FTZ Update: New Anhui FTZ Reform Plan Expands Service Sector Openings

On March 15, 2025, the Anhui provincial government released a new reform plan introducing 23 specific measures to expand service sector openings within the 中国（安徽）自由贸易试验区 (Anhui Pilot Free Trade Zone, AH-FTZ, Zhōngguó (Ānhuī) Zìyóu Màoyì Shìyàn Qū). The plan targets financial services, professional consulting, healthcare, and digital trade — four sub-sectors that collectively contributed 42% of AH-FTZ’s total foreign direct investment (FDI) in 2024, which reached $3.8 billion.

Key Provisions of the Reform Plan

The new reform package, formally titled the “Anhui FTZ Service Sector Deepening Opening Action Plan (2025–2027)”, lowers equity caps for foreign investors in five previously restricted service categories. For instance, foreign ownership limits in value-added telecommunication services within the FTZ are raised from 50% to 70%, and wholly foreign-owned hospitals are now permitted in designated zones. The plan also eliminates geographic restrictions for foreign law firms establishing representative offices in the FTZ, a move that aligns the AH-FTZ with the 2024 national negative list revisions.

A second major provision fast-tracks approval for foreign-invested financial institutions. Under the new rules, the review period for establishing a foreign bank branch or a securities company within the FTZ is shortened from 120 business days to 45 business days — a 62.5% reduction in waiting time. This change is expected to attract at least 15 new foreign financial entities to Hefei by 2026, according to the Anhui Commerce Department’s internal projections.

Third, the plan introduces a “service trade negative list” specific to the AH-FTZ, which explicitly permits cross-border data transfers for financial and healthcare services under a new “green channel” filing system. This addresses a long-standing pain point for multinational corporations handling client data across borders. Companies that qualify can file a one-time compliance report instead of applying for individual approvals per data set, cutting administrative lead time by an estimated 80%.

Impact on Foreign Investors in the Service Sector

For foreign executives evaluating China market entry, the AH-FTZ reform plan signals a clear pivot toward service sector liberalization. The FTZ’s service trade volume grew 18.3% year-on-year in 2024, reaching $12.7 billion, outpacing the national FTZ average of 11.6%. The new measures are designed to accelerate this trajectory, with a stated target of attracting 50+ foreign-invested service enterprises by the end of 2026.

Financial services remain the most consequential opening. The plan permits foreign banks to underwrite panda bonds — yuan-denominated bonds issued by foreign entities in China — without requiring a Chinese joint venture partner. This removes a structural barrier that previously made it difficult for foreign banks to compete in the AH-FTZ’s bond market, which totaled $4.2 billion in issuance volume in 2024. For asset managers, the plan also allows wholly foreign-owned fund management companies to offer onshore wealth management products to Chinese high-net-worth clients within the FTZ — a privilege previously limited to joint ventures with a Chinese partner holding at least 51% equity.

Healthcare is another area with immediate commercial implications. The plan permits the establishment of wholly foreign-owned hospitals (外商独资医院, wholly foreign‑owned hospital, wàishāng dúzī yīyuàn) in three designated zones: Hefei National High-Tech Zone, Wuhu Economic & Technological Development Zone, and Bengbu FTZ sub‑zone. These hospitals can operate under international medical standards and repatriate profits without additional approval, provided they meet a minimum total investment threshold of 200 million RMB (approximately $28 million). This opens the door for specialized hospital chains — particularly in oncology, orthopedics, and rehabilitation — that have hesitated to enter China due to prior joint-venture requirements.

Comparison with Previous FTZ Policies

The table below summarizes the key changes between the previous AH-FTZ framework (2022 version) and the new reform plan released in March 2025.

Two leading indicators underscore the plan’s potential. First, the AH-FTZ reported a 24% increase in foreign service sector project registrations in the first quarter of 2025 compared to the same period in 2024, even before the plan’s formal release — suggesting early investor confidence. Second, the municipality of Hefei has allocated 500 million RMB ($70 million) in a dedicated service sector development fund to subsidize office rental and talent recruitment for newly established foreign service enterprises within the FTZ.

Implications for China Market Entry Strategy

Foreign executives should note that the AH-FTZ reform plan does not apply uniformly across all Chinese pilot free trade zones. Each of China’s 22 FTZs has the authority to issue its own reform measures within the bounds of the national negative list. Anhui’s plan is among the most aggressive in the service sector this year — but it is also tested. The 23 measures were piloted in the Hefei sub‑zone starting in July 2024 and have already facilitated the entry of 8 foreign service companies, including a German industrial design firm and a Singaporean digital health platform.

For investors weighing whether to establish a 外商独资企业 (Wholly Foreign‑Owned Enterprise, WFOE, wàishāng dúzī qǐyè) in the service sector, the AH-FTZ now offers a faster registration track: 15 business days for WFOE establishment in prioritized service industries, compared to 30–45 days outside the FTZ. Combined with the new data transfer green channel, this makes the AH-FTZ a strong candidate for companies whose business model depends on cross-border data flows, such as fintech platforms, telemedicine operators, and global law firms with China‑facing practices.