Value of foreign direct investments in China 2023, by sector

In 2023, about 45.5 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 163 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 rapidly. The manufacturing sector’s contribution to total FDI inflows has gradually declined from nearly 60 percent in 2005 to less than 20 percent in 2021, while the service sector accounted for more than 75 percent in that year. In particular, research and technology, IT, and leasing and business services, are quickly 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.