China Is Top Emerging Market in Kearney's FDI Confidence Index for Third Year in Row

China has topped the list of emerging markets in an annual survey of global business executives conducted by US consulting firm Kearney Holdings that ranks markets likely to attract the most investment in the next three years.

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In the world rankings of the Foreign Direct Investment Confidence Index, published in a report on April 9, China slipped to sixth place from third, "likely reflecting the market's economic challenges, including an ongoing property crisis, alongside rising uncertainties in United States-China relations, particularly as they relate to trade," Kearney said.

"Nevertheless, investors are buoyed by China's tech innovation, a sentiment perhaps boosted by the launch of popular artificial intelligence assistant by Chinese startup DeepSeek, and may reflect some optimism that China's USD1.4 trillion stimulus package announced in November 2024 could further boost economic performance," Kearney added.

"China's vast domestic market has always been a central factor for foreign companies in their strategic planning," said Sherri He, president of Kearney China. "Its large consumer market, well-established industrial supply chains, and continuously improving business environment are key drivers in attracting FDI to China."

Amid increasing global economic and trade uncertainty, the Chinese market is expected to be a stabilizer of global business confidence with its steady growth, openness, and innovative vitality, she added.

The United States ranked first in the global FDI Confidence Index for the 13th straight year, followed by Canada, the United Kingdom, Japan, and Germany. "Investors highlight the strength of US technological innovation and Canada's high infrastructure quality as top factors to invest in these markets," according to Kearney. France, Italy, the United Arab Emirates, and Australia completed the top 10 behind China.

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 536 respondents. When the survey was done, tariffs had not yet been hiked, and investors were still cautiously optimistic about the global business environment.

The report also showed that domestic economic performance emerged as a key factor for investors. According to Kearney, the efficiency of legal and regulatory processes and domestic economic performance tied at 16 percent of respondents as the two most important factors in deciding where to invest. Domestic economic performance ranked just 16th last year, with only 6 percent of respondents highlighting it as a key consideration.

Investors still have FDI plans, according to Kearney. Eighty-four percent of respondents intend to increase their FDI in the next three years, while 68 percent expressed optimism about the state of the global economy.

However, investors are concerned about a number of risks, with rising commodity prices, geopolitical tensions, and restrictive business regulatory environments in developed markets being their top three worries.

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