China’s National Foreign Exchange Administration Releases a Package of Policies to Deepen Reform of Cross-Border Investment and Financing FX Management
Published 17 September 2025
Yu Du
On 15 September 2025, the State Administration of Foreign Exchange (SAFE) issued the Notice on Matters Concerning the Deepening of Reform of Foreign Exchange Administration for Cross-Border Investment and Financing, accompanied by relevant Operational Guidelines. This policy package was developed following in-depth research into the views and feedback from banks, enterprises, and individuals regarding foreign direct investment (FDI), cross-border financing, and capital account income payments. The aim is to enhance the convenience of cross-border investment and financing, facilitate foreign investment utilization, and promote the high-quality development of the real economy through improved financial services.
The newly issued policies mainly focus on three areas: FX management for FDI, cross-border financing, and the use of capital account income.
1. Deepening FDI FX Management Reform
The new policy introduces significant reforms to simplify and enhance the flexibility of foreign exchange (FX) management for foreign direct investment (FDI). These measures aim to improve the investor experience, reduce administrative burdens, and support reinvestment and innovation in China. Key reforms include:
1) Elimination of Basic Information Registration for Pre-Establishment Expenses
Foreign investors are no longer required to complete basic information registration for pre-establishment expenses before opening a bank account. If a foreign investor needs to remit funds to cover pre-investment costs prior to the formal establishment of a foreign-invested enterprise (FIE) in China, they may now directly open a pre-establishment expense account with a bank and remit funds without prior registration.
2) Removal of Domestic Reinvestment Registration Requirements for FIEs
Foreign-invested enterprises are now allowed to carry out domestic reinvestments without the need to register the basic information of the receiving party.
As long as the reinvestment complies with China’s national Negative List for Foreign Investment Access and the underlying domestic project is genuine and compliant, an FIE may use its FX capital or the RMB obtained through FX settlement to reinvest domestically. Reinvestment funds may be directly transferred to the appropriate accounts, enhancing capital mobility and promoting domestic capital flow.
3) Reinvestment of FX Profits Now Permitted
FX profits generated by FIEs or received by foreign investors can now be reinvested in China under FDI. These FX funds can be transferred into either the capital account of the investee enterprise or the capital account settlement account of the equity transferor. Use of these funds must comply with the respective account management requirements, but no additional registration is needed for reinvestment purposes.
4) Facilitating Receipt of Overseas Funds by Domestic Non-Enterprise Research Institutions
Domestic non-enterprise research institutions can now receive overseas funds and conduct related FX transactions by referring to FDI rules. These institutions may follow the same procedures applicable to FIEs when registering foreign exchange, opening accounts, and settling funds. If they intend to reinvest the received foreign funds or the RMB obtained through FX settlement within China, the process will also follow the FDI reinvestment model.
2. Deepening Cross-Border Financing FX Management Reform
The policy optimizes cross-border financing macro-prudential management by expanding the pilot scope and improving quota calculation methods. Key measures include:
1) Expanding Access and Increasing Financing Quotas for Innovation-Oriented Enterprises
For high-tech enterprises, “little giants” with specialization and innovation capabilities, and science and technology-based small and medium-sized enterprises (SMEs), the quota has been uniformly increased to the equivalent of US$ 10 million.
For a selected group of eligible enterprises identified through the “innovation points-based system”, the quota is further increased to the equivalent of US$ 20 million.
2) Simplifying Registration Requirements for Enterprises Participating in the Facilitation Scheme
The new policy removes the requirement for enterprises to submit audited financial statements from the previous fiscal year or the most recent period during the signing and registration process for cross-border financing facilitation.
3. Enhancing Convenience in the Use of Capital Account Income
SAFE’s new policies introduce greater flexibility in the use of capital account income, including funds obtained through equity investment, asset sales, and overseas financing. Key measures include:
1) Reduction of Restrictions on the Use of Capital Account FX Income and Its RMB Settlement
SAFE has shortened the negative list that governs the use of capital account foreign exchange income and its RMB equivalents for domestic payments. One notable change is the removal of the restriction that previously prohibited the use of such funds to purchase non-self-use residential property.
2) Optimization of the Payment Facilitation Mechanism for Capital Account FX Income
Banks are now authorized to independently determine the sampling ratio and frequency of post-transaction random inspections based on a client’s compliance status and risk profile. This reform reduces unnecessary interference in compliant transactions and also contributes to a more efficient and attractive environment for foreign investment in China.
3) Nationwide Expansion of FX Settlement and Payment Facilitation for Property Purchases by Foreign Individuals
Previously piloted in the Guangdong-Hong Kong-Macao Greater Bay Area, the policy allowing FX settlement for property purchases by Hong Kong and Macao residents has now been rolled out nationwide.
Foreign individuals who meet local purchase qualifications may now settle and pay FX funds for home purchases in advance, using a valid purchase contract or agreement. The filing certificate from real estate authorities can be submitted afterward, making the process significantly more efficient and accessible.
