The State Council, China's cabinet, has recently intensified efforts to attract foreign investment, focusing on the removal of all restrictions on foreign investment in manufacturing and implementing new trial measures to expand the services sector. During the latest State Council executive meeting, the crucial role of foreign businesses in the new development paradigm was emphasized, underscoring the need for a stable and attractive investment environment.

Encouraging Data Amidst Challenges

China's commitment to opening its market is yielding promising results. In March, the country announced the elimination of market access restrictions in manufacturing and the reduction of barriers in sectors such as telecommunications and healthcare. According to the Ministry of Commerce, the number of newly established foreign-funded enterprises in the first five months of 2024 grew by 17.4 percent year-on-year to 21,764. Despite this growth, the total amount of foreign investment declined by 28.2 percent to 412.51 billion yuan.

Notably, certain sectors experienced significant investment increases. Foreign investment in consumer equipment manufacturing surged by 332.9 percent, while investment in the professional and technical services sector rose by 103.1 percent. However, this positive trend is juxtaposed against a backdrop of global economic challenges. The China Macroeconomic Forum (CMF) report indicates that factors such as global economic sluggishness, industrial chain restructuring, geopolitical tensions, and competition from developing countries are contributing to the overall decline in foreign investment.

Strategic Measures to Sustain Foreign Investment

In response to these challenges and to sustain foreign investment, the State Council has outlined a series of comprehensive measures:

Deepening Key Sector Opening: The government will deepen the opening-up of key sectors by implementing a new round of pilot measures to expand the opening-up of the services industry.

Equal Treatment in Participation: Both foreign and domestic businesses will be equally supported in participating in large-scale equipment renewal, government procurement, and other investment opportunities.

Policy Optimization: Efforts will be made to optimize policies related to foreign investment in pharmaceuticals, medical devices, and other fields. This includes enhancing the convenience for foreign personnel working in China.

Promoting New Business Models: The government will encourage new business models and industries, such as bonded maintenance, to further attract foreign investment.

Strengthening Service Mechanisms: Continuous improvements will be made to the service guarantee mechanisms for foreign investment, ensuring better facilitation and support.

Building the "Invest in China" Brand: The promotion of the "Invest in China" brand will be strengthened, and a revised  Catalogue of Encouraged Industries for Foreign Investment will be published.

These measures reflect China's commitment to providing a fair and competitive environment for foreign investors. By addressing their concerns and enhancing institutional openness, China aims to attract sustained and high-quality foreign investment, driving economic growth and innovation.