China’s operating environment continues to evolve for foreign invested enterprises, with recent developments affecting data protection, financial reporting, cross border finance and foreign investment.
For international leadership teams, these are not isolated regulatory changes. They can affect how businesses structure, fund, manage and grow their China operations.
Here are four developments that CEOs, CFOs, COOs, CHROs and Legal teams should have on their radar.
1. New data protection proposals
On 7 August 2026, China’s Cyberspace Administration released draft provisions for large scale personal information processors.
The proposals are not yet effective, but could introduce significant requirements for organisations within scope, including:
• storing China generated personal information in China
• requirements around the location and management of data centres
• governance and oversight obligations
• regular compliance audits and annual risk assessments
• continued controls around cross border transfers of personal information
Processing personal information relating to at least 10 million individuals is an important threshold, although other criteria would also apply.
What should businesses do now?
Foreign invested enterprises should consider mapping how much personal information they process in China, where it is stored, who manages the relevant infrastructure and how data moves across borders.
For multinational businesses using global HR, payroll or technology platforms, understanding those data flows is increasingly important.
2. Financial reporting is changing
China’s Ministry of Finance has revised CAS 30, Presentation of Financial Statements, with implementation beginning for certain companies from January 2027 and later dates applying to other entities.
Changes include a more structured presentation of profit and loss, new subtotals and requirements concerning management defined performance measures and comparative information.
What should businesses do now?
Finance teams potentially within scope should assess the implications early, particularly for:
• reporting processes
• systems and data
• comparative information
• management reporting
• group consolidation
For multinational CFOs, the important question is not simply whether the China entity can comply locally, but how the new requirements interact with the group’s wider reporting architecture.
3. Cross border finance remains a priority
China’s State Administration of Foreign Exchange has identified further foreign exchange and cross border investment facilitation among its priorities for the second half of 2026.
Areas include cross border investment and financing, foreign exchange settlement and expanded centralised RMB and foreign currency cash management for multinational companies.
These are policy priorities rather than immediately operative rules, but they are important developments for international businesses to monitor.
Why does this matter?
Establishing an entity and hiring employees are only part of entering a new market.
Businesses also need to determine:
• how capital will enter the Chinese operation
• how intercompany funding will work
• how cash will be managed
• which foreign exchange processes apply
• how permitted funds can move across borders
Market entry determines where you operate. Treasury planning helps determine how effectively you can operate once you are there.
4. M&A and foreign investment scrutiny
Foreign investors considering China linked acquisitions should assess regulatory feasibility early in the transaction.
In April 2026, China’s foreign investment security review authority prohibited the proposed foreign acquisition of AI company Manus and required the transaction to be unwound.
The case is particularly relevant to transactions involving technology, data or other potentially sensitive assets.
Foreign investment security review may also sit alongside separate considerations such as merger control, technology and data requirements and sector specific approvals.
The authorities did not disclose the substantive grounds for the prohibition, so businesses should distinguish between official findings and external speculation surrounding the case.
What does this mean for deal teams?
Regulatory feasibility should be considered before transaction structures and closing plans become fixed.
The question isn’t only:
“How should we structure this acquisition?”
It is also:
“Can this transaction obtain the regulatory clearances it needs?”
What does this mean for your role?
For CFOs
Focus on treasury, funding, foreign exchange and financial reporting. Consider how the China operation will be funded and how cash will move before market entry, and assess whether forthcoming reporting changes require systems or process changes.
For COOs
Think about the whole operating model. Banking, systems, data, suppliers, people, reporting and compliance need to work together. A legally established entity is not necessarily an operationally effective one.
For CHROs
Understand the employee data lifecycle. Where is employee information collected? Where is it stored? Which HR, payroll and benefits providers have access to it? Does it leave China?
For Legal and General Counsel
Monitor the final personal information rules and bring regulatory feasibility into transactions earlier, particularly where technology, data or sensitive assets are involved. One regulatory clearance may not resolve all applicable requirements.
The Nucleus View
The common thread across these developments is that international expansion cannot be managed effectively in silos.
A decision about HR can create a data issue. A corporate structure can affect finance and tax. A transaction can create regulatory requirements across several different regimes.
For leadership teams, the objective should be to build one integrated operating model in which Finance, HR, Legal and Operations work together.
Nucleus supports businesses across more than 53 countries with integrated international employment, payroll, HR, accounting, tax, legal and compliance support.
One relationship. Multiple countries. One team managing the complexity.
Expanding into China?
Whether you’re entering China, making an acquisition or reviewing an existing operation, Nucleus can help you navigate the financial, operational, employment and compliance considerations.
Schedule a consultation with Nucleus →