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Exploring Opportunities for Foreign Companies in China’s Emerging and High-Tech Industries

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China’s emerging industries offer significant opportunities for foreign investors through supportive policies and high growth potential. Key sectors include biopharmaceuticals, AI, and advanced technologies, driven by innovation-led initiatives to enhance global competitiveness and foster technological self-sufficiency.


China’s emerging industries present a plethora of new opportunities for foreign investors and companies. Highlighted as key to securing China’s future economic prosperity, these industries are bolstered by support and incentive policies, while harboring huge growth potential. We outline opportunities across five emerging industries in China.

China’s drive to develop new and emerging technologies is presenting a host of new opportunities for foreign investors and companies. This drive is anchored in its shift towards an innovation-led growth model, recently represented by concepts such as new quality productive forces (NQPFs), new-type industrialization, and “future industries”.

Central to China’s economic agenda since 2023, NQPFs prioritize the development of cutting-edge technologies, such as AI, robotics, biotechnology, and new energy and materials, to enhance global competitiveness and economic growth. Meanwhile, another core tenet of China’s growth strategy, the new-type industrialization initiative complements NQPFs by promoting advanced manufacturing, secure supply chains, and technological self-sufficiency, thereby positioning China as a leader in high-tech sectors. “Future industries“, meanwhile, focus on emerging technologies that are still in the early stages of development, such as quantum computing and 6G networks. Together, these strategies reflect China’s broader goal to drive economic growth through technological innovation and leadership in frontier industries.

Developing China’s biopharmaceutical industry is a strategic priority for the government. Recognized as a “strategic emerging industry” in the 14th Five-Year Plan (2021-2025), the biopharma sector is positioned for substantial growth, offering promising opportunities for foreign companies. According to the Qianzhan Industry Research Institute, the market size of China’s biopharmaceutical industry reached RMB 1.86 trillion (US$261.21 billion) in 2022, an 8.3 percent increase from the previous year. Between 2016 and 2020, the number of biotech science parks grew from 400 to 600, further reflecting government efforts to boost the sector.

Meanwhile, the 14th Five-Year Plan for Developing the Bio-Economy (2021-2025) outlines general development goals for the industry, such as increasing the contribution of the biopharmaceutical industry to GDP and enhancing the strategic position of biomedicine and related industries. The plan also emphasizes boosting R&D investment, increasing high-value patents, and strengthening innovation platforms.

Foreign companies are also encouraged to invest in the biopharmaceutical industry, with the sector listed in the 2022 Catalogue of Encouraged Industries for Foreign Investment (“2022 FI Encouraged Catalogue”) for multiple provinces, including Liaoning, Jilin, Heilongjiang, Henan, and Yunnan. This inclusion reflects the government’s desire to attract international expertise and capital to bolster domestic capabilities. Moreover, the government provides attractive incentive policies, such as a reduced 15 percent corporate income tax (CIT) rate for biopharmaceutical companies operating in certain development zones, including the Lingang New Area in Shanghai and the Nansha Economic Zone in Guangzhou.

China’s AI industry presents significant opportunities for foreign companies, fueled by strong government commitment, a rapidly growing market, and policies encouraging private and foreign investment. The Chinese government has prioritized AI as a key driver of innovation and is actively encouraging the integration of AI technologies across a variety of sectors, such as healthcare, education, finance, and urban management.


This article was first published by China Briefing , which is produced by Dezan Shira & Associates. The firm assists foreign investors throughout Asia from offices across the world, including in in ChinaHong KongVietnamSingapore, and India . Readers may write to info@dezshira.com for more support.

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Faurecia Relocates Electronics Headquarters from Japan to China – Automotive News

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Faurecia relocates its electronics business headquarters from Japan to China, signaling a strategic shift to enhance operational efficiency and strengthen its presence in the growing Chinese automotive market.


