In the first half of the year, nearly 4,800 foreign-invested enterprises increased their investments in China.

The number of newly established foreign-invested enterprises in China increased by 5.3%, with total foreign investment reaching 402.14 billion yuan.

The structure of foreign investment has improved, with investment in high-tech industries growing by 33.2% and accounting for 42.4% of the total.

This figure continues to rise. When it comes to attracting foreign investment, the focus is on:

Which industries are the new foreign investors targeting? And what are companies already established in China investing in to expand their operations?

With global investment slowing down, why are companies increasing their investments in China? What conditions do local regions need to meet to attract foreign investment projects?

01 New Foreign Investment: Capital Flows

In the first half of the year, the number of newly established foreign-invested enterprises nationwide increased by 5.3% year-over-year.

While the number of foreign-invested enterprises has increased, the real changes lie in the structure.

A series of data points reveal the following:

Foreign investment in high-tech industries grew by 33.2%, accounting for 42.4% of the total—a record high;

the share of foreign investment in modern services reached 57%; the electronics and communications equipment manufacturing sector grew by 52%; services for the commercialization of scientific and technological achievements grew by 57.1%; and R&D and design services grew by 82%.

Taken together, these figures point to the same trend.

Today, foreign investment entering China is increasingly moving away from assembly plants seeking cheap land and labor, and toward more upstream sectors such as R&D, high-end manufacturing, and modern services.

In the past, cooperation between foreign companies and China was largely based on cost advantages and took the form of manufacturing partnerships; however, the true sources of competitive advantage in the future will gradually shift toward innovation, talent, and connections among Asian cultures.

Zhang Fei, an associate researcher at the Institute of Foreign Investment under the China Institute of International Trade and Economic Cooperation (CIIE), puts it more bluntly:

Today, foreign investment is focusing on “new-quality productive forces,” aligning with the upgrading needs of industries toward intelligent, green, and integrated development. Foreign investors are no longer looking at China’s ability to manufacture cheaply, but rather at China’s ability to collaborate in creating new things.

An even clearer sign is that foreign investors are beginning to relocate their R&D operations to China.

In the first half of this year, actual foreign investment in R&D and design services surged by 82%, marking the sharpest growth among all sub-sectors.

Kang Linsong, Chairman of the Board of Mercedes-Benz, explained this shift very clearly. Mercedes-Benz’s positioning in China is evolving from “in China, for China” to “in China, for the world.” He even mentioned that technologies developed in China will, in the future, be applied in Germany.

Fang Xingjian, Global President of Danfoss, also described how China has grown into a crucial fulcrum of this Danish industrial giant’s global innovation system.

From “manufacturing in China” to “creating in China”—this oft-repeated phrase is now being reflected in the actual investment structure.

Zhao Beiwen, Deputy Director of the Institute of World Economics at the Shanghai Academy of Social Sciences, analyzed that the highlights of foreign investment in the first half of the year were attributable to structural policy support and the continued advancement of China’s high-level opening-up.

Only when policies open the door wider will foreign investors dare to bring in more upstream and higher-value segments of their operations.

02 Expansion and Capital Injections in China

While newly established enterprises represent incremental growth, the nearly 4,800 existing foreign-invested enterprises that have made additional investments are the key players worth watching in the past six months.

An additional investment carries a different implication than the establishment of a new company.

The former involves companies that are already established and have assessed the market conditions, then injecting real capital into their operations—a move that often reflects their assessment of China’s long-term prospects more accurately than the sheer number of new foreign-funded enterprises.

The pharmaceutical sector is the most active area. Since the beginning of this year, multinational pharmaceutical companies such as AstraZeneca, Novartis, and Eli Lilly have successively announced capital increases and production expansions in China, adding not only production capacity but also R&D centers and innovation platforms.

In the chemical sector, BASF’s integrated complex in Zhanjiang—representing an investment of approximately 10 billion euros—became fully operational in March of this year, establishing itself as the German giant’s third-largest production base globally.

In the automotive sector, Tesla’s Shanghai Gigafactory—while meeting domestic demand—has already become a key export hub for the Asia-Pacific and Europe; Toyota’s wholly-owned Lexus new energy vehicle plant has also been established in Shanghai.

