On September 12, 2025, the State Administration of Foreign Exchange (SAFE) issued Huifa [2025] No. 43, introducing a new set of measures to streamline foreign exchange (FX) management for cross-border investment and financing. The notice reflects Beijing’s broader commitment to high-level opening-up, as emphasized during the Third Plenary Session of the 20th Central Committee of the Communist Party of China, and aligns with efforts to enhance the quality of economic development.
The reform package introduces adjustments in three key areas: cross-border investment, cross-border financing, and capital account income management.
Cross-Border Investment Reform
SAFE has removed several administrative requirements to make cross-border investment more straightforward:
- Upfront expenses: Foreign investors can now remit funds and open upfront expense accounts directly with banks, without registering preliminary information in advance.
- Domestic reinvestment: Foreign-invested enterprises (FIEs) are no longer required to register domestic reinvestments, provided the projects comply with investment access rules.
- Use of FX profits: FIEs and foreign investors can reinvest legally earned FX profits directly into Chinese entities, subject to capital account rules.
- Scientific research institutions: Non-enterprise research institutions are permitted to receive overseas funds and conduct reinvestments under a framework comparable to foreign direct investment, with access to certain facilitation policies.
These measures reduce procedural friction and expand opportunities for reinvestment, particularly in sectors aligned with China’s industrial policy priorities.
Cross-Border Financing Reform
Revisions to financing rules aim to broaden access for innovative companies and reduce compliance burdens:
- Debt limits: Eligible high-tech, “specialized and innovative” SMEs can borrow foreign debt up to USD 10 million, with higher limits of USD 20 million for firms recognized under the “innovation points system.”
- Simplified registration: Companies engaging in cross-border financing no longer need to submit audited financial statements during the registration process.
This shift is designed to improve liquidity access for smaller, innovation-driven enterprises that often face financing constraints in domestic capital markets.
Capital Account Income Policy Adjustments
SAFE has refined policies governing the use of capital account income, emphasizing both facilitation and compliance:
- Reduced negative list: Enterprises may use FX income and related RMB funds more flexibly, while remaining restricted from securities trading, high-risk wealth management, or lending to unaffiliated companies.
- Bank oversight: Banks now have greater discretion in determining the scope of post-event inspections, tailoring oversight to clients’ compliance history and risk profile.
- Real estate purchases: Overseas individuals can settle and remit FX for property purchases before completing local filing requirements, provided they meet regulatory eligibility.
These changes seek to balance efficiency in fund usage with risk management and regulatory oversight.
Implications for Business and Finance
The reform signals SAFE’s intention to modernize FX management by shifting from pre-approval to post-event supervision. For businesses, this reduces upfront compliance hurdles and accelerates the pace of cross-border capital flows.
Foreign investors benefit from streamlined reinvestment rules and broader channels for profit deployment. SMEs and high-tech enterprises gain new financing flexibility, potentially supporting growth in strategically important sectors. At the same time, continued monitoring by banks and regulators underscores that convenience will be paired with accountability.
Conclusion
Huifa [2025] No. 43 marks a further step in China’s gradual liberalization of its capital account and FX regime. By lowering entry barriers while strengthening post-event supervision, SAFE seeks to enhance the efficiency of cross-border fund flows, support innovation-led growth, and maintain regulatory control.