technology-oriented businesses.

4.The relaxation of restrictions on property purchases by qualified foreign individuals expands investment opportunities and creates stronger incentives for international professionals to live and work in China.

For the Chinese economy, 

1.These reforms are designed to strengthen the overall attractiveness of the Chinese investment environment while directing foreign capital into priority areas such as advanced manufacturing, research, and innovation.

2.By encouraging profit reinvestment and broadening the permissible uses of capital, the measures support industrial upgrading, more efficient utilization of foreign capital, and deeper regional integration.

3.The nationwide facilitation of property purchases by foreign individuals is expected to inject vitality into the real estate sector, helping to stabilize demand, restore market confidence, and contribute to the broader recovery of the domestic property market.

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