Faurecia’s Strategic Shift

Faurecia has announced the relocation of its electronics business headquarters from Japan to China. This move is aimed at enhancing the company’s presence in a rapidly growing market for automotive technologies. By shifting its base, Faurecia intends to optimize operations and better serve its clientele across Asia.

Strengthening Market Position

The decision is part of Faurecia’s strategy to consolidate its resources in regions where electric and hybrid vehicle demand is soaring. As China leads the global automotive market in innovative technologies, the relocation will allow Faurecia to align its efforts with industry trends and consumer needs.

Future Aspirations

With this strategic shift, Faurecia aims to drive innovation and expand its production capabilities in China. The company expects this decision to create new growth opportunities and help solidify its competitive edge in the evolving automotive landscape.

Source : Faurecia moves headquarters of electronics business from Japan to China – Automotive News

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China

China’s FDI Trends for 2024: Major Sources, Destinations, and Industries

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Despite a 13.7% decline in FDI inflows to $163 billion in 2023, China remains a strong magnet for foreign capital, holding a 12.3% global share. Early 2024 shows recovery, with increased foreign investment in high-tech and services sectors.


Despite a challenging environment, including a significant downturn in 2023, where FDI inflows fell by 13.7 percent to US$163 billion following a 4.5 percent growth in 2022, China remains resilient in attracting foreign capital. This decline was attributed to several factors, including an uneven post-COVID economic recovery, ongoing geopolitical tensions, regulatory uncertainties, and stringent capital control measures.

According to the recently released Statistical Bulletin of FDI in China 2024, China’s FDI scale remained stable in 2023, with a 12.3 percent share of global cross-border direct investment, marking the fourth consecutive year exceeding 10 percent.

Encouragingly, the first nine months of 2024 have demonstrated signs of recovery, with China attracting RMB 640.6 billion (US$90.26 billion) in foreign investment. Notably, there has been an 11.4 percent increase in new foreign-invested enterprises (FIEs), with high-tech manufacturing, medical equipment, and professional technical services experiencing substantial growth in foreign capital utilization.

These trends signal a shift towards innovation and services, underscoring ongoing investor interest in China’s dynamic market.

In this article, we explore the key trends and government initiatives shaping China’s FDI landscape, providing insights for businesses seeking to navigate and capitalize on opportunities in the world’s second-largest economy.

In 2023, China’s FDI landscape demonstrated a strong concentration across various industries, underscoring the country’s continued appeal to international investors. The primary sectors attracting foreign capital included:


This article was first published by China Briefing , which is produced by Dezan Shira & Associates. The firm assists foreign investors throughout Asia from offices across the world, including in in ChinaHong KongVietnamSingapore, and India . Readers may write to info@dezshira.com for more support.

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Why China now wants to put some limits on its ‘no limits’ friendship with Russia

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China’s “no-limits friendship” with Russia is evolving amid war scrutiny. Growing skepticism about Russia’s stability, economic dependencies, and differing international outlooks prompt China to reconsider its alignment with Moscow.

Just before Russia’s invasion of Ukraine, China announced to much fanfare a “no-limits friendship” with Russia, suggesting a future of close collaboration in trade, energy and, perhaps most importantly, security.

Now, more than two years into the war, the meaning and interpretation of this “no-limits” commitment has evolved.

There has been much debate in Chinese society in recent months about Beijing’s alignment with Moscow. While some have advocated for a more formal alliance with Russia, others have taken a more cautious stance.

In sharp contrast to 2022, China’s growing wariness is increasingly being discussed in the open, even among those who were previously censored. In early 2022, for instance, a joint letter by six Chinese emeritus historians opposing Russia’s invasion was censored by the government. The scholars were also warned.

Now, however, it appears the government is seeking to balance its relationships with both Russia and the West. Beijing may not want to be seen as a “decisive enabler” of the war.

For example, the once-prominent “no-limits” friendship language quietly vanished from a Sino-Russian joint statement in May.

And Beijing’s response to Russian President Vladimir Putin’s visit that month was notably subdued. Putin ingratiated himself with Xi, saying they were “as close as brothers”. Xi’s response was more perfunctory – he called Putin a “good friend and a good neighbour”.

