Trends in China’s Foreign Direct Investment: Origins, Destination Markets, and Critical Industries

China has seen a substantial change in foreign direct investment (FDI) with a growth of 20.2% in 2021, slowing to 8% in 2022 and declining 8% in 2023. This is due to COVID-related restrictions, uneven economic recovery, geopolitical tensions, supply chain diversification, and policy concerns.

China, positioned as the world’s second-largest recipient of foreign direct investment (FDI), is undergoing significant shifts. In this article, we analyze the emerging trends within China’s investment landscape.

China has been witnessing a shift in the foreign investment landscape in recent years. After a significant FDI growth of 20.2 percent in 2021, the growth rate slowed to 8 percent in 2022, before hitting an 8 percent decline in 2023.

Key factors contributing to the dramatic rise and fall include China’s extensive and extended enforcement of COVID-related restrictive measures until the end of 2022, uneven recovery of China’s economy after reopening its border, rising geopolitical tensions, increasing supply chain diversification pressure, as well as concerns about policy predictability for several sectors.

This article is republished from China Briefing. Read the rest of the original article.

China Briefing is written and produced by Dezan Shira & Associates. The practice assists foreign investors into China and has done since 1992 through offices in Beijing, Tianjin, Dalian, Qingdao, Shanghai, Hangzhou, Ningbo, Suzhou, Guangzhou, Dongguan, Zhongshan, Shenzhen, and Hong Kong. Please contact the firm for assistance in China at china@dezshira.com.