As China enters the final stage of preparing its 15th Five-Year Plan (2026–2030), understanding China’s evolving approach to foreign direct investment (FDI) requires more than a standalone reading of the new planning document. From our perspective, a meaningful assessment of the 15th Five-Year Plan can only be achieved by examining it in direct comparison with the 14th Five-Year Plan (2021–2025), thereby placing policy signals within their proper historical context.
A comparison between the officially implemented 14th Five-Year Plan (2021–2025) and the Recommendations of the CPC Central Committee for Formulating the 15th Five-Year Plan adopted in October 2025 reveals a clear policy direction. China is not retreating from opening up; rather, it is redefining the role of foreign investment within its national development framework.
A Shift in Overall Positioning: From “Stabilizing FDI” to “High-Quality Utilization of FDI”
During the 14th Five-Year Plan period, China’s FDI policy was primarily guided by the objective of stabilizing scale and expectations.
This approach reflected prevailing global conditions, including the impact of the COVID-19 pandemic, supply chain disruptions, and heightened geopolitical uncertainty. Accordingly, the 14th Five-Year Plan emphasized expanding market access, improving foreign investment services, and strengthening protection of foreign investors’ rights, with a clear policy goal: ensuring that foreign capital could “enter, remain, and operate with confidence” in China.
By contrast, the 15th Five-Year Plan recommendations place noticeably less emphasis on investment scale and far greater emphasis on quality, functionality, and contribution. Concepts such as high-quality development, new quality productive forces, resource allocation efficiency, and the balance between development and security feature prominently throughout the document.
This indicates a clear change in how foreign investment is viewed: from a focus on scale toward a focus on quality and practical contribution to China’s long-term development.
A Shift in Industrial Orientation: From Selling into China to Playing a Defined Role in China’s Industrial Landscape
Under the 14th Five-Year Plan, China’s industrial approach to foreign investment remained largely market-oriented. Foreign investors were encouraged to participate in manufacturing, modern services, high-end consumption, and R&D activities, with policy acceptance primarily determined by sector alignment and commercial viability.
Put simply, foreign investors were mainly treated as ordinary market participants. As long as an investment fell within encouraged sectors and made commercial sense, policy assessment focused far less on how the business fit into China’s broader industrial or technological development.
The 15th Five-Year Plan recommendations reflect a more system-focused perspective. Industrial policy is increasingly framed around the integrity, resilience, and security of China’s industrial system, with repeated emphasis on modernized industrial chains, supply chain security, core technology breakthroughs, future industries, and new quality productive forces.
In this context, the key question for foreign investment is no longer simply which sector an investor operates in, but rather:
What role does the investment play within China’s broader industrial system?
Foreign investments that are more readily recognized as “high-quality” increasingly exhibit industrial collaboration characteristics, such as:
- Integration into local supply chains that strengthens key links;
- Ongoing R&D or technological iteration conducted within China;
- Provision of scalable solutions that support China’s industrial upgrading;
- Development of shared platforms that enhance overall industrial capabilities.
Under the 15th Five-Year framework, policy discussion places increasing emphasis on how an investment contributes to China’s long-term industrial upgrading, technological capability, and supply chain development.
A Shift in the Institutional Environment: From Easing Market Entry to Setting Clearer Rules and Stronger Oversight
Under the 14th Five-Year Plan, the main institutional focus was to make it easier for foreign investors to enter and operate in China. This was reflected in concrete measures such as shortening the foreign investment negative list, applying national treatment both before and after establishment, and using pilot free trade zones to test simpler approval processes and more flexible regulatory arrangements.
The 15th Five-Year Plan recommendations, however, introduce a more balanced approach—institutional opening combined with risk governance.
Data, artificial intelligence, platform economies, and cross-border data flows are explicitly incorporated into governance and security frameworks, while the principle of balancing development and security is elevated to a foundational policy position.
For foreign investors, this implies that compliance is no longer merely a minimum requirement, but an integral component of sustainable operational capability. Upfront structuring, functional clarity, and careful management of data and technology flows are becoming increasingly critical.
Shifts in Location Strategy: From Incentive-Driven Choices to Clearer Regional Positioning
During the 14th Five-Year period, foreign investment location decisions were often shaped by competition among local governments, with incentives, subsidies, and cost considerations playing a significant role.
The 15th Five-Year Plan recommendations signal a clear recalibration. On the one hand, they emphasize the construction of a unified national market; on the other, they call for regions to leverage comparative advantages and clarify functional positioning.
As a result, policy differentiation across regions is expected to rely less on incentives and more on functional specialization.
For foreign investors, location selection is increasingly a strategic decision rather than a cost-driven one. Enterprises are encouraged to first define the intended function of their China presence—such as regional headquarters, R&D hubs, manufacturing nodes, or market service centers—and then align that function with the most appropriate region.
Under this approach, a China subsidiary is no longer viewed simply as a one-off investment or local project. Instead, it is expected to serve a clearly defined purpose within the group’s global operations, and to be located in regions whose development priorities are broadly aligned with that role, providing greater clarity and stability over time.
Conclusion: The 15th Five-Year Plan Signals Clearer Priorities
Taken together, the transition from the 14th to the 15th Five-Year Plan does not suggest a reduction in China’s openness to foreign investment. Rather, it reflects a shift toward clearer policy priorities and more explicit expectations for how foreign investment is expected to contribute to China’s development goals:
- From focusing mainly on investment volume to paying closer attention to how foreign investment supports industrial upgrading and long-term development;
- From prioritising easier market entry to placing greater emphasis on clear rules, compliance, and predictable regulatory expectations;
- From competition among local governments based on incentives to clearer regional roles within a unified national market;
- From short-term location or cost advantages to longer-term considerations around stability, alignment, and sustainability.
For foreign enterprises committed to long-term engagement with China and willing to integrate China into their global strategies, the 15th Five-Year Plan offers clearer rules, stronger direction, and greater predictability.