Several Measures of Shanghai Municipality to Encourage Foreign-Invested Enterprises to Reinvest within the Territory

To implement the decisions and arrangements of the CPC Central Committee and the State Council on expanding high-level opening-up, attract and utilize foreign investment more effectively, and encourage reinvestment by foreign-invested enterprises within China, and in accordance with requirements such as the “Notice of the National Development and Reform Commission and Other Departments on Implementing Several Measures to Encourage Reinvestment by Foreign-Invested Enterprises,” the following measures are hereby proposed based on the actual conditions of this city.

I. Supporting Various Forms of Domestic ReinvestmentForeign-invested enterprises are encouraged to expand their domestic reinvestment through multiple channels, including using undistributed profits of foreign-invested enterprises established in China in accordance with the law, or having overseas investors reinvest legally obtained domestic profits in both local and foreign currencies. These reinvestment methods include establishing new enterprises in this city, increasing capital in existing enterprises, acquiring shares, equity interests, property shares, or other similar rights in domestic enterprises, as well as investing in projects.

II. Strengthening Project Coordination ServicesThis city has established a project database for domestic reinvestment by foreign-invested enterprises, promoting cross-departmental collaboration to accelerate the implementation of these projects. For domestic reinvestment projects by foreign-invested enterprises included in the city’s list of major and key foreign-invested projects, the city’s special task force for major and key foreign-invested projects will provide overall coordination services and grant access to relevant support policies. (Responsible units: Municipal Development and Reform Commission, Municipal Commission of Commerce, Municipal Commission of Economy and Informatization, Municipal Science and Technology Commission, responsible according to their respective duties)

III. Optimizing Land Resource AllocationForeign-invested enterprises are encouraged to use industrial land flexibly through methods such as lease-then-transfer, combined lease-and-transfer, and long-term leasing when undertaking domestic reinvestment. The system of “20-year flexible land-use term plus renewal upon application” is implemented for industrial land; upon expiration of the transfer term, if the land still aligns with industrial guidance, it can be renewed at the original paid-use contract price via agreement. Nationally and municipally designated major foreign-invested projects may obtain industrial land for industrial purposes through 50-year land-use transfers. (Responsible units: Municipal Planning and Natural Resources Bureau, Municipal Commission of Economy and Informatization, responsible according to their respective duties)

IV. Encouraging Technological Upgrades and TransformationsForeign-invested enterprises are encouraged to engage in domestic reinvestment activities such as production expansion and technological upgrades. Projects that meet the technical transformation requirements under the municipal special fund for promoting high-quality industrial development will receive support. Foreign-invested enterprises are also supported in applying for national ultra-long-term special treasury bonds as prescribed, enabling large-scale equipment renewal investments in key sectors. (Responsible units: Municipal Commission of Economy and Informatization, Municipal Development and Reform Commission, responsible according to their respective duties)

V. Guiding and Supporting Domestic ProductionForeign-invested enterprises are encouraged to shift product manufacturing from imports to domestic production. Support is provided for foreign-invested enterprises acting as medical device registration applicants to transfer imported products held by registrants under the same de facto control into domestic production, along with advisory services regarding product inspection, declaration procedures, review requirements, and system verification for converted products. Foreign-invested enterprises are also supported in participating in pilot programs for cross-border segmented production of biopharmaceuticals and provided with guidance services. (Responsible units: Municipal Drug Administration, Municipal Science and Technology Commission, responsible according to their respective duties)

VI. Supporting Increased R&D and Innovation EffortsForeign-invested enterprises are supported in reinvesting to establish R&D institutions and build municipal key laboratories and technology innovation centers, enjoying related policy support as stipulated by law. R&D institutions established through reinvestment by foreign-invested enterprises are encouraged to undertake service outsourcing businesses, with projects meeting the municipal special fund requirements for service trade development receiving support. (Responsible units: Municipal Science and Technology Commission, Municipal Commission of Commerce, responsible according to their respective duties)

