China’s shifting demographics and evolving economic landscape are creating significant opportunities for foreign firms across various sectors. The country’s aging population, driven by low fertility rates and longer life expectancies, is accelerating demand for healthcare, elder care, pharmaceuticals, wealth management and other financial services, and wellness products. According to the Economist Intelligence Unit (EIU), by 2035, over 450 million people in China will be aged 60 and above, constituting more than 32 percent of the population. Foreign companies with expertise in these sectors are well-positioned to tap into this growing market.

Simultaneously, China’s shrinking working-age population presents challenges and opportunities. With a declining labor force, demand for automation and robotics in industrial sectors will likely increase. Although the working age population is decreasing, the number of new college graduates is set to rise to an all-time high of more than 12.2 million in 2025. There may be opportunities to take advantage of the mismatch in the skillsets of these graduates and what the labor market demands; there is a shortage of workers in technology driven sectors but an overabundance of graduates in other fields.

Despite economic challenges, China’s middle class remains a significant market. In 2024, per capita consumption grew by 5.1 percent, with notable increases in education, culture, and services. However, retail sales growth slowed to 3.5 percent, and consumer caution is evident due to economic pressures like the ongoing property crisis. According to BNP Paribas, private consumption as a percentage of GDP remained stagnant at 39.4 percent, reflecting ongoing reluctance among consumers. Nevertheless, S&P Global forecasts that China’s middle class will grow by 80 million people by 2030, with services accounting for over half of GDP. McKinsey’s 2024 survey highlighted that younger consumers in Tier 2 and Tier 3 cities represent key growth opportunities, particularly as e-commerce and urbanization continue to expand. Foreign firms that tailor their products to local preferences and leverage digital platforms may be well-positioned to capture demand in these emerging markets.

China’s policy support in areas such as energy efficiency, environmental protection, water management, and the circular economy offers further opportunities for foreign companies. U.S. firms specializing in sustainable technologies, waste management, water treatment, and carbon capture can capitalize on China’s efforts to meet its environmental goals. However, foreign companies must navigate procurement policies that favor domestic competitors, export controls, and intellectual property concerns, particularly in sectors involving sensitive or critical technologies.  

In October 2021, the Ministry of Finance (MOF) issued a circular prohibiting discrimination against foreign-invested enterprises (FIEs) in government procurement for products “produced in China.” The circular required that suppliers not be restricted based on ownership, organization, equity structure, investor country, or product brand, to ensure fair competition between domestic and foreign companies. However, foreign companies report that the Chinese government continues to enforce Document 551, “Auditing guidelines for government procurement of imported products,” issued in May 2021 by MOF and the Ministry of Industry and Information Technology (MIIT), which outlined local content requirements for hundreds of items, many of which are medical devices. Additionally, the October 2021 circular provided no guidance on what constitutes a “domestic product” and did not address treatment of products manufactured in China that incorporate content from other jurisdictions, key concerns for a wide range of U.S. firms. Foreign businesses have reported that in some cases, even products manufactured completely within China are not considered to meet the local content requirements for participation in a Chinese government procurement process, as the underlying IP is not owned by a Chinese entity.  

Strategic partnerships and joint ventures may be prerequisites for market entry, exacerbating intellectual property risks. As noted by McKinsey & Company and other environmental consultants, the focus on green technologies continues to expand across sectors like water management and sustainable packaging, offering growth potential for companies in these fields. 

This iteration of the Country Commercial Guide for China explores several top prospect sectors, including Agriculture, Aviation, Consumer Goods, Design and Construction, Education, Energy, Environmental Technologies, and Healthcare.