The Chinese Ministry of Commerce recently released the latest data, showing a 16.2% year-on-year increase in the number of newly established foreign-invested enterprises in the first three quarters of this year, while the actual use of foreign capital has decreased by more than 10%. Amid the official claim of a “resurgence of foreign investment,” these contradictory figures have raised doubts among the public about the true situation of China’s ability to attract foreign investment.
According to the announcement by the Chinese Ministry of Commerce on October 25th, there were 48,921 newly established foreign-invested enterprises nationwide from January to September this year, representing a 16.2% increase compared to the same period last year. However, during the same period, the actual utilization of foreign capital amounted to 573.75 billion yuan, a 10.4% decrease year-on-year. The official Chinese media has described this as a “sign of renewed foreign confidence,” but experts interviewed by a news outlet noted that the increase in the number of enterprises does not necessarily indicate a return of capital but rather reflects a structural shift in increased registration activities and decreased investment scale.
In September, the monthly actual use of foreign capital increased by 11.2% compared to the previous year. However, when converted into US dollars, the total inflow of foreign capital in the first three quarters of this year was approximately $80.3 billion, still lower than the same period in 2024, indicating that the total fund inflow still lags behind pre-pandemic levels.
An investment consultant at a Beijing firm, using the pseudonym Yin Min, mentioned that the increase in the number of newly established enterprises is mainly due to relaxed policies and lowered registration thresholds. He explained, “Some companies register with capital as low as tens of thousands of yuan, far below the scale of investment in the past by large manufacturing companies that often amount to billions. The increase in numbers does not address the issue; it is the decrease in capital that signals economic problems.”
According to data from the Chinese Ministry of Commerce, the actual use of foreign capital in the high-tech industry amounted to 170.84 billion yuan, accounting for 29.8% and becoming the main absorption sector. Growth was seen in industries like e-commerce services at 155.2%, aerospace equipment manufacturing at 38.7%, and medical device manufacturing at 17%. Yin Min pointed out that these increments are mostly in small-scale projects, insufficient to offset the outflow of funds from traditional manufacturing and real estate sectors.
Yin Min disclosed, “To my knowledge, in order to retain their positions, some local governments have invited overseas private enterprises to register multiple companies in China, claiming to be foreign companies, but their funds do not flow back.”
The European Union Chamber of Commerce in China released the “Business Confidence Survey 2025” in May, indicating that due to factors such as the business environment and geopolitics, many European companies are reevaluating their investment plans in China. Some have delayed or reduced their investments in China during the first half of 2025 and are considering establishing supply chains and capacity alternatives in Southeast Asia.
Multiple international media outlets in September cited analyses of the report, stating that while there has been some improvement in foreign business confidence, it still remains at a low level overall. Some academics expressed their views in October 2024, suggesting that the narrowing of the decline in foreign investment in China reflects statistical effects due to a low base in the previous year, rather than a significant rise in confidence.
An independent analyst in the academic community in Shanxi Province, using the pseudonym Zhao Jianmin, mentioned that some foreign investments opt to register companies to retain market options but have not yet injected actual funds. “The registration process is now quick. Foreign enterprises prefer to secure a position and wait for stability before deciding whether to invest. This strategy gets categorized as ‘newly established foreign enterprises’ in statistics but cannot reflect the actual flow of investment.”
From a global perspective, according to statistics from the United Nations Conference on Trade and Development, global foreign direct investment increased by 3% in 2024, but China experienced a decrease of nearly 30%, the largest decline among major economies. Experts believe that China’s foreign investment environment faces multiple pressures such as declining institutional transparency, stricter data security reviews, and geopolitical risks.
Several analysts pointed out that the current trend of foreign capital inflow exhibits characteristics of “increased quantity but reduced amount” and “small-scale probing,” with more companies setting up small-scale service entities to observe market trends. This indicates that foreign capital has not truly returned but is shifting towards short-term, low-risk, and light-asset models.
As of now, the Chinese Ministry of Commerce has not provided an explanation for the phenomenon of an increase in the number of enterprises and a decrease in capital. Scholars suggest that if only the number of registered enterprises is used as a measure of “recovery,” it may mask the reality of the long-term reduction in foreign capital. Reports from the European Union Chamber of Commerce and the United Nations Conference on Trade and Development do not show a significant increase in foreign business confidence, contrasting sharply with the Chinese official claims of a “resurgence of foreign investment.”