China continues to post strong FDI flows

Foreign direct investment (FDI) into the Chinese mainland increased 11.6% year-on-year to CNY102.28 billion in January, according to the Ministry of Commerce (MOC), the first double-digit increase for the same period since 2016.

The MOC reported that FDI into the Chinese mainland had increased 14.9% YoY to a record high of CNY1.15 trillion in 2021 and this momentum was sustained into 2022 as global capital flows accelerated. Foreign investment in the service industry increased 12.2% YoY in January, while the inflow to high-tech industries surged 26.1%.

Foreign investors were reassured by the country’s stable economic fundamentals, improved business environment and new foreign-investment law, said Zhang Jianping, a researcher at the MOC’s Chinese Academy of International Trade & Economic Cooperation.

China has strengthened efforts to further open the economy. A shortened negative list for foreign investment came into force on 1 January, with restricted sectors cut to 31 from 33 a year ago, while manufacturing restrictions in pilot free trade zones were also reduced to zero.

Looking forward, while the pandemic will still weigh on the global economy, experts believe China’s FDI inflow can maintain the impetus this year despite the high comparable base in 2021 and the possibility of softened transnational investment activities around the world.

MOC spokesperson Shu Jueting has said China will further expand its high-level opening-up, enhance its services for foreign-funded firms and projects, and make more efforts to optimise the business environment in 2022.

The ministry will guide more foreign capital to invest in emerging fields, including advanced manufacturing, modern services, high-tech, energy conservation, environmental protection and the digital economy.

Part of the country’s FDI impetus will also come from the central and western regions, which saw FDI inflows up significantly by 46.2% and 42.2%, respectively, in January. Foreign businesses investing in those areas can have much lower operating costs and enjoy various policy supports, such as tax breaks.

Contact Sovereign China
Get in Touch

Please contact us if you have any questions or queries and your local representative will be in touch with you as soon as possible.