Chinese Investment Shifts to Emerging Markets and Greenfield Projects

Chinese outbound investment has shifted from advanced economies like the U.S. and Europe to emerging markets, particularly in Asia, Africa, Latin America, and the Middle East. This shift is driven by tighter capital controls in China, anti-corruption campaigns, and the property market slump. The U.S. and Europe have also intensified scrutiny of Chinese investments due to national security concerns.

Key Points:

• Investment Rebound: Outbound Chinese FDI rebounded to $103 billion in 2023 but remains below pre-pandemic levels.
• Regional Shift: Asia is now the largest recipient of Chinese FDI, with 72% of investments going to non-advanced economies.
• Greenfield Projects: Chinese investors are increasingly focusing on greenfield projects, which involve building facilities from scratch, rather than mergers and acquisitions.
• Economic Influence: This shift allows China to exert more economic influence in emerging markets, creating local jobs and boosting local economies.

Insight: The shift to greenfield projects signifies a strategic move by Chinese companies to diversify supply chains and navigate geopolitical tensions. This approach not only mitigates risks but also deepens China's economic footprint in regions eager for development. Governments aiming to counter China's influence now face the dual challenge of competing with both state-backed financing and mature Chinese multinationals offering local economic benefits.