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In 2024, about billion U.S. dollars of foreign direct investments (FDI) have been invested into the manufacturing sector in China. Total FDI inflows to China amounted to around *** billion U.S. dollars that year.

Sectoral FDI distribution

Foreign investment in China has been traditionally strong in the manufacturing sector. However, with the focus of Chinese economic development shifting from production to technology, services, and consumption, the landscape is changing. The manufacturing sector’s contribution to total FDI inflows gradually declined from nearly ** percent in 2005 to less than ** percent in 2021, rebounding to around ** percent in 2024. The service sector accounted for around ** percent in 2024. In particular, research and technology, IT, and leasing and business services, have been gaining importance adding to the diversification of investments into China. 

Investment restrictions in China

In international comparison, the level of investment openness in China is still low. Sectors with long standing restrictions are media and telecommunications, as well as industries of national interest. In recent years, China has made new efforts to improve the investment environment and issued a new foreign investment law in 2019, further protecting the interests of foreign companies in the country. Given China’s ongoing, comparatively low FDI intensity, the country has the potential to attract much more foreign investment than it currently does. However, current geopolitical tensions and doubts about China’s determination to further open the market, raise questions about future development in this area.