Foreign direct investment (FDI) from China - statistics & facts
With the rapid development of China's globalization process, worldwide investment of Chinese enterprises has experienced rapid growth over the last two decades, reaching its peak with over 196 billion dollars in foreign direct investment (FDI) outflows in 2016. Although Chinese investments abroad remained at a lower level since 2016, China has firmly established itself as one of the largest direct investors in the world.
Given China’s important role in global value chains and the low FDI intensity of its economy, there is a huge potential for increased overseas investment. However, as geopolitical tensions are growing and concerns about national security and strategic asset protection is rising, the future development of China’s FDI flows might be strongly influenced by domestic and international political factors.
Sectors receiving the most direct investment from China were leasing and business services, manufacturing, wholesale and retail trade, and financial services.
FDI development in China
Driven by China’s fast economic development, the country’s outward investment stock grew quickly from only around 28 billion U.S. dollars in 2000 to around 2.9 trillion in 2023. A large part of this investment volume was used for mergers and acquisitions, which attracted the attention of the Chinese government and foreign countries alike and led to stronger market surveillance and lower investment outflows since 2017. Although China is one of the most restricted countries regarding outward FDI flows in comparison with developed nations, the government still encourages its companies to go global and has taken steps to facilitate outward investments in recent years.Given China’s important role in global value chains and the low FDI intensity of its economy, there is a huge potential for increased overseas investment. However, as geopolitical tensions are growing and concerns about national security and strategic asset protection is rising, the future development of China’s FDI flows might be strongly influenced by domestic and international political factors.
Investment destinations and sectors
A regional breakdown of China’s outward FDI indicates that investment flows are primarily directed towards Asia. However, more than 60 percent of the total FDI volume in 2023 was transferred to Asia’s financial hub, Hong Kong, and around ten percent to the Cayman Islands and British Virgin Islands, which makes it difficult to identify final investment destinations. A significant share of this money is likely related to Chinese corporations that are registered in tax-friendly environments abroad and is ultimately reinvested in China.Sectors receiving the most direct investment from China were leasing and business services, manufacturing, wholesale and retail trade, and financial services.
