(Yicai) April 13 -- After slipping three spots last year, China moved up two positions to rank fourth in this year’s Foreign Direct Investment Confidence Index, according to US consulting firm Kearney.

“China’s leadership in AI, along with the scale of its domestic market, are highly appealing to foreign investors,” said Sherri He, managing director of Kearney China. “China achieved gross domestic product growth of 5 percent in 2025, due in part to its export resilience and increasing embeddedness in global supply chains.”

Chinese manufacturers are increasingly price-competitive in high-value segments, including specialized machinery, green technology, and biomedical equipment, she noted, adding that the country’s new supporting policies issued last year showed its renewed commitment to attracting global investment across key sectors.

China also ranked first in the emerging markets index for the third consecutive year, followed by the United Arab Emirates and Saudi Arabia, which also made it into the top 10 of the main index, according to a report released by Kearney on April 10.

The United States ranked first in the global FDI Confidence Index for the 14th consecutive year, followed by Canada, Japan, China, and Germany. This year’s index reflects a global investment environment shaped by intensifying geopolitical tensions, expanding industrial policy, and accelerating technological competition, according to Kearney.

“Investors still believe in the value of FDI, but they are recalibrating how they make their decisions in a more turbulent operating environment,” said Erik R. Peterson, partner and managing director of Kearney’s Global Business Policy Council. “Capital continues to flow, but companies are becoming more selective about where they invest as they weigh technological capabilities, geopolitical risks, and the growing influence of industrial policy.”

Kearney surveyed senior executives at world-leading corporations with annual revenues of more than USD500 million in January. Its findings were based on data from more than 500 respondents.  

Investors still have FDI plans, according to Kearney. Eighty-eight percent of respondents said they plan to increase FDI over the next three years, compared with 84 percent last year.

Technological and innovation capabilities are the most important factor in investment decisions, ahead of regulatory efficiency and domestic economic performance. As investment in AI, digital infrastructure, and data-driven technologies accelerated worldwide, markets with strong innovation ecosystems are viewed as the most attractive destinations for long-term investment.

Industrial policy emerged as a major variable influencing investment decisions, with 84 percent of respondents calling it extremely or very important in determining their company’s business performance. However, nearly nine in 10 investors flagged at least moderate business risk from competing national industrial policies.

“Industrial policy is reshaping the global investment landscape and fast becoming a key factor in FDI decision-making,” said Terry Toland, principal at Kearney’s Global Business Policy Council. “Investors are weighing the opportunities created by subsidies and other policy incentives with the complexity of competing industrial policies across markets.”

The report also showed that Asia holds the largest share of ranked markets on the main index for the first time in more than a decade, as Japan rose to third and China to fourth, with Singapore, South Korea, India, Thailand, and Malaysia making it into the top 25.

This indicates a growing investor focus on markets that combine technological capability, economic growth potential, and geopolitical relevance, Kearney noted.

Editor: Futura Costaglione