In 2022, total annual foreign direct investment (FDI) inflows into China amounted to around 189.13 billion U.S. dollars. According to official accounts, approximately 137.24 billion U.S. dollars were invested from Hong Kong and 2.21 billion from the U.S. However, this picture might not be representative for the actual origin of these money flows.
Who are the investors?
International financial hubs play an important role in directing foreign financial streams to China. According to official accounts, almost 56 percent of the inward Chinese FDI stock in 2022 had entered China through Hong Kong, while a substantial share also came from the Virgin Islands. These financial hubs offer favorable conditions or services to international investors, who are in most of the cases located in a third country. According to calculations by UNCTAD, made in an attempt to trace back ultimate investors, approximately 10.4 percent of the total Chinese inward FDI stock in 2020 originated from investors in the United States, 7.6 percent from Japan, and 6.1 percent from the United Kingdom. Only 10.4 percent originated from Hong Kong, while 12.1 percent came from within China, from Chinese companies not registered on the mainland.
Investment destinations in China
Although China’s economic development has spread from Eastern China into the inner provinces, foreign FDI inflows are still mainly directed towards the coastal regions, which attracted more than 80 percent of total investments in recent years. Foreign companies were most active in the Yangtze River Delta, namely in Shanghai, Jiangsu, and Zhejiang province, in the Greater Bay Area in Guangdong, and in the north in Beijing, Tianjin, and Shandong province. Many investments were made in Special Economic Zones, which provide beneficial conditions for foreign investors.
