China's foreign investment landscape presented a complex picture through the first three quarters of 2025, with a notable decline in overall capital inflow contrasted by a significant increase in the number of new foreign companies establishing operations. Despite the headline drop, the nation's high-tech industries have emerged as a powerful magnet for international capital, signaling a strategic shift in investment focus.
Key Takeaways
- The number of new foreign-invested enterprises in China grew 16.2% year-on-year to 48,921 in the first nine months of 2025.
- However, the actual use of foreign capital fell 10.4% during the same period, totaling 573.75 billion yuan ($78.7 billion).
- High-tech industries attracted a substantial 170.84 billion yuan, with e-commerce services investment soaring by 155.2%.
- A significant rebound was recorded in September, with utilized foreign capital increasing 11.2% compared to the previous year.
A Diverging Investment Story
Data from the first nine months of 2025 reveals two distinct trends in China's foreign direct investment (FDI). While the total amount of money invested saw a decrease, the confidence of foreign businesses in establishing a presence grew substantially. Nearly 49,000 new foreign-funded enterprises were set up between January and September, a 16.2% rise from the same period in the previous year.
This surge in new company registrations suggests that international firms continue to see long-term opportunities in the Chinese market. However, the actual capital utilized during this period amounted to 573.75 billion yuan, marking a 10.4% decline.
Understanding the Numbers
The gap between the number of new companies and the total investment value can indicate several economic factors. It may suggest that many new ventures are smaller-scale or are phasing their investments over a longer period. It also highlights a more selective approach from global investors, who are targeting specific high-growth sectors rather than making broad-based capital injections.
High-Technology Becomes the Main Attraction
The standout performer in this mixed economic environment has been the high-tech sector. These industries attracted 170.84 billion yuan, accounting for nearly 30% of the total foreign capital used. This demonstrates a clear trend of foreign investment moving towards more advanced and innovative areas of the Chinese economy.
Certain sub-sectors experienced explosive growth, underscoring where global capital sees the most potential.
- E-commerce services saw an incredible 155.2% increase in investment.
- Aircraft and equipment manufacturing investment rose by a robust 38.7%.
- Medical equipment production also saw a healthy increase of 17%.
This targeted investment in high-value manufacturing and digital services contrasts with the broader slowdown, indicating a strategic pivot by foreign companies towards China's next phase of economic development.
Sector Investment Breakdown
During the first nine months of 2025, the services sector remained the largest recipient of foreign capital, attracting 410.93 billion yuan. The manufacturing sector drew 150.09 billion yuan, with high-tech manufacturing forming a critical and growing component of this figure.
Shifting Sources of Global Capital
The data also reveals a shift in the geographic origins of investment. While some traditional sources may have pulled back, several key economies significantly increased their capital flows into China. This diversification of investment sources is a crucial element of the current landscape.
Investors from Japan led the pack with a remarkable 55.5% increase in their investments. They were followed by other significant contributors:
- The United Arab Emirates boosted its investment by 48.7%.
- The United Kingdom increased its capital flow by 21.1%.
- Switzerland, including investments through free ports, grew its contribution by 19.7%.
This robust engagement from a diverse group of developed and emerging economies highlights continued global confidence in specific segments of the Chinese market, particularly in advanced industries.
September Rebound Signals Potential Turnaround
Despite the year-to-date decline, the most recent monthly data offers a reason for optimism. In September 2025, the actual use of foreign capital experienced a strong rebound, growing 11.2% year-on-year. This positive turn could signal that the downward trend is stabilizing or even reversing as the year comes to a close.
Analysts will be watching closely to see if this momentum continues into the fourth quarter. The combination of a resilient high-tech sector, a growing number of new enterprises, and a potential recovery in overall capital flow could set a more positive tone for foreign investment in the coming year.
