Net inflows of foreign direct investment to China quadrupled in 2025 according to balance-of-payments data, official figures showed on Friday, signaling a structural improvement in inbound investment and renewed confidence in China's long-term growth prospects.

Preliminary balance-of-payments data from the State Administration of Foreign Exchange showed that China recorded an increase of $76.5 billion in direct investment liabilities in 2025, representing net FDI inflows on a balance-of-payments basis.

The figure marked a sharp increase from $18.6 billion in 2024, indicating a notable rebound in inbound direct investment despite extreme external shocks due to the United States tariff and sanction policies.

With the rising foreign investment appetite, China's direct investment deficit — the gap between outbound and inbound direct investment — narrowed sharply on a balance-of-payments basis, shrinking to $82 billion in 2025 from $153.7 billion in 2024, the SAFE said.

Guan Tao, global chief economist at BOCI China, said in a note that the improvements in FDI inflows reflect China's effective policy response to external shocks, stronger-than-expected economic and financial resilience, and measures to stabilize foreign investment by expanding opening-up and improving the business environment.

The recovery in foreign investment also comes as multinationals become more adapted to China's economic transformation and pursuit of innovation-driven quality growth.

Jiang Liqin, head of clients and markets for KPMG China, said that foreign enterprises are increasingly shifting from expansion to profitable models, using local digital innovations to boost efficiency, refine pricing and strengthen competitiveness in China.

For instance, US chemical company Dow has been enhancing its local innovation and production capabilities in China, with its new Cooling Science Studio at the Shanghai Dow Center opening in November.

"The studio represents a significant long-term investment, underscoring our confidence in the strength and future growth of China's chemicals industry," said Puay Koon Chia, president for Dow in the Asia-Pacific region.

SAFE data also showed that China posted a current account surplus of $734.9 billion in 2025, which refers to the excess of a country's exports of goods and services, investment income and transfers over its imports and outward payments. Surplus in trade in goods came in at $1.0234 trillion last year.

On a renminbi basis, the current account surplus amounted to 5.24 trillion yuan ($759 billion), roughly equivalent to 3.7 percent of the country's GDP — which hit 140.19 trillion yuan in 2025 — up from 2.2 percent in 2024.

While export growth propped up the surplus, Liu Chunsheng, an associate professor of international economics at the Central University of Finance and Economics, said that China's aim is to maintain overall balance in its balance of payments, rather than run excessive surpluses, which could create pressure on both the economy and the renminbi.

Liu said that authorities have sought to ease the surplus by expanding imports, strengthening domestic demand and deepening opening-up in the services sector.

"China's imports hit a record high in scale last year, securing the country's position as the world's second-largest import market for the 17th year running," Wang Jun, deputy head of the General Administration of Customs, said at a news conference.

"It's worth noting that several countries have politicized trade and economic issues, restricting high-tech exports to China on various pretexts. Otherwise, we'd be importing even more," Wang said.

Mei Xinyu, a research fellow at the Chinese Academy of International Trade and Economic Cooperation, said if Western countries ease their restrictive high-tech export controls on China, Chinese demand for imported products would expand significantly, fostering more balanced trade flows.

Contact the writers at zhoulanxv@chinadaily.com.cn