Comment
This reform package marks an important step in the internationalization of China’s financial and investment environment. It will not only help attract new foreign investment but also support existing investors in optimizing their capital structures and expanding reinvestment in China. For foreign investors engaged in FDI in China, the new policies offer greater predictability, lower compliance costs, and enhanced capital mobility. By removing long-standing administrative bottlenecks and granting banks greater autonomy in facilitating foreign exchange transactions, the SAFE is sending a clear signal of its shift toward a more market-oriented, transparent, and investor-friendly regulatory framework.
The newly issued policies mainly focus on three areas: FX management for FDI, cross-border financing, and the use of capital account income.
1. Deepening FDI FX Management Reform
The new policy introduces significant reforms to simplify and enhance the flexibility of foreign exchange (FX) management for foreign direct investment (FDI). These measures aim to improve the investor experience, reduce administrative burdens, and support reinvestment and innovation in China. Key reforms include:
1) Elimination of Basic Information Registration for Pre-Establishment Expenses
Foreign investors are no longer required to complete basic information registration for pre-establishment expenses before opening a bank account. If a foreign investor needs to remit funds to cover pre-investment costs prior to the formal establishment of a foreign-invested enterprise (FIE) in China, they may now directly open a pre-establishment expense account with a bank and remit funds without prior registration.
2) Removal of Domestic Reinvestment Registration Requirements for FIEs
Foreign-invested enterprises are now allowed to carry out domestic reinvestments without the need to register the basic information of the receiving party.
As long as the reinvestment complies with China’s national Negative List for Foreign Investment Access and the underlying domestic project is genuine and compliant, an FIE may use its FX capital or the RMB obtained through FX settlement to reinvest domestically. Reinvestment funds may be directly transferred to the appropriate accounts, enhancing capital mobility and promoting domestic capital flow.
3) Reinvestment of FX Profits Now Permitted
FX profits generated by FIEs or received by foreign investors can now be reinvested in China under FDI. These FX funds can be transferred into either the capital account of the investee enterprise or the capital account settlement account of the equity transferor. Use of these funds must comply with the respective account management requirements, but no additional registration is needed for reinvestment purposes.
4) Facilitating Receipt of Overseas Funds by Domestic Non-Enterprise Research Institutions
Domestic non-enterprise research institutions can now receive overseas funds and conduct related FX transactions by referring to FDI rules. These institutions may follow the same procedures applicable to FIEs when registering foreign exchange, opening accounts, and settling funds. If they intend to reinvest the received foreign funds or the RMB obtained through FX settlement within China, the process will also follow the FDI reinvestment model.
2. Deepening Cross-Border Financing FX Management Reform
The policy optimizes cross-border financing macro-prudential management by expanding the pilot scope and improving quota calculation methods. Key measures include:
1) Expanding Access and Increasing Financing Quotas for Innovation-Oriented Enterprises
For high-tech enterprises, “little giants” with specialization and innovation capabilities, and science and technology-based small and medium-sized enterprises (SMEs), the quota has been uniformly increased to the equivalent of US$ 10 million.
For a selected group of eligible enterprises identified through the “innovation points-based system”, the quota is further increased to the equivalent of US$ 20 million.
2) Simplifying Registration Requirements for Enterprises Participating in the Facilitation Scheme
The new policy removes the requirement for enterprises to submit audited financial statements from the previous fiscal year or the most recent period during the signing and registration process for cross-border financing facilitation.
3. Enhancing Convenience in the Use of Capital Account Income
SAFE’s new policies introduce greater flexibility in the use of capital account income, including funds obtained through equity investment, asset sales, and overseas financing. Key measures include:
1) Reduction of Restrictions on the Use of Capital Account FX Income and Its RMB Settlement
SAFE has shortened the negative list that governs the use of capital account foreign exchange income and its RMB equivalents for domestic payments. One notable change is the removal of the restriction that previously prohibited the use of such funds to purchase non-self-use residential property.
2) Optimization of the Payment Facilitation Mechanism for Capital Account FX Income
Banks are now authorized to independently determine the sampling ratio and frequency of post-transaction random inspections based on a client’s compliance status and risk profile. This reform reduces unnecessary interference in compliant transactions and also contributes to a more efficient and attractive environment for foreign investment in China.
3) Nationwide Expansion of FX Settlement and Payment Facilitation for Property Purchases by Foreign Individuals
Previously piloted in the Guangdong-Hong Kong-Macao Greater Bay Area, the policy allowing FX settlement for property purchases by Hong Kong and Macao residents has now been rolled out nationwide.
Foreign individuals who meet local purchase qualifications may now settle and pay FX funds for home purchases in advance, using a valid purchase contract or agreement. The filing certificate from real estate authorities can be submitted afterward, making the process significantly more efficient and accessible.
Comment
This reform package marks an important step in the internationalization of China’s financial and investment environment. It will not only help attract new foreign investment but also support existing investors in optimizing their capital structures and expanding reinvestment in China. For foreign investors engaged in FDI in China, the new policies offer greater predictability, lower compliance costs, and enhanced capital mobility. By removing long-standing administrative bottlenecks and granting banks greater autonomy in facilitating foreign exchange transactions, the SAFE is sending a clear signal of its shift toward a more market-oriented, transparent, and investor-friendly regulatory framework.