Doing business in China

China is a civil law jurisdiction in which national laws are adopted by the National People's Congress and its Standing Committee, with State Council regulations and ministry rules filling in detail and provinces and cities issuing local implementing rules. The main authorities for an incoming business are the Ministry of Commerce and the National Development and Reform Commission (foreign investment access), the State Administration for Market Regulation (registration and competition), the State Taxation Administration, the State Administration of Foreign Exchange, the General Administration of Customs, the Cyberspace Administration and CNIPA. Official English translations are for reference only and the Chinese text prevails.

Key facts

Corporate income tax

25% standard; 5% effective on first CNY 3m for small low-profit enterprises (to 2027)

VAT

13% / 9% / 6%; VAT Law in force from 1 January 2026

Foreign ownership

Open except sectors on the 2024 negative list (29 items); manufacturing fully open

Investment framework

Foreign Investment Law, in force 1 January 2020

Exchange control

Managed by SAFE; current-account remittances need supporting documents

Data protection

Personal Information Protection Law, in force 1 November 2021

New York Convention

Party since 1987 (reciprocity and commercial reservations)

Working time

8 hours a day, 40 hours a week

Foreign investors set up foreign-invested enterprises under the Foreign Investment Law, which replaced the old joint venture and wholly foreign-owned enterprise laws in 2020. Whether a sector is open depends on the national negative list; outside it, foreign and domestic investors are treated alike. Company capital rules changed with the revised Company Law from July 2024.

Key facts

• The Foreign Investment Law has applied since 1 January 2020 and repealed the separate joint venture and wholly foreign-owned enterprise laws, so new entities follow the general company rules.

• Check the 2024 national negative list first: it has 29 items and no longer restricts manufacturing; sectors not on it are open on equal terms.

• A project that breaches the negative list will be refused registration or licensing, and foreign-invested partnerships cannot be used in sectors with equity limits.

• The revised Company Law in force from 1 July 2024 made major changes to capital rules, so subscribed capital and its payment schedule should be set with care.

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Corporate income tax is 25 percent, with reduced rates for qualifying small low-profit and high-technology enterprises. VAT runs at 13, 9 and 6 percent and is now set by a VAT Law in force from 1 January 2026. Dividends, interest and royalties paid abroad carry 10 percent withholding tax unless a treaty reduces it.

Key facts

• The standard corporate income tax rate is 25 percent; qualifying small low-profit enterprises pay an effective 5 percent on the first CNY 3 million of taxable income until the end of 2027.

• Outbound dividends, interest and royalties are subject to 10 percent withholding tax under domestic law, which treaties can reduce.

• VAT rates are 13 percent for goods, 9 percent for items such as transport and construction and 6 percent for most services; the VAT Law and its implementing regulation apply from 1 January 2026.

• The tax year is the calendar year; the annual corporate income tax return is due within five months of year end, with monthly or quarterly provisional payments.

Who handles this in ChinaTax and structuringAccounting and annual filings

Every employee needs a written labour contract, probation is capped by contract length, and standard hours are 8 a day and 40 a week with premium overtime pay. Termination in many cases triggers economic compensation based on service. Employers must enrol staff, including foreign nationals, in social insurance and the housing provident fund.

Key facts

• Sign a written labour contract with every employee; probation cannot exceed six months even for long or open-ended contracts.

• Standard hours are 8 a day and 40 a week; overtime is capped and paid at 150, 200 or 300 percent depending on when it is worked.

• Economic compensation where due is about one month's salary per year of service, so termination costs grow with tenure.

• Social insurance covers five schemes and applies to foreign employees too, subject to any bilateral social security agreement.

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Sector access is governed by two lists: the foreign investment negative list and a Negative List for Market Access that applies to everyone. Pilot free trade zones have a shorter list, and more favourable treaty or zone measures prevail. Sector-specific licences were not researched for this essentials guide.

Key facts

• The Negative List for Market Access applies to domestic and foreign investors alike, so an activity can need approval even if it is open to foreign investment.

• Pilot free trade zones apply their own, shorter 27-item list, which can open activities still restricted elsewhere.

• Where a treaty or a special-zone measure is more favourable to the investor than the national list, it takes precedence, so check treaty protection and zone rules before choosing a location.

Who handles this in ChinaLicences, permits and regulatorsSetting up and running a company

The renminbi is subject to exchange control administered by SAFE. Current-account payments such as trade payments and dividends can be remitted with supporting contracts, invoices and tax certificates, while capital-account transactions remain more tightly regulated despite easing since 2012.

