The nation’s share of global GDP experienced a rapid rise between 2000 and 2021, accelerating from 3.5% to 18.5%, but recent economic challenges have caused it to slip back to around 16.5%. 

China’s stuttering economy in the post-pandemic landscape has come as a result of a decline in working-age citizens and a falling population, contributing to stalling productivity growth domestically. 

When Evergrande filed for bankruptcy in 2023, it underlined the severe weakness within China’s housing market and was a catalyst for further economic uncertainty.

Last year, the Communist Party of China (CPC) introduced a series of stimulus packages geared towards supporting domestic growth to galvanize its economic struggles. 

Curiously, while productivity in China has resulted in some exported goods reaching overcapacity as domestic consumption falls, the Shanghai Composite index for mainland stocks has been on a whirlwind rally, reaching a 10-year high on August 25th. 

Put in dollar terms, the index is up 17% since the beginning of 2025, weighing in stronger than both America’s S&P 500 and global indices. 

This turnaround in fortunes has been not only lucrative for Chinese investors who had recently become accustomed to looking elsewhere for stock picks but also for foreign investors looking to build a presence in China. 

More impressive is that analysts have noted that much of the Shanghai Composite’s outperformance in 2025 so far is down largely to sovereign funds, insurers, and other institutional investors, with retail investors only just waking up to the market growth rates. 

While China’s export-heavy GDP will rely on the outcome of trade negotiations with the United States, which were recently handed another 90-day delay, growing market confidence is contributing to attracting more entrepreneurs to build a presence in Asia by registering in China. 

Attracting Foreign Investors

2025 has been a challenging year for foreign direct investment (FDI) in China, with just $50 billion arriving between January and May, a figure that’s 13.2% lower than the same period last year. 

However, despite declining from a 2022 annual peak, utilized FDI reached $163.3 billion in 2023 and $116.2 billion in 2024, climbing significantly higher than its worrying balance-of-payments (BOP) statistics reported. 

According to a recent AMRO study, China’s weaker BOP statistics are down primarily to cyclical factors, with tighter global liquidity and higher borrowing costs overseas, such as the US Federal Reserve’s interest rate hikes between 2022 and 2024, playing a key role. 

We’re also seeing a significant range of government initiatives to attract foreign investment gather momentum. Last year, the State Council released its Action Plan for Solidly Promoting High-Level Opening-up and Attracting and Utilizing Foreign Investment with Greater Efforts strategy, which introduced fewer restrictions on market access, new tax and financial support policies, optimized business environments by promoting procurement systems and government services, and promoted the cross-border flow of information. 

Evidence of this more prosperous environment for foreign businesses can be found in China’s growing biopharmaceuticals industry, which has attracted record foreign direct investment in 2025. 

Between January and July, more than $4 billion of greenfield FDI was pledged in the industry, which is six times higher than the same period of 2024. 

AstraZeneca is now China’s largest foreign drugmaker by sales, and the UK-listed company pledged $2.5 billion in March to build a research and development hub in Beijing. 

The Lure of Registering in China

The increasingly favorable business environment in Chinese industries that are becoming more receptive towards foreign investors can help to open more businesses up to the world’s second-largest market. 

The country’s emphasis on innovation, particularly in the field of AI, as well as low-cost manufacturing, is being unlocked by foreign direct investors thanks to the more lenient programs like WFOE.

China’s newfound reputation as an innovative nation is helping to inspire more entrepreneurs to open up in Asia to reap the benefits of an AI-fluent workforce. 

In recent months, China’s government has converted AI in education into policy, and this can open the door to foreign investors seeking to access a technologically literate workforce to stay competitive in a rapidly growing industry. 

Embracing China’s Economic Revival

China’s economy may have been struggling in recent years, but it’s opened the door to foreign business owners looking for a cost-effective way to access one of the world’s largest markets backed by rapidly advancing tech industries. 

For those seeking a way into China, 2025 may be the best time to take the plunge. Although tariff uncertainty may continue to play a role in the nation’s export-heavy economy, signs of a turnaround in fortunes are already playing out in the Shanghai Composite index, and the arrival of a trade deal could be a further catalyst for growth. 

Despite its struggles since the pandemic, China is an opportunity for business owners to significantly expand their operations, and the timely arrival of government stimulus means that there’s no time like the present.