The Ministry of Commerce recently released data showing that from January to May this year, 25297 foreign-invested enterprises were newly established nationwide, a year-on-year increase of 5.3%; The actual amount of foreign investment used was 327.29 billion yuan, a year-on-year decrease of 8.6%. If not expected, this set of data on "quantity increase" and "quantity decrease" will soon become evidence for some overseas media to hype up a new round of "foreign capital withdrawal theory". On the contrary, this is not a decline in foreign investment, but a change in the structure and methods of China's utilization of foreign investment. To put it vividly, this is equivalent to a "blood transfusion" and "shift" in the utilization of foreign investment.

Looking at the timeline, the "scissors gap" in the utilization of foreign investment data began to appear as early as 2023 and reached its peak the following year. In 2025, the number of newly established foreign-funded enterprises continues to reach new highs, but the actual usage amount is still declining, although the decline is significantly narrower than in 2024. In the first five months of this year, the utilization of foreign capital continued its previous trend, but the actual decrease in usage amount continued to narrow.

To analyze the reasons for the normalization of the "scissors gap" in the utilization of foreign investment, the framework of analysis must first be placed in the global cross-border investment context. Affected by post pandemic supply chain restructuring and local geopolitical shocks, global foreign direct investment has remained sluggish in recent years. According to data from the United Nations Conference on Trade and Development, foreign direct investment flowing into developing countries has been declining for two consecutive years in the past two years. The decline in China's utilization of foreign investment is essentially an objective reflection of global trends. In fact, as the relevant person in charge of the Ministry of Commerce responded, external unfavorable factors have an impact on the increase of foreign investment, but the impact on existing foreign investment is not significant. By the end of 2025, there will be 533000 foreign-funded enterprises in China with a scale of nearly 4 trillion US dollars, and their main operating indicators such as revenue, profit, and industrial added value have maintained a certain positive growth in recent years.

What is truly worth dismantling is the structural changes in the utilization of foreign capital, which is also the fundamental reason for the formation of the 'scissors gap'. Compared with the heavy asset investment of billions of yuan invested by foreign capital in building factories in China in the past, more global cross-border investment now flows to research and development centers, regional headquarters, digital platforms, etc. The service-oriented and light asset characteristics of utilizing foreign capital are very obvious, which is also in line with the iterative upgrading of China's industrial structure. With the rise of domestic labor and land costs, and the enhancement of local industrial competitiveness, some cost sensitive and labor-intensive foreign-funded enterprises are gradually reducing their production capacity or transferring to countries with lower costs. At the same time, the level of foreign investment utilization in some high-tech and high value-added fields is still growing rapidly, especially with the acceleration of the opening up of China's service industry and the further reduction of market access barriers. The number of newly established small and medium-sized service and technology foreign enterprises continues to increase, and the actual use of foreign investment in the service industry has reached 70%. They contribute to the number of foreign enterprises, but their driving effect on the actual use of foreign investment in the current period is relatively mild.

Of course, we cannot simply attribute the "scissors gap" to the pains of industrial transformation. Some countries and regions have set various restrictions and barriers on investment in China, which have indeed disrupted the normal investment decisions of enterprises, and even forced factories to be transferred out of China. But it should also be noted that currently, although foreign investment in our country has both inflows and outflows, the overall inflow is greater than outflows, and the stock of foreign investment is steadily increasing. The chassis for utilizing foreign investment has not loosened. Not only that, by 2025, more than 8000 foreign-funded enterprises will increase their investment in China, with a year-on-year growth of over 10%. In the first five months of this year, nearly 4000 foreign companies increased their investments in China. It is worth noting that although the actual amount of foreign investment used in the first five months decreased year-on-year, it increased by 5.9% year-on-year in May, indicating that the trend of foreign investment inflows is improving.

At present, the Chinese economy has entered a new stage of high-quality development, and the utilization of foreign capital has surpassed the previous worship of investment amount. The evaluation focus of the utilization of foreign capital has also shifted to three new dimensions, namely, the stability of stock, the excellence of structure, and the unreality of expectations. At the end of the day, China's attractiveness to foreign investment is no longer the cheap production factors it used to be, but rather the advantages of a super large market, complete industrial chain capabilities, human resource supply dividends, and continuously promoted institutional openness. This means that the underlying logic of China's utilization of foreign capital has changed, and traditional "old standards" can no longer be used to measure the new changes in the utilization of foreign capital. (Source: Economic Daily, Author: Gu Yang)