The financial and electronics sectors are also seeing activity: Fidelity has completed a new round of capital injection, and Samsung is upgrading its production lines in Suzhou to manufacture higher-end products.

When viewed collectively, these cases reveal a clear common thread: companies are not merely adding production capacity, but rather investing in R&D, high-end production lines, and localization capabilities.

The approach to entering the market is also changing, shifting from the past practice of establishing new factories to capital increases and reinvesting profits; this year, some foreign-invested enterprises have even chosen to raise funds through domestic IPOs.

Deepening engagement with existing operations has become the mainstream approach for foreign investors to ramp up their presence in China.

03 Investment Slowdown, Increased Commitment to China

The logic behind foreign capital’s increased investment in China only becomes complete when viewed within a global context.

The limited amount of capital flowing back into the global economy is not distributed evenly but is firmly concentrated in a handful of strategic industries.

The United Nations Conference on Trade and Development’s (UNCTAD) *World Investment Report 2026* presents a striking figure:

In 2025, artificial intelligence infrastructure, semiconductors, critical minerals, and energy transition—these four sectors—collectively accounted for 44% of global greenfield investment, up from just 16% five years ago. Data centers, oil and gas, and semiconductors are the main growth drivers, while traditional renewable energy, infrastructure, and manufacturing are in decline.

Not only has capital become scarcer, but it has also become extremely selective in terms of sectors.

When overlaid against China’s foreign investment structure for the first half of the year, the two curves almost coincide.

Foreign investment in high-tech industries reached 42.4%, a record high, with the electronics and communications equipment manufacturing sector growing by 52%.

As global capital floods into sectors such as semiconductors and artificial intelligence, China is precisely scaling up its investments in these very areas.

This is no coincidence. What the world has always lacked is not money, but places capable of absorbing this kind of high-tech, high-value-added investment—and it is precisely this capacity that China has been prioritizing in recent years.

In practical terms, this capacity manifests as the depth of the industrial support ecosystem.

Take semiconductors as an example: from advanced process foundry services and advanced packaging to memory interfaces and server circuit boards, China has developed a relatively complete domestic supply chain; when global demand for AI computing power surges, this chain can keep pace and provide immediate support.

Zhao Beiwen, Deputy Director of the Institute of World Economics at the Shanghai Academy of Social Sciences, notes that China possesses a massive market, a comprehensive industrial and supply chain system, and a high-quality business environment. The combination of these factors has further strengthened the country’s ability to attract high-quality foreign investment.

Chen Guangyan, Professor Emeritus at Nanyang Technological University in Singapore, summarizes this advantage as the “certainty of the industrial ecosystem”—in his view, China is rapidly becoming the world’s leading platform for the large-scale application of technology.

Therefore, rather than saying China has “bucked the trend” to attract foreign investment amid this round of cautious global investment, it is more accurate to say that the world’s limited and increasingly selective capital has proactively flowed toward a handful of destinations capable of absorbing it, with China being the largest among them.

04 Higher Thresholds: Conditions for Attracting Investment

Taken together, the three points mentioned above essentially present the same requirement to every region.

New capital requires R&D and industrial chains; existing investments seek localized support systems; and foreign investors are increasing their stakes because they value the certainty of the industrial ecosystem.

The capacity to attract investment implied by these three criteria is entirely different from the approach taken in the past.

In the past, the competition centered on location, land prices, and tax rebates—factors that could attract an assembly plant; but for a high-tech project that requires establishing an R&D center and integrating into key links of the industrial chain, these incentives alone are insufficient.

The new requirements are more stringent and cannot be met overnight.

Can the industrial park clearly identify a specific position for the project within the industrial chain map? Does it have a genuine understanding of the industry itself, rather than merely calculating costs? Can it provide adequate support for R&D and application scenarios? And once the company is established, will the services offered encourage it to reinvest its profits locally?

These capabilities aren’t something that come into play only at the moment the project is signed; they are what make the difference before the deal is even closed.

As we’ve observed the trends in this round of foreign investment, we’ve identified a crucial insight: what’s scarce isn’t capital itself, but the industrial ecosystem capable of supporting high-tech, high-value-added investments.

This statement holds true in reverse as well: fostering an industrial ecosystem takes time and requires long-term investment in and deep understanding of a given industry.