VII. Supporting Participation in Service Sector Opening-Up PilotsAccelerating the advancement of the national comprehensive pilot program for expanding service sector opening-up, eligible foreign-invested enterprises are supported in reinvesting in expanded opening-up areas such as value-added telecommunications, healthcare, biotechnology, culture, education, and finance. (Responsible units: Municipal Commission of Commerce, Municipal Development and Reform Commission, Municipal Market Supervision Administration, Municipal Commission of Economy and Informatization, Municipal Telecommunications Administration, Municipal Health Commission, Municipal Science and Technology Commission, Municipal Drug Administration, Municipal Party Propaganda Department, Municipal Culture and Tourism Bureau, Municipal Education Commission, Municipal Financial Affairs Office, responsible according to their respective duties)

VIII. Simplifying Medical Device Conversion ProceduresFor foreign-invested enterprises producing Class II medical devices in this city after transferring products previously registered for import, on-site inspections of registration and production systems shall be exempted in accordance with relevant regulations. On-site inspections for different permit applications involving the same enterprise shall be conducted jointly. The efficiency of review and approval processes for converted Class II medical devices shall be enhanced, with parallel processing of review, inspection, and testing stages, and associated matters handled concurrently. (Responsible unit: Municipal Drug Administration)

IX. Promoting Multi-Warehouse Collaboration in Pharmaceutical WholesaleFor foreign-invested pharmaceutical wholesale enterprises operating under unified quality management systems, the leading wholesaler meeting modern logistics requirements for entrusted storage and transportation may leverage information technology to share personnel, information, warehousing, and transportation resources with other pharmaceutical wholesalers, conducting cross-regional multi-warehouse collaborative logistics operations, with the leading entity assuming core responsibilities for managing such multi-warehouse coordination. (Responsible unit: Municipal Drug Administration)

X. Facilitating Food Chain OperationsFor headquarters of foreign-invested food retail chains registered in this city, using a unified brand name and possessing a unified food safety management system, if they meet the conditions for simplified food business licensing, newly opened stores shall be exempt from on-site inspections when obtaining food business licenses. (Responsible unit: Municipal Market Supervision Administration)

XI. Implementing Tax Policies for Profit ReinvestmentA cross-departmental collaborative management service mechanism shall be established to provide convenient policy consultation services, disseminating bilingual promotional videos and policy explanations on cross-border tax incentives to overseas investors and foreign-invested enterprises, ensuring effective implementation of tax credits for direct reinvestment with distributed profits and temporary exemption from withholding income tax on overseas investors. (Responsible units: Municipal Taxation Bureau, Municipal Finance Bureau, Municipal Commission of Commerce, responsible according to their respective duties)

XII. Guiding Foreign Investors toward Encouraged IndustriesPublicity campaigns shall be carried out regarding the “Catalogue of Industries Encouraging Foreign Investment,” supporting foreign-invested enterprises in increasing investment in nationally prioritized development sectors, guiding domestic reinvestment projects by foreign-invested enterprises that meet the criteria specified in the encouraged industries catalogue, and granting them legal access to import-related equipment support policies. (Responsible units: Municipal Development and Reform Commission, Municipal Commission of Commerce, Shanghai Customs, responsible according to their respective duties)

XIII. Optimizing Foreign Exchange Registration and Capital Usage ProcessesProvided that foreign investment access special administrative measures are not violated and the invested projects within China are genuine and compliant, the invested enterprise or equity transferor shall be exempt from registering basic information for received domestic reinvestment and making change registrations. The reduced negative list for foreign exchange earnings from foreign-invested enterprise capital projects and the renminbi proceeds from their conversion into domestic payments shall be implemented. Foreign-invested enterprises are supported in reinvesting domestically using legally earned foreign exchange profits, and overseas investors in reinvesting domestically with legally acquired foreign exchange profits. Relevant foreign exchange funds may be transferred by banks into the invested enterprise’s capital account or the equity transferor’s capital project settlement account, with fund usage managed according to applicable account management requirements. (Responsible unit: Shanghai Branch of the State Administration of Foreign Exchange)

