China utilizes foreign capital through various channels and forms, which mainly fall into three major categories: foreign loans, including loans from foreign governments, international financial organizations, foreign commercial banks, export credits, and issuance of bonds overseas; direct foreign investments, including Chinese-foreign joint ventures, Chinese-foreign cooperative enterprises, wholly foreign-funded enterprises and Chinese-foreign cooperative development projects; and other foreign investments, including international leasing, compensation trade, processing and assembly and issuing stocks overseas.

From 1979 to 2000, direct foreign capital utilized by China totaled 393.5 billion US dollars. At present, China ranks second in the world in absorbing foreign capital, next only to the United States.

Since the early 1980s China has put in a large amount of human, material and financial resources to have a large number of infrastructure facilities constructed, creating a favorable environment for foreign investors in China. Meanwhile, the Chinese government has promulgated more than 500 foreign-related economic laws and regulations to provide the legal basis and guarantee for foreign investors in China.

At the end of 1997, China revised and promulgated the Directory of the Industries for Foreign Investors to encourage and support foreign business-people to invest in the comprehensive development of agriculture, energy, communications, important raw and processed materials, new and high technology, the comprehensive utilization of resources, and environmental protection.

By the end of 2001, foreign business-people from more than 170 countries and regions have invested in China, with a total of 390,000 foreign-invested enterprises.

Some international consortiums and transnational companies show great interest in the Chinese market. Of the 500 top transnational companies in the world, over 400 have invested in China. China has been regarded as one of the countries with the best investment environment by investors and financial circles across the world.