Why Foreign Companies Averse to Invest in China

July 3, 2026

China’s President Xi Jinping has repeatedly emphasised at high-level meetings with world leaders and corporate heads that his country is keen to attract foreign investments, even though recent events have brought into question the safety and viability of those potential investments.

It highlights that world’s top business leaders that Jinping has addressed at meetings in recent months include Elon Musk of Tesla and SpaceX, Jensen Huang of Nvidia, Tim Cook of Apple, Larry Fink of BlackRock and Kelly Ortberg of Boeing. Jinping is reported to have told them that China “will only open its door wider” and that “China-U.S. economic and trade ties are mutually beneficial and win-win in nature.”

However, over the past few years, issued new laws and decrees that impact the degree to which Chinese citizens are obligated to act as informants to the government. Effectively, these laws require ordinary people to act as eyes and ears of state security, reporting suspicious and seditious behaviour, as well as anything they suspect could adversely impact the national security of China. It is inevitable that these laws would dampen the enthusiasm of foreign companies to invest in China. Any company would be reluctant to put their treasure and trust into a country that has turned its citizens – including the employees of their very own foreigninvested enterprises – into intelligence assets, under penalty of law..

That may be the deciding factor against investing in China for the time being, especially as one goes up the value chain. The higher the value of the technology, the more it will attract attention and interference from the Chinese government. Foreign companies may increasingly find that other low-cost options are safer and more welcoming. This is a difficult problem for China. Historically, nothing is more important to the Chinese Communist Party (CCP) than propagating its own position as the single defining and leading force of Chinese power.