The trade truce extended between the United States and China is one of the biggest economic stories of 2026. For foreign entrepreneurs and investors watching from the sidelines, this is a moment worth paying close attention to. The window is open — and China is actively inviting international business in.
What the Trade Truce Actually Covers
In November 2025, Presidents Trump and Xi reached a deal in South Korea. The agreement was significant.
Key terms include:
- The U.S. suspended heightened reciprocal tariffs on Chinese imports until November 10, 2026 (White House, 2025)
- U.S. fentanyl-related tariffs on China dropped from 20% to 10%
- China suspended retaliatory tariffs and non-tariff countermeasures through December 31, 2026
- China committed to buying 25 million metric tons of U.S. soybeans annually through 2028
- Both sides agreed to a one-year pause on reciprocal port charges
Overall, the deal didn’t resolve every tension. But it gave businesses something they badly needed — breathing room.
As Coface North Asia economist Junyu Tan put it, the truce offers “a respite” — though companies must stay alert to potential shifts (Coface, 2025).
Why This Matters for Foreigners Doing Business in China
The trade truce extended the calm long enough for real strategic decisions to happen. Foreign companies are not waiting passively.
Consider this: 53,782 new foreign-invested enterprises (FIEs) were registered in China in the first 10 months of 2025 — up 14.7% year-on-year (China Briefing, 2026).
That’s not a coincidence. It reflects a calculated bet. China remains the world’s second-largest economy, with GDP reaching US$18.8 trillion in 2024. Its consumer market ranks second globally by retail sales. And its middle class keeps growing.
Furthermore, China has actively lowered barriers to entry. The 2025 Negative List — the list of sectors restricted to foreign investors — has dropped to just 29 sectors, the smallest in 30 years (MS Advisory, 2026). In practice, foreigners can now own 100% of a business in the vast majority of industries, including:
- Manufacturing
- Technology and R&D
- E-commerce
- Consulting and services
- Renewable energy
China Is Opening Wider — Not Closing
Some assume the trade friction is a signal to stay away. That reading misses what Beijing is actually doing.
In early 2026, China’s Ministry of Commerce (MOFCOM) revised its Negative List to reduce restrictions in advanced manufacturing, renewable energy, and medical technology (Registration China, 2025). Foreign ownership caps in EV battery production were lifted entirely.
Additionally, on December 18, 2025, China activated full-island special customs operations in the Hainan Free Trade Port — the world’s largest free trade port by geographic area. The goal: transform Hainan into a globally competitive hub for trade, investment, tourism, and technology (Charles Russell Speechlys, 2026).
Meanwhile, at the China Development Forum in March 2026, Premier Li Qiang pledged to further open China’s economy to foreign firms. Senior executives from Samsung, Volkswagen, Siemens, BASF, Novartis, HSBC, and UBS attended (CNBC, 2026). These are not companies that show up without reason.
Sectors Drawing the Most Foreign Interest
Not all doors are equally open. However, the sectors attracting the most foreign investment right now are clear.
High-tech and AI — China’s digital economy is projected to reach $15 trillion, driven by AI integration and platform ecosystems (Registration China, 2025). Foreign tech firms with the right structure can access this market directly.
Green energy — China’s “dual-carbon” goals (peak emissions by 2030, neutrality by 2060) create direct demand. Tax breaks, subsidies, and streamlined permits are available for companies contributing to green development.
Healthcare and biotech — China’s 2026 Government Work Report committed to expanding wholly foreign-owned hospital trials. This is a meaningful opening in a sector that was previously heavily restricted (China.org.cn, 2026).
Manufacturing and supply chains — Companies like BASF and Volkswagen are doubling down. VW committed €2.5 billion to R&D infrastructure in Anhui province. The logic: staying embedded in China’s industrial base is harder to replace than it looks (CKGSB Knowledge, 2025).
How to Actually Set Up as a Foreign Business
If you’re seriously considering China, the structure question comes first.
The most common path is a Wholly Foreign-Owned Enterprise (WFOE). It allows 100% foreign ownership, full operational control, and the ability to invoice in China. Setup typically takes 8 to 12 weeks for service or trading businesses, at a cost of roughly USD 6,000–12,000 all-in (MS Advisory, 2026).
Other options include:
- Joint Venture (JV) — required in restricted sectors; setup takes 4–6 months
- Representative Office (RO) — suitable for market research only; cannot generate revenue
- Employer of Record (EOR) — best for 1–10 hires before establishing a full entity; operational in about 2 weeks
For businesses in consulting, technology, e-commerce, or manufacturing — a WFOE is almost always the right answer.
Also worth noting: China maintains 23 Free Trade Agreements, including RCEP, along with 114 tax treaties and 110 bilateral investment treaties. These significantly reduce tax burdens and improve cross-border predictability for foreign businesses (China Briefing, 2026).
The Bottom Line
The trade truce extended more than a temporary ceasefire. It extended a strategic window for foreign businesses to enter or deepen their presence in China.
Beijing is lowering barriers, launching new free trade zones, and signaling to the world that China remains open. The numbers back this up — nearly 54,000 new foreign-invested enterprises registered in 2025 alone.
For those thinking about doing business in China, the question is no longer whether the market is accessible. The question is whether you have a plan.
References
Charles Russell Speechlys. (2026, March 3). China stepping up efforts to attract foreign investment. https://www.charlesrussellspeechlys.com/en/insights/expert-insights/corporate/2026/china-stepping-up-efforts-to-attract-foreign-investment–new-measures-and-new-trends/
China Briefing. (2026, January 9). An introduction to doing business in China 2026. https://www.china-briefing.com/news/an-introduction-to-doing-business-in-china-2026/
China Briefing. (2026, March 17). US-China relations in 2026: What to watch. https://www.china-briefing.com/news/us-china-relations-in-2026-what-to-watch/
China.org.cn. (2026, April 23). Foreign investors eye long-term opportunities as China opens wider. http://www.china.org.cn/2026-04/23/content_118458365.shtml
CNBC. (2026, March 22). China vows to continue opening its economy amid trade tensions with U.S. https://www.cnbc.com/2026/03/22/china-vows-to-continue-opening-its-economy-amid-us-trade-tensions.html
Coface. (2025). US-China tactical deal: Tariffs, tech, and rare earths. https://www.coface.com/news-economy-and-insights/us-china-trade-agreement-a-tactical-truce-not-a-strategic-shift
MS Advisory. (2026). How to start a business in China in 2026: Foreigner guide. https://msadvisory.com/start-business-in-china/
White House. (2025, November). Fact sheet: President Donald J. Trump strikes deal on economic and trade relations with China. https://www.whitehouse.gov/fact-sheets/2025/11/fact-sheet-president-donald-j-trump-strikes-deal-on-economic-and-trade-relations-with-china/
World Economic Forum. (2026, May). What’s next for US–China relations? https://www.weforum.org/stories/2026/05/us-china-relations-trump-xi-summit-areas-cooperation/
