BEIJING, March 25 (APP): As global economic growth slows and capital markets become increasingly risk-averse, China continues to stand out as a crucial investment destination. However, its appeal is no longer merely about low-cost manufacturing or sheer market size.
Instead, it stems from industrial upgrading, policy shifts, and the restructuring of global supply chains – factors that present both opportunities and challenges for foreign investors.
During the ongoing China Development Forum (CDF) 2025 held in Beijing from March 23 to March 24, experts and multinational executives discussed China’s investment returns, policy advantages, and long-term outlook. While skepticism might persist, actual capital flows indicate that global businesses remain deeply engaged in the Chinese market.
The role of foreign enterprises in China is shifting from being low-cost production bases to high-value market participants.
In recent years, the Chinese government has accelerated market reforms, including lowering entry barriers for foreign firms and strengthening intellectual property protection, aiming to create a more predictable investment environment. But unlike the investment-for-growth model of the 1990s, today’s approach prioritizes investment quality over sheer volume.
“China is very effectively integrating its move up the value chain,” pinpointed Ian Goldin, Founding Director of Oxford Martin School, Oxford University, saying the country used to be the factory of the world for low-skilled, low-value-added goods.
This shift has profound implications. Foreign companies are no longer competing on cost efficiency alone, but on their ability to integrate into China’s evolving industrial ecosystem. “Now, it is shifting toward high-value-added, artificial intelligence, and IT-driven industries. As a result, China will become increasingly significant, but at a higher value level – and this is good for both China and the world,” Goldin told China Economic Net.
Why Capital Still Flows into China
Despite slowing growth in some sectors, industries such as renewable energy, advanced manufacturing, and digital technology continue to expand rapidly. As per China’s 2025 government work report, last year the added value of high-tech manufacturing and equipment manufacturing increased by 8.9 percent and 7.7 percent, respectively, and the annual output of new energy vehicles exceeded 13 million.
Foreign players in sectors like new energy and advanced manufacturing are increasingly setting up R&D centers in China rather than just production hubs. “These past 25 years have been a remarkable period of economic growth for China, as it has for Schneider Electric as well. Our global revenue, globally, has increased fourfold during this time, and China has played a very significant role in this success,” highlighted Jean-Pascal Tricoire, Chairman of Schneider Electric, adding that the company’s China hub is one of their major four Hubs around the globe today.
These industries in China not only enjoy strong policy support but also benefit from massive economies of scale, making them highly attractive to global investors.
“China’s transformation since 2008 has been extraordinary, and is increasingly defined by new urbanisation, green development, and digitalisation. These shifts are opening up vast new opportunities, not only in China, but for the entire global economy,” said Mike Henry, Chief Executive Officer (CEO) of BHP. His perspective is backed by hard data: As the world’s second-largest economy, China contributes approximately 30% to global growth, and is the largest trading partner for over 150 countries and regions.
China’s development pattern of dual circulation – which seeks to boost domestic consumption while maintaining global trade links – has significant implications for foreign firms. Many multinationals previously treated China as an export-driven production hub, but the growing importance of domestic consumption and industrial upgrading means they must rethink their approach.
Many foreign companies used to rely on China for manufacturing exports. Now, their focus is on how to tailor the products for local consumers. This shift is not just affecting consumer goods, but also high-end manufacturing and technology sectors.
Mercedes-Benz, for example, succeeded not just because of demand but also because China’s supply chain ecosystem is highly developed. “Powered by our R&D centres in Beijing and Shanghai and thanks to our 2,000 experts on the ground, we’ve taken the development of connectivity, digitalisation, automated driving features and EV transformation to the next level,”said Ola Kaellenius, chairman of the board of management of Mercedes-Benz. The logic is clear: as China’s industries upgrade, foreign firms that fail to localize will lose their competitive edge.
China remains an integral pillar of the global investment landscape – not just for its sheer market size, but for its distinctive blend of sustained growth and economic predictability. In an era of heightened volatility, investors are seeking more than just short-term returns; they prioritize long-term stability, a factor that continues to bolster China’s appeal.
“With over three decades of operations in China, Rockwell Automation has witnessed firsthand how the nation’s steadfast commitment to openness continues to unlock innovation,” said Ian Shih, Regional Vice President for Greater China at Rockwell Automation. “By leveraging our global expertise in industrial automation and forging strategic partnerships with Chinese firms, we are accelerating the deployment of next-generation technologies, from digital twins and 5G networks to artificial intelligence (AI), across industrial ecosystems.”
Regardless of external narratives, capital ultimately follows opportunity. For investors who can navigate policy shifts, harness industrial transformation, and adapt to China’s evolving market dynamics, the country remains one of the most compelling investment destinations worldwide.
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