XIV. Deepening Qualified Foreign Limited Partner Pilot ProgramFurther broadening funding sources, supporting foreign private equity fund managers to allocate part of their registered capital toward investments in private equity funds they initiate, optimizing pilot application and processing procedures, and facilitating overseas investors to invest domestically through the qualified foreign limited partner mechanism. (Responsible units: Municipal Financial Affairs Office, Shanghai Branch of the State Administration of Foreign Exchange, Municipal Market Supervision Administration, responsible according to their respective duties)

XV. Expanding Financing Channels for ReinvestmentProviding loan application services for affiliated shareholders, guiding foreign-invested enterprises to make good use of medium- and long-term foreign debt review and registration facilitation measures when applying for loans from affiliated shareholders required for domestic reinvestment. Supporting parent companies of foreign-invested enterprises to issue “panda bonds” in interbank and exchange markets while retaining funds for domestic reinvestment, and supervising banks to continuously optimize foreign exchange registration, dedicated account opening, and fund remittance processes. Removing restrictions on foreign-invested companies’ use of domestic loans, allowing them to use domestic loans for equity investments. Encouraging financial institutions to offer differentiated financial products and services tailored to domestic reinvestment needs. (Responsible units: Municipal Development and Reform Commission, People’s Bank of China Shanghai Head Office, Municipal Commission of Commerce, responsible according to their respective duties)

XVI. Promoting the Establishment of a New Model for High-Level Investment PromotionImplementing the requirements for building a unified national market and fostering a fair competitive environment. Intensifying targeted policy support, encouraging foreign-invested enterprises to engage in activities such as capital increases, capacity expansion, technological upgrading, equipment renewal, digital transformation, R&D innovation, talent recruitment, and vocational training. Leveraging the city’s coordinated mechanism for promoting foreign investment to guide all districts in enhancing the scientific rigor, precision, compliance, and transparency of investment promotion efforts. (Responsible units: Municipal Commission of Economy and Informatization, Municipal Commission of Commerce, responsible according to their respective duties)

XVII. Strengthening Investment Promotion Coordination between Central Districts and New TownsDeepening paired cooperation among districts to further amplify synergy effects. Regularly disseminating industrial policies, including those pertaining to the city’s five new towns, to regional headquarters of multinational corporations, organizing events inviting foreign corporate headquarters to visit new towns, and encouraging headquarters enterprises to fully utilize new town resources for expanded reinvestment. (Responsible units: Municipal Development and Reform Commission, Municipal Commission of Commerce, Municipal Commission of Economy and Informatization, responsible according to their respective duties)

XVIII. Advancing the Domestic Investment Information Reporting PilotImproving cross-departmental system integration and information sharing, urging foreign-invested enterprises to submit reinvestment information reports through electronic business licenses and other means, guiding timely completion of reporting to facilitate enterprises in accessing relevant support policies. (Responsible units: Municipal Commission of Commerce, Municipal Market Supervision Administration, responsible according to their respective duties)

XIX. Conducting a Pilot Evaluation of Foreign Investment Promotion EffectivenessEvaluating the effectiveness of foreign investment promotion in a reasonable manner, incorporating domestic reinvestment by foreign-invested enterprises into the evaluation framework, emphasizing the actual contributions of reinvestment to economic and social development, and improving the quality of attracted investment. (Responsible unit: Municipal Commission of Commerce)

XX. Strengthening Policy Promotion for Investment AttractionEstablishing a “Domestic Reinvestment by Foreign-Invested Enterprises” policy column on the Shanghai Foreign Investment Promotion Service Platform, centrally listing relevant policies and operational guidelines and precisely disseminating them to enterprises. Publishing the Chinese and English versions of the Shanghai “14th Five-Year Plan,” conducting specialized publicity and interpretation targeting foreign-invested enterprises to assist them in formulating strategic investment plans. (Responsible units: Municipal Commission of Commerce, Municipal Development and Reform Commission, responsible according to their respective duties)