Professor Heiwai Tang and Mr Cyrus Cheung
10 June 2026
In recent years, as the two-way investment landscape between China and the rest of the world has markedly changed, the scope of Hong Kong’s bridging role has also expanded. To analyse this evolution and the development opportunities it presents, it is necessary to examine trends in the data on China’s realized foreign direct investment (FDI) and outward foreign direct investment (ODI).
Foreign enterprises step up entry into high-end industries
According to the Statistical Bulletin of Foreign Direct Investment in China 2025 published by the Ministry of Commerce and announcements by its press office, China’s FDI reached a historical high of US$189.13 billion in 2022 before continuing to decline to approximately US$106.38 billion (RMB747.69 billion) in 2025. Over the same period, the number of newly established foreign-invested enterprises surged from 38,497 to 70,392 annually. These trends have continued―from January to April 2026, FDI amounted to RMB287.69 billion (approximately US$41.92 billion), down 10.3% year on year, while the number of newly established foreign-invested enterprises totalled 20,113, representing a year-on-year increase of 6.8%.
The cyclical adjustment in China’s FDI in recent years reflects a more cautious stance among foreign investors. On the one hand, this has resulted from the global high-interest-rate environment and persistently weak price growth in China. On the other hand, this has stemmed from the “China + 1” strategy adopted by multinational corporations amid geopolitical pressures. Nevertheless, given the sustained and substantial increase in the number of newly established foreign-invested enterprises, foreign investors are clearly seeking to secure strategic positions. This indicates that they have not withdrawn from the Chinese market, but are actively preparing to expand their investment in the future.
Indeed, foreign investors have shown strong interest in China’s high-tech industries. In 2024, FDI in China’s high-tech industries amounted to US$40.26 billion, registering 34.6% of the total. Of this, FDI in high-tech manufacturing and high-tech services stood at US$13.51 billion and US$26.76 billion respectively. From January to April 2026, FDI in high-tech industries reached RMB116.33 billion (US$16.95 billion), surging by 20.3% year on year and accounting for 40.4% of the total. In particular, FDI in R&D and design services, computer and office equipment manufacturing, and electronics and telecommunication equipment manufacturing rose sharply by 108.4%, 22.9%, and 20.2% respectively. As foreign investors increasingly recognize China’s technological strengths, high-tech industries are expected to remain a key driver of China’s FDI growth.
In terms of the sources of FDI into China in 2024, the top five jurisdictions were Hong Kong (63.5%), Singapore (9.2%), the Cayman Islands (4.7%), the British Virgin Islands (3.3%), and the US (2.4%). This shows that most foreign capital entering the Mainland is routed through offshore financial centres rather than invested directly from investors’ home countries. Hong Kong remains by far the leading bridge between Chinese and foreign capital, while Singapore has also become especially important. In addition, some Chinese-funded enterprises register companies in offshore financial centres and undertake round-tripping investment into the Mainland as foreign investors.
Rising ODI is spanning the entire value chain
In contrast to the cyclical adjustment seen in FDI, China’s ODI has continued to demonstrate an upward trend. According to summary statistics released by the press office of the Ministry of Commerce, China’s ODI amounted to US$174.38 billion in 2025, representing a year-on-year increase of 7.1%. From January to April 2026, ODI was US$61.99 billion, with year-on-year growth accelerating to 7.7%.
Detailed information on ODI is provided in the 2024 Statistical Bulletin of China’s Outward Foreign Direct Investment, compiled by the Ministry of Commerce, the National Bureau of Statistics, and the State Administration of Foreign Exchange. In 2024, 83.8% of China’s ODI was directed to five major industries: mining (11.1%), manufacturing (19.5%), leasing and business services (19.8%), wholesale and retail (21%), and finance (12.4%), spanning the upstream, midstream, and downstream segments of the value chain. Among these, mining, manufacturing, and finance recorded particularly strong performance, with ODI flows rising sharply by 115.2%, 37.3%, and 30.5% year on year respectively.
