China vows to boost foreign investment amid US tensions

Chinese authorities on Thursday vowed to step up efforts to attract foreign direct investment in the face of the threat that tensions with the US could accelerate outflows from factories and research centers owned by multinational companies.

China’s cabinet, the State Council, recently approved a 20-point action plan to stabilize investment from abroad. The measures include easing restrictions in the telecommunications, medical care, and education sectors.

Detailing these measures, Deputy Commerce Minister Ling Ji said his ministry will “mobilize foreign investment task forces at all levels to visit foreign enterprises, understand their concerns first-hand and facilitate solutions.” Ling noted that many multinational companies are optimistic about the long-term development prospect of investing in China as the country continues to build a “world-class business environment.”

China’s latest move came after inbound foreign direct investment in January fell 13.4 percent from a year ago to 97.59 billion yuan ($13.4 billion), according to an official statement on Wednesday. Balance of payments data released last week showed a 90 percent decline in net foreign investment in 2024, taking into account capital withdrawn out of the country.

Ling attributed the downward trend to weak cross-border investment globally, geopolitical tensions, and “adjustments” adopted by foreign-owned companies as local industries such as automobiles make technological advances.

But he noted that foreign direct investment in January grew on a month-on-month basis and sources are becoming more diverse, citing double-digit growth investments from the UK, South Korea, the Netherlands, and Japan as examples.

Still, more than half of US companies operating in China expect bilateral relations to worsen this year, according to a survey published in January by the American Chamber of Commerce in China.

US President Donald Trump imposed 10% tariffs on China earlier this month as part of his “America First” trade policy.

Immediately after the tariffs went into effect, China announced its own retaliatory tariffs and said it was launching an antitrust investigation into Google. It also added American companies PVH and Illumina to its list of untrustworthy organizations.

On Thursday, Ling reinforced the retaliation, saying China has “conducted investigations and imposed penalties on enterprises and individuals who violate laws and regulations.” Sharing the same stage with Ling, another commerce ministry official, Zhu Bing, reiterated that the US tariffs were “a serious violation of World Trade Organisation rules” and “not conducive to the development of foreign-funded companies in China, including US-funded enterprises.”

In the latest development, Trump said it was “possible” for the US and China to strike a new trade deal and that he expected a visit from Chinese President Xi Jinping, Reuters reported on Thursday, but gave no further details.