New Working Models and Self-Reliance Deter Foreign Investment in China
Foreign direct investment (FDI) into China has declined in recent months as international companies rethink their strategies in response to Beijing’s emphasis on self-reliance. According to data from the Ministry of Commerce, new actual utilized foreign investment in March fell 38% compared to the same month in 2023.
Experts attribute the decline to new working models adopted by companies, which involve separating their China operations from their global operations, slowing down investment and reducing enthusiasm. Despite the decline, companies are not withdrawing from China but are becoming more cautious about their investment plans.
While China’s massive economy remains an attractive market, foreign investors have been hesitant to increase their investments due to concerns about self-reliance policies in certain business segments, such as technology.
To boost investment, experts believe that China needs to identify new industries where foreign companies can participate. The country’s slowing economy and geopolitical tensions have also contributed to the cautious approach of foreign investors.
A survey conducted by the American Chamber of Commerce earlier this year revealed that nearly half of the respondents had no plans to expand their investment in China, despite some optimism about improving US-China relations.
