Foreign Investment Surges in China’s High-End Manufacturing

Foreign investment in China’s high-tech industries reached 170.33 billion yuan (approximately $25 billion) in the first half of 2026, up 33.2% year-on-year, according to data from the Ministry of Commerce. High-tech industries now account for 42.4% of total actual foreign investment in China, up 12.2 percentage points from the same period last year, as major multinational projects continue to land across the country in semiconductors, new energy vehicle components, and advanced chemical materials.

A Wave of Major Projects

The surge in high-end manufacturing investment is visible across multiple regions, with several flagship projects recently signed, broken ground, or accelerated construction. In Jiangsu Province, the Oruide Automotive and Core Components Circular Industry R&D and Manufacturing Headquarters project was officially signed in the Wuxi High-tech Zone. The joint venture between Stellantis Group—the world’s fourth-largest automaker—and Tianqi Co., Ltd. covers auto parts remanufacturing and power battery R&D and manufacturing, with projected revenue exceeding 10 billion yuan.

Alongside new signings, several major projects are accelerating in Jiangsu. Ruihua Technology, a national key foreign investment project, is advancing construction of a production base for new energy intelligent cockpits, medical smart beds, and precision structural components, with total investment of 10.5 billion yuan and projected annual revenue exceeding 10 billion yuan. French industrial gases company Air Liquide is also accelerating construction of an energy storage air separation project in the province.

In Guangdong Province, South Korea’s STI Co., Ltd. has begun construction of the Donghan Semiconductor Guangzhou Base, with total investment exceeding 10 billion yuan. Phase 1 focuses on AMB ceramic substrate production—a critical base material for new energy vehicles, smart grids, 5G communications, and aerospace—with an investment of approximately 2.3 billion yuan and projected annual output value exceeding 3 billion yuan. The project will complement the Greater Bay Area’s power semiconductor industry chain.

In Shanghai, German materials giant Covestro has announced an MDI strategic investment plan to build a new 660,000-ton-per-year MDI production facility, planned for completion around 2030. MDI is a key raw material for polyurethane rigid foam, and a world-class production line typically costs 1.5-2 billion euros. The new plant will primarily supply the Chinese market while also serving the broader Asia-Pacific region.

From Cost-Driven to Innovation-Driven

The investment data reflects a structural transformation in how foreign companies view China. According to Xinhua News, R&D and design services saw foreign investment grow by 82%, electronics and communications equipment manufacturing grew by 52%, and computer and office equipment manufacturing grew by 29.2% in the first half of 2026.

Zhang Xiaotao, director of the International Investment Research Center at Central University of Finance and Economics, said the rise in high-tech industry investment attraction reflects that China’s factor conditions for attracting foreign investment have shifted from “cost-driven” to “innovation-driven.” “The comprehensive competitiveness formed by high-quality R&D talent, complete industrial supporting facilities, and efficient supply chains resonates with China’s strategic direction of increasing innovation incentives and cultivating emerging industries,” Zhang said.

Chen Jianwei, professor at the National Academy of Opening-up at University of International Business and Economics, noted that these projects precisely target strategic emerging industries such as semiconductors, new energy vehicles, and new chemical materials. “Multinational companies are confirming with real money the irreplaceable position of the Chinese market in the global value chain,” Chen said, adding that the full-chain layout from remanufacturing to power semiconductors to MDI integrated facilities confirms that China’s systematic advantages are transforming into a strong magnetic field attracting high-end capital.

Policy Support and Market Confidence

The policy environment is reinforcing this momentum. The “15th Five-Year Plan” (2026-2030) calls for guiding more foreign investment toward advanced manufacturing, modern services, high technology, energy conservation, and environmental protection. In June 2026, the Ministry of Commerce, National Development and Reform Commission, and Ministry of Finance jointly issued the “Action Plan for Stabilizing and Optimizing Foreign Investment Utilization,” deploying 15 policies across five areas, including supporting qualified key foreign-invested enterprises to list and raise funds domestically, as reported by CCTV Finance.

Local governments are also stepping up. Chongqing has announced plans to develop municipal-level policies encouraging foreign-invested enterprises to reinvest domestically. Zhejiang has issued documents supporting Fortune Global 500 companies and industry-leading foreign enterprises to establish R&D institutions in the province. Shanghai has issued local documents encouraging foreign-invested enterprises to reinvest domestically and establish R&D institutions.

Market confidence extends beyond policy. The 7th Qingdao Multinationals Summit, held June 15-17, 2026, attracted 435 corporate guests, including 355 representatives of overseas multinationals from 36 countries and regions, as reported by Global Times. Nearly 60% of surveyed US companies plan to increase investment in China, according to the American Chamber of Commerce, while British firms were more optimistic about 2026 than in any year since before COVID-19, according to the British Chamber of Commerce in China.

A Structural Shift in Foreign Investment

The broader data paints a picture of resilience and transformation. In the first four months of 2026, 20,113 new foreign-invested enterprises were established nationwide, up 6.8% year-on-year. Over 3,000 foreign-funded enterprises expanded their investments in China during that period, following a 2025 in which more than 8,000 foreign-funded companies made additional investments, up more than 10% year-on-year, according to China Daily.

Vice Minister of Commerce Ling Ji described China’s foreign investment as characterized by “stable scale, stable operations, stable contributions, and stable expectations.” He noted that foreign investment in China has both inflows and outflows, but overall, inflows exceed outflows, and China’s scale of attracting foreign investment remains first among developing countries.

The shift toward high-tech sectors is particularly notable. The updated foreign investment incentive catalogue, which took effect on February 1, 2026, gives greater priority to advanced manufacturing, modern services, high technology, energy conservation, and environmental protection. Chen Jianwei noted that these policy arrangements will further release dividends by continuously reducing institutional transaction costs, strengthening intellectual property protection, and opening up application scenarios.

What to Watch

As the 15th Five-Year Plan period unfolds, several trends bear watching. The share of foreign investment flowing into high-tech industries is expected to continue rising, with R&D centers and regional headquarters accelerating their concentration in China. The Donghan Semiconductor project in Guangzhou, which was negotiated in less than one month and completed land preparation in just two weeks, demonstrates the speed at which high-value projects can now move forward, as detailed by China News.

Song Ding, research fellow at the China Development Institute, said China’s sustained expansion of high-level opening-up is giving multinational corporations solid institutional safeguards, broad market space, and greater confidence to expand in China for the long term. The question now is whether the momentum in high-end manufacturing can offset broader headwinds in global foreign direct investment flows—and how quickly the pipeline of announced projects translates into operational capacity.

For multinationals, the calculus appears increasingly clear: China’s complete industrial categories, rich application scenarios, and deepening innovation ecosystem are making it a destination not just for market access, but for long-term strategic positioning in the global value chain.