1.
Logistics Infrastructure (Transport, Communication, Supply Chain)
A.Transport
China possesses one of the world’s most advanced logistics infrastructures, playing a central
role in global supply chains. Its extensive network includes over 160,000 km of expressways, a
leading high-speed railway system, 70 international airports, and major seaports such as
Shanghai, Shenzhen, and Guangzhou. These elements, along with the rapid development of
inland logistics hubs and digitalized distribution centers, enhance both domestic and
international connectivity.
Nonetheless, foreign companies still face operational challenges. According to CIP, complex
customs procedures, difficulties in choosing between standard and bonded warehouses, and
regional cost disparities can affect logistics efficiency. Inconsistent adoption of logistics
technology across regions also hinders supply chain performance.
Despite these issues, China's logistics sector continues to expand and modernize, supported by
initiatives like the Belt and Road and smart transport systems. As noted by ScienceDirect, these
developments improve cross-border connectivity, reduce delivery times, and lower operational
costs.
In conclusion, China invests around $1,000 billion annually in the development and
maintenance of its transport infrastructure, reflecting its strategic importance in
supporting economic growth and logistics capacity. While urban congestion and multimodal
coordination remain challenges, the country’s modern, large-scale infrastructure offers strong
potential for efficient, large-scale supply chain operations.
B. Communications Infrastructure
+ Telecommunications internet
● Major Providers: The market is dominated by three state-owned giants:
○ China Mobile – the largest telecom provider globally by subscribers.
○ China Telecom – strong in fixed-line and broadband services.
○ China Unicom – competitive in mobile and internet services.
● 5G Deployment: China is a global leader in 5G infrastructure, with millions of 5G
base stations installed nationwide. Cities and even rural areas are quickly getting
5G access.
● Fiber Optics: China has the largest fiber-optic network in the world, providing
high-speed internet even in remote provinces.
+ Internet Access
● Penetration Rate: As of 2024, internet penetration exceeds 75%, with over 1 billion
users online.
● Urban vs. Rural:
○ Urban areas enjoy high-speed, affordable broadband and mobile data.
○ Rural connectivity has improved drastically thanks to government-driven
infrastructure expansion programs.
● Mobile Internet: The vast majority of Chinese internet users access the web through
mobile phones, and super apps like WeChat and Alipay play central roles in daily
life.
+ Regulation & Control
● The Chinese internet is heavily regulated and monitored.
● Popular global platforms (Google, Facebook, X, YouTube, etc.) are blocked under
the "Great Firewall".
● China has a self-contained digital ecosystem, with domestic equivalents like:
○ WeChat (instead of WhatsApp)
○ Baidu (instead of Google)
○ Weibo (instead of Twitter/X)
● The government maintains strict oversight via cybersecurity laws and data
sovereignty policies.
+ Emerging Technologies
● China is actively developing satellite internet projects (like "StarNet") to expand
coverage to remote areas and compete globally.
● Heavy investments are also being made in AI-powered communication networks,
quantum internet, and 6G research.
2. Preferential Trade Agreements & FDI Attractiveness
2.1 Overview of China's Trade Agreements
China has established an extensive network of trade agreements to enhance its global
economic integration:
● Free Trade Agreements (FTAs): As of 2025, China has signed 28 FTAs, with 10
additional agreements under negotiation and feasibility studies for 8 more. These FTAs
encompass regions such as ASEAN, Australia, South Korea, Switzerland, Chile, and the
Eurasian Economic Union (EAEU).
● China has free trade agreements with countries and territories accounting for almost 40
per cent of its exports.
● Bilateral Investment Treaties (BITs): China maintains over 100 BITs with countries
including Germany, Canada, the United Kingdom, and Venezuela. These treaties provide
legal protections for foreign investors, covering aspects like expropriation, dispute
resolution, and repatriation of profits.
● Regional Comprehensive Economic Partnership (RCEP): China is a key member of
RCEP, the world's largest trade bloc, which aims to reduce tariffs and streamline trade
among 15 Asia-Pacific nations.
●
2.2 Impact on Foreign Direct Investment (FDI)
China's trade agreements have significantly influenced its attractiveness to foreign investors:
● FDI Inflows: According to UNCTAD's World Investment Report, China was the
second-largest recipient of global FDI inflows in 2023. The 2024 Kearney Foreign Direct
Investment Confidence Index ranked China third globally and first among emerging
markets.
● Preferential Trade Agreements (PTAs) and FDI: Research indicates that PTAs
positively impact FDI inflows, especially in middle- and high-income countries. The
benefits are more pronounced when agreements involve large market sizes, rather than
mere geographic proximity.