When they met in May, Xi was less effusive towards Putin than he has been in the past.
Sergei Bobylev/Pool Sputnik Kremlin/AP

Scholars are also articulating their concerns about China’s political and economic investments in Russia, both publicly and privately.

Shen Dingli, a leading scholar of Chinese security strategy at Fudan University in Shanghai, said China doesn’t want to be seen as collaborating with Russia against Ukraine or any other country.

He also quoted Fu Cong, China’s former ambassador to the European Union, who said last year the “no-limits” [friendship] is “nothing but rhetoric”.

And in August, after Putin referred to China as an “ally” during a visit to far-eastern Russia, Chinese scholars promptly sought to clarify this statement to prevent any misunderstanding China wants a formal alliance with Russia.

These statements carry weight. In many respects, leading Chinese scholars at the government-affiliated universities act as propagandists to convey and justify the government’s stance on issues. As a result, subtle shifts in their commentary provide insights into the strategic mindset in Beijing.

Why China is rethinking its ‘no-limits’ friendship?

There are three elements driving this re-evaluation of the Russia-China alignment.

First, there is growing scepticism of Russia’s state capacities. The mutiny by the Wagner Group last year and Ukraine’s recent incursion into Russia’s Kursk region have prompted critical reassessments in Beijing of Russia’s political stability and military preparedness, as well as the growing anti-war sentiment in Russia.

As Feng Yujun, director of Fudan University’s Russia and Central Asia Study Centre, argued, the Wagner rebellion was a reflection of Russia’s internal conflicts and domestic security challenges. He noted every time Russia has faced both internal and external crises in history, its regimes have become less stable.

More recently, Feng has been even bolder, predicting Russian defeat in Ukraine. He argued China should keep its distance from Moscow and resume a policy of “non-alignment, non-confrontation and non-partisanship”.

Second, China’s sluggish economy and its underwhelming trade with Russia have further exposed how dependent both countries are on the West.

While Russia-China trade reached a record US$240 billion (A$360 billion) in 2023, it has slowed so far this year, as Chinese financial institutions have sought to limit connections with Russia.

The relationship still heavily favours Beijing. Russia accounts for only 4% of China’s trade, while China accounts for nearly 22% of Russia’s trade.

Many Chinese experts are now warning against an over-dependence on Russia, instead calling for more cooperation with neighbouring countries. This echoes a recent concern Russia has been using its natural resources as a bargaining chip to extract greater benefits from China.

Russia’s value as a military ally

Finally, there are rising Chinese concerns its international outlook does not align with Russia’s.

Zhao Long, deputy director of the Shanghai Institute of International Relations, says there is an important difference in how they view the world:

Russia wants to destroy the current international system to build a new one. China wants to transform the current system by taking a more prominent place in it.

Shi Yinhong, a strategist at Renmin University in Beijing, has highlighted an unbridgeable gap preventing a stronger China-Russia alliance. He says there’s a deep mutual mistrust on regional security. Russia has never promised support for China in the event of a conflict over Taiwan, just as China has avoided involvement in the war in Ukraine.

As Russia’s war in Ukraine reaches a stalemate, its value as a military ally is increasingly being questioned in China.

Recently, Feng Yujun warned China risks being led by the nose by Russia, despite being the stronger economic partner. He says every time China has attempted an alliance with Russia in history, it has had negative consequences for China.

Consequently, it is crucial for China to maintain its long-term partnership with Russia without undermining its constructive relationship with the West.

Russia has arguably benefited from the current competition between the US and China, as it has sought to exploit the rivalry for its own benefit. But this has also led to uncertainty in the China-Russia relationship.

As another analyst, Ji Zhiye, argues, relying too heavily on Russia will leave China isolated and vulnerable. And this is not a position China wants to be in.

This article is republished from The Conversation under a Creative Commons license. Read the original article.

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