China sees strong foreign investment growth in Q1 despite global uncertainty

Despite rising global economic uncertainty, China's commitment to reform and opening-up continues to attract foreign investors. In the first quarter of 2025, the number of newly established foreign-invested enterprises increased by 4.3 percent year on year to 12,603, according to the Ministry of Commerce.

Although foreign direct investment (FDI) inflows dropped to 269.23 billion yuan (.2 billion) in the first quarter, the pace of decline slowed down significantly, with March showing a notable 13.2 percent year-on-year rebound in FDI.

Analysts attribute the overall dip in FDI to external challenges, including heightened geopolitical tensions and US tariff hikes on Chinese goods, according to a China Media Group (CMG) report. However, the recovery in March signals that investor confidence in China's long-term market potential remains strong.

China's focus on high-tech and innovation-driven sectors continues to draw foreign interest. Investment in e-commerce services surged by 100.5 percent in Q1, while biopharmaceuticals and aerospace equipment saw gains of 63.8 percent and 42.5 percent, respectively.

FDI sources are also becoming more diverse, with investments from ASEAN nations rising 56.2 percent, EU inflows up 11.7 percent, and Switzerland and the UK seeing surges of over 60 percent, including investments routed through free ports.

A survey by the American Chamber of Commerce in South China revealed that 58 percent of the foreign companies surveyed still consider China one of their top three global investment destinations, reflecting confidence in the market's resilience.

Foreign companies are also increasing their R&D investments in China, with firms like Sanofi, AstraZeneca, and Valeo expanding innovation hubs, citing the country's stable policy environment, high returns, and a thriving innovation landscape, said the CMG report.

In response, China is further opening up key service sectors. Siemens and other global firms have already been approved for telecommunication trials, while the Ministry of Commerce has introduced 155 new measures to expand access to healthcare, tourism, and cross-border e-commerce.

The government is also streamlining market access and has reduced the national negative list to just 29 items.