Key facts

• SAFE and its branches administer foreign exchange; banks apply its rules when processing payments.

• Plan profit remittances and service fees around documents: contracts, invoices and tax payment or exemption certificates.

• Capital-account items, including capital injections and foreign debt, are regulated separately, although some approvals were removed after 2012.

• Banks carry out Common Reporting Standard due diligence, so expect questions on tax residence at account opening.

Who handles this in ChinaPayments and currencyBanking and capitalTreasury and funding

Customs is administered by the General Administration of Customs. Import and export duties are governed by the Tariff Law in force since December 2024, and a revised Foreign Trade Law has applied since 1 March 2026. The Export Control Law covers dual-use and other controlled items.

Key facts

• GACC is the customs authority; import and export duties follow the Tariff Law, with the tariff schedule issued separately and changed over time.

• A revised Foreign Trade Law has applied since 1 March 2026; check how it affects trading rights and trade remedies for your goods.

• The Export Control Law, in force since December 2020, governs exports of dual-use and other controlled items.

Who handles this in ChinaCustoms, trade and export controlsAnti-bribery, sanctions and compliance · Roberto Gilardino

Personal information is regulated by the Personal Information Protection Law, in force since November 2021, alongside the Data Security Law and the Cybersecurity Law, amended from 1 January 2026. Outbound transfers can require a security assessment, a standard contract or certification. Shanghai uses a negative list that frees data outside it from these steps.

Key facts

• The Personal Information Protection Law applies from 1 November 2021, with fines for serious breaches of up to RMB 50 million or 5 percent of prior-year turnover.

• Before sending personal information or important data abroad, check whether a security assessment, standard contract or certification is needed.

• In Shanghai, data outside the four-sector outbound data negative list can be transferred without those procedures.

• The Data Security Law applies from September 2021, and an amended Cybersecurity Law has applied since 1 January 2026.

Who handles this in ChinaData protection and cyberAnti-bribery, sanctions and compliance · Roberto Gilardino

CNIPA handles patents, trademarks, geographical indications and integrated circuit layout-designs. China is in the PCT, Madrid and Hague systems, so international filings can designate it. The Patent Law was last amended in 2021 and a revised Trademark Law takes effect on 1 January 2027.

Key facts

• File patents, trademarks and designs with CNIPA, directly or via the PCT, Madrid and Hague systems.

• The Patent Law as amended in 2020 has applied since 1 June 2021.

• A revised Trademark Law applies from 1 January 2027; filings and enforcement plans should allow for the change.

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Mergers meeting turnover thresholds must be notified to SAMR before closing under the Anti-Monopoly Law, amended in 2022. Thresholds were raised in January 2024. National security review of foreign investment and the insolvency regime were not confirmed for this guide.

Key facts

• Notify SAMR before closing if combined turnover exceeds RMB 12 billion worldwide or RMB 4 billion in China and at least two parties each exceed RMB 800 million in China.

• The higher thresholds apply to deals notified from 26 January 2024; older guidance quoting lower figures is out of date.

• Merger control sits in the Anti-Monopoly Law, amended with effect from 1 August 2022, and SAMR reviews notified deals.

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The Anti-Money Laundering Law was revised from 1 January 2025 and the Anti-Unfair Competition Law from 15 October 2025. China also has its own counter-sanctions law, which matters for groups that apply foreign sanctions.

Key facts

• The revised Anti-Money Laundering Law applies from 1 January 2025; expect updated customer due diligence by banks and other obliged entities.

• The Anti-Unfair Competition Law was revised with effect from 15 October 2025; review commercial practices against the new text.

• The Law on Countering Foreign Sanctions has applied since June 2021, so complying with foreign sanctions in China needs careful analysis.

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China has applied the New York Convention since 1987, with reciprocity and commercial reservations. A revised Arbitration Law has applied since 1 March 2026. CIETAC is the main international arbitration body, and Shanghai has specialised courts for foreign-related matters.

Key facts

• Foreign arbitral awards from other Convention states arising from commercial relationships can be enforced under the New York Convention.

• A revised Arbitration Law applies from 1 March 2026; check arbitration clauses drafted under the old law.

• CIETAC, founded in 1956, offers commercial arbitration, mediation and investment arbitration.

• In Shanghai, designated courts handle foreign-related cases, and the Shanghai International Commercial Court hears arbitration judicial reviews.

Who handles this in ChinaDisputes and arbitrationContracts and commercial law · Roberto Gilardino