By Hasan Muhammad

 

 

China is doubling down on efforts to revitalize foreign investment, unveiling a sweeping action plan to counteract a decline in foreign direct investment (FDI), which fell 13.4% year-on-year in January 2025 to 97.6 billion yuan ($13.4 billion). The initiative underscores Beijing’s commitment to maintaining its appeal as a global business hub amid rising geopolitical tensions and economic headwinds. 

 

At the heart of this strategy is the forthcoming 2025 edition of China’s industry catalog, designed to expand market access for foreign investors in key sectors such as advanced manufacturing, modern services, high-tech industries, and energy conservation. In a significant policy shift, the government will also lift restrictions on domestic loans for foreign-invested enterprises, allowing them to use domestic financing for equity investments.

 

China is also prioritizing regulatory alignment with international economic standards, ensuring stronger intellectual property protections and clearer policies on industrial subsidies and labor rights. These measures, coupled with the country’s vast market and robust supply chains, reinforce China’s position as a critical destination for multinational investment, even amid a shifting global economic landscape. 

 

A significant policy shift within the action plan involves lifting restrictions on domestic loans for foreign-invested enterprises, permitting these businesses to utilize domestic financing for equity investments. Additionally, China aims to support pilot regions in implementing opening-up policies in sectors such as telecommunications, biotechnology, and wholly foreign-owned hospitals, providing comprehensive services to facilitate foreign-invested projects in these areas.

 

Despite global geopolitical tensions and a trend toward protectionism, China's vast market, efficient industrial and supply chains, and evolving innovation ecosystem continue to offer a robust foundation for multinational companies. The government's proactive measures, including the expansion of the encouraged industries catalog and the introduction of favorable policies, underscore China's determination to attract and retain foreign investment, reinforcing its position as a global hub for high-tech and green development. 

 

The government has pledged to actively support entrepreneurs and investors from all countries in innovating and starting businesses in China, encouraging foreign companies to establish research and development centers and collaborate with domestic enterprises. China will promote foreign participation in digital development, green transition, and smart manufacturing, as well as facilitate the localization of advanced technologies and solutions. Foreign-invested businesses in China play a significant role in the economy, contributing one-seventh of tax revenue, about one-third of foreign trade, and half of electromechanical and high-tech product exports, as well as creating nearly 7 percent of employment opportunities, according to data from the Ministry of Commerce. 

 

To date, foreign investment in China spans 20 industrial categories and 115 major sectors. In the manufacturing sector alone, foreign capital is present in 31 major categories and 548 subcategories. To further enhance national treatment for foreign-invested enterprises, Ling Ji, vice-minister of commerce and deputy China international trade representative, said the country is actively revising its Government Procurement Law and exploring specific standards for "domestic production" by foreign companies in this area.

 

Data from the Ministry of Industry and Information Technology shows that China saw actual use of foreign investment in the manufacturing sector exceed 220 billion yuan in 2024, after it removed all market access restrictions for foreign investors in the sector last year. By enhancing market access, providing financial incentives, and fostering an environment conducive to innovation, China is actively working to attract foreign enterprises, thereby contributing to its economic resilience and long-term growth.