Topic: Foreign direct investment (FDI) into China (2024)

  • Economy
In recent years, China has been the second largest recipient of foreign direct investments (FDI) worldwide, attracting approximately 189 billion U.S. dollars in 2022. However, after a period of strong investments during the coronavirus pandemic, inflows dropped considerably in the second half of 2022 and remained low in 2023. This is most probably related to rising interest rates outside of China but might also reflect less optimistic business expectations of foreign investors in the Chinese market.

Development of FDI inflows to China

Internationally, China is still a country with comparatively low FDI openness. High restrictions and growing competition from domestic companies were main factors contributing to low FDI growth rates and decreasing greenfield investment since 2011. To improve the investment environment, the Chinese government issued a new Foreign Investment Law, which came into force in January 2020. The new law seeks to protect the interests of international investors, mainly by prohibiting forced technology transfer, protecting intellectual property rights, and promoting equal treatment. The number of sectors open to foreign investment have also been further increased in two “negative lists” published in June 2020 and a list of encouraged industries for foreign investment. In addition, several new Special Economic Zones have been set up, trying to attract foreign investors with further incentives.

Origins of FDI inflows and invested sectors

One special aspect about FDI in China is that a large part of the money is coming through Hong Kong into the country, accounting for more than 50 percent of the total capital stock in 2022. Most of that money is conduit FDI, flowing through Hong Kong in its function as a financial hub, but originating from investors located in other countries. According to UNCTAD estimates for 2020, only around 10.4 percent of China’s FDI stock originated from investors in Hong Kong, while another 10.4 percent came from the U.S., and 12.1 percent from China itself – from Chinese companies not registered on the mainland. In terms of invested industries, foreign investment in China is traditionally strong in the manufacturing sector. However, manufacturing has been gradually losing ground over the last 15 years, while the service sector has been quickly gaining significance, with industries such as IT and leasing and business services.

For the future development of FDI in the country, China’s determination to further open its economy and the impact of geopolitical tensions on global FDI flows are the two main factors that will determine whether China’s huge potential in foreign investment can be further unlocked.

This text provides general information. Statista assumes no liability for the information given being complete or correct. Due to varying update cycles, statistics can display more up-to-date data than referenced in the text.

Published by C. Textor, Feb 29, 2024

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Global FDI inflows 2022 1.3tr USD

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Topic: Foreign direct investment (FDI) into China (2024)

FAQs

Topic: Foreign direct investment (FDI) into China? ›

China's foreign direct investment totaled $33 billion on a net basis in 2023, according to the State Administration of Foreign Exchange, down about 80% from 2022. The figure was positive as new investment surpassed outflows.

What is China's foreign direct investment? ›

Synopsis. China's direct investment liabilities in its balance of payments rose by $33 billion last year, 82% down on 2022, according to data from the State Administration of Foreign Exchange released Sunday.

Why is FDI important to China? ›

FDI has contributed to higher investment and productivity growth, and has created jobs and a dynamic export sector.

What is the source of foreign direct investment in China? ›

International financial hubs play a key role in channeling foreign financial inflows into China. According to official records, a significant portion of China's incoming FDI stock in 2022 flowed through Hong Kong, with the Virgin Islands also contributing substantially.

What is an example of FDI in China? ›

Examples include NBCUniversal setting up a subsidiary and a joint venture to establish the Universal Beijing Resort. Tesla's 50 billion yuan (US$7.5 billion) gigafactory in Shanghai, or Starbucks' 1.1 billion yuan innovation park in Kunshan in Jiangsu province are also considered examples of FDI into China.

Who are the 5 largest investors of FDI in China? ›

Hong Kong, the Virgin Islands, Japan, Singapore and the United States are among the major investors (data U.S. Trade Administration). Investments are mainly oriented towards manufacturing, real estate, leasing business and services, and computer services.

How much does China invest in FDI? ›

China Economy: FDI Slumps to Lowest Since 1993 With $33 Billion Added in 2023 - Bloomberg.

How much foreign investment does China have? ›

In recent years, China has been the second largest recipient of foreign direct investments (FDI) worldwide, attracting approximately 189 billion U.S. dollars in 2022.

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