Your talking points

The services sector benefited significantly as China doubled its pilot cities program at once. Despite running for a decade, this program had never seen a move this expansive, now covering highly coveted cities like Shenzhen and Xiamen.
China unveils 155 new pilot tasks across 14 areas—many repeat past pledges, but telecom sees incremental opportunities.
Although China’s accession to major trade pacts like CPTPP and DEPA remains uncertain, it is proactively aligning domestic standards in some areas in a move toward multilateral trade frameworks.
China exempts FTZs from retaliatory tariffs on U.S. goods, while making modest sectoral improvements.
Beijing’s latest business-friendly measures aim to show private and foreign businesses that they are valued, but real progress is needed to address long-standing “promise fatigue.”

The brief

As global trade tensions rise and the U.S. escalates tariffs worldwide, especially against China, Beijing is taking a different path. Instead of retreating, President Xi Jinping reaffirmed during a March meeting with global business leaders that “China’s door to opening up will only become broader,” calling for the accelerated implementation of opening-up measures. Reinforcing this stance, and in direct response to the U.S. decision on April 2—dubbed “liberation day”—to impose 145% punitive tariffs on Chinese goods, China swiftly rolled out a series of foreign business–supportive policies throughout April. These moves reflect Beijing’s growing urgency to stabilize foreign investment and revive economic momentum, particularly as its inbound FDI fell to 1992 levels in 2024 and declined another 20% in early 2025. But while they reflect urgency, they don’t break new ground, relying on tried-and-true tactics like free trade zones and pilot programs, albeit in new and important cities.

Red Cranes and Multicoloured Cargo Containers on a Cost (pexels.com, Jimmy Chan)

Beyond the points

The services sector benefited significantly as China doubled its pilot cities program at once. Despite running for a decade, this program had never seen a move this expansive, now covering highly coveted cities like Shenzhen and Xiamen.

On April 18, China’s Ministry of Commerce (MOFCOM) released a new pilot work program to further liberalize the service sector. The ministry recognized that safeguarding this sector, which accounts for over 70% of China’s inbound FDI, has become critical to stabilizing foreign investment, especially as services have been less affected by U.S.-China trade tensions due to the U.S. service surplus with China.

While not China’s first such initiative, this is its most expansive yet. Since 2015, service pilot reforms have expanded to 11 cities, attracting USD 40 billion in FDI in 2024—about half of all service-sector inflows. The new plan builds on that base but significantly scales up by doubling the number of pilot locations in one sweep, adding nine major export hubs—including Dalian, Ningbo, Xiamen, and Shenzhen, most of which have been highly sought-after by foreign investors. Liberalizing these key markets is expected to open new opportunities and cushion tariff impacts
on coastal regions.

China unveils 155 new pilot tasks across 14 areas—many repeat past pledges, but telecom sees incremental opportunities.

Alongside expanding pilot cities, following its traditional model of piloting reforms before scaling them nationwide, the plan also introduces 155 new pilot tasks across 14 areas, targeting sectors that have long been shielded from foreign competition (see Table 1). While several measures are modest or fulfill previous promises, such as allowing foreign doctors to open clinics, some represent incremental new opportunities.

Chief among these is telecom, which stands out as the top sector in the new plan. Specifically, China’s opening in the VPN sector and the partial lifting of foreign equity restrictions on app stores and internet access services represent measured progress. However, by limiting the telecom openings to pilot cities and confining them to the domestic market (i.e., excluding international cross-border services), Beijing underscores its continued preference for controlled regulatory experimentation over broad liberalization. The telecom sector’s strategic importance ensures that even incremental openings demand rigorous evaluation. While these pilots offer foreign firms limited market access, scalability beyond the domestic market remains contingent on Beijing’s assessment of risk to its existing operators and data security imperatives. This necessitates a dual focus for companies: adapting to hyper-localized compliance frameworks within China while maintaining strategic patience for potential broader access, a calculus familiar to firms operating in China.

The plan also reiterates its commitment to advance financial liberalization by supporting international factoring services, enabling RMB-based cross-border cash pooling, broadening the Qualified Foreign Limited Partner (QFLP) scheme, and inviting more foreign ESG and pension funds into China’s green finance sector through new provisions for eligible leasing companies to issue green bonds — though many of these measures are not mentioned for the first time.

Although China’s accession to major trade pacts like CPTPP and DEPA remains uncertain, it is proactively aligning domestic standards in some areas in a move toward multilateral trade frameworks.

Another notable development is Beijing’s pledge to align service-sector reforms with the strict standards of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the Digital Economy Partnership Agreement (DEPA), covering intellectual property, labor and environmental rules, government procurement transparency, e-commerce, and financial services. Although China’s accession to CPTPP and DEPA remains uncertain, and there remain many other areas that would require regulatory reform, such as on SOEs and cross-border data flows that would be challenging for China, the commitment signals China’s potential willingness to ease longstanding barriers and deepen its integration into multilateral trade frameworks.

China exempts FTZs from retaliatory tariffs on U.S. goods, while making modest sectoral improvements.

Complementing its broader push to liberalize the service sector, Beijing has released new guidelines to upgrade China’s 22 pilot free trade zones (FTZs), which collectively account for nearly one-fifth of the country’s total trade volume. A series of targeted pilot measures have been introduced—albeit minor improvements to existing sectors—including allowing foreign firms to conduct film post-production, introducing “whitelist” systems for importing R&D-related medical products, easing cross-border data flows, and enhancing capital mobility for foreign investors.

The most important signal happened at a subsequent press briefing, where Beijing clarified that all U.S.-origin products entering China’s FTZs would be exempt from retaliatory tariffs. This carve-out provides a tariff shield for foreign businesses, particularly those with supply chains dependent on U.S. components, enabling them to continue leveraging China’s cost advantages while manufacturing for global distribution. In addition, there are indications that this exemption may be extended to all U.S. goods routed through Hong Kong, a move seen as a signal that Beijing is leaving the door open for engagement.

Beijing’s latest business-friendly measures aim to show private and foreign businesses that they are valued, but real progress is needed to address long-standing “promise fatigue.”

As trade tensions with the U.S. escalate, China continued to roll out business–friendly policies throughout April to show both foreign and private firms that they are valued, given their contribution of over 60% of China’s GDP, though many of these had been pledged long ago. These include legalizing equal access to government procurement in the upcoming Private Economy Promotion Law, updating the national market access negative list for the first time since 2022 (cutting restrictions by 10%), and establishing a trade task force that has already granted 131 retaliatory tariff exemptions to ease pressure on both Chinese and foreign firms. These efforts reflect Beijing’s broader hope that foreign investment will remain and support the next stage of growth, fueled by domestic consumption and industrial upgrading.

However, for many multinational firms long active in China, these measures, though positive, could amount to what Bill Bishop dubs “promise fatigue” if not implemented. What foreign businesses need to boost confidence is not more promises, but credible enforcement. In China’s complex regulatory environment, where central directives often face fragmented local execution, the gap between intent and implementation remains structural, even in the face of central-government dispatched policy enforcement teams. Real progress will depend on narrowing regional inconsistencies, ensuring uniform enforcement, and improving regulatory predictability.

Talking Points | Facing Trade Pressures, China Renews Its ‘Opening Up’ Pledges — But What Do They Really Mean?