Foreign direct investment in China dropped 15.2% in the first half of 2025, driven by geopolitical tensions, cautious investor sentiment, and regulatory uncertainty.
Foreign direct investment (FDI) into China dropped by 15.2% year-on-year in the first half of 2025, continuing a two-year trend of declining capital inflows. According to the Ministry of Commerce, FDI totaled ¥423.2 billion (~$59 billion) from January to June—an indicator of persistent caution among global investors facing a mix of regulatory uncertainty, geopolitical risks, and slower-than-expected domestic economic recovery.
These figures point to a continued downtrend, though the rate of contraction has slightly moderated compared to the previous year.
Despite the headline decline, some sectors remain resilient:
FDI from Singapore, Germany, Switzerland, ASEAN, and the UK remains comparatively strong.
To reverse the FDI trend, China introduced targeted reforms in July 2025:
These measures signal a proactive effort to retain foreign capital and foster long-term commitments.
| Year | FDI Trend | Notes |
|---|---|---|
| 2024 | ↓ 27.1% | Steepest drop since 2008 crisis |
| H1 2025 | ↓ 15.2% | Moderate decline, some sectoral resilience |
| 2026 (forecast) | Flat or slightly ↓ | Outlook depends on regulatory clarity, trade thaw, and recovery of confidence |
China’s outbound investment through the Belt and Road Initiative (BRI) continues to surge:
This shift suggests China may be reallocating capital expansion abroad while stabilizing its domestic FDI environment.
China’s FDI decline in H1 2025 is not a wholesale retreat but a strategic recalibration of global capital flows. Investors are cautious—but not absent. The rise in foreign company registrations, sectoral interest in innovation, and Beijing’s reform package all suggest a foundation for eventual recovery.
If China can deliver on regulatory transparency, economic rebalancing, and geopolitical stability, the FDI picture in 2026 may look very different—more measured, more targeted, and perhaps more sustainable.
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