Shanghai Issued Measures to Encourage Foreign-Invested Enterprises to Expand Domestic Reinvestment
ISSUING AUTHORITIES:
Shanghai Municipal Development and Reform Commission
Shanghai Municipal Commission of Commerce
Shanghai Municipal Commission of Economy and Informatization
Shanghai Municipal Science and Technology Commission
Shanghai Municipal Medical Products Administration
Shanghai Municipal Bureau of Planning and Natural Resources
Shanghai Municipal Administration for Market Regulation
Shanghai Municipal Finance Bureau
Shanghai Municipal Tax Service, State Taxation Administration
Shanghai Head Office of the People’s Bank of China
Shanghai Branch of the State Administration of Foreign Exchange
DATE OF ISSUANCE:
December 26, 2025
EFFECTIVE DATE:
December 26, 2025
Recently, the Shanghai Municipal Development and Reform Commission, together with the Shanghai Municipal Commission of Commerce and other relevant authorities, released a new set of measures entitled Several Measures of Shanghai Municipality to Encourage Domestic Reinvestment by Foreign-Invested Enterprises (the “Measures”).
The Measures focus on supporting foreign-invested enterprises (“FIEs”) in Shanghai in using undistributed profits or profits of overseas investors in both RMB and foreign currencies for domestic reinvestment. Reinvestment may be carried out through the establishment of new enterprises, capital increases, or equity acquisitions.
According to the Measures, first, Shanghai will establish a project pool for domestic reinvestment by FIEs. Projects included in the municipality’s list of major and key foreign investment projects will be coordinated by dedicated task forces and entitled to supporting policies. Second, land-use arrangements will be optimized by allowing industrial land to be used through models such as “lease first, then grant,” a combination of leasing and granting, or long-term leasing. Industrial land aligned with industrial policies may adopt a “20-year flexible term plus renewal upon application” mechanism, while the land grant term for major foreign investment projects may extend up to 50 years. Third, foreign-invested enterprises will be supported in technological upgrades, equipment renewal, and capacity expansion through municipal special funds and national ultra-long-term special government bonds. Reinvestment in the establishment of Research and Development institutions and technology innovation platforms is encouraged and may receive support from special funds for trade in services. Fourth, for medical device production conversion projects, on-site inspections for registration and production systems may be reduced or exempted and parallel review procedures adopted to improve approval efficiency. Foreign-invested pharmaceutical wholesale enterprises are permitted to conduct cross-regional, multi-warehouse collaborative logistics under a unified quality management system. Eligible foreign-invested chain food retailers may be exempted from on-site inspections when applying for new food business licenses for their stores. Fifth, the Measures call for the implementation of tax incentives for profit reinvestment, the provision of bilingual (Chinese–English) policy guidance, and strengthened application of tax credits for direct reinvestment of profits as well as temporary exemption from withholding income tax. Sixth, foreign exchange registration and fund utilization procedures will be optimized by relaxing restrictions on the transfer and use of foreign exchange funds for domestic reinvestment. Reinvestment through channels such as Qualified Foreign Limited Partners (QFLP) will be supported, and financing methods including shareholder loans and Panda bonds will be further expanded.
The Measures also require the advancement of an information reporting system for domestic reinvestment and an evaluation mechanism for the effectiveness of foreign investment promotion. The scale and contribution of reinvestment will be incorporated into the evaluation framework, and external communication will be strengthened through dedicated policy columns and multilingual explanations.
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