Foreign capital constitutes a vital force in participating in the economic cycles of major countries, and serves as a key barometer for observing their economic transformations. Foreign capital in China includes both foreign direct investment (FDI) and foreign funds participating in investments in the domestic capital markets.  Since 2024, foreign investment in China has experienced significant fluctuations, with withdrawal by some prominent enterprises drawing substantial market attention. Although the latest round of the US tariff tension has eased, its impacts may still influence the future allocation of foreign capital in China. Nonetheless, the recent dynamics of foreign capital in China present both opportunities and challenges. The continuous improvement of China's opening-up framework, coupled with the accelerated implementation of sector-specific liberalization measures, is generating institutional dividends that can largely mitigate adverse impacts. As external shocks interact with domestic "positive" factors, the long-term trajectory of cross-border foreign capital flow is expected to remain stable and positive.

New Features in Recent Foreign Capital Inflows to China

While the actual amount of utilized FDI has declined in recent years, the number of newly established foreign-invested enterprises has grown steadily, and the FDI structure has undergone further optimization. According to the data of the Ministry of Commerce, in 2024, China's actual use of FDI was 826.25 billion yuan, a year-on-year decrease of 27.1%. Notably, however, 59,080 new foreign-invested enterprises were established nationwide, with a year-on-year increase of 9.9%, indicating that the cumulative effects of recent policy measures to stabilize growth and FDI are gradually emerging. Concurrently, the composition of FDI was further optimized. The actual use of FDI in high-tech manufacturing was 96.3 billion yuan, accounting for 11.7% of the total. Specifically, FDI in medical equipment and instrument manufacturing, professional and technical services, and computer and office equipment manufacturing increased by 98.7%, 40.8% and 21.9% respectively. These figures reflect a growing focus of foreign investment on sectors tied to China's new productive forces, with deeper engagement in China's high-quality development. According to the September 2024 China Business Environment Survey Report released by the US-China Business Council, fewer than one-fifth of surveyed enterprises reported having moved or planned to move some businesses out of China. Almost all respondents viewed the Chinese market as a critical component of their global layout.