Momentum called sign of growing confidence among foreign investors

Net foreign direct investment inflows into China reached the highest first-half level in four years, reflecting growing foreign investor confidence as the Chinese economy shifts toward more resilient growth driven by innovation and domestic demand, according to an official, experts and executives.

China recorded net FDI inflows of $60.9 billion in the first half of 2026, up 81 percent year-on-year, according to the latest balance of payments data released by the State Administration of Foreign Exchange.

An administration official confirmed that the figure was the highest for the corresponding period in four years.

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"In the first half of 2026, foreign direct equity investment totaled $63.8 billion, up 55 percent year-on-year, indicating that FDI inflows into China are stabilizing and gaining momentum," the administration official said.

Within foreign direct equity investment, inflows of new capital, which reflect long-term investment intentions, rose 10 percent to $43.1 billion in the first half, the official said.

Furthermore, reinvestment of earnings by foreign-invested enterprises in China increased 31 percent, indicating that they were using more of their earnings to expand investment with a stable willingness to invest and operate here, the official said, adding that "China's steady expansion of institutional opening-up and improvements to its foreign investment services have helped create a favorable development environment for foreign investors to invest and operate in China".

"Combined with its vast market, comprehensive industrial system and strong supporting capabilities, these advantages have enabled foreign-invested enterprises to earn relatively high returns, consistently ranking among the highest across major economies," the official said.

According to the first-half balance of payments data released by the administration, FDI returns in China came in at $179.8 billion in the first half of 2026, remaining stable compared with the same period last year.

Amid persistent global economic and geopolitical uncertainties, executives said that China's relatively stable growth and pursuit of high-quality development have provided foreign companies with sources of confidence and opportunity, citing the nation's role as an innovation hub and the growth opportunities offered by its vast domestic market.

Australian wine company Treasury Wine Estates said it will continue to deepen its focus on the Chinese market as its flagship Penfolds brand gains momentum in China.

"The Chinese mainland is one of the world's most dynamic luxury beverage markets," said Wu Mingfeng, managing director for China at Treasury Wine Estates.

Iris Cui, vice-president of Asia procurement and operations at Apple, said that more than 80 percent of Apple's 200 major suppliers worldwide operate manufacturing facilities in China, while work on its newest product — the iPhone Duo — was carried out exclusively in China, from early-stage product development to final assembly.

New capital contributions by foreign direct investors into high-tech services and high-tech manufacturing saw a 61 percent year-on-year increase in the first half, the State Administration of Foreign Exchange said in the latest balance of payments report, indicating that foreign investors are shifting from seeking the cost and scale advantages of "Made in China" to participating in "Created in China".

The administration official said that FDI under the balance of payments framework comprises three components: capital contributions in forms such as funds, physical assets and technology; retained earnings attributable to foreign-in-vested companies, also known as reinvestment of earnings; and debt transactions with overseas affiliates, which can serve a long-term investment function.

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All three components are measured on a net basis, deducting withdrawals or repayments from new investment, the administration official said.

Pan Yuanyuan, a researcher at the National Institute for Global Strategy at the Chinese Academy of Social Sciences, underscored the need for drawing on China's institutional strengths to further provide a predictable business environment for foreign investors.

The administration official said that further measures are planned to facilitate cross-border investment and financing by multinational companies, providing more convenient and efficient services for them.

Among other things, the administration plans to continuously improve cross-border cash-pooling policies, thereby making it easier for multinational companies to pool and manage their renminbi and foreign currency funds across domestic and overseas operations.

Contact the writers at zhoulanxv@chinadaily.com.cn