China’s foreign Investment Policies

Writing about China’s Foreign Investment Policies as an assignment given during my study trip to China!


The (Western) new year 2015 opens with the news of China being the world leading recipient of Foreign Direct Investment, leaving the United States behind for the first time in history. Lately China is becoming more services oriented instead of delivering manufacturing oriented activities. But is it possible that this trend might be changing in the next couple of years?

According to UNCTAD this might be the case, as wages in China are rising and manufacturers look for cheaper production elsewhere, lowering the inbound investment. But besides the lowering of the inbound investment, China is doing some important investment outside of China; outbound investment.


It is acquiring properties around the globe. According to China’s Ministry of Commerce, since 2007, China’s outbound investments have grown with more than 70 billion U.S.$. Among these investments there is the Beijing Anbang Insurance, which bought the Waldorf Astoria hotel in New York just last month (February 2015), for $1.95 billion. The Dalian Wanda, China’s bigger private property developer and the largest cinema chain owner in the world is becoming a strong figure in the world business, buying among others 20% of the Spanish football club Atlético de Madrid, and having properties in London, Chicago, Los Angeles and Sydney.

Now zooming back into inbound investment, it is interesting to note that it is becoming more difficult for companies to invest in China. Unlike some 10 years ago, now the policies for accepting foreign direct investment have been sharpened by the Chinese government. Guided among others by the Five Year Plan and the Preferred Industries List (preferred industries that China wants its companies to pursue), the government screens all applications for investment in China.













Just to put a very simple example: Is your business a high- tech one? Is it zero polluting? Then you’re most likely in. On the other hand, are you a automobile manufacturer? Then your investment will most likely not be approved. So a concluding tip for companies wanting to establish their business in China: Study the current Five Year Plan (2011- 2015) and the Preferred Industries List. This will help on the way of making an accurate decision into investing in China.



– BBC News, “China overtakes US for foreign direct investment” (2015), available here.

– Insurance journal, “Hilton closes $1.95B Waldorf Astoria sale to Anbang Insurance (2015), available here.

– The economist, “It’s a Wanda- ful life.- China’s biggest property tycoon wants to become an entertainment colossus”(2015), available here.

– Wikipedia, ” Five year plans of the People’s Republic of China”, available here.

– United Nations UNCTAD, “Global FDI flows declines in 2014. China becomes the world’s top FDI recipient, available here.

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