China’s overseas investment fell 18% year-on-year to about 147 billion dollars last year. This is a 25% decrease from the peak of $19 billion in 2016. Foreign direct investment has recently weakened not only in China but also around the world, but China’s decline has been steeper and longer, especially in advanced countries, the WSJ explained. Thus, China shifts attention to Southeast Asia.
‘China Money’ Pulls Out of the West, Crowds To Southeast Asia
In 2016, when China’s overseas investment peaked, Chinese companies, including state-run companies, made 120 investments worth a total of $84 billion in seven major countries (G7), 63 of which were U.S. investments. However, only 13 investments were made in China last year. The U.S. Enterprise Research Institute (AEI) said China’s investment in the G7 totaled $7.4 billion last year, accounting for only 18% of China’s overseas investment. According to a report by the U.S. research firm Rodium Group and the German think tank Mercator China Research Institute, China’s direct investment in Europe was $8.8 billion last year, the lowest in 10 years.
China attention away from the West is focused on Southeast Asia. Hong Kong’s South China Morning Post (SCMP) paid attention to the Pinglu Canal, which China is penetrating. The SCMP reported on the canal that “with a population of 600 million, there is already Beijing’s hope to make China’s largest trading partner, the ASEAN bloc, the key to U.S. influence.”.”
Chinese governments and companies are also increasing their investment in alternative regions in the U.S. and Europe, such as Asia and South America. The WSJ reported that Chinese companies and state institutions invested a total of $24.5 billion in Asia, South America and the Middle East last year, up 13% from the previous year. The WSJ explained that the funds that have been withdrawn from the West are being used for factories in Southeast Asia, as well as mining and energy projects in Asia, the Middle East, and South America.
The biggest beneficiary of Chinese investment so far this year is Indonesia, which is rich in nickel, a key element of electric vehicle batteries. Indonesia took 17% of China’s overseas investment this year. WSJ explained the reason for intensive investment in Indonesia, saying, “China is trying to solidify its alliance and secure access to important resources.”