Foreign investors are not optimistic about the economic prospects of China, as many continue to make a significant retreat in recent times. The latest official statistics from the Chinese government show that foreign direct investment (FDI) in China in the third quarter of this year has decreased by a massive 51% compared to the previous period. Against the backdrop of economic uncertainty, many multinational companies are either cutting back or adjusting their investments in China.
The State Administration of Foreign Exchange (SAFE) of China released the data on the “International Balance of Payments” for the third quarter and the preceding quarters of this year on November 7. The net inflow of foreign direct investment (FDI) from foreign enterprises was $8.5 billion, marking a 51% decrease compared to the previous period, and a staggering 92% drop from the peak in the first quarter of 2022.
An article on the financial information portal website FastBull highlighted that foreign direct investment in China dropped by 51% in the third quarter of 2025, underscoring the diminishing willingness of global companies to engage in long-term investments.
Over the past two years, China’s economy has been experiencing continuous decline, characterized by weak domestic demand, low consumer confidence, significant inflationary pressures, and a struggle to attract and retain foreign businesses as part of its post-pandemic recovery strategy. However, foreign investors have a pessimistic outlook on China’s economic growth, leading to a substantial decrease in investment interest. In fact, in the third quarter of 2023, there was a net outflow of FDI for the first time since 1998, amounting to $12.06 billion.
With the resurgence of the US-China trade war in 2025, the scale of foreign investment in China continues to shrink. According to the “2025 China Business Report” released by the American Chamber of Commerce in Shanghai (AmCham Shanghai) on September 10, only 41% of American companies are optimistic about their business prospects in China for the next five years, marking a four-year low. Additionally, a mere 12% of American companies consider China as the primary investment destination for their headquarters, hitting a historical low.
China’s GDP growth rate in the third quarter of 2025 slowed to 4.8%, down from 5.2% in the second quarter. Despite official figures, there have been doubts raised about their accuracy.
Foreign enterprises that have invested and established businesses in mainland China are facing intense competition from local brands, leading to declining performance in recent years. Many have resorted to shutting down and withdrawing their operations in major Chinese cities, selling off a significant portion of their business in China, or completely exiting the Chinese market.
Two recent examples include the well-known US multinational fast-food chain, Burger King, announcing on November 10 that it will sell 83% of its stake in its Chinese business, “Burger King China,” to the Chinese investment asset management company, “CPE Source Peak,” while the Restaurant Brands International (RBI), the owner of the Burger King brand, will retain only 17% of the shares. Similarly, the American coffee chain giant Starbucks announced on November 3 that it would sell 60% of its stake in its Chinese business to the Chinese fund, Bo Yu Investment. These actions are considered strategic retreat measures taken by foreign investors to maintain their market position and ensure resilience in local operations.
FastBull’s article suggests that the sharp decline in foreign direct investment indicates a changing perception among international companies regarding China. They no longer view China solely as a manufacturing hub but rather as a market environment with higher risks and greater unpredictability. Factors such as opaque regulations, geopolitical tensions (especially with the United States), and concerns about intellectual property protection continue to suppress foreign investors’ confidence.