In the past year, the global landscape has undergone significant and multifaceted changes, largely influenced by rising geopolitical tensions and the backlash against economic globalizationThe Chinese government, in the face of these challenges, has resolutely committed to enhancing its level of openness to the outside worldThis determination is reflected in its efforts to attract foreign investment more vigorously and provide substantial services to foreign enterprisesSuch strategic movements have not gone unnoticed, as numerous foreign institutions continue to expand their operations in China, signaling their unwavering confidence in the market.

Recent data released indicates that between January and November 2024, the actual utilization of foreign capital in China reached an impressive 749.7 billion yuanThis marks a significant achievement with the establishment of 52,379 new foreign-invested companies during the same period—a staggering year-on-year increase of 8.9%, representing the highest number ever recorded in history.

An Optimizing Investment Structure

As China's economy exhibits signs of recovery, coupled with the gradual implementation of a series of effective policies, confidence among foreign investment enterprises in expanding their operations in China remains stable

Influential financial giants from abroad maintain a strong focus on the Chinese marketFollowing the footsteps of significant players like Yuan Sheng, Bridgewater, and others, a new wave of quantitative hedge funds has begun to penetrate the China marketRecently, Kuan Li Capital, a wholly-owned subsidiary based in London, completed its registration as a private equity management firm in Shanghai, further adding to the growing number of over 30 foreign private equity institutions that have set their sights on China.

According to Wan Zhe, a researcher at the Belt and Road Institute of Beijing Normal University, the fundamental stability of the Chinese economy demonstrates substantial resilience amidst a complex international environmentEspecially noteworthy is the recent rollout of a comprehensive set of increment policies aimed at market stabilization, which are characterized by their significant scale, organized approach, and innovative measures.

Foreign investments are breathing new life into China’s production capabilities with continued focus on optimizing the investment structure as a key highlight

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Reports suggest that the actual foreign capital utilized in high-tech manufacturing accounted for 11% of the national total from January to November 2024. Specifically, sectors such as medical instrument and equipment manufacturing, alongside computer and office equipment manufacturing, witnessed impressive year-on-year growth rates of 53.4% and 39.1%, respectively.

Additionally, more and more international firms are setting up R&D innovation centers within ChinaLeading global pharmaceutical companies like Eli Lilly and Bayer have established new centers in Beijing, while automotive giant Volkswagen plans to invest 2.5 billion euros to further expand its production and innovation center located in HefeiApple also announced its intention to expand and establish new application research laboratories in both Shanghai and Shenzhen, and Otis has launched its largest R&D team in Shanghai.

According to Xu Xinxiong, CEO of Thailand's Tsingtao Group, the Chinese market remains a first-choice investment location

Over the last five years, Tsingtao Group has invested a cumulative amount of 4.36 billion yuan in ChinaCurrently, the first phase of the Tsingtao Group's Red Bull beverage production base in Sichuan has already been operational for a year.

A Step-by-Step Approach to Openness

The sustained influx of foreign investment into China can, in the short term, be attributed to a series of incentivizing policiesIn the long term, this trend is linked to the continuous push to open up financial markets at a high standardWang Ning, a deputy researcher at the Institute of World Economy Research, Ministry of Commerce, stated that despite an overall decline in global outward investment, China’s massive market and advantageous industrial partnerships offer new investment opportunities for global investors

On the domestic front, China continues to reduce restrictions on foreign entry, thereby enhancing the quantity and quality of foreign investments, particularly in advanced manufacturing and high-tech sectorsSimultaneously, via the construction of a network through bilateral and regional free trade agreements, it actively participates in the reform of multilateral trade rules, creating a supportive domestic and international institutional framework for foreign capital development.

Several major opening measures are progressively coming to fruition, laying a solid foundation for foreign institutions to establish a long-term presence in the Chinese marketThis includes the release of five collaborative measures concerning capital markets with Hong Kong and enhancements to the trading mechanisms of the Shanghai and Shenzhen stock exchangesFurthermore, adjustments made by the State Administration of Foreign Exchange to pilot policies for transnational corporations' integrated currency funding pool have generated more space for foreign banks to deepen their engagement with the Chinese market.

The continuous reduction of restrictions on foreign investments further broadens opportunities for foreign enterprises operating in China

From completely lifting restrictions on foreign capital in the manufacturing arena to expanding openings in telecommunications and medical services, and from enhancing the legal framework associated with foreign investments to advancing the internationalization process—China has been engaged in a deliberate act of "subtraction," reducing barriers for investments while simultaneously working on an "addition" to the business environment that bolsters the country's attractiveness for high-quality foreign investments.

Strengthened support services for foreign investors have led to the “Invest in China” brand becoming increasingly prominentIn 2024, China hosted 27 “Invest in China” promotional events domestically and internationally, convening 15 roundtable meetings specifically for foreign companiesThroughout the year, over 200 exchanges and discussions were held with foreign businesses and international trade associations, resulting in the resolution of more than 300 issues faced by foreign enterprises

These initiatives also took "Invest in China" overseas to countries such as Denmark, Germany, France, and Italy, establishing crucial bridges for cooperation and exchange between domestic and international companies.

Expanding Opportunities for Foreign Investment

The determined march of foreign investments within China highlights an enduring confidence in the future of its economic developmentA report by global management consulting firm Kearney revealed that China’s rank in foreign direct investment confidence is set to jump from seventh place in 2023 to third place over the next three years, leading among emerging markets.

China's robust advancement toward high-quality economic development is paving the way for the emergence of new productive forces, providing strong momentum for foreign enterprises operating within China

The 2024/2025 business confidence survey published by the German Chamber of Commerce indicates a persistent enhancement in China’s attractiveness as an innovation market, with over half of surveyed German companies planning to increase their investments in China over the next two yearsImpressively, 92% of surveyed German firms affirmed their commitment to maintaining a deepening presence in the Chinese marketSimilarly, the British Chamber of Commerce’s survey reports that 76% of British enterprises plan to maintain or escalate their investments in China.

Investing in China is synonymous with investing in the futureIn the coming years, China is set to remain one of the most significant growth markets worldwide, with substantial opportunities present within its asset management sectorFinancial institutions like BlackRock, Goldman Sachs, Morgan Stanley, UBS, Schroders, and JP Morgan Asset Management maintain a favorable outlook toward the trajectories of China’s capital market until 2025. In particular, JP Morgan Asset Management predicts an expected annualized return of 7.8% for the Chinese stock market over the next decade to fifteen years