By Hasan Muhammad

 

 

In its much-anticipated 2025 Special Report on the State of Business in South China, the American Chamber of Commerce in South China (AmCham South China) has affirmed China's position as a beacon of business opportunity. Despite the general negative trends in the world and in the global economy, the world's second-largest economy still attracts investors, and does so with relative ease, demonstrating remarkable resistance and sustainable growth.

 

The 21st edition of this annual survey was conducted with the help of 316 companies in South China in 2024 and is a quantitative analysis of the business environment in the region.  The results of the study reveal changes in the trends of development and stress the attractiveness of China as an investment destination. 

 

In the report, it was found that China is currently the most attractive investment climate globally. Only 42 per cent of foreign companies surveyed did not include China in their top three investment destinations. Up to 76 per cent of the companies intend to continue investing in China in the next three to five years, and American companies are the most likely to do so. It should be noted that 74% of American companies are planning reinvestments, which is 11% higher than the year before. Most of the survey participants are from the U.S., China, and the European Union. More than half of these companies are fully foreign owned and more than 30% have American capital. 

 

The percentage of companies which derive more than 60% of their global revenue from China increased by 5 percentage points to 31%, which proves the strategic importance of the Chinese market. The attraction of the Chinese market is based on the growth strategy. As stated by Harley Seyedin, the Chairman and President of AmCham South China, the main drivers of the increased investment include the growth of the Chinese market, the advantages of the industrial cluster approach and the good policy environment.

 

This paper aims to explore how China's economic growth has encouraged investor confidence. In 2024, China's GDP rose to a historic high of 134.91 trillion yuan (US$18.81 trillion) and grew by 5% year on year. Economic growth combined with strategic policy measures provides a good environment for foreign firms to prosper.

 

One of the most significant policy measures in 2024 was the adoption of the negative list for foreign investment access. Jointly developed by China's National Development and Reform Commission and Ministry of Commerce, this reform removed all restrictions on foreign investment in the manufacturing sector.  The policy is considered to be a significant step towards opening up the market and creating more competition.

 

Many of the companies that were surveyed believed that this policy was good and they thought that it would lead to more investments and the opening of more markets for expansion. These optimists are an example of China's efforts to create a business-friendly environment. According to AmCham South China, its member companies have identified a total of US$14.59 billion from the profits they have made in China and plan to reinvest this amount in the country within the next three to five years. This planned reinvestment is up by 33.18% from the previous estimates, which show that investors have a high belief in the Chinese economy.