On April 11, 2025, China's State Council approved the inclusion of nine more cities in its “Comprehensive Pilot Program for Expanding the Opening-Up of the Service Industry,” bringing the total number of pilot cities to 20. This expansion is part of China's ongoing strategy to enhance its integration into the global economy and attract greater foreign investment in its service sectors.

The new cities—Dalian, Ningbo, Xiamen, Qingdao, Shenzhen, Hefei, Fuzhou, Xi'an, and Suzhou—will join existing hubs like Beijing, Shanghai, Tianjin, and Chengdu. The expansion is aimed at fostering a more open, efficient, and innovative service sector to improve China's global competitiveness.

Shifting Focus to Services

China's economy has traditionally been driven by manufacturing, but the service sector has grown significantly in recent years. In 2024, foreign direct investment (FDI) in China's service sector reached RMB 5.85 trillion (USD 584.56 billion), accounting for over 73% of the total FDI. This shift reflects the growing importance of services in modernizing the economy.

The service sector covers industries such as finance, healthcare, telecommunications, education, and technology, all of which are transforming rapidly due to digital innovation. By opening up more pilot cities, China seeks to attract foreign expertise and capital to these high-growth areas, encouraging collaboration, innovation, and sustainable economic development.

New Pilot Zones: A Strategic Opportunity for Global Investors

The inclusion of nine new cities offers significant opportunities for foreign businesses, particularly in finance, healthcare, and technology. These cities span coastal and inland regions, offering investors a broader range of geographic options. Shenzhen and Suzhou are key tech and innovation hubs, while Hefei and Xi'an are emerging as centers for digital manufacturing and education services.

China's focus on fostering innovation, reducing regulatory barriers, and increasing startup financing further strengthens the environment for foreign investment. With access to both mature urban centers and rapidly developing second-tier cities, foreign firms can target regions that best meet their needs.

Key Growth Sectors

Several sectors stand to benefit from this expansion:

Financial Services: China has liberalized its financial markets in recent years, and more cities opening up to foreign investment will enhance access to China's growing consumer and corporate markets. This opens doors to new cross-border investment opportunities and the development of financial technologies (fintech).

Healthcare: China's aging population and rising health awareness have driven demand for advanced medical services. Foreign healthcare providers, pharmaceutical companies, and biotechnology firms will find significant opportunities for collaboration and innovation.

Telecommunications: China is rapidly modernizing its telecommunications infrastructure, creating opportunities for foreign firms specializing in telecommunications equipment, cloud computing, and data services. The rise of 5G, IoT, and smart cities will further boost demand.

Education and Technology: Education services are undergoing reform, with foreign institutions invited to partner with local organizations. There is growing demand for EdTech, online learning, and AI-powered tools, creating opportunities for foreign investors in the education sector.