Mr. Huang Feng, Chairman of the Shanghai Association of Foreign Investment, was invited to speak on the above topic at Keidanren Kaikan. A total of 31 participants attended, primarily executives and overseas business personnel from Keizai Koho Center member companies operating in China.

Addressing the Declining Trend in Foreign Direct Investment (FDI) in China
Mr. Huang noted that FDI inflows to China have been on the decline, a trend shaped by heightened uncertainty in the Chinese market and capital outflows driven by rising U.S. dollar interest rates. On the other hand, the Chinese government has announced the 2025 Action Plan for Stabilizing Foreign Investment, designed to attract foreign capital and strengthen the investment environment. He expressed his expectations about the plan’s potential impact, highlighting in particular the forthcoming launch of the Hainan Free Trade Port in December, which is expected to become one of China’s most preferential regions in terms of the free circulation of goods and services.

Resolving the Unpredictable Trade Friction between China and the U.S.
Turning to trade relations with the United States, Mr. Huang emphasized that while the Chinese government was unprepared during the first Trump administration, the current government strategy is to retaliate against U.S. trade measures without allowing tensions to escalate. Trade negotiations between the two countries are proceeding cautiously, but Mr. Huang pointed out that reaching a comprehensive agreement is expected to be a lengthy process given the fundamental differences between their economic systems.

Engaging in Lively Discussions on Current Issues and Concerns
The exchange of views covered a wide range of topics, including changes in the competitive environment, investment trends in Europe and the U.S. toward China, responses to potentially volatile domestic demand, and risk management for cross-border data transfers. When asked about diversifying investment strategies, Mr. Huang explained that the decision is no longer a simple matter of “to invest or not to invest.” Instead, non-capital alliances that balance risk and return—such as minority shareholder investments and licensing agreements—are increasingly attractive, particularly among European and U.S. companies. On the challenging phenomenon of “involution” in China, characterized by intensifying yet unproductive competition within the Chinese economy, Mr. Huang identified healthcare, nursing care, green transformation, and decarbonization as areas where Japanese companies can play a meaningful role in supporting China’s growth and expansion.