Foreign direct investment (FDI) within mainland China has experienced notable trends as reported by the Ministry of Commerce on March 17, 2025. For the first two months of 2025, the actual use of FDI reached 171.21 billion yuan (approximately 23.87 billion U.S. dollars), which marked a significant 20.4 percent decrease compared to the same period last year. Despite this drop, the country has seen the establishment of 7,574 new foreign-invested enterprises, reflecting a 5.8 percent increase year-on-year.
Of the total FDI during January and February 2025, 47.82 billion yuan was designated for the manufacturing sector, whereas the services industry attracted 120.49 billion yuan. Notably, high-tech sectors accounted for 52.49 billion yuan, with impressive growth figures reported for specific industries: e-commerce services grew by 33.5 percent, biopharmaceutical manufacturing by 22.9 percent, and smart consumer equipment manufacturing by 40.7 percent, all relative to the same time frame last year.
Investment dynamics from various countries were also highlighted, with the United Kingdom showing the most substantial increase of 87.9 percent, followed by Germany at 54.7 percent, and the Republic of Korea at 45.2 percent.
Responding to these trends, Shenzhen, the thriving tech-hub located in Guangdong province, announced on March 12, 2025, its own package of incentives aimed at attracting even more foreign investment. The package is jointly promoted by the city's commerce and investment promotion bureaus, catering to several financial rewards, tax breaks, and support schemes to encourage multinational corporations to expand their presence or establish new operations within Shenzhen.
At the center of Shenzhen’s initiative is the offer of rewards to foreign-invested enterprises investing significantly within its borders. Specifically, those enterprises with “newly added actual foreign investment” exceeding $50 million between 2023 and 2024 will receive incentives ranging from 1 percent to 3 percent of the investment amount, capped at 50 million yuan ($6.9 million). This incentive is aimed at encouraging larger capital inflows.
For multinational corporations seeking to set up regional headquarters, Shenzhen offers a one-time reward of 5 million yuan to companies meeting the threshold of $10 million investment per year over two years. The proposals are part of Shenzhen's ambitious goal to cultivate its reputation as the top choice for global investment destinations.
Ye Wenge, deputy director of Shenzhen's commerce bureau, emphasized the city's commitment to enhancing its international appeal: "To optimize Shenzhen's market-oriented, law-based, and internationalized business environment, we have outlined four key areas." These areas focus on creating a global capital integration hub, fostering innovative tech environments, and enhancing the appeal to international talent.
Beyond attracting foreign investments, Shenzhen is also dedicated to supporting local enterprises as they aim for international expansion. The city offers cash rewards up to 2 million yuan for companies undertaking overseas construction projects based on their earnings from completed business projects. Additional subsidies covering 50 percent of various expenses incurred during international partnerships can also amount to up to 20 million yuan.
This strategic approach aims to facilitate the export of goods and services, support local companies entering global markets, and strengthen Shenzhen’s position as not only a local but global economic force.
Yu Qiang, a professor at Beijing Technology and Business University, noted the significance of these investments, stating, "By attracting high-value investments... Shenzhen is becoming a global hub for multinational companies. Foreign companies investing in the city create jobs and new technologies, enhancing their competitiveness and ensuring their success."
The figures from early 2025 reflect mixed signals - on one hand, the overall drop in FDI is concerning, yet the continued establishment of new foreign-invested enterprises and significant sectorial growth, particularly within high-tech industries, could indicate resilience against global economic fluctuations.
Shenzhen’s proactive measures and incentives may prove instrumental not just for local economic resilience but also for its role as a global player. By actively creating avenues for investment and nurturing local firms, Shenzhen is positioning itself as not only China’s powerhouse but also as a competitive player on the world stage, appealing to investors who are seeking both immediate opportunities and long-term growth potential.
Moving forward, the efficacy of Shenzhen's measures and the broader fluctuations within China's economic environment will be closely monitored by both stakeholders and analysts, as the global market continues to evolve.
