China utilizes foreign capital through various channels and forms, which fall into three major categories: 1) foreign loans, including loans from foreign governments, international financial organizations and foreign commercial banks, export credits, and issuance of bonds overseas; 2) direct foreign investment, including Chinese-foreign equity joint ventures, Chinese-foreign cooperative joint ventures, wholly foreign-owned enterprises and Chinese-foreign cooperative development projects; 3) other foreign investments, including international leasing, compensation trade, processing and assembly and issuing stocks overseas. From 1979 to 2004, foreign capital utilized by China in real terms totaled US$743.6 billion, including US$560.4 billion of direct investments by foreign businesspeople. In 2004, foreign investment maintained its momentum of rapid increase, and foreign capital utilized in real terms for the year totaled US$64.1 billion, of which direct foreign investment amounted to US$60.6 billion.

Since the 1980s, China has devoted great human, material and financial resources to construct infrastructure facilities to help create a favorable environment for foreign investors to invest in China. The Central Government has promulgated more than 500 foreign-related economic laws and regulations to provide legal and other guarantees for foreign investors in China. At the end of 1997, China revised and promulgated the Foreign Investment Industrial Guidance Catalogue to encourage and support foreign businesspeople 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. In accordance with the rules of the WTO and China's undertakings, China has basically completed the rationalization and revision of foreign-related economic laws and regulations. A foreign-investment law system has been formed, its mainstay being the Law on Chinese-Foreign Equity Joint Ventures, the Law on Chinese-Foreign Cooperative Joint Ventures, the Law on Foreign Investment Enterprises and the relevant rules for the implementation of these laws. By the end of 2004, foreign businesspeople from more than 170 countries and regions had invested in China, with a total of 509,000 foreign-invested enterprises. Of the world's top 500 transnational companies, over 400 have invested here. China has been hailed by investors and the financial world as among the countries with the best investment environment.