Insights from MNCs Senior Executives in China: Investment Opportunities in Central and Western China

March 2024

Over the past four decades of economic opening, China has emerged as a significant global destination for foreign direct investment (FDI). In 2023, the country reported USD163.25 billion of actual use of foreign capital, the third highest in history, only shy of the 2021 and 2022 levels, according to China’s Ministry of Commerce.

Historically, China’s foreign investment has been predominantly centred around its coastal regions, but the ongoing development of regional economic clusters has made the central and western regions, including Sichuan, Chongqing, Hubei, Hunan, Shaanxi, and Shanxi, increasingly attractive to foreign investors. Central and western China is home to populous provinces like Henan and Sichuan, as well as education powerhouses like Hubei and Shaanxi. This implies that the regions have considerable development potential in becoming an ideal market and a strategic hub for research and production for MNCs. Through continuous efforts on the part of local governments, the central and western regions have seen a growing interest from foreign investors in recent years, driven by improvement in the business and infrastructure environment, as well as the support of subsidy measures.

In January 2024, PwC China held its annual conference for senior executives from multinational corporations (MNCs) in Shanghai, during which over 100 business representatives shared their perspectives on investments in central and western China via an onsite survey.

The result shows the central and western regions of China are becoming a "new hotspot" for foreign investment, with over 70% of surveyed companies considering conducting business in these regions. Population and market size, preferential policies for foreign investment by local governments in the central and western regions, and labour and land cost advantages are the three key factors that attract MNCs to invest in the central and western regions.