The continued growth of China’s ODI and its coverage of the full value chain mean that Chinese-funded enterprises not only obtain investment returns overseas, but also bring their mature technologies and business models to investment destinations, turning them into drivers of local economic growth. From building infrastructure such as mines, factories, warehouses, data centres, commercial buildings, and shopping malls to opening large numbers of retail outlets and offices, these activities create substantial economic activity, tax revenue, and employment opportunities in investment destinations.
In terms of the destinations of China’s ODI in 2024, the top four jurisdictions were Hong Kong (60.4%), Singapore (9.3%), the Cayman Islands (4.6%), and the US (3.5%). This indicates that China’s ODI also largely goes outwards through offshore financial centres rather than being invested directly in its ultimate destinations. As in the case of China’s FDI, Hong Kong’s role is exceptional, while Singapore also plays a significant role. Notably, including Singapore’s share, a total of 17.9% of China’s ODI in 2024 flowed directly to the ASEAN region, whereas the corresponding share of ODI stock was merely 6.3%.
Inbound and outbound investment move towards high-quality development
In view of the cyclical adjustment in FDI and the continued growth of ODI, China is taking policy measures to optimize the investment environment for foreign investors. At the same time, as Chinese enterprises go global, they are placing greater emphasis on cultural integration and the creation of local value. Under the Fifteenth Five-Year Plan, the government has made clear that it will step up efforts to attract and utilize foreign investment, including by fully implementing national treatment for foreign-invested enterprises; guiding more foreign investment into advanced manufacturing, modern services, high technologies, energy conservation, and environmental protection. Stronger measures will also be taken to attract foreign-invested enterprises to establish regional headquarters and R&D centres in China, and broaden channels for foreign investment in the securities market.
Furthermore, many Chinese enterprises are leveraging their strengths in technology, capital, and supply chains to actively explore diverse operations, such as licensing, joint ventures, and public-private partnerships, in host markets. These approaches benefit local suppliers, employment, and tax revenues, thereby building communities of shared interests and achieving mutually beneficial global expansion.
Greater scope for Hong Kong’s value-adding role
Hong Kong has been a convergence point for Mainland and international capital for years. In 2024, Hong Kong accounted for 63.5% of the Mainland’s FDI flows and 56.8% of its cumulative FDI value. It also contributed 60.4% to Mainland China’s ODI flows and 61.2% to its ODI stock. Undoubtedly, this proves the city’s long-standing and crucial role as a bridge in the nation’s “bringing in” and “going global” strategies.
As two-way investment between China and overseas markets continues to develop, Hong Kong’s functions are also deepening. In the past, Hong Kong more often served as a “capital transit hub” for foreign capital entering Mainland China or Chinese capital investing overseas. Today, what global capital seeks from the Chinese market has evolved from traditional scale expansion to targeted investment in innovative industries. The globalization of Chinese enterprises has moved from the 1.0 stage of “product exports” to the 2.0 stage of “industrial-chain exports, technology licensing, and localized operations”. Full value-chain coverage also means that the overseas assets of Chinese enterprises are becoming more asset-heavy. While asset-heavy operations can certainly enable enterprises to build competitive barriers, their drawbacks include low liquidity and high sunk costs. This exposes Chinese enterprises going global to greater risks in areas such as geopolitical competition, supply-chain restructuring, international tax scrutiny, and differences in international regulations.
Against this backdrop, Hong Kong’s determination to develop its “10 centres” can meet the various needs of Chinese and international capital. These range from traditional areas such as finance, trade, and shipping to innovation and technology, risk management, intellectual property trading, legal and dispute resolution services, high value-added supply-chain services, asset and wealth management, and cultural and artistic exchanges between China and the rest of the world.
In summary, the evolution of two-way investment between China and global markets is by no means simply a matter of fluctuations in aggregate volume, but rather a profound structural transformation. Hong Kong must consolidate its existing strengths and highlight its role as a “super value adder” for Chinese and international capital. It should not only serve foreign capital investing in high-tech industries in China, but also support Chinese capital in establishing a full value-chain presence overseas. While capital from various sources has ever greater expectations and demands regarding Hong Kong’s positioning, the scope for the city to create value is also becoming broader.
