China and MNCs built a mutually beneficial relationship during the past few decades. Between 1990 and 2019, China’s real GDP grew at an average of almost 10% per year, contributing more than a quarter of global GDP growth, and average household income rose from about $750 to $13,000. That dynamism was a magnet for MNCs, which flocked to China to capture part of the growth.
But MNCs have started reappraising their relationship with China. A recent survey indicated that the share of US MNCs perceiving China as one of their top three investment priorities dropped from 77% in 2010 to 45% in 2022. Though many MNCs are continuing to invest in China, some are curtailing their operations there or rebalancing their investments toward other countries, and a few are pulling out of China altogether.