According to official statistics from the Chinese Communist Party and annual surveys conducted by several foreign chambers of commerce, foreign enterprises’ willingness to increase investment in China is decreasing. Some multinational companies are delaying or canceling expansion plans and shifting some capital and production capacity away from China to other regions. Several foreign business professionals have told reporters that these changes indicate foreign investment is reassessing China’s role in their global investment layout.
The official statistics released by the Ministry of Commerce of China show that in the first three quarters of 2025, the number of newly established foreign-funded enterprises in the country increased by over 16% year-on-year, but the actual utilization of foreign capital decreased by about 10.4% year-on-year. Analysis points out that the increase in the number of newly established enterprises does not necessarily mean a simultaneous substantial capital input expansion. There is a clear differentiation between active business registration and slowed inflow of funds.
A retired official in Guangdong named Mr. Zhang told reporters that many new investment projects on the mainland of China have been delayed this year, with some capital redirected to Southeast Asia, India, or other markets. He stated that some companies have repositioned their businesses in China for sustainability rather than primary growth engines. “The main task of the development and reform commission in cities like Guangzhou and Foshan this year is to stabilize foreign investment, but in the current environment, it is difficult to keep foreign investment steady and prevent foreign companies from leaving,” he said.
Mr. Zhang pointed out that the reduced investment by foreign capital in the Pearl River Delta is not an isolated case but a more widespread phenomenon. “Shanghai, Shenzhen, Jiangsu, Zhejiang, and even the Northeast region are facing similar situations. In the eyes of foreign businesses, investing in China is no longer as profitable as it was ten years ago.”
Official data and market feedback indicate that there are changes occurring in the investment behavior of foreign companies in China. Several individuals familiar with the operations of foreign-funded enterprises told reporters during interviews that unlike past cases where factories were loudly closed or withdrawals publicly announced, the current adjustments by foreign capital are more reflected in postponed decisions, slowed layouts, and reduced risk exposures.
Mr. Yuan, who has long provided consultancy services for foreign-funded enterprises in China, told reporters that for most multinational corporations operating in China, “avoiding new risks” has become an internal consensus. “Companies may not need to withdraw, but they will pause and observe first.”
Mr. Yuan further pointed out that many companies have now positioned their operations in China as “sustaining operations,” prioritizing the maintenance of existing orders and customer relationships without taking on new capital investments and long-term commitments for now, “holding back on new investments.”
He noted that the increased uncertainties in operating in China in recent years have made companies more conservative in developing medium to long-term plans. “Even if some businesses still have profit potentials, decision-makers are beginning to consider institutional environment, compliance costs, and public opinion risks as core considerations.”
Survey results released in recent years by several foreign chambers of commerce and research institutions also reflect similar trends. The European Chamber of Commerce, the American Chamber of Commerce, and various international consulting firms have indicated in their annual surveys of member companies that while most surveyed companies continue their operations in China, the percentage planning to increase investment in China in the coming year continues to decline, with more companies opting to maintain the status quo or reduce risk exposure.
According to the “2025 Business Environment Survey Report” released by AmCham China on December 26, 2024, some surveyed foreign-funded enterprises have downgraded China’s priority in their global investment layout, indicating that some companies are reevaluating the focus of their operations in China. These adjustments are a result of repositioning China’s market role.
Mr. Ding, a German automobile manufacturing company’s head in China, stated that in the past, when evaluating investments, companies mainly focused on market size and cost structure; however, policy interpretation space, data compliance requirements, and unforeseen risks have now become important variables affecting investment decisions. “These factors are difficult to quantify, but once they occur, the impacts are often irreversible.”
Mr. Ding believes that foreign enterprises “pausing and observing” is not simply a matter of waiting and seeing but is reflected in a series of specific operational decisions, including delaying new investment projects, postponing expansion plans, freezing recruitment scales, and redirecting some production capacity or research resources originally planned for China to other countries or regions.
Changes in the supply chain have also accelerated the pace of adjustments to the layout of foreign investments in China. Mr. Ding stated that as some countries in Southeast Asia, India, and Latin America actively accept industrial transfers, foreign-funded enterprises are adopting a strategy of “multi-point allocation” when expanding production capacity. Even though China remains an important market, it is no longer the only option.
Several interviewees also mentioned that this shift was not formed overnight but was a gradual choice made by companies after years of internal discussions and repeated calculations. What the outside world often sees is the slowdown in foreign investment, rather than the internal risk assessments and decision-making processes within companies.
Regarding the economic environment in China for the next few years, Mr. Ding acknowledged that for China, the state of foreign investment being “no longer coming in but not fully leaving” may not bring significant impacts in the short term but could affect industry structure and employment prospects in the medium to long term. He pointed out that compared to a public withdrawal, the decreasing investment willingness is more challenging to detect immediately but often has more profound and long-lasting effects.