Foreign Capital in China Surges as High-Tech FDI Hits Record

Foreign direct investment (FDI) in China reached 402.14 billion yuan (approximately $55.6 billion) in the first half of 2026, with nearly 4,800 foreign-invested enterprises expanding their operations in the country, according to data released by China’s Ministry of Commerce (MOFCOM) on July 23. The figures, announced at a State Council Information Office press conference, underscore China’s continued appeal as a global investment destination despite persistent economic headwinds.

Resilient Inflows Amid Global Uncertainty

According to Xinhua News, the number of newly established foreign-invested enterprises in China rose 5.3% year-on-year during the first half of 2026. Crucially, May and June both recorded month-on-month positive growth in actual utilized FDI, signaling a stabilizing trend after a period of global investment contraction.

“China’s absorption of foreign investment has shown a trend of stabilization and improvement,” said Meng Huating, Director General of MOFCOM’s Department of Foreign Investment Administration, as reported by Xinhua.

Vice Minister of Commerce Ling Ji provided additional context, noting that while foreign capital flows have seen both entries and exits, “overall, inflows have exceeded outflows,” and China remains the top developing-country destination for cross-border investment. As of the end of 2025, the total stock of foreign capital in China stood at nearly $4 trillion, with over 530,000 foreign-invested enterprises operating in the country.

Perhaps the most striking development in the H1 data is the structural shift toward high-technology sectors. High-tech industry FDI surged 33.2% year-on-year, reaching a record 42.4% share of total foreign investment, according to Science and Technology Daily.

Within this category, the growth was particularly dramatic in knowledge-intensive segments: electronic and communication equipment manufacturing rose 52%, research and design services jumped 82%, and science and technology achievement conversion services increased 57.1%. The modern services sector accounted for 57% of total FDI.

These figures reflect a fundamental transformation in the nature of foreign investment in China. Multinational corporations are increasingly treating the country as an innovation hub rather than merely a manufacturing base, with R&D-focused investments leading the charge.

Global Executives Bet on China’s Market

Major multinationals are backing their confidence with substantial capital commitments. BASF’s €8.7 billion Zhanjiang integrated chemical base — its largest single investment globally — commenced full operations on March 26, 2026. “If we stop investing in China, it would be equivalent to exiting half of the global market,” Dr. Martin Brudermüller, Chairman of BASF’s Executive Board, told Xinhua.

Similarly, Mercedes-Benz launched its all-electric GLC SUV — tailored specifically for Chinese consumers and featuring reinforcement learning AI — on July 8. Ola Källenius, Chairman of Mercedes-Benz Group, described the Chinese market as “the champions’ league of the automotive industry,” explaining why the company continues to increase its investment footprint.

Airbus, meanwhile, has extended its presence from aircraft sales into full lifecycle services, with a 6-billion-yuan center in Chengdu that has already serviced over 70 aircraft since opening in 2024.

Business Confidence Showing Signs of Recovery

Survey data corroborates the investment trends. The European Chamber of Commerce in China’s 2026 Business Confidence Survey, covered by China Daily, found that 75% of respondents said their China-based production is more efficient than operations elsewhere. The proportion of companies optimistic about their profit outlook over the next two years rose to 17%, a 5-percentage-point increase from the historic low recorded in 2025.

“For the first time since China optimized its COVID-19 response measures, there are signs of an uptick in business confidence,” said Jens Eskelund, President of the European Chamber.

The US-China Business Council’s 2026 survey further reinforced the picture, with 92% of surveyed US companies reporting profitability in their China operations in 2025.

Policy Support and the “Investment China” Brand

China has pursued a deliberate strategy to maintain its competitive edge as an investment destination. The Encouraged Foreign Investment Catalogue (2025 Edition) directs capital toward advanced manufacturing, modern services, high-tech, and green technology. An action plan for stabilizing and optimizing foreign investment has expanded market access in services, finance, and pharmaceuticals.

The “Investment China” brand campaign has included 50 roundtable meetings with foreign enterprises as of June 2026, resolving nearly 3,000 issues raised by international investors.

Outlook: Structural Transformation Continues

The H1 2026 data suggests that China’s FDI story is no longer simply about scale — it is about quality and composition. The shift toward high-tech and R&D-intensive investment indicates that multinationals are embedding themselves more deeply in China’s innovation ecosystem, moving from “R&D in China” to “co-creation with China,” as described in a recent report by MOFCOM’s Chinese Academy of International Trade and Economic Cooperation.

Sina Finance noted that MOFCOM plans to further guide foreign investment toward advanced manufacturing sectors such as organic polymer materials and high-efficiency magnetic levitation equipment, as well as modern services including humanoid robotics R&D and high-end shipping services.

Key questions remain: Can China sustain this positive FDI trajectory through H2 2026 and beyond? How will evolving US-China and EU-China trade relations affect future investment decisions? And can the concentration in high-tech and services sectors be maintained without narrowing overall investment opportunities?

For now, the data tells a clear story: despite global headwinds, foreign capital continues to bet on China’s long-term market potential — and the bet is getting smarter, targeting the technologies that will define the next decade of global economic competition.