China Unveils New Cross-Border Investment Policies

China’s State Administration of Foreign Exchange (SAFE) announced on July 17 a new package of policies aimed at further improving cross-border investment and financing convenience, marking the third consecutive year the regulator has rolled out such measures as part of the country’s ongoing financial market liberalization. The announcement was made at a State Council Information Office press conference on China’s foreign exchange receipts and payments data for the first half of 2026.

Background: A Three-Year Policy Drive

Since 2023, SAFE has introduced annual “package” cross-border investment and financing facilitation policies, rolling out nearly 20 policy measures. According to The Paper, these policies have significantly improved business processing efficiency — some processing times have been reduced from three working days to same-day completion, and the number of documents required for review has been halved for some enterprises.

Xiao Sheng, Director of SAFE’s Capital Market Management Department, stated that the bureau plans to introduce another “package” of policies in three main areas: enhancing direct investment facilitation, expanding high-level opening of cross-border financing, and optimizing capital account business registration management.

Three Pillars of the New Policy Package

Enhancing Direct Investment Facilitation: SAFE will simplify capital account settlement and payment procedures for foreign-invested enterprises to support the attraction and stabilization of foreign investment. For Chinese enterprises “going global,” the regulator will streamline fund remittance review processes to ensure efficient use of operational funds.

Expanding Cross-Border Financing Access: To broaden the reach of technology and green finance services, SAFE plans to expand the scope of entities eligible for cross-border financing facilitation policies and promote the green foreign debt pilot nationwide. The regulator will also optimize macro-prudential management policies for cross-border financing to help foreign-invested enterprises manage currency risks and allocate funds more flexibly across borders.

Optimizing Capital Account Registration Management: SAFE will transfer certain registration businesses to banks for direct processing, increase “online processing” options for capital account transactions, and enhance the digitalization of foreign exchange management to reduce compliance costs for businesses.

Xiao Sheng confirmed that the reform measures will be released and implemented after completing relevant procedures.

QDII Quotas to Be Issued Soon

In a related development, SAFE is working to issue a new round of Qualified Domestic Institutional Investor (QDII) quotas as soon as possible. According to CLS, the regulator is “pushing forward relevant preparations” to better support domestic residents’ legitimate overseas securities investment needs. The new quotas will further tilt toward public fund products to enhance the普惠 (inclusive) nature of QDII business.

Strong H1 2026 Performance Provides Context

The policy announcement came alongside robust first-half data for China’s foreign exchange market. According to the SAFE official press conference transcript, bank-client cross-border receipts and payments reached $9.2 trillion in H1 2026, up 21% year-on-year — a historical high for the first half. Bank settlement and sales of foreign exchange totaled $2.9 trillion, up 24% year-on-year, also a record for the period.

SAFE Spokesperson and Deputy Director Li Bin described the market’s performance as showing “strong vitality and resilience” despite volatile external conditions. The non-bank sector recorded a cross-border capital net inflow of $247.2 billion in the first half.

Notably, the renminbi’s share in cross-border receipts and payments reached 52.9%, up 1.3 percentage points from the full-year 2025 figure, continuing its internationalization trend.

Foreign Investment Trends Signal Structural Shift

Foreign investment in China showed significant improvement in early 2026. Data from January to May showed a net increase of approximately $160 billion in foreign investment across various categories — substantially better than the same period last year, as reported by Interface News.

Foreign direct investment (FDI) equity investment saw a net increase of over $50 billion, with reinvested earnings up 35% year-on-year. China’s FDI stock now exceeds $4 trillion, ranking second globally excluding offshore financial centers.

Perhaps most telling of the structural transformation underway, high-tech FDI inflow surged 61% year-on-year in the first half, accounting for 36% of total capital inflow — up 11 percentage points from H1 2025. Zhao Yuchao, SAFE Spokesperson and Head of the Balance of Payments Department, remarked that “foreign investment in China is shifting from valuing the cost and scale advantages of ‘Made in China’ to jointly participating in ‘Created in China.’”

Analysis: Incremental Steps Toward Capital Account Convertibility

The new policy package represents incremental but meaningful progress toward full capital account convertibility, a long-standing policy goal for China. The measures aim to attract and stabilize foreign investment, support Chinese enterprises going global, promote green finance and technology innovation financing, and enhance the digitalization of foreign exchange services.

China’s external assets hit a record high of approximately $12 trillion at the end of March 2026, while net external assets exceeded $4 trillion — the second-largest globally. The country’s external debt stood at $2.41 trillion at the end of Q1 2026, with all safety indicators well below international警戒线 (warning thresholds): a debt ratio of 11.9%, a debt service ratio of 6.2%, and a short-term debt-to-foreign-exchange-reserves ratio of 39.2%.

What to Watch For

Market participants will be watching for the formal release and implementation timeline of the specific measures, which banks will be authorized to handle the newly delegated registration businesses, and the size and allocation of the new QDII quotas. These details will determine the practical impact of the policies on businesses and investors operating in China’s financial markets.

As Li Bin emphasized at the press conference, SAFE “always adheres to the combination of promoting convenience and preventing risks, and resolutely guards the safety bottom line under open conditions.” The regulator’s dual focus on liberalization and risk management will continue to shape the pace and scope of China’s financial opening in the months ahead.