China ranks 3rd most attractive global investment destination over next 3 years: Kearney report

A view of Shanghai's Lujiazui area, a major financial zone in China Photo: VCG

A view of Shanghai’s Lujiazui area, a major financial zone in China Photo: VCG

Foreign investors’ confidence in China is on the rise. The country improved its ranking as an attractive destination to invest over the next three years, jumping to the third place from the seventh in 2023, and continuing to lead emerging markets, according to a report released by Kearney on Monday. The report aims to understand global investors’ views on future flows of foreign direct investment (FDI).

Analysts said that such a level of confidence showed that global investors are optimistic about China’s economic prospects, as several indicators have exceeded expectations since the beginning of 2024. 

They said that the report shows that global enterprises do not follow the US policy to suppress China and they have begun to actively invest in the China market, whose potential is huge and obvious.

Emerging-market performances have improved markedly overall in 2024, with China jumping four spots to the third position, according to the 2024 Kearney Foreign Direct Investment Confidence Index (FDICI) report released on Monday by Kearney, a global management consulting firm.

China’s FDICI stands at 2,210, which is close to Canada’s second-place ranking of 2,235. The US remained the top FDI destination, with an index of 2,340, the report said.

It wasn’t easy for China to rise from the seventh to the third place in such a short period of time, since its FDI inflows suffered a major setback during the pandemic in the previous two years. It is easy to lose confidence but hard to recover it, Zhou Fangyin, a professor at the Guangdong Research Institute for International Strategies, told the Global Times on Monday.

“The rise in foreign investors’ confidence is a result of China’s introduction and implementation of a large number of policies in the past year, which exceeded common expectations, letting global companies see the determination of the Chinese government to improve the business and investment environment,” Zhou said.

From 2023, the FDICI report had a separate ranking of emerging markets, aiming to give corporate leaders insight into which emerging markets are most attractive to investors.

China ranked top among the emerging markets. Together with China, the United Arab Emirates, Saudi Arabia, India, Brazil, Mexico, Poland and Argentina made up the top eight positions, and they were the only emerging markets included in the world rankings in 2024, as shown in the FDICI report.

Under the trend of globalization, the China market’s attraction to foreign investment is inevitable, Wang Yiwei, a professor at the School of International Relations at Renmin University of China, told the Global Times on Monday.

According to statistics from the Chinese Ministry of Commerce (MOFCOM), the actual use of foreign capital in the first two months of 2024 was the third-highest in nearly 10 years. The number of new foreign-invested enterprises amounted to 7,160 during the same period, up 34.9 percent year-on-year, the highest level in nearly five years.

These statistics showed that multinationals are still optimistic about the development opportunities in the China market and they will continue to invest in China.

“China is an emerging market that is in transition. The new-energy vehicle sector, for example, is leading the world. Many foreign companies have noticed that if they want to achieve a green digital transformation, they must be highly integrated with the China market,” Wang noted.

In January and February, the actual use of foreign capital in high-tech industries reached 71.44 billion yuan ($9.9 billion), accounting for 33.2 percent of China’s actual use of foreign capital, 1.2 percentage points higher than in 2023, according to the MOFCOM.

The actual use of foreign capital in high-tech manufacturing was 28.27 billion yuan, up 10.1 percent year-on-year. This fully attests to China’s continuous high-quality economic development, as foreign investment in China is also undergoing constant transformation and upgrading, said the MOFCOM in late March.