Global Times: Why does China still need foreign investment?

BEIJING, May 22, 2025 /PRNewswire/ -- "I've noticed that a new action plan to stabilize foreign investment has been introduced this year. After more than 40 years of reform and opening-up, China's domestic market entities have grown strong. Why do we still need foreign investment?" This is a question that a reader of people.cn posted.

This reader's question is representative. The answer can be found in three sets of data.

First, as of now, foreign investors have established a cumulative total of 1.24 million enterprises in China, with investments nearing $3 trillion. Foreign-funded enterprises have long been an integral part of China's high-quality development, contributing one-quarter of industrial added value, one-seventh of tax revenue, and creating over 30 million jobs, making significant contributions to China's economic growth.

Second, foreign investment in China spans 20 industry categories and 115 major industry sectors. In the manufacturing sector, all 31 major categories and 548 subcategories have attracted foreign investment.

China is the only country with all industrial categories listed by the United Nations, and foreign investment has played a pivotal role. Over the past decade, investment in research and development by foreign-funded industrial enterprises above a designated scale in China has grown by 86.4 percent, and the number of effective invention patents has surged by 336 percent. The advanced technologies and management expertise brought by foreign enterprises have positively influenced the development of Chinese companies and talent cultivation, providing substantial support for building a modern industrial system.

Third, foreign-funded enterprises contribute to one-third of China's imports and exports. The negative list for foreign investment access has been reduced from an initial 190 items to the current national version of 29 items and the free trade zone version of 27 items, with the manufacturing sector achieving a "zero" negative list.

In accelerating the construction of a new development pattern, foreign investment serves as a bridge connecting domestic and international dual circulation. On one hand, it promotes factor-flow-based openness, driving the cross-border flow of technology, products, and services through supply chains, enabling China to deeply engage in global industrial division and cooperation. On the other hand, it supports institutional openness, advancing institutional reforms in economic, technological, ecological, and other areas.

"All of this shows that foreign businesses are important participants in the Chinese modernization drive, in the country's reform and opening up and innovation, and in its interconnectivity with the world and integration into economic globalization."

In fact, the question "Why does China still need foreign investment?" is not new.

In 1979, China enacted a law on Chinese-foreign equity joint ventures, opening the door to foreign investment. At that time, some argued that introducing foreign capital would hinder the development of domestic industries.

Over the past 40 years, a consensus has emerged: Reform and opening-up have enabled China to rapidly integrate into the global market and keep pace with the times, with the active utilization of foreign investment being a key factor.

Opening door wider 

In recent years, global unilateralism and protectionism have intensified, with foreign investment in China increasingly disrupted by geopolitical factors. Some have claimed that "China does not welcome foreign investment."

"Humankind is a community with a shared future." "Openness brings progress while closing the door can only leave one behind." China's commitment to reform and opening-up remains unwavering, its doors of openness will only widen, and its policy of welcoming foreign investment has not changed and will not change.

China's pace of opening up to the world has never slowed.

The action plan to stabilize foreign investment in 2025 further proposes 20 policy initiatives building upon the existing 24 measures for attracting foreign capital. 

Since the beginning of this year, the Ministry of Commerce has held an "Invest in China" policy briefing in Japan and organized related events in Sweden and the UK, significantly boosting the willingness of relevant countries to invest and cooperate with China.

In early 2025, the China Council for the Promotion of International Trade dispatched 107 delegations to visit 33 countries and regions, visiting corporate headquarters such as Mercedes-Benz, BMW, and Bosch.

How sincere is China's commitment to opening-up? Foreign enterprises have the most say—At the China Development Forum 2025, 86 official representatives from multinational corporations from 21 countries and regions participated. According to the 2025 China Business Climate Survey Report released by the American Chamber of Commerce in China, nearly 70 percent of surveyed US consumer firms plan to increase their investments in China this year.

From January to March 2025, China established 12,603 new foreign-invested enterprises, a year-on-year increase of 4.3 percent, according to the Ministry of Commerce. Actual foreign investment in e-commerce services, biopharmaceutical manufacturing, aerospace and equipment manufacturing, and medical equipment and instrument manufacturing grew by 100.5 percent, 63.8 percent, 42.5 percent, and 12.4 percent, respectively. By region, actual investment from ASEAN rose by 56.2 percent, and from the EU increased by 11.7 percent.

Wang Peng, associate research fellow at the Beijing Academy of Social Sciences, told the Global Times that the data reflected the firm confidence and sustained commitment of foreign companies to the Chinese market.

China's economy is on a sustained upward trajectory, with a vast and expanding market, providing foreign investors with broad market opportunities and reliable returns. Moreover, the Chinese government has implemented a series of proactive measures to attract foreign capital, continuously optimizing the business environment and providing policy support, offering robust guarantees for foreign investors, Wang said.

"Partnering with China will bring more opportunities. No matter how the external environment may evolve, China remains firmly committed to high-standard opening up and always welcomes companies from all countries to keep investing in China and explore the Chinese market to enjoy benefits and development together," Mao Ning, spokesperson from China's Foreign Ministry, told a press conference on March 13, 2025.

https://www.globaltimes.cn/page/202505/1334660.shtml

SOURCE Global Times