● Tariff Reductions: China has progressively lowered its overall tariff rate, which stood at
7.3% as of July 2023, enhancing its appeal to foreign investors.
2.3 Strategic Initiatives Enhancing FDI Attractiveness
China has implemented several strategies to bolster its investment climate:
● Belt and Road Initiative (BRI): This global development strategy involves infrastructure
and investment projects across Asia, Europe, and Africa, facilitating trade and
attracting FDI.
● Encouraged Industry Catalogue: China's government identifies sectors where foreign
investment is particularly welcome, offering incentives such as tax breaks and simplified
administrative procedures.
● Private Economy Promotion Law: Enacted in April 2025, this law aims to bolster
private sector confidence and economic contribution, ensuring fair market access and
supporting both public and private sector development.
2.4 Conclusion
China's extensive network of trade agreements, combined with strategic initiatives like the BRI
and supportive domestic policies, significantly enhances its attractiveness to foreign investors.
These efforts not only facilitate trade but also provide a stable and favorable environment for
FDI, positioning China as a key destination for global investment.
3. Potential Industries for Foreign Investment
3.1 High-Tech & Emerging Industries
China is actively promoting investment in high-tech and strategically important sectors to
support its long-term innovation-driven growth strategy.
● Semiconductors (Integrated Circuits):
China’s IC (integrated circuit) industry is projected to surpass $250 billion in revenue by 2025,
with strong government backing and growing market demand. The country is making major
strides in IC design, fabrication, packaging, and testing. This creates significant openings for
foreign firms with expertise in chip design, equipment, and materials.
● Quantum Technology:
In 2025, China launched a 1 trillion yuan ($138 billion) government-backed venture capital fund
aimed at accelerating the growth of critical emerging technologies—including quantum
computing. This initiative is part of China's broader ambition to lead in next-generation strategic
industries and indicates strong state-level support for foreign collaboration and innovation.
● Artificial Intelligence (AI) & Biotech:
According to China Briefing, sectors such as AI, biopharmaceuticals, and new energy are
among the top priorities in China's investment promotion plans. These industries benefit from a
combination of favorable government policies, large consumer markets, and rising domestic
demand for advanced tech solutions.
3.2 Strategic Industries Aligned with National Priorities
● Green & Renewable Energy:
China is placing increasing emphasis on sustainability and environmental protection, promoting
foreign investment in clean energy solutions. The focus includes solar, wind, hydrogen, and
battery storage, aligned with its carbon neutrality goals.
● High-End Equipment & Manufacturing:
As mentioned in People.cn, China continues to encourage foreign participation in industries
such as aerospace, railway equipment, marine engineering, and intelligent
manufacturing—which are key pillars of the "Made in China 2025" initiative. These sectors aim
to move China up the global value chain and offer opportunities for technology transfer and R&D
cooperation.
Conclusion: Based on official strategies and verified reports, China is clearly opening doors for
foreign investors in high-growth sectors such as semiconductors, quantum technology, AI, green
energy, and advanced manufacturing. These industries are not only strongly supported by policy
and funding but also offer long-term growth potential for companies looking to expand in one of
the world’s largest and most dynamic markets.
4. Investment Incentives & Government Policies
4.1 Tax Incentives in Key Regions
China offers preferential tax policies in specific regions to attract foreign investment:
● Hainan Free Trade Port (HFTP): Enterprises engaged in encouraged industries such as
tourism, modern services, and high-tech sectors benefit from a reduced corporate
income tax rate of 15%, down from the standard 25%. Additionally, certain
foreign-source income is exempt from taxation, and accelerated depreciation is available
for eligible capital expenditures.
● Guangdong-Hong Kong-Macao Greater Bay Area (GBA): The GBA implements
similar tax incentives, including subsidies to reduce the effective individual income tax
rate to 15% for qualified foreign and domestic talent.
4.2 Free Trade Zones (FTZs) Benefits
China's FTZs provide a range of advantages to facilitate foreign investment:
● Duty-Free Imports and Bonded Warehousing: Companies can import goods without
immediate payment of duties and taxes. Duties are only levied when goods enter the
domestic market, allowing for cost-effective storage and re-export options.
● Simplified Customs and Registration Procedures: FTZs offer streamlined customs
clearance and company registration processes, reducing administrative burdens for
foreign enterprises.
4.3 Talent Attraction Incentives
To attract and retain skilled professionals, various FTZs have introduced:
● Tax Reductions and Subsidies: Qualified individuals may benefit from reduced
personal income tax rates, with some regions offering subsidies to lower the effective tax
rate to 15%.
● Housing and Transportation Allowances: FTZs provide additional benefits such as
housing and transportation subsidies to make relocation more